Cohousing-L Mailing List: RE: Legal forms

[Rob Sandelin (Exchange) (Robsan]

>Has any group out there formed a corporation rather than a =
>partnership/joint venture for the early stages of development?

Sharingwood started off as a joint venture, then incorporated.  A joint =
venture, in our state , is fully liable for all the debts of the =
venture, to the full assets of all the partners.  A corporation, is only =
liable up to the assets of the corporation, shielding personal assets =
from liability.  Example.  If someone sues your five member organization =
and wins a judgment for $100,000, then under a joint venture, each =
member is liable for an equal share of that. $20K. If they don't have =
that money they have to file for personal bankruptcy.  If  the same =
$100,000 judgment is filed against a corporation, then, depending on the =
setup, if the corporations assets are only $20,000, then in our state =
the corporation files bankruptcy, the assets of the corporation are =
doled out, over time, but the personal assets of the corporation =
partners are not touchable.  This is why Sharingwood incorporated. We =
are a non-profit, private corporation and this same entity holds title =
to most the land (undeveloped greenbelt).  A second non-profit special =
corporation (home-owners association) controls the non-private land of =
the condominium.


Did any JVs have problems with banks - demands for personal guarantees, =
etc?
In our case, the banks were willing to take mortgages based on =
individual income requirements.  Since members paid for the land up =
front with personal notes and assets, not bank loans, this was not a =
problem for us. Unfortunately, since we had no mechanism to define =
ownership, the only person wanting a bank loan had to wait until we =
formed the condominium, a process that took us awhile.

>We would also like to hear from any group that has attempted to include =
>an affordable component - successful or not.

Our affordable component is built into the lot development model.  You =
can build whatever you want to, with your own hands, with your own =
assets.  There is no minimum requirement beyond building codes.  We got =
our land cheaply, The core group paid all the upfront costs, developed =
it slowly over time, and let people build to suit their own pocketbooks. =


Rob Sandelin
Sharingwood