Legal Question in Business Law in California

Re: Llc

Check the second article I wrote on this page of my website that discusses just a couple of these issues. http://www.legalwarriors.com/articles.htm

In particular, however, you will have some potential issues being 50/50 owners, such as whether you need agreement in order to proceed on an issue. What happens if you deadlock, etc.

Re: Llc

The main disadvantage is the likelihood of deadlock. This can happen in any two-person business arrangement, whether corporation, partnership or LLC. In an LLC (as with a partnership) the possibility of deadlock can be addressed in advance by writing one or more tie-breaking techniques into the operating agreement. These can range from the drastic, such as a "drop dead" buy-out (one owner names a price, then the other owner says whether he's buying or selling at that price) to the sublime (flipping a coin).

The answer to your second question would be easy except for the part about "using it to capitalize his interest." The answer would be yes, it's perfectly permissible, provided all the relevant facts are disclosed to the other member(s). By the way, I think you mean "lease it" not "lease it back" - a leaseback usually implies an immediately preceding sale of the property by the lessee to the lessor.

Land contributed by an LLC member to the LLC as his contribution to its capital is no longer the property of the member. Contributing property to a partnership, LLC, corporation or whatever to capitalize it necessarily divests the contributor of title to the property and vests the title in the business. The contribution must be done by deed to be effective, of course. Thereafter, the LLC owns the land and doesn't have to lease it from you.

If the land isn't really and truly deeded to the corporation, the supposed "contribution" of it to the LLC's capital is at least highly suspect and probably illusory and void.