Cohousing-L Mailing List: Re: Questions on Financial, Legal and Sweat Equity Structures

[Pare Gerou (paregerou]

Hi Jasmine,

You’ve raised an important set of questions that cross legal, financial,
governance, and social cultural lines — and you’re right that the
traditional U.S. cohousing model won’t always fit every site or zoning
situation.

I’m an attorney and have been studying this for decades, and I now have my
own consultancy in Greece- we use collaborative design (and good attorneys)
to design some novel legal forms aligned with our values.  From what you’ve
described, your property presents overlapping issues of *zoning,
subdivision, financing, and internal governance* — not just ownership form.
If I understood, each lot is zoned for one legal owner, and you are hoping
to create a more integrated, community-led structure--- you’ll likely need
to separate and consider separately what’s *legally compliant* from
what’s *socially
cohesive and effective.  This is one element that separates intentional
community from privately owned and controlled coliving with leases.*

A few broad considerations from communities I’ve studied:

1.     *Entity First, Units Later.*
Many general projects where traditional condo mapping doesn’t work start
with an *LLC or cooperative entity* that owns all the land and buildings.
Members then hold internal leases or “exclusive use rights” to their homes.
This is common in rural cohousing and ecovillage settings. It avoids
multiple mortgages and allows internal buy-ins, but requires good legal
counsel on securities and resale rules.

2.     *Sweat Equity.*
It’s possible to formalize sweat equity — especially when professional
skills like contracting are involved — but it must be documented and valued
clearly. Most groups use reporting and a written *Memorandum of
Understanding* outlining:

o   a fixed dollar value per hour or per completed improvement,

o   clear scope of work,

o   and how that value is converted to ownership credit or reduced buy-in.
Otherwise, it can create confusion later during resale or exit.

3.     *Zoning & Permitting.*
Your biggest constraint may not be ownership but *land-use rules*. If each
lot can only have one owner, creating a unified community structure may
require either a *master lease* (LLC leases the parcels from individual
owners) or a *planned development permit modification**.* It’s worth a
conversation with a local land-use attorney familiar with intentional
communities and ADU law.  If you'd like true intentional community, it
sounds like this is an important step.

4.     *Governance.*
No matter what legal form you use, having a sociocratic or consensus-based
decision system from the beginning will help align expectations around
equity, power, and shared responsibility.  Having the person interested in
sweat equity involved in making the policy is a first step.

It might help to look at examples like:

·       Dancing Rabbit Ecovillage (MO) – land trust + leasehold model (See
IC.org for some of great courses from the founder- and there is a course on
legal structure you will find helpful)

·       Earthaven Ecovillage (NC) – LLC/lease model

·       Arboretum Cohousing (WI) – hybrid limited-equity co-op

Each started from a slightly different regulatory environment and adjusted
the ownership model to fit their land and financing realities.

Hope That Helped,
Pare (Evi) Gerou
Founder, *Greek Village Cohousing*
(Consultant with two current projects- one is resident owned through an
entity--hybrid cooperative + leasehold model currently under development in
Greece)

On Wed, Oct 29, 2025 at 7:58 PM Jasmine Gold <jasmine [at] spiritgold.com> 
wrote:

> I'm interested in getting information on how different communities have
> handled buy-in once they've found land as well as alternative ownership
> models to the traditional cohousing model where everyone owns their own
> home. The traditional model won't work for my property so we're trying to
> figure out how to structure it. More details below the questions.
>
> 1. What was your initial or minimum buy in? How did that change over time?
>
> 2. Are there any communities here that are not legally structured as single
> family homes or condos? How are you structured? LLC? Tenants in Common?
> Private Membership Association? Co-op?
>
> 2. How does your structure affect buying and selling homes?
>
> 3. Does everyone own the property as a whole and is everyone listed on the
> mortgage? Do residents have exclusive rights to their home? Is everyone
> invested equally?
>
> 4. Do you have silent investors or investors who don't live there? Do they
> get a set rate or a percentage of profit? What kind of decision making do
> they have?
>
> 5. Do you allow sweat equity? I'm especially wondering about
> professional services like a licensed contractor who wants to fix up an
> existing home instead of making a down payment.
>
> 6. Did you build your homes together or did the residents build their own
> homes?
>
> I'm sure there will be follow up questions too.
>
> Here are more details on the situation.
>
> My friend and I are in escrow on 10 acres of rural land in Sonoma County,
> California. The property has been subdivided into four lots. Each lot is
> zoned to be able to have a home, 2 ADUs (up to 1200 square feet) as well as
> a  junior ADU (up to 500 square feet) for a possible total of 16 dwellings
> (15 with common house which might have rental rooms). While legally each
> lot can only have one owner, we hope internally to make all or most of the
> homes owner occupied.
>
> There are four existing homes on two of the lots that all need a lot of
> work. One lot has a large home on it that may eventually become the common
> house, but initially the two of us will live in it. The three smaller homes
> on one of the other lots are currently rented.
>
> There is a family thinking about joining our group that would like to live
> in one of the rental homes. The husband is a licensed contractor and the
> family can qualify for a loan, but they don't have much cash to put down.
> They would like to fix up their home as sweat equity. This seems perfect
> since the two of us won't have money left over for constructing new homes
> or fixing up the other homes after buying the property and fixing up the
> home we are going to live in. The amount they can pay per month is about
> the same as the house is currently renting for. We aren't sure how to
> credit the sweat equity though.
>
> Thanks for your help,
> Jasmine
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