|getting money up front and non-profit legal structure||<– Date –> <– Thread –>|
|From: Kristen Simmons (simmonskristengmail.com)|
|Date: Thu, 11 Feb 2010 13:03:43 -0800 (PST)|
This is not my area of expertise, but here goes. Please keep in mind that what worked in Massachusetts may not work elsewhere. (States can have very different laws about this stuff.) Stonybrook Cohousing does not have any "investors". It only has members who have joined on to the LLC operating agreement. The agreement does contain information about the risk of the project. Because of the LLC legal structure, individual member risk is limited. The roughly 30 page agreement was drawn up by the group's attorney, and all members were encouraged to have it reviewed by their own legal counsel (although the group tried to use plain english as much as possible). This legal structure seems to be pretty common for forming groups. And most, to my knowledge, do not seek funds from outside investors who would need to be given a specific rate of return, at least not until it's time for the construction loan. And that's a different can of worms. Group members put in the up-front money for the project, which becomes part of their down payment on their home. We had money saved and/or borrowed from family or others. And the earliest group members took a heck of a risk. Later members don't have to take that risk. Because groups are building housing for themselves, it's not seen as a "non-profit" by the government, although most groups make no profit what so ever. Both Diana Leafe Christian and Chris Scott Hanson address these issues in their books about cohousing. Good luck! <snip> If they would have lost money, they would have been liable. Even if they did not get the return they expected, or were unhappy living in their house because their condition or circumstance changed. There are people in prison right now for doing just what is described below. The difference is whether or not they are (preferably) accredited investors who have a history of accepting risk. I would not do it without securitizing it unless every member had done something previously with me in the same vein.
getting money up front and non-profit legal structure Kristen Simmons, February 11 2010
- Re: getting money up front and non-profit legal structure David Heimann, February 14 2010
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