Re: "arm's length"
From: Janet Kelly (
Date: Fri, 30 Jan 2009 07:46:24 -0800 (PST)
Hi Catya,

I'm assuming this is coming up when members apply for bank loans to buy
their units.  We ran into several sticky problems at that point.  The first
was that our project is legally structured as a condominium, and banks don't
generally give conventional fixed rate mortgages to the first buyers in a
new condominium, since they can't resell them on the secondary market.  And
many members were concerned about getting an adjustable rate mortgage, even
though they can usually be converted easily after the requisite number of
units has closed.  We made an arrangement with the bank holding our
construction loan so that the bank created an internal fund to offer
conventional fixed rate mortgages to the early buyers.  I don't know whether
banks would be willing to do this in the current financial market.

The second problem was with appraisers, who were completely flumoxed (sp. ?)
by the cohousing concept. Also, at least in Wisconsin appraisers get paid a
fixed rate by the lending bank for each appraisal, so they balk at spending
extra time on anything that looks unusual to them.   Here again, the first
unit sold is the hardest.  My suggestion is to talk with them in detail and
offer info about how your units were priced, document costs of construction,
point them to other cohousing in your state.  In our case appraisers also
looked at sales of local condos in projects that had some common space
(although it was nothing like cohousing).  Once you have convinced one
appraiser, you can use his or her name in talking to the next set of

I hope this helps some.  Please feel free to call me if you would like to

Janet Kelly
Arboretum Cohousing -- Madison Wisconsin
janetkelly28 [at]

On Fri, Jan 30, 2009 at 9:24 AM, Catya Belfer-Shevett <catya [at]>wrote:

> Hi folks,
> This is probably mostly for groups that self-developed...
> Did any of you run into problems with the banks not considering the
> purchase of the units by a member being an "arm's length transaction"?
> If so, how did you deal with that?
> Thanks,
>        - catya
> --
> Catya Belfer-Shevett   ~   webmaster,
>   ~   Cohousing in MA!
> _________________________________________________________________
> Cohousing-L mailing list -- Unsubscribe, archives and other info at:

Janet Kelly
255-7277(w); 280-9617(h); 333-8338(cell)

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