<html xmlns:v="urn:schemas-microsoft-com:vml" xmlns:o="urn:schemas-microsoft-com:office:office" xmlns:w="urn:schemas-microsoft-com:office:word" xmlns:m="http://schemas.microsoft.com/office/2004/12/omml" xmlns="http://www.w3.org/TR/REC-html40"><head><meta http-equiv=Content-Type content="text/html; charset=us-ascii"><meta name=Generator content="Microsoft Word 12 (filtered medium)"><style><!--
/* Font Definitions */
@font-face
{font-family:"Cambria Math";
panose-1:2 4 5 3 5 4 6 3 2 4;}
@font-face
{font-family:Calibri;
panose-1:2 15 5 2 2 2 4 3 2 4;}
/* Style Definitions */
p.MsoNormal, li.MsoNormal, div.MsoNormal
{margin:0in;
margin-bottom:.0001pt;
font-size:11.0pt;
font-family:"Calibri","sans-serif";}
a:link, span.MsoHyperlink
{mso-style-priority:99;
color:blue;
text-decoration:underline;}
a:visited, span.MsoHyperlinkFollowed
{mso-style-priority:99;
color:purple;
text-decoration:underline;}
span.EmailStyle17
{mso-style-type:personal;
font-family:"Calibri","sans-serif";
color:windowtext;}
span.EmailStyle18
{mso-style-type:personal-reply;
font-family:"Calibri","sans-serif";
color:#1F497D;}
.MsoChpDefault
{mso-style-type:export-only;
font-size:10.0pt;}
@page WordSection1
{size:8.5in 11.0in;
margin:1.0in 1.0in 1.0in 1.0in;}
div.WordSection1
{page:WordSection1;}
--></style><!--[if gte mso 9]><xml>
<o:shapedefaults v:ext="edit" spidmax="1026" />
</xml><![endif]--><!--[if gte mso 9]><xml>
<o:shapelayout v:ext="edit">
<o:idmap v:ext="edit" data="1" />
</o:shapelayout></xml><![endif]--></head><body lang=EN-US link=blue vlink=purple><div class=WordSection1><p class=MsoNormal>Happy Holidays!</p><p class=MsoNormal><span style='color:#1F497D'><o:p> </o:p></span></p><p class=MsoNormal>I have a client interested in setting up an ownership structure for a 5<sup>th</sup> generation family cabin. There are enough family members so that a co-tenancy would be unwieldy. In addition, the client wants to reduce the possibility that less interested members of the family could force a sale of the cabin down the road in order to realize on its value.<o:p></o:p></p><p class=MsoNormal><o:p> </o:p></p><p class=MsoNormal>I have considered using an LLC or a non-profit corp/homeowner’s association structure. The cabin would be donated to the LLC, and membership would be open to all family members. To discourage profiteering, a low entry price would be set, unrelated to the value of the asset, with the same amount payable to any withdrawing member. The property could not be sold without a unanimous, or near unanimous vote.<o:p></o:p></p><p class=MsoNormal><o:p> </o:p></p><p class=MsoNormal>Use would be determined by lottery. Members would be jointly responsible for upkeep, utilities, taxes, reserves and other recurring expenses, probably based on frequency of use. Improvements would require a substantial vote, but not as high a threshold as approving a sale.<o:p></o:p></p><p class=MsoNormal><o:p> </o:p></p><p class=MsoNormal>Management would be elected by the members, with set terms. Regular membership meetings would be held to elect management and approve budgets. More detailed rules would be established by bylaws or rules established by management and/or member approval.<o:p></o:p></p><p class=MsoNormal><o:p> </o:p></p><p class=MsoNormal>I would prefer to use the non-profit corp/homeowners association rules as the client is already a member of two associations and is familiar with the workings. However, I am concerned that the membership structure limited to family members might not be allowed under the non-profit statutes, or that the use of the HOA statutes would not be allowed for governance of a jointly owned single structure. <o:p></o:p></p><p class=MsoNormal><o:p> </o:p></p><p class=MsoNormal>I have not seen an LLC structure used for this type of organization, and most of the LLCs I have seen have a far more rigid structure and are designed to operate a for profit business, although I understand the LLC statute allows for lots of flexibility, and an operating agreement could likely be tailored to meet the needs of the client. I believe administration of this organization as an LLC would require more effort and expense than would a non-profit corp.<o:p></o:p></p><p class=MsoNormal><o:p> </o:p></p><p class=MsoNormal>Any thoughts or experiences on the best structure for this organization, LLC, non-profit corp or otherwise, would be greatly appreciated.<o:p></o:p></p><p class=MsoNormal><o:p> </o:p></p><p class=MsoNormal><span style='color:#1F497D'><o:p> </o:p></span></p><p class=MsoNormal><span style='color:#1F497D'>________________________<o:p></o:p></span></p><p class=MsoNormal>Nick Bergh<o:p></o:p></p><p class=MsoNormal>Law Office of G N Bergh<o:p></o:p></p><p class=MsoNormal>2006 South Post Street<o:p></o:p></p><p class=MsoNormal>Spokane WA 99203-2049<o:p></o:p></p><p class=MsoNormal>ph 509-624-4295 | fx 509-344-1844<o:p></o:p></p><p class=MsoNormal><span style='color:#1F497D'><a href="mailto:nick@gnbergh.com">nick@gnbergh.com</a><o:p></o:p></span></p><p class=MsoNormal><span style='color:#1F497D'><a href="http://www.gnbergh.com/">www.gnbergh.com</a><o:p></o:p></span></p><p class=MsoNormal><o:p> </o:p></p></div></body></html>