Standard Operating Agreement for Sweetgrass Property LLCs
The complete LLC Operating Agreement is available for download. This document governs the relationship between co-owners and outlines all rights and responsibilities.
This Operating Agreement governs the limited liability company that owns each Sweetgrass property. When you purchase a fractional interest, you become a member of the property-specific LLC with rights and obligations defined in this agreement.
The Company is organized as a limited liability company under the laws of Delaware. Each property is held by a separate Series LLC to provide liability protection and operational independence.
The Company name shall be "Sweetgrass [Property Location] LLC" with principal offices at 2100 Ross Avenue, Suite 500, Dallas, TX 75201.
The Company shall continue until terminated as provided in this Agreement or by law.
Each Member's initial capital contribution equals their purchase price for their fractional interest. No Member is required to make additional capital contributions except as approved by majority vote.
Ownership percentages are based on the number of shares owned. Standard shares are 1/8 (12.5%) interests, though members may own multiple shares up to 7/8 (87.5%) of the property.
No Member shall be personally liable for any debt, obligation, or liability of the Company solely by reason of being a Member.
Sweetgrass Management LLC serves as the Manager responsible for day-to-day operations, maintenance, and administration. The Manager may be replaced by vote of Members holding at least 75% of membership interests.
The following require approval by Members holding majority of interests:
During pre-construction phase, all design decisions including finishes, fixtures, and furnishings are made by simple majority vote of Members.
Each 1/8 share entitles the Member to 6 weeks of annual usage. Usage is scheduled through the Company's reservation system with the following priorities:
Members must comply with property rules including occupancy limits, no smoking, pet policies, and maintaining the property in good condition. Violations may result in usage restrictions.
Members pay monthly dues proportional to their ownership to cover:
Members may place unused weeks in the rental program. Net rental income after management fees (25%) is distributed to the renting Member.
Proceeds from property sale or refinancing are distributed pro rata based on ownership percentages after payment of all obligations.
Before selling to a third party, a Member must offer their interest to existing Members at the same price and terms. Members have 30 days to exercise this right. If multiple members want to purchase, the share is divided pro rata based on existing ownership.
Members have multiple paths to liquidity:
For transfer purposes, value is determined by:
Members may transfer to immediate family or trusts without triggering ROFR, subject to Manager approval. Estate transfers are permitted with proper documentation.
A 3% transfer fee is paid to the Company on all transfers to cover administrative costs and maintain property reserves. Sweetgrass Buyback program waives this fee.
As LLC members, all owners receive pass-through taxation benefits:
When you rent unused weeks to other Sweetgrass owners:
Consult your tax advisor regarding material participation rules, passive activity limitations, and state-specific treatment. Tax benefits vary based on individual circumstances and usage patterns.
An annual meeting is held virtually each January to review financials, discuss property matters, and vote on any required decisions.
Each Member votes in proportion to their ownership percentage. Voting may be conducted electronically through the owner portal.
Members may take action without a meeting by written consent of the required majority.
The Company shall dissolve upon:
Upon dissolution, assets are liquidated and proceeds distributed after payment of all debts and obligations, with any remainder distributed pro rata to Members.
Members agree to first attempt resolution through mediation before pursuing other remedies.
If mediation fails, disputes shall be resolved through binding arbitration under American Arbitration Association rules.
This Agreement is governed by Delaware law without regard to conflict of law principles.
This Agreement may be amended only by written consent of Members holding at least 67% of membership interests.
If any provision is deemed invalid, the remainder of the Agreement continues in full force and effect.
This Agreement constitutes the entire agreement among Members and supersedes all prior agreements and understandings.
This is a summary of key provisions. The complete LLC Operating Agreement contains additional details, definitions, and provisions. You should review the full agreement with legal counsel before purchasing a fractional interest. Each property may have specific amendments or variations to this standard agreement.