Levels of Liability
From: Rachel Wangen-Hoch (wangen-hochmsn.com)
Date: Tue, 26 Jun 2007 15:05:03 -0700 (PDT)
I am a prospective member of Woodard Ln Cohousing in Olympia. We are currently in the development stage hoping to break ground this summer (send positive thoughts and energy to expediate the permitting process, please!). I volunteered to research a subject that we are currently discussion: levels of liability.

Our membership policy requires $20,000 investment (excuse my terminology - not sure that is the correct way to put it), but we allow for a minimum of $5000 if a family or individual is not able to invest the $20,000 immediately, along with a written statement of how and when the addition funds will be made available. A question has been raised as to levels of liability - would members who had not invested the full $20,000 still be liable for the full $20,000 should something happen to the project (ie. we couldn't sell all the units, an ancient archeological site was found while digging for a foundation, etc). And what about persons who have invested far more than $20,000? How much are they liable for? At first, the answer seemed obvious - yes, everyone would be liable for up to the full $20,000. However, after further discussion, we were concerned that this might affect a person or family's decision to become full members, and thus give us less interested parties when we go for our construction loan. We wondered if it might not be better at this point to have more full members with less financial liability rather than fewer. There are several families who are struggling with affordability in this project, and have stated that if they were to be liable for the full $20,000, they might delay becoming full members until it was clear that the project was really going ahead (ie. persons who cannot access the $20000 without selling their homes - who don't want to be without a home should this project fail).

My question is: how have other communities handled levels of liability during the development phase? What were the ramifications of how you handled liability. Your stories would be very helpful to us.


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