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

[Jasmine Gold (jasmine]

Thank you Pare for all that information. It was very helpful. I believe it
could be possible to have an LLC own all four lots rather than lease it
from the owners, but perhaps leasing it could make sense instead. I hadn't
thought of that option. The lots will all have the same owner initially. I
definitely need to find a land use attorney familiar with intentional
communities. This was my first step. I will definitely look into the
communities you suggested.

Jasmine


>
>
> ------------------------------
>
> Message: 2
> Date: Fri, 31 Oct 2025 10:14:35 +0200
> From: Pare Gerou <paregerou [at] gmail.com>
> To: cohousing-l [at] cohousing.org
> Subject: Re: [C-L]_ Questions on Financial, Legal and Sweat Equity
>         Structures
> Message-ID:
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> CAP+GJ3icH1byj1hQdZnnyqwCu62thmrdqpUQnqUohzoSmZTomA [at] mail.gmail.com>
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>
> 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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