Re: Pre-Sold Units as Condition of Membership
From: John Beutler (
Date: Wed, 11 Jul 2007 19:01:37 -0700 (PDT)
Don't sell your house until you have land locked up & zoned to suit your development. If you need cash, take a home equity loan against the house or something else.

You really can't get people to commit without a piece of land, as you say, what are they committing to ? I know land is expensive and hard to find in Chester County - I grew up in Kennett Square.....Cecil Co. will be cheaper, but it's a long ways to employment.

You will need to put down money to get a land contract. There will be risk involved - that's why developers can make big money - because they can risk losing a bunch as well. Don't bet more than you can afford to lose, though. One way or another your group will collectively have to pony up some serious money to move forward. It doesn't all have to be equal shares, though vast imbalances in investment can be a problem. At LV the initial minimum was $6K, but that was just for lot purchase, and it was 10 years ago. Some folks put in much more.

With the down housing market there may be opportunities to work with folks who otherwise wouldn't give you the time of day. All of the big mega-developers and mini-mansion builders are retrenching big time. Perhaps look at being one section of a larger development if you can stand the proximity to the other stuff....



At 08:14 PM 7/10/2007 -0400, you wrote:

We have been working under the assumption
that a developer won't even talk to us unless a certain percentage of
units are "Pre-Sold", but lately, one prospective member suggested
that perhaps simply a larger non-refundable contribution from members
would be sufficient to convince a developer that we are serious.

We are still searching for land, generally in Chester County, PA, but
haven't ruled out Cecil County MD, or New Castle County, DE. While
some of us would like a more rural setting, others would be delighted
with something more urban. Obviously, when land is selected, we will
lose some members and gain others, simply because we are still
considering so many options.

Given the state of flux, there is hesitation among a group of 3
families (I'm one of them) to sign as Equity Members and commit to
purchase a house when we don't know where the house will be, when it
would be built or even if we can afford a house that would meet our
families' needs. We also know that life throws curve balls, and you
never know when there will be one of those life events that changes
all the big decisions you thought you had the answers to.

So, how do we make sure that members are committed, yet not trapped
into something financially ruinous? What does "Pre-Sold" really mean
in a case like this, where we don't have land, architectural plans,
or one of those cute scale models with all the lots outlined in
yellow? Can a Membership Agreement have contingencies, like that the
current primary residence is sold? Would non-refundable cash work as
well to convince a developer that we are sincere? Should agreements
to purchase a home come later, once there is not so much flux? What
have other groups done to balance these concerns?

Thank you for your guidance.
--Janet Pelletier

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John Beutler
Liberty Village, MD
jabeutler [at]

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