Joynt puts a clear process in place before missed payments put everyone else at risk.
Owning together works best when everyone knows what they’re responsible for and what happens if circumstances change.
Joynt Pro puts those expectations into the Operating Agreement from the start. If someone misses a payment, the group already has a defined process for addressing it without having to make up the rules in the moment.
The Joynt Operating Agreement establishes what each owner is responsible for, how payments are collected, what happens when money is overdue, how an owner can resolve or dispute the problem, and what protections become available if the owner ultimately defaults.
The goal is to protect the property and the rest of the ownership group while giving the owner who missed a payment a defined opportunity to fix the problem.
Everyone agrees to their financial responsibilities upfront.
The Operating Agreement establishes an Operating Budget for the property based on expected expenses, which can include mortgage payments, taxes, insurance, necessary repairs, HOA fees, management costs, and utilities.
When an owner’s share of those anticipated expenses exceeds their share of anticipated rental income, if any, the Operating Budget includes a Regular Monthly Assessment payable by that owner on the first day of each calendar month.
If there is a mortgage on the property, the group can also assign each owner a specific percentage of the mortgage responsibility. That percentage can be different from their ownership percentage, allowing the agreement to account for situations where owners are not splitting the mortgage equally.
From the Joynt Operating Agreement
“To accommodate the special allocation of the Company Mortgage, each Member’s Regular Monthly Assessment shall include their Shared Debt Percentage of the Company Mortgage monthly payment; provided, however, that no Company Mortgage payment shall be included in the Regular Monthly Assessment of any Member whose Shared Debt Percentage is zero.”
In the Operating Agreement, “Company Mortgage” simply means a loan secured by the property.
The Operating Agreement makes these payment responsibilities part of the ownership structure from the beginning.
Joynt also builds in financial safeguards before there’s a problem.
The agreement doesn’t only address what happens after someone stops paying. It also creates safeguards designed to help keep money available for the property’s expenses.
Each Membership Interest must maintain a minimum balance in the Group’s Operating Account. The Members determine that minimum when they establish the Operating Agreement, and it can later be changed only with Unanimous Approval.
If a Membership Interest’s balance remains below its required minimum for 45 continuous days, the group (AKA: Company) levies a Minimum Balance Assessment intended to restore the balance to 110% of the required minimum.
Separately, each owner must maintain an agreed-upon minimum balance in a connected bank or brokerage account and keep the necessary authorization in place for automatic payment of Regular Monthly Assessments and Minimum Balance Assessments.
From the Joynt Operating Agreement
“Each Member hereby agrees: (i) that Joynt shall collect Regular Monthly Assessments and Minimum Balance Assessments on behalf of the Company and deposit amounts collected in a Company Operating Account; (ii) to at all times maintain a deposit account at a licensed bank or brokerage, and to keep in such account a minimum balance; and (iii) to maintain in effect all necessary instructions and authorizations under which such bank or brokerage automatically pays each Regular Monthly Assessment and Minimum Balance Assessment by its stated due date upon receipt of a bill from Joynt.”
The agreement specifically makes the personal-account requirement separate from the minimum-balance requirement for the group’s Operating Account.
Together, these safeguards are designed to reduce the chance that a payment problem leaves the property without enough money to meet its obligations.
What happens when a payment becomes overdue?
An overdue payment does not automatically cause an owner to lose their ownership interest.
The Operating Agreement establishes a formal enforcement process first.
The Management Coordinator or any Member may trigger that process by providing Joynt with a Notice of Possible Enforcement Action. The notice must explain the alleged violation, identify the actions required to cure it, and describe the proposed enforcement actions.
Joynt then posts the Notice of Possible Enforcement Action to its online portal.
The accused owner has 14 calendar days after the notice is posted to provide Joynt with a response and verifiable proof that they have either completed each required cure action or, when they are disputing the violation, satisfied the agreement’s requirements for taking the dispute to court or arbitration.
From the Joynt Operating Agreement
“The Management Coordinator or any Member may trigger the process described in this Subsection be providing to Joynt a Notice of Possible Enforcement Action that includes: (i) a description of the alleged violation; (ii) an itemized list of the actions required to Cure the alleged violation and avoid enforcement action; and (iii) a description of the proposed enforcement actions.”
The agreement continues:
“Within 14 calendar days of such posting, the accused Member must provide to Joynt a Notice of Alleged Violation Response, including verifiable proof, that the accused Member has either: (i) performed each of the Cure actions identified in the Notice of Alleged Violation Response; or (ii) paid the full amount (if any) that the Notice of Alleged Violation Response alleges is owed and initiated court action or, if Subsection 7.4B is in effect, initiated arbitration.”
So there is a defined process between “payment missed” and “owner in Default.”
What if the owner thinks the amount is wrong?
They still have a way to challenge it, but the Operating Agreement prioritizes keeping enough money available to operate and maintain the property.
An owner cannot simply withhold a disputed monetary obligation while the disagreement is being resolved.
Instead, the owner must first pay the full outstanding amount under protest. They can then seek reimbursement through court action or, if the group has elected to use the arbitration provisions of the Operating Agreement, through arbitration.
From the Joynt Operating Agreement
“TO ENSURE THAT THE COMPANY ALWAYS HAS THE FUNDS IT NEEDS TO PAY ITS BILLS AND MAINTAIN THE PROPERTY, NO MEMBER IS PERMITTED TO DELAY PAYMENT OF A DISPUTED MONETARY OBLIGATION UNTIL AFTER THE DISPUTE IS RESOLVED; RATHER, A MEMBER WHO WISHES TO DISPUTE THE AMOUNT OR PROPRIETY OF A MONETARY OBLIGATION MAY ONLY DO SO AFTER PAYING THE FULL OUTSTANDING BALANCE.”
The agreement further provides:
“The accused Member may then seek reimbursement of the disputed amount through court action or, if Subsection 7.4B is in effect, through arbitration.”
That helps prevent a disagreement over a payment from becoming a cash-flow problem for the property itself.
When does a missed payment become a Default?
A missed payment by itself does not automatically trigger all of the agreement’s Default remedies.
First, the Notice of Possible Enforcement Action process described above must be triggered.
If the accused owner does not timely satisfy the requirements of that process, the owner is deemed to be in Default beginning on the 15th calendar day after the Notice of Possible Enforcement Action is posted on Joynt’s online portal.
From the Joynt Operating Agreement
“Unless the accused Member timely satisfies the requirements described in Subsection A, such Member shall be deemed to be in Default beginning on the 15th calendar day after the date on which the Notice of Possible Enforcement Action is posted on the Joynt online portal.”
At that point, Joynt, the Management Coordinator, the LLC, or any Member may pursue the Default remedies available under the agreement.
Simple interest also begins accruing on the outstanding balance on the 15th calendar day after the notice is posted. The interest rate is the maximum allowed by law or 3% over the then-current Prime Rate, whichever is less.
A Defaulting owner loses their right to use the property.
One of the most immediate consequences of Default is that the owner automatically loses their usage rights while the Default continues.
For a shared second home or vacation property, that’s significant.
An owner who is in Default cannot continue using their allotted time at the property as though nothing has happened.
From the Joynt Operating Agreement
“Upon Default, the Defaulting Member automatically loses all usage rights for the Property.”
Unless another provision applies, the Defaulting Member’s usage rights are reallocated through Joynt’s Usage Allocation System as though that Member’s Percentage Interest had been redistributed among the other owners in proportion to their Percentage Interests.
The other owners can choose to cover the missing money without simply absorbing the loss.
A common concern with shared ownership is:
If one person doesn’t pay, does everyone else just have to cover their portion forever?
The Joynt Operating Agreement provides a more structured option.
Following Default, and with Unanimous Approval, another owner can provide the LLC with money owed by the Defaulting Member.
Importantly, the agreement treats that advance as a loan to the Defaulting Member, not simply an extra expense the paying owner volunteered to absorb.
From the Joynt Operating Agreement
“Following a Default, and provided such action receives Unanimous Approval, any Member may loan money to the Defaulting Member by providing to the Company money that is owed by the Defaulting Member.”
The loan bears interest at the maximum rate allowed by law or 3% over the then-current Prime Rate, whichever is less. Interest is compounded and added to the principal annually on January 1, and the principal and interest are due immediately upon written demand.
The lending owner is also entitled to distributions that would otherwise have gone to the Defaulting Member until the lending owner has recovered the principal and interest owed.
This gives the ownership group a way to keep the property funded while preserving the fact that the money remains the responsibility of the owner who failed to pay.
What happens to the Defaulting owner’s usage if another owner covers their payments?
The agreement connects the financial responsibility with usage rights.
If only one owner advances funds on behalf of the Defaulting Member, that owner becomes entitled to all of the usage rights the Defaulting Member otherwise would have received while the Default continues.
If some, but not all, of the owners advance funds, those usage rights are divided among the contributing owners in proportion to the amounts each advanced.
From the Joynt Operating Agreement
“If only one Member has advanced funds on behalf of the Defaulting Member under Subsection 6.3D, such Member shall be entitled to all of the usage rights to which the Defaulting Member would have been entitled.”
If several owners have advanced funds:
“Such Members shall be share the usage rights to which the Defaulting Member would have been entitled in proportion to the amount each has advanced, and the procedure for reserving such usage shall be determined by Joynt.”
That helps prevent a situation where one owner stops meeting the financial responsibilities of ownership while continuing to receive the same usage benefits.
Can the other owners eventually buy out someone who remains in Default?
Yes.
The Operating Agreement creates a Post-Default Purchase Option that allows another owner or subgroup of owners to purchase a Defaulting Member’s ownership interest.
This is not an automatic consequence of a late payment. The agreement’s Notice of Possible Enforcement Action and Default procedures come first.
From the Joynt Operating Agreement
“For valuable consideration receipt of which is hereby acknowledged, each Member hereby irrevocably grants an option (a ‘Post-Default Purchase Option’) to purchase their Membership Interest for its Option Price under certain circumstances as described in this Subsection E.”
This creates a potential long-term resolution when an owner has reached Default and the ownership group needs a path forward.
How is the buyout price determined after Default?
The Defaulting Member does not simply lose their entire investment.
The agreement establishes a specific calculation for determining the Option Price.
First, the Management Coordinator determines the Fair Market Value of the property using the valuation procedure established elsewhere in the Operating Agreement.
The Management Coordinator then estimates what the Defaulting Member would have received if the property had been sold at Fair Market Value and the LLC dissolved, taking into account expected sales commissions and seller-paid costs, amounts owed to creditors, expected taxes, and other estimated costs of dissolution.
From that amount, the agreement deducts:
10% as liquidated damages for the effort, inconvenience, and time associated with dealing with the Default, plus amounts the Defaulting Member still owes the LLC that were not already accounted for, including applicable interest, attorney fees, and other enforcement costs.
From the Joynt Operating Agreement
“From such amount, the Management Coordinator shall subtract (i) 10% as liquidated damages for the effort, inconvenience and time incurred in dealing with the Default; and (ii) all amounts owed by the Defaulting Member to the Company that were not already taken into consideration when making the Section 5.3 estimation, including interest as due under this Agreement, attorney fees, and any other enforcement costs.”
The remaining amount becomes the Option Price.
The agreement specifically states that this calculated amount is intended to be the final and binding price for purposes of the Post-Default Purchase Option, rather than the starting point for another negotiation.
How does the buyout get paid?
The Operating Agreement does not require the purchasing owner or owners to pay the entire Option Price at once.
Instead, it establishes a five-year installment structure.
From the Joynt Operating Agreement
“The Option Price shall be payable in five equal 20% instalments due on the first, second, third, fourth and fifth anniversaries of the date on which the Option Exercise Notice is posted on the Joynt online portal as described below or, if more than one Option Exercise Notice is timely provided, on such anniversaries of the date the purchaser(s) is/are determined.”
The purchaser can prepay some or all of the Option Price before it is due, and the unpaid portion of the Option Price does not bear interest.
This creates a defined way for the ownership group to resolve a Default without necessarily requiring another owner to produce the entire buyout amount immediately.
What if more than one owner wants to exercise the Post-Default Purchase Option?
The agreement addresses that too.
After the Notice of Option Price is posted on Joynt’s online portal, an owner or subgroup of owners has 15 calendar days to provide Joynt with an Option Exercise Notice.
If more than one qualifying notice is submitted on time, the purchaser is determined through a random process administered by the Management Coordinator, such as a coin flip or drawing straws.
From the Joynt Operating Agreement
“Any Member or subgroup of Members may exercise the Post-Default Purchase Option by providing to Joynt Notice of their intent to do so (an ‘Option Exercise Notice’) within 15 calendar days after the date on which the Notice of Option Price is posted on the Joynt online portal.”
If more than one is submitted:
“The purchaser shall be determined by random process (such as using a coin flip or drawing straws) administered by the Management Coordinator.”
The OA explains that this approach is intended to resolve the matter quickly and simply and avoid disrupting the group’s usage-allocation structure.
Does the Defaulting owner have to agree to the transfer?
Once the Post-Default Purchase Option has been properly exercised, the agreement does not require the Defaulting Member to cooperate by signing another transfer document.
From the Joynt Operating Agreement
“Such transfer shall be effectuated by the Company and, notwithstanding anything to the contrary in this Agreement, shall not require that any document be signed by the Defaulting Member.”
If there is one timely Option Exercise Notice, the Defaulting Member’s Membership Interest is transferred as soon as reasonably possible after the notice is posted on Joynt’s online portal.
If more than one Option Exercise Notice is timely provided, the transfer occurs within 120 calendar days after the purchaser is determined.
That prevents a Defaulting Member from indefinitely blocking the agreement’s resolution process simply by refusing to sign transfer paperwork.
Why is the process this structured?
Because one owner’s missed payment can affect much more than that one person.
The LLC still has obligations associated with the property, including mortgage payments, taxes, insurance, HOA assessments, utilities, repairs, management costs, and other required expenses.
Without a process, the other owners could suddenly be left to answer difficult questions themselves:
- Who covers the missing payment?
- Does the nonpaying owner still get to use the home?
- Is money another owner contributes an extra expense or a loan?
- Can an owner challenge a payment simply by withholding it?
- At what point does a payment problem become a Default?
- What happens to the Defaulting owner’s usage rights?
- Can the other owners eventually purchase the Defaulting owner’s interest?
- And if they can, how is that interest valued and paid for?
Joynt Pro puts those rules into the ownership structure before anyone has missed a payment.
The goal is to protect the property and the people who own it together.
One missed payment does not automatically cost someone their ownership.
There is a formal notice process. There is a defined opportunity to cure the violation. And if an owner believes a monetary obligation is incorrect, there is a defined process for paying it under protest and challenging it through court or, when applicable, arbitration.
But if an owner ultimately reaches Default, the group also has meaningful protections: usage rights are suspended, other owners can advance funds through the agreement’s Member Loan process rather than simply absorbing the loss, and the Operating Agreement provides a potential path for purchasing the Defaulting Member’s ownership interest.
Everyone enters the ownership group with those rules already established.
So if someone stops paying, the group already has a process to follow.
