Buy In/ Buy Out Agreements

Agreement for Equity Ownership in La’akea Community

By consensus on 3/3/2019

The following describes the process for purchasing equity (or buying in) and recouping equity (or buying out)  in La’akea Community, LLC., when joining or departing in the role of member. This document does not pertain to equity in one’s personal dwelling.

 To Buy In:

 The buy in amount is $35,000.  Of the $35,000, the first $17,000 is not considered equity; it is a non-refundable fee (hereafter referred to as the “land security fee”).  If a member leaves before 4 years, the land security fee will be prorated per annum at $4,250.  

The buy-in schedule will be negotiated between the incoming member and the community and will be based upon the financial resources of the incoming member. For example, if the incoming member has sufficient liquid assets, they will be expected to pay the full buy-in upon entering the community. If the member has little liquid assets and instead has a monthly income, the buy-in may be negotiated to be some portion of their monthly income. Historically, the buy-in schedules have ranged from $300-$500/month for those with little liquid assets and low monthly incomes while other members have paid their entire buy-in amount within 1-2 years.

  To buy out:

The buy-out sum is the amount paid in minus the land security fee. For example, if the member has paid the full buy-in amount of $35,000, the buy-out sum will be $18,000 ($35,000 minus the land security fee of $17,000). 

When a member gives written notice of her/his intent to resign membership or when the community follows its process to remove a person as a member of La’akea Community LLC, the departing member has the opportunity to request a buy-out from La’akea in order to recoup their equity in the LLC. This request must be written (and can be part of the letter of resignation). La’akea will respond with a letter acknowledging the request. La’akea will endeavor to pay the buy-out sum in full accordance with La’akea’s buy-out schedule. 

 Buy-Out Schedule:

Funds from current member buy-ins will be paid to existing buy-outs. La’akea will disperse these funds respecting the chronology by which departing members have submitted their requests for buy-outs. The community can channel funds to multiple members during the same period so long as it respects this chronology.

For example, supposing departing members (DM’s, for short) 1, 2 and 3 signed buy-out agreements in that order. La’akea could pay DM’s 1 and 2 simultaneously, but it would need to pay DM 1 equal or more money per month than it does DM 2. It could not choose to pay DM’s 2 and 3 without paying DM 1 as much or more than DM’s 2 and 3 are receiving.

“New Chapter Payment”

The community will endeavor to pay the departing member a “new chapter payment” of $5,000 or more of their total buy-out within one year of the member’s written request for buy-out. This is an aspiration and not an obligation of La’akea; it will pay this amount if it has sufficient funds and chooses to do so.

In Case of Death

 In the case of the death of a member, his/her membership status will become inactive.  La’akea Community will be obligated to pay the deceased member’s buy-out in accordance with this agreement and the buy-out will be paid to the deceased member’s heir(s). However, any member can negotiate a different agreement with La’akea regarding their equity in the case of his/her death. 



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