Cohousing-L Mailing List: Re: Cohousing Inclusiveness, selecting your neighbors

[Rob Sandelin (robsan]

Bill Dean wrote.

> I understand that if someone in a cohousing place moves out, the 
others have no >say asto who buys the house and moves in to replace 
them.  The only admissions
>group would be mortgage lenders, and they are not cohousing residents.
>Anyone out there who can tell me if my impression is accurate, otherwise,
>or does it vary for different existing groups?

This is one of the big dividing lines between condominium ownership and 
a cooperative ownership.  Coops are often set up so that some group 
within the coop: the board, an admissions committee, or even the whole 
group, can approve (or dissaprove) sale of a unit.  Since the units are 
owned essentially by the group, not individuals, the group can choose 
who they live with.  Many coops exist for this particular reason - to 
exclude those who they don't want to live with.

In a condominium, ownership of units is private, and therefore subject 
to the limitations that the bank puts upon it.  Right of first refusal 
is often put into the CC&R's of a condo and is usually meaningless as 
the cost of the unit is such that the organization, nor any of its 
members could ever afford to exercise it.

I remember reading once about a group who wanted to have the membership 
selection ability of a coop and the bank acceptance of a condo and so 
created both a coop and a condo and made membership in the coop a 
prerequisite to purchase of a condo unit. They then were using the coop 
to "screen" members.   I don't remember who the group was, I think the 
article was in a past issue of the cohousing journal which is not handy 
to me now to look up.  I also am not sure if this group successfully 
negotiated mortgages with a bank with this setup, which is the key 
determining factor of any legal setup.

In my limited experience, I have found banks tend to be wary of schemes 
which make it hard for them to foreclose and sell a property and 
cohousing groups having complicated legal schemes may have a hard time 
getting bank funding.  We were told that FNMA would not favorably 
review a right of first refusal clause in our declarations, and since 
it was largely meaningless anyway, we had our lawyer pull that out of 
our CC&R's.  Getting FNMA approval was very helpful for us, we have 7 
banks holding mortgages, and this diversity is a good thing as it tells 
other banks that this project is a reasonable investment.

Sharingwood is probably one of the few cohousing groups where members, 
and the organization and not banks, actually own the project.  Our 
greenbelt is fully owned by the organization and over a third of the 
homes are resident owned.  Our legal structure is such that the banks 
have no ownership over the common elements and we are corporate debt 
free to banks, having self funding all development to date.  Banks own 
7 of 12 homes at Sharingwood and own big pieces of only 3 homes.

Rob Sandelin
Sharingwood
(Where the trees are greener, the skies bluer, and the children are all 
above average ;-)