Cohousing-L Mailing List: Re: Agreements to reshare financial burden (was: Per Household or per person?)

[Diana Carroll (dianaecarroll]

I think most real estate development is done by professional developers, in
which case the risk is assumed by the development corporation and the
construction lender.  If the project goes south, the lender and/or
corporation eat the loss.

Projects being funded by the individuals who are going to live there is a
cohousing thing.  I don't think there's any precedent for it in the real
estate industry.

Our individuals of course did form a corporation (LLC), but the lender knew
it wasn't a "real" company...they (wisely, I guess) required the
individuals in the corporation (us) to sign personal guaranties before
they'd give us our loan, so any money the project doesn't pay back comes
out of the pockets of the LLC members.

The money we all put in as individuals above and beyond the construction
loan...that does...*poof* disappeared.  Which is what happens in the real
world, too...developers front money on a gamble, and sometime they lose
their gamble.  However I don't think most development corporations have 20
people who put startup money at risk, and who are then friends and
neighbors at the end of it.  :-(




On Wed, Mar 20, 2013 at 7:40 AM, Sharon Villines
<sharon [at] sharonvillines.com>wrote:

>
>
> On Mar 20, 2013, at 5:52 AM, Diana Carroll <dianaecarroll [at] gmail.com>
> wrote:
>
> > In our case, our project "succeeded" in the sense that our homes were
> built and we live here. But the homes weren't sold for enough to pay what
> we owed, so there was still a loss. And there was no agreement up front
> about how to handle that possibility.
>
> What is the standard practice in condominium financing?
>
> Sharon
> ----
> Sharon Villines, Washington DC
> Where all roads lead to Casablanca
>
>
>
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