Cohousing-L Mailing List: Developer Model of Co-housing

[Thomas Lofft (tlofft]

 Robin & Sue Ellen raise a very important question for development teams. 
Who owns the land?
Who's going to invest the financing required to jumpstart the project?
Who is creating value in the project?
Does that value attach to the land? when? 
How does the financier secure any promise to recover its investment in either 
the short term or long term? If it's a commercial lender, they will undoubtedly 
require collateral in either the subject property or other assets of the 
borrower(s) or both and all. 
A similar risk is incurred by any party owning land, entering into a 
partnership agreement with any other party, related or unrelated, who seeks to 
obtain any interest in the property. Are they contributing fair value 
comparable to the land value interest being sought? 
If one member of a forming group owns the land and seeks to get other members 
financially invested in the project, I believe the owner of land which will 
accrue value from the joint effort funded by others should pledge the land 
contractually to the ownership and control of the group. The terms of that 
contract should be explored openly with all the members of the group 
considering investment.
Perhaps the greater question is: "How does this happen? 
Most typically, it results from a conditional contract for purchase, detailing 
the obligations of all parties, the schedule for performance, the expectations 
of results, the conditions that would be considered a default by any of the 
parties, the conditions for cure of default, and the conditions for 
interpretation and resolution of disputes, e.g., whether by mediation, 
arbitration or litigation. 
 
Tom Lofft
Liberty Village, MD
  
"Robin Allison" robin.allison [at] earthsong.org.nz wrote:
To: <cohousing-l [at] cohousing.org>
Subject: Re: [C-L]_ Developer Model of Co-housing

I too would be very interested to hear any experience of cohousing that has 
arisen successfully in this way. 

I come across this situation a lot, where one family owns a property and would 
like to either create cohousing on it, or at least invite others to "share" the 
land and build community there. A transition is required at some stage to 
transfer the ownership and decision-making from the original owners to the 
cohesive group, and even with the very best intentions, it seems that this is a 
very tricky transition. 

If we believe that risk and control need to go together, then the land-owners 
need to keep some control while they are the only ones at (financial) risk. If 
they want to share the risk, they need to also share the control, and if a 
group wants to share the control, as in consensus decision-making, they need to 
also share the risk. Skin in the game, and all that.

If there were successful strategies for making this transition, I think there 
would be a lot more cohousing in NZ. 

Thanks
Robin Allison
Earthsong Eco-Neighbourhood in New Zealand.
www.earthsong.org.nz

-----Original Message-----
From: Cohousing-L [mailto:cohousing-l-bounces+robin.allison=earthsong.org.nz 
[at] cohousing.org] On Behalf Of ???Sue Ellen Hiers
Sent: Friday, 4 September 2015 7:51 a.m.
To: cohousing-l [at] cohousing.org
Subject: [C-L]_ Developer Model of Co-housing


Are there any best practices for the situation where one party (call this 
person the developer) owns the land?  My heart wants to be a part of such a 
forming co-ho but my brain says too much is undefined for money to start 
changing hands. And what is defined is unsettling. In fact if I didn't know the 
developers I would not even consider it. 
How can lawyers/consultants/architects, represent both sides of this 
transaction? By that I mean the money changing hands will be used to add value 
to the land (zoning changes, etc) that the members have no title to. Should the 
non-developer members hire their own lawyers/consultants to represent their 
interest? Should liens be put on the land for the value added?  How can the 
group be protected in the event of the developer's death or incapacity? This 
model of co-ho seems ripe for affinity fraud because it appears to be based 
only on trust. Again the owners of the land (who are not professional 
developers) are long time friends of mine so I am not suggesting there is any 
fraud here.I would like to know what others who have faced or are facing this 
model have done.
 Regards, Sue Ellen
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