Decision-Making in Your Co-Owned Property

One of the most important aspects of a successful co-ownership arrangement is having a clear and transparent process for making decisions. Your Operating Agreement serves as the official rulebook for your property, defining how different types of decisions are made.

The voting structure is designed to balance efficiency with fairness. It allows for day-to-day operational matters to be handled smoothly without constant meetings, while ensuring that major, property-altering decisions have the full support of the ownership group.

Here is a breakdown of which decisions require a unanimous vote, a majority vote, or no member vote at all, as outlined in your Operating Agreement.

Decisions Requiring a Unanimous Vote

A unanimous vote ensures that all owners are aligned on fundamental changes that significantly impact the property, its finances, or the ownership structure. According to the agreement, a unanimous vote of the members who participate in the vote is required for the following critical actions:

• Selling the Entire Property: A decision to sell the entire property during the first five years of ownership requires a unanimous vote. The voting threshold to trigger a sale may change to 75% and later 50% after specific time milestones are met (Section 5.1).
• Changing Expense or Income Allocations: Any change to how expenses, income, or proceeds from a sale are allocated among the members must be agreed upon by all voting members (Section 2.1C(2)). This includes special mortgage payment arrangements (Section 1.4H).
• Approving Major Expenditures: Any single, non-mandatory expenditure that exceeds the "Majority Discretionary Expenditure Maximum" (a high-cost threshold set by Joynt) requires unanimous approval (Section 2.1C(2)).
• Making the Property Available for Rent: The initial decision to make the property available for any type of rental use (either individual or group) must be approved by all voting members (Section 2.1C(2) & 3.3).
• Deciding Not to Fulfill a Required Duty: If the Operating Agreement explicitly requires an action (e.g., performing a Necessary Repair), a decision to not take that action requires a unanimous vote (Section 2.1C(2)).
• Authorizing Member Loans to a Defaulting Member: Approving a plan for one or more members to loan funds to a defaulting member to cover their obligations must be agreed upon by all voting members (Section 6.3C).
• Amending Voting Rules: Any amendment to the Operating Agreement that would change the voting power or the number of votes required to pass a decision requires a unanimous vote of those participating (Section 2.1C(3)).

Decisions Requiring a Majority Vote

A majority vote is the standard method for most group decisions that fall between day-to-day management and fundamental changes. Approval requires affirmative votes from members holding the majority of the voting power among those who cast a vote. These decisions include:

• The General Rule for Decisions: Unless otherwise specified in the agreement, any proposed action requires a majority vote to pass (Section 2.1C(1)).
• Discretionary Repairs and Improvements: Approving any maintenance, repairs, or improvements that are not "Necessary Repairs" (i.e., not urgent or required for safety/compliance) is decided by a majority vote (Section 1.2C).
• Approving Mid-Level Expenditures: Approving a non-mandatory expenditure that is above the "Management Discretionary Expenditure Maximum" but below the "Majority Discretionary Expenditure Maximum" requires a majority vote (Section 1.5).
• Adopting Special Assessments: Levying a Special Assessment for costs that are not for urgent Necessary Repairs must be approved by a majority vote (Section 1.4E(3)).
• Amending Most Terms of the Agreement: Most changes or amendments to the Operating Agreement can be made with a majority vote, provided the change does not alter voting rules themselves (Section 2.1C(3)).
• Adopting Shared or Individual Storage: A decision to designate and use shared or individual owner storage areas on the property is made by majority vote (Section 3.6B & 3.6C).

Actions That Do Not Require a Member Vote

To ensure the property runs efficiently, certain operational and administrative actions are pre-approved or are handled by the Management Coordinator or Joynt without requiring a member vote.

• Mandatory Expenditures: Payments for essential costs like the mortgage, property taxes, insurance, HOA fees, and utilities do not require a vote. These are defined as Mandatory Expenditures and must be paid (Section 1.1). The Management Coordinator is authorized to pay these from company funds (Section 1.5).
• Necessary Repairs: The Management Coordinator is empowered to arrange for Necessary Repairs to maintain the property's condition, address safety issues, or comply with official demands. No member vote is needed to initiate these essential repairs (Section 1.2A & 2.2B(2)).
• Submitting an Insurance Claim: The Management Coordinator has the sole discretion to decide whether or not to submit an insurance claim for a loss (Section 1.3).
• Budget and Assessment Approvals (by default):
  • Operating Budget: A Draft Operating Budget created by the Management Coordinator is deemed approved if members do not approve an alternative budget within 30 days of it being posted (Section 1.4B).
  • Urgent Special Assessments: A proposed Special Assessment for a Necessary Repair or other urgent mandatory expense is deemed approved unless members approve an alternative payment method before the due date (Section 1.4E(2)).
• Levying Automatic Assessments:
  • Minimum Balance Assessments: If a member’s share of the operating account falls below the required minimum, Joynt will automatically levy an assessment to restore the balance. No member vote is required (Section 1.4C).
  • Reimbursement Assessments: When the agreement requires a member to reimburse the company (e.g., for damages), a Reimbursement Assessment is levied automatically, unless the members vote not to levy it (Section 1.4F).
• Tax-Related Amendments: If required by law, the company's Tax Professionals may amend the agreement to ensure tax compliance without member approval (Section 1.7C).

Understanding these different levels of decision-making is key to a smooth and predictable co-ownership experience. For more specific details, you can always refer to Article 2 and other relevant sections of your LLC Operating Agreement.