Cohousing-L Mailing List: Re: self-managing cost overruns

[mark (mark]

Hi Ksenia:

I tried to reply to you off-list, but the contact number listed on 
your web site seems to be one of your development consultants, who in 
turn appears to have some sort of association with your builder. 
This is not necessarily bad, but it does suggest that your group may 
be a bit ingrown for my personal taste, and this may make it awkward 
to untangle lines of responsibility and inadequately-documented 
finances.

To begin with, I'm sure you know better than to take at face value 
much of what you hear on this list, especially since much of it will 
relate only passingly to Canadian law, custom and construction 
practices.  If you need real help with accounting or legal issues 
(which sure sounds like the case), you probably need to hire 
accountants and lawyers.  They'll charge vast amounts of money, but 
if chosen wisely will be worth it.

Because you provide few details it is difficult to tell who is 
responsible for cost overruns.  Some are probably not your 
responsibility, some are certainly your responsibility, and some are 
probably up for negotiation.  Who is negotiating these on your 
behalf?  Are their loyalties clear?

I assume, since you hint that your builder is not finished, that you 
have not yet paid them.  It would be wise to find out how to do this 
in a legally defensible manner, or you may run into some real 
trouble.  I assume further that your contract with the builder calls 
for a completed job, and that your contract with your project manager 
makes it his or her responsisbility to persuade the builder to 
perform as contracted.  If one or the other of these things is not 
happening, identifying who is not doing their job is the first step 
to asking them to please resume doing it.  Of course, I also know 
that it is never quite this simple: but then again on one level or 
another it really IS that simple, and it can be best dealt with on 
that basis.

In a general sort of way, everyone should receive adequate 
doccumentation of everything....bar nothing.  Personally, I do not 
pay bills of any sort in the absence of satisfactory documentation of 
what it is that I am paying for, and I recommend this approach to 
your membership as well as to your development entity.  It is not 
clear to me why this would not happen as a matter of course.  Perhaps 
I misunderstand your question.

Your development entity, which built and then transferred ownership 
to individual owners, is not finished with its reponsibilities (at 
least under the laws of the State of Washington).  For example, it 
remains in a contractual arrangement with your builder, who will need 
to come back and fix stuff within a warranty period, and it remains 
in a contractual arrangement with you, the homeowners, to whom it 
represented that your homes were built to certain codes and 
standards.  It needs to be funded for those purposes (and others) 
until it has fulfilled its responsibilities.  Its eventual 
dissolution will depend on how it was structured in the first place 
(this should be clearly defined in your organizing documents), and on 
provincial law.

There are certainly embedded issues in your situation that neither 
you nor I can even dream of.  One reason for hiring lawyers is that 
they take great pride in thinking of all the possible ramifications 
of everything anyone might ever do.  This tends to get tiresome at 
times, but sometimes it's worth having that perspective.  Sometimes 
it's even worth paying for it.  I think this is probably one of those 
times for your group.

I am not certain that I'm being of any help at all here, or even that 
I'm answering the questions which you thought you were asking.  I 
hope what I've said has some value.

Good luck.

Mark
(Bellingham Cohousing)





> Hi folks,
>
> At Cranberry Commons, we are in the not-uncommon situation of 
> dealing with cost
> overruns. We'd appreciate some advice about how to manage things at 
> this point.
> The residents are directors in the development corp., and we hired a cohousing
> consultant and a construction manager (who also did our accounting). Our
> contract with our consultant is over, and the builder has limited 
> time to devote
> to our project due to the project taking longer than anticipated. We 
> moved in in
> October and paid for our homes, but the development corp. is now in 
> the red and
> all households need to come up with cost overruns immediately to pay trades,
> etc. Questions have been raised about the accuracy of the accounting 
> because the
> estimated cost overruns have quadrupled since the last accounting 
> report that we
> received (2 1/2 months ago). Any advice regarding the following:
>
> * ensuring that the final accounting is accurate;
> * ensuring that residents get adequate documentation of their final purchase
> price (is this necessary?);
> * phasing out the Development Corp as a legal entity;
> * dealing with a household potentially selling a unit before final 
> accounting of
> cost overruns is completed; and
> * other things we haven't thought of?
>
> Thanks in advance,
> Ksenia Barton
>
> Cranberry Commons Cohousing
> Burnaby, BC, Canada
> http://www.cranberrycommons.ca/
>
>
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