Re: Construction Loans
From: Denise Meier and/or Michael Jacob (
Date: Wed, 23 Sep 1998 14:36:55 -0500

On Wed, 23 Sep 1998, Sharon Villines wrote:

> Synergy Cohousing in Delray Beach FL is in the process of getting a
> construction loan. We have a subgroup, Delray Grove, that is the limited
> partnership development entity and will sign for the loan, but the bank is
> asking for personal guarantees as well.
> Could others who have been through this process let us know how you handled
> this. I'm sure there are many on the list who could benefit from this
> information.

We all just had to do this. In our case, the development company (a
California Limited Liability Company) includes all members. We just closed
(on Monday!) our construction loan, and each of us had to sign a personal
guarantee for the $ 2.2 million loan. All 22 of us. Once the construction
loan, building permits, insurance policies, and contract with the builder
are all in place, your risk is pretty low. It was sobering, but by far not
the scariest step we've taken in all this long process.

> Also what did you include in the presentation to the bank? What impressed
> them, or turned them off?

We included a list of built communities and the names of the banks that
had loaned to them. (I can try to find this for you, if you want it). It
really depends on your area and the bank in terms of turning them on or
off. In our case, our lender is a community-oriented S&L that really
WANTED to be linked to something as cool as cohousing. (We've had a lot of
positive press coverage) This might not have worked in a more conservative
area, where it might make more sense to portray it as just another
condominium development.

Denise Meier
Two Acre Wood
Sebastopol, Sonoma County
Northern California

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