Mario and Luigi were friends who decided to buy an apartment…
Mario and Luigi were friends who decided to buy an apartment building on campus. On the advice of their business law instructor, they form a limited liability company called Mushroom, LLC to own the building. Mario and Luigi were the only members of Mushroom, LLC and each owned 50% of the company. Mushroom, LLC entered into a purchase agreement with Sales, Inc. for $1.5 million to purchase the building. In order to pay for the building, Mushroom, LLC borrowed $1 million from Big Bank. Big Bank required that Luigi personally guaranty the bank loan in the event that Mushroom, LLC defaulted on its loan. After taking out the loan and purchasing the building, a resident slipped on ice in front of the building and was injured. Additionally, Mushroom, LLC entered into a snow removal contract with Harry’s Snow Removal at a cost of $400 per month. Mushroom, LLC failed to pay Harry’s Snow Removal for three months and now owes $1,200 to Harry’s. Finally, Mario collected money from Luigi to pay the real estate property taxes that were owed by Mushroom, LLC but then failed to pay the property taxes with the money from Luigi. Which of the following statements is true:
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