3 ms·

So, if I buy every share in one of these house LLCs, can I do what I will with the house? (I.E. ending the relationship with Pacaso, doing major renovation, cha

by ohyes 5y ago

So, if I buy every share in one of these house LLCs, can I do what I will with the house? (I.E. ending the relationship with Pacaso, doing major renovation, changing the terms of the agreement). If so, what happens if I just buy 51%? It seems that the argument against being a timeshare is that it is structured in a legally different way, where Pacaso itself does not own the house anymore, they just collect a monthly fee similar to a condo association. This seems like really, the ultimate in rent-seeking. I'm going to sell something and force you to continue paying me for it, until you sell it to some other poor sucker. It seems like the obvious move would be to acquire a controlling share and vote Pacaso out, then start issuing new shares with your controlling ownership to pay for maintenance fees or any other incidental costs of the house. Continue issuing shares until the other owners are diluted enough to own like, < 1 day a year, buy them out for cheap... It seems like the only way for Pacaso to guard against this would be to retain a controlling ownership, at which point they are much closer to being a time-share.

jeffbee 5y ago
You know, owning 51% of these and screwing the minority out of their share is a great strategy with plenty of wholesome American values-slash-jurisprudence on your side. In Salyer v. Tulare the Supreme Court said as long as JG Boswell owned the majority of the flood control district it was A-OK for him to just destroy the farms of the minority owners. You could make a lot of money this way.
JAlexoid 5y ago
They could have put things into the incorporation documents. It's not a secret, what you're signing up-to. They don't need to retain any controlling ownership.
- ohyes 5y ago
  Agreed. I would be very interested in reading an example of Pacaso's LLC incorporation documents. I would expect some sort of ongoing property management contract between Pacaso and the LLC, which I wouldn't expect to be indefinite or impossible to change via vote.
mindslight 5y ago
I'd guess the LLCs are structured so that Pacaso is the manager, and also so you need a unanimous vote to replace the manager or operating agreement. So sure, collect 100% of the shares and then dissolve the LLC - 51% won't do it. It's likely that Pacaso would actually appreciate you doing this, as it validates their investment proposition.
ajsnigrutin 5y ago
...or they just don't care, they'll take the investors money now, fail in a year or two, and won't have to deal with the fallout, but rather create a new startup, eg. car timeshare, where you car is an LLC!

by ohyes 5y ago

jeffbee 5y ago

You know, owning 51% of these and screwing the minority out of their share is a great strategy with plenty of wholesome American values-slash-jurisprudence on your side. In Salyer v. Tulare the Supreme Court said as long as JG Boswell owned the majority of the flood control district it was A-OK for him to just destroy the farms of the minority owners. You could make a lot of money this way.

JAlexoid 5y ago

They could have put things into the incorporation documents. It's not a secret, what you're signing up-to. They don't need to retain any controlling ownership.

ohyes 5y ago
Agreed. I would be very interested in reading an example of Pacaso's LLC incorporation documents. I would expect some sort of ongoing property management contract between Pacaso and the LLC, which I wouldn't expect to be indefinite or impossible to change via vote.

mindslight 5y ago

I'd guess the LLCs are structured so that Pacaso is the manager, and also so you need a unanimous vote to replace the manager or operating agreement. So sure, collect 100% of the shares and then dissolve the LLC - 51% won't do it. It's likely that Pacaso would actually appreciate you doing this, as it validates their investment proposition.

ajsnigrutin 5y ago

...or they just don't care, they'll take the investors money now, fail in a year or two, and won't have to deal with the fallout, but rather create a new startup, eg. car timeshare, where you car is an LLC!