Cohousing-L Mailing List: RE: co-housing and real-estate investments

[John Eaton (johne]

> 
> We are drawing up our documents, and are considering a clause which grants 
> the community the option to buy any member's lot at a "limited equity value,"
> equal to the money they put into their house plus inflation, before they
> can sell it elsewhere at a higher price.
> 
> The intent of this clause is to prevent the value of these lots from rising
> so rapidly that they are no longer affordable to moderate-income families.
> (As community living becomes the trendy lifestyle of the future!) 
> 
> We also wish to attract people who see this as a place to live rather than 
> as a lucrative real-estate investment.
> 
> Does anyone have experience with such a provision? How well has it worked
> out for you?

Bad idea. The community is not at risk if the value goes down but stands to
gain if the value goes up. That is not fair. The biggest problem comes from
"The tyranny of the majority". Majority rule is not always fair. In this case
if the property has skyrocketed then 51% of the residents could decide to 
force out the other 49% at a fraction of the real value and then turn around
and resell the units at market value and make a killing.


Giving the community the right of first refusal is a better idea. Let the 
market determine the price. 


John Eaton