What if we need to remove someone from our group?

At Joynt, we understand that investing in a property with others is a significant commitment. We also know that circumstances can change. One of the most common concerns for co-owners is what happens if a member of the group fails to meet their obligations.

Our primary goal is to protect every owner's investment and ensure the continued enjoyment of your shared property. That's why the Joynt Operating Agreement includes a clear, structured, and fair process for handling violations, which, in serious cases, can lead to the removal of an owner from the group.

This process is not arbitrary and is designed to give the owner in question a clear opportunity to resolve the issue before more serious steps are taken. Here’s a plain-language guide to how it works.

Grounds for Removal: The Concept of "Default"

Removing an owner from your group is a serious step reserved for when an owner is in Default. An owner isn't immediately in Default the moment an issue arises. Default occurs when an owner fails to meet their legal obligations under the Operating Agreement—such as not paying their share of expenses or breaking property rules—and does not fix the problem after being formally notified.

The Enforcement Process: A Step-by-Step Guide

The process is designed to be transparent and fair, providing clear communication and an opportunity for resolution at every stage.

Step 1: The Formal Notice is Issued
If an owner violates the terms of the agreement, any other member or the group's designated manager can initiate the enforcement process. This is done by issuing a "Notice of Possible Enforcement Action." This is a formal notice that clearly states:

The specific violation (e.g., "unpaid dues of $500").
The exact actions required to "Cure" or fix the violation.
The potential consequences if the violation is not cured.

This notice is posted to the group's online portal for full transparency.

Step 2: The Member Has 14 Days to Respond
The owner who received the notice has 14 calendar days to respond in one of two ways:

Cure the Violation: They can perform the actions required in the notice (e.g., pay the outstanding bill, fix the damage) and provide proof.
Dispute the Violation: If the owner disagrees with the notice, especially if it involves a monetary charge, they must first pay the disputed amount "under protest." They can then formally dispute the charge through court action or arbitration.

Why "Pay Under Protest"?
This critical rule ensures that a dispute from one owner doesn't jeopardize the group’s finances. The property’s mortgage, taxes, insurance, and maintenance bills must be paid on time, regardless of internal disagreements. By paying first, the owner preserves their right to dispute the charge while ensuring the property's financial health remains secure. If their dispute is successful, the money will be reimbursed.

Step 3: Entering Default
If, after 14 days, the owner has neither cured the violation nor paid under protest to initiate a dispute, they are officially considered to be in Default.

Consequences of Default

Once an owner is in Default, the Operating Agreement provides the remaining owners with strong remedies to protect their investment.

Immediate Loss of Usage Rights: The Defaulting Member immediately loses all rights to use or stay at the property. Their reserved time is reallocated to the other members, often prioritizing those who have stepped in to cover the Defaulting Member's unpaid costs.
The Buyout Option: The other members gain the right—but not the obligation—to buy out the Defaulting Member's share of the property through a "Post-Default Purchase Option." This is the primary mechanism for removing a member from the group.

How the Buyout Works: The Post-Default Purchase Option

This process is designed to be definitive and fair, based on a clear formula rather than a stressful negotiation.

Calculating the Buyout Price: The price is not arbitrary. It is calculated based on the property's current Fair Market Value (determined by averaging appraisals from four local real estate agents). From that value, we determine what the Defaulting Member would have received if the entire property were sold. Then, two deductions are made:
1. A 10% reduction as a liquidated damage for the time, effort, and inconvenience caused to the group by the Default.
2. A deduction for all outstanding debts the owner owes to the company, including unpaid dues, interest, and any legal fees incurred.
The final number is the official, non-negotiable Option Price.
Exercising the Option: Any other member or subgroup of members has 15 days to exercise their option to purchase the share at the calculated price. If more than one member wants to buy the share, the buyer is determined by a simple, random process (like a coin flip) to keep the process swift and avoid bidding wars.
Affordable Payment Terms: To make the buyout more achievable for the remaining owners, the payment is structured over time:
- 20% of the Option Price is paid within 120 days.
- The remaining 80% is paid in four equal, annual installments of 20% each.
- No interest is charged on the unpaid balance.
Automatic and Final Transfer: The transfer of ownership is handled by the company and is legally binding. It does not require the Defaulting Member’s signature, ensuring the group cannot be held hostage by an uncooperative individual.

An Alternative: Member Loans

In some cases, the group may want to avoid a full buyout. The Operating Agreement allows other members to vote to cover a Defaulting Member's missed payments. This is treated as a formal loan from the other members to the Defaulting Member, which accrues interest. These loans (plus interest) must be fully repaid before the Defaulting Member can receive any money from a future sale of their share or the property.

Our Commitment to a Secure and Fair Process

We know that thinking about these "what-if" scenarios can be stressful. The Joynt framework is built to provide peace of mind by replacing uncertainty with a clear, predictable, and legally sound process. These rules exist to protect every co-owner, ensuring that the actions of one individual cannot compromise the entire group's investment or their ability to enjoy their shared property.