What if I get kicked out?

LLC expulsions vs. PMA expulsions.

This is a good question. To answer it, let's be specific: You can get kicked out of an RTTL Land Association, and you can get kicked out of the Return to the Land PMA (Private Membership Association). Both situations merit their own explanation.

Getting kicked out of an RTTL Land Association

An RTTL Land Association is a Limited Liability Company (LLC) that owns a piece of land and administers it on behalf of its members, operating as an expense sharing agreement (ESA.)

Typically, an LLC member is alloted a parcel of land within the LLC's property which they can develop as their homestead. Or, the member purchased a membership interest that was allotted a piece of land that had already been developed by a previous ower/member.

Things Get Hairy

Now, let's say your life gets out of hand. Maybe you commit some crimes, maybe your addiction comes roaring back. Maybe you routinely cause problems with all the neighbors - day in and day out blasting loud music, dumping toxic waste, and walking around your yard buck naked. This would create a situation where your neighborhood wouldn't want you to live there anymore.

These things would be violations of the LLC Operating Agreement, which the LLC is required to follow in accordance with state law. The LLC Board of Managers has to give you a written warning for minor infractions, and conduct a special meeting for grave infractions. There is a specifically defined number, frequency, and rolling period of minor infractions that must be incurred before they can expel you, and grave infractions must be of a severe nature - certain types of felonies, or revealing that you are an SPLC Senior Researcher, for example. Consult your Land Association's operating agreement for specifics.

A Decision Is Made...

... To forcibly expel you from the Land Association. Your rights as an LLC member are immediately ended, and you are kicked out onto the streets - and of course, the LLC seizes all the developments you made on your lot, sells it at a handy profit, and pockets it all, leaving you with nothing. Right?

Fortunately, state LLC statutes (look up the "ULLCA") require the LLC board of managers to follow the operating agreement, and our standard operating agreement requires not only that a fair process be followed for expulsions, but that fair market value be paid to a member that is expelled from the LLC.

Sadly, many previous attempts at group land buy projects did not do it this way, and ended up expelling people without just compensation, causing families to lose their entire life savings. RTTL is setting a high standard, certifying Land Associations to be sure that their Operating Agreement and their board are following best practices. Watch out for look-alike projects that do not have RTTL certification.

What Happens if the Board Ignores the Operating Agreement?

This is where the state's LLC statutes come in handy. You have a right to take legal action against an LLC board that treats you unfairly and does not follow the operating agreement. Some examples:

• If the board gives you an amount that is obviously far below the fair market value that your LLC membership would be appraised at or sell for, a judge can decide the correct amount and award it to you.

• If the decision to expel you was not done in accordance with the LLC Operating Agreement, and instead was done for frivolous reasons, a judge can order the decision reversed or award you additional damages.

What Happens if I Ignore the Board?

• If a member ignores the board regarding a forced expulsion, it doesn't matter since the operating agreement gives authorization to the board and the LLC to control the records and member status.

• If an expelled member refuses to leave the property, the LLC may have to involve law enforcement, or begin eviction proceedings.

Fair Market Value and Compensation

Assuming the board writes you a check and kicks you off the property and out of the LLC, where does that money come from? Let's explore the options that are given in the LLC Operating Agreement:

1. Finding a Buyer from the PMA. The Board will most likely find a buyer in the RTTL PMA, who will pay you the decided-upon amount for your share, including all improvements.

2. LLC-Funded Buyout. The Board may raise funds from all or some existing LLC members to buy your share.

3. Forced Owner Financing. In severe cases, and/or in "white elephant" situations where a buyer cannot be found in a reasonable time frame, the Board has the authority to make regular payments over a set time period to pay you the full value of the membership interest. This is required to be reasonable. For example, the board cannot decide to pay you $40 per month for 30 years.

4. Loss of Land Rights Without Expulsion. The Board may decide to allow you to continue to own the property and rent it out or otherwise benefit economically from it, or sell it within your own timeframe, but without rights to personally reside on the property.

Getting Kicked Out of RTTL

What happens if you get kicked out of the RTTL Private Membership Association (PMA)?

We considered making Land Association membership completely dependent on RTTL membership. The problem with that: It gives a large, separate, [currently] unincorporated organization the right to control the membership of an LLC. Also, the criteria for RTTL expulsion may be looser or different than the criteria for LLC expulsion. So we included the following guidelines in the standard Operating Agreement for RTTL Land Associations:

• If a person is kicked out of RTTL, they are not automatically kicked out from the land-owning LLC. However, it does trigger a mandatory review by the board of the Land Association.

• If the board decides that your actions were indeed also a violation of the LLC Operating Agreement, they may take disciplinary action, which may or may not include expelling you.

• The RTTL Land Association is allowed to maintain individuals on its membership roll who were expelled from the RTTL PMA. However, it absolutely must not let anyone join the LLC who is not an RTTL member at the time of application.

• If the Land Association ignores grave behavioral problems, criminality, or other things that are clear violations of its LLC Operating Agreement, the RTTL PMA may decide to revoke its status as an RTTL Land Association. This can have far-reaching effects such as making it much more difficult to find buyers for any shares of membership interest that might be available.

• A member of a land association may not voluntarily leave RTTL without also leaving the land association. Therefore, voluntarily leaving RTTL is grounds for mandatory immediate expulsion from the Land Association, with fair market value being paid to the member being expelled as is required by the Operating Agreement.

In Conclusion

Being able to kick people out of a private neighborhood is just as important as getting people to join it. Having a smooth, seamless process for joining and onboarding, but a jagged, unfair, and unplanned process for expulsion is unacceptable. As time goes on we will continue to refine both our application and expulsion processes, and hopefully we will use the former far more than the latter.