Cohousing-L Mailing List: Re: Consulting fee assessments

[Nancy Wight (wight]

> 
> If someone leaves the group how much, if any, of their money is 
> refunded? And does any of this count toward downpayment on mortgages or 
> are you not dealing with commercial banks?
> 
> Also, what sort of legal agreement do you have, if any, which defines 
> how money is to be used?

We have 2 separate legal structures for dealing with money.  One is our
corporation, and one is a Land Fund.  The corporation assesses households
monthly for operating expenses.  These assessments have run anywhere from
a couple hundred to a couple thousand dollars, depending upon what phase
we are in.  We hired a professional real estate project manager, who is
responsible, among other things, for reporting to the group regularly on 
how the money is being spent, and authorizes checks to be written.  If a 
household leaves the group, they must wait until the devlopment is completed, 
and then they can get back all of this money minus $500.00.

The Land Fund is a separate entity set up with a person outside of the group 
in charge of "overseeing" it.  This fund can only be used to purchase land, 
and there are different rules for recovering your money.  To get your money
back from the land fund, you must be "bought out" by either the household
coming in off of the waiting list, or other members of the group willing
to put up more money.

All of this money counts towards the downpayment (indeed, some people have
already put in MORE than their downpayment and will actually get money back
at the closing!).  Yes, we are dealing with a commercial bank.   But, here's 
the catch.  You have to make sure your budget is at or below what the 
appraised value of the project is, or you could get into big trouble.  If the 
bank appraises a house for $150,000, but it costs (including all fees, land,
etc.) $200,000 to build it, the bank will only lend $120,000, and your
downpayment will end up being $80,000.  We were holding our breath 
about this until about a month ago, when an appraisal company came back with
an appraisal that was very close to our budget, if even a little higher.

- Nancy



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