Cohousing-L Mailing List: Memberships and Securities Laws

[Cohomag (Cohomag]

Kate N. Nichols wrote:
<<I just got back from talking to two lawyers today. They asked me how
cohousing groups handle LLC's and securities. It is my understanding that we
are in possible violation of security laws when the original members ask
people to put in money towards a unit to become members, especially when they
don't have a significant development plans to disclose to  prospective
members...The lawyer asked if we would be a 504 or a 505 tax (code?)>>

I wrote a 2200-word article on this subject (including Rules 504-506 for
exemption from securities registration requirements) as part of my master's
degree report on legal and financial structures for cohousing (Berkeley,
1995).  Seems a little long and technical for general dissemination on this
list, but I will send it to anyone interested.  
(Please send your request directly to me [cohomag [at] aol.com] and identify
yourself and your group or organization.)  I'd be especially interested in
feedback from any attorneys lurking on this list, since I am considering
publishing all or part of the article in the Cohousing Journal.
P.S.  The quarterly journal is currently available on a subscription basis
for $25-$35 (you choose the rate) from The CoHousing Network, P.O. Box 2584,
Berkeley, CA  94702.  (In the future the journal will also be distributed to
members of the new national nonprofit which was discussed at the national
conference last week.)
Don Lindemann
cohomag [at] aol.com