Legal Question in Real Estate Law in California

A Variation On A Previous Question:

1. I want to borrow large amounts of funds from private citizens and/or businesses to buy an expensive home.

2. I will offer lenders access to home for certain "functions" and a share of the profits generated from the home: ie: events, parties etc

3. I will use an LLC and set it up as "manger-managed" with myself as the manager and the lenders as "silent partners" with no voting rights.

4. We'll use the LLC for pass-throughs on expenses and income, for liability protection, and an operating agreement to organize everything.

4. After 10 years, I would sell the home and pay back the lenders according to our "operating agreement"

Questions:

1. Is that legal?

2. Is this considered an investment?

3. Do I have any problems with the SEC?

I'm interested in hiring an attorney for this project.

Thanks Mr Bowen San Diego CA [email protected]


Asked on 12/11/21, 12:35 pm

1 Answer from Attorneys

1, You are not actually proposing to borrow funds if you, 2. offer a share of profits and expenses which makes it an investment not a loan. 3. Possibly, depending on how you set it up.

Yes, you need a lawyer, and don't trust one who would take this on any kind of contingency. You also should not trust any lawyer who would take compensation in the form of a part of the deal. That creates all kinds of conflicts of interest that no qualified and reputable lawyer would touch.

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Answered on 12/12/21, 2:41 pm


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