Cohousing-L Mailing List: Re: Unit Entitlements

[Pare Gerou (paregerou]

 Congratulations!

Congratulations on your progress!    Ann Zabaldo and several others have
posted some excellent HOA fee calculations options and analysis in the
archives.
However, you might consider some group intentional legal design work before
you take in her analysis-- because you would be glossing over lots of
hidden assumptions and would be creating future problems by adding one
misaligned legal feature on top of another.

>From the little I can glean from the few line disclosure,  it sounds like
your group might have chosen to legally design the community using a
"Strata Corporate" structure and Strata lot ownership legal design-  The
(strata) and percentage ownership of the common buildings (entitlement).

For what it’s worth, the legal design of the community can significantly
impact its social cohesion, almost as much as the architectural design.
Combining misaligned legal features can create complexities that entangle
the community.

Currently, it seems your underlying assumption, as reflected in your
disclosure (and thus likely in your Bylaws and/or in your Articles of
Org.), is that your monthly costs assessed to households must be tied to
the shares/percentage ownership.  Tying this legal knot affects not only
monthly costs assessed but taxes and governance as well.

Given the complexities involved, it’s important to consider Canadian law
and regulations pertaining to Homeowner Associations (HOAs) and strata
corporations.  But more important than that, it is important to start with
your detailed vision and values concerning governance and cost sharing and
then work from the ground up to alter your legal design to better align.
Making the changes at the foundational level will mean you can take on
Ann's analysis without getting tripped up in a host of other unintentional
legal design.

Over the years, I've been following all of the knots communities tie
themselves into legally without proper legal design workshops, and it
almost feels to me like learned helplessness in doing such a great job of
architectural design but not so much with legal design.  All people need is
being taken step by step through a legal design process just as they were
with architectural design, identifying the places of poor construction, and
knowing how to build a new legal house.  Even for nonlawyers, It is not
that much harder really than designing a Common House.

I've been gathering some materials over the years and would be up to trying
a "beta" test workshop with a small group if they wanted to more
comprehensively tackle a few of the foundational legal design issues and
set their legal house in order.  Perhaps I'll reach out to Ann and the
others who've taken on portions of this problem over the years adn team up
so you can have a better experience and so groups will not feel so at sea.
Let me know if this interests you.

Pare Gerou
paregerou [at] gmail.com

On Sun, Jul 7, 2024 at 12:56 AM Elizabeth Rosenau <ejrosenau [at] gmail.com>
wrote:

> Hello!!
>
> I’m part of a Canadian community called Compass Cohousing that’s planning
> to starting building soon.  We are looking to engage realtors and this has
> brought up the subject of “unit entitlements” as a component of setting our
> monthly Strata fees.  (I believe our Strata fees may be analogous to HOA
> fees in the USA.)
>
> Right now we are using the square footage of each unit to calculate those
> fees.  We realize that square footage alone is not the ideal way forward
> because it doesn’t take into consideration the expense of operating common
> facilities which we assume will be used by residents of all unit sizes.
>
> Here are my questions:  What was your community’s experience deciding how
> to calculate unit entitlements?  Has your community been satisfied with the
> way the entitlements work or have there been struggles or pushback?  Is it
> easy to change unit entitlements after occupancy?
>
> Thanks in advance for any wisdom you may have to share.
>
> Elizabeth Rosenau,  Compass Cohousing.
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