Cohousing-L Mailing List: RE: securities regulations

[Rob Sandelin (robsan]

> Our project manager, Sheri Rosenthal,
>has been advised by a lawyer that if we incorporate and then offer
>memberships to the public, that we will be, in effect, trading in
>securities, and would be subject to regulation.

Each state law regarding incorporation is different.  Our state law 
protects individuals through incorporation.  I have never heard of 
housing membership shares being considered securities but the best 
course of action is to pay an attorney to give you the actual scoop on 
this.  Was this a legal opinion based on a precedent? If so get the 
case number.  Or was it an off the cuff lunch opinion?

>What this could mean
>over the long run is that if someone who joined later became disaffected,
>he or she might have grounds for a very costly and ugly lawsuit.

Anybody ,  at any time, can sue anyone for anything. A disaffected 
cohousing member anywhere can sue any group any time.  That is why if 
you are smart you get competent legal advise in drawing up purchase 
agreements and such. Yeah, this costs real money upfront, but it also 
hopefully gets you a small modicum of safety.  In our state, if you sue 
a corporation, the assets of the individuals are protected by 
incorporation, that is why people incorporate in the first place.  Your 
state may have different rules and the only one who can tell you 
clearly is a real estate attorney.

Rob Sandelin
Sharingwood  WA