split equity
From: Kate Taylor (katetihug.co.nz)
Date: Tue, 25 Aug 1998 17:43:28 -0500
Hi, I belong to a New Zealand intentional community founded back in 1971.
The properties are all owned by a the collective and residents pay a
mixture of cash-rental and sweat-rental.  We are looking at expanding and
perhaps moving to some sort of buy-in situation, as we believe it may
create greater stability of membership over time.  It would also add to the
total amount of finance we can raise.  Most people who live here now - or
are likely to live here in the future -are in the bottom income quadrant so
they're unlikely to be able to raise the full cost of an apartment.  Is it
possible to have a split equity, with say the collective owning a 70% share
and the resident a 30% share (the proportion staying constant despite
rising or falling valuations). Does anyone have experience of this
situation? Will banks loan on a partial equity situation?  What are the
pitfalls? Is there a literature on such schemes?  I realise the New Zealand
situation/laws may vary but if we can start with some overseas imput it may
give us a base to work from.  Thanks to anyone who can be of help.

Dave Welch  Chippenham Community, Christchurch NZ  

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