Cohousing-L Mailing List: RE: Group reluctance to incorporate <FWD>

[Rob Sandelin (robsan]

Steve Farley (sfarley [at] igc.apc.org) asked about groups buying land 
without being legally incorporated.

Even if you have no formal signed legal agreements among your group, 
you actually technically do.  The courts will consider you to be a 
simple partnership.  This is not good.  You should NOT be putting an 
option on land without first having an attorney draw up a partnership 
agreement at the least.  Up to the point of buying a site, this has all 
been a pleasant, or maybe not so pleasant, adult conversation.  When 
you buy an option you are jumping into the shark infested waters of 
legal ownership.  This carries some big liabilities with it. The courts 
are full of people with good intentions who got SCREWED.

Three extreme cases.  You put a down payment on some land.  Someone 
goes on to the land, climbs a tree, falls and dies.  YOU are liable. Do 
you have insurance?  The victims survivors sue and get a one million 
dollar settlement. (This has actually happened, although not to a 
cohousing group)  The courts come with a bill for $50,000 to each member.

The site you put a down payment on is a toxics dump.  YOU are liable 
for clean up costs.  Again, another million dollar judgment which each 
individual in the group is liable for.

A bunch of hippies buy some land and hang out together on the land in 
teepees and school buses.  Someone gets pissed and sues.  They have no 
legal agreement at all and the court rules them a partnership.  The 
hippies lose the land, and all of their possessions are confiscated by 
the court to pay the judgment. (This actually happened)

Buying land without proper legal knowledge and protection is very, very 
foolish.  Groups sometimes do this and it turns out OK, but getting 
legally incorporated is usually pretty easy and simple and shouldn't 
cost more than a $1,000 at most.  If you are doing 20 units at $100,000 
each that is a 2 million dollar project.  Makes that legal investment 
look pretty small eh.

My advise is to not be included in the membership of any group buying 
land until they are legally defined. This way you can still come to 
meetings as a non-member, and be safe should something go wrong, and 
you are also in the know and should be able to become a member later.  
Don't get pressured into joined a group right away if you have doubts 
about it.  Even if the group is full, You can be assured that along the 
way, several people are going to drop out during the development 
process, especially when it comes time to go knocking on the door of 
the bank for loans.


Rob Sandelin
Puget Sound Cohousing Network.