Cohousing-L Mailing List: ownership and principal

[don i arkin (shardon5]

Hi,  Shared ownership can be beneficial if all the questions are dealt
with ahead of time in writing.  At Sonora Cohousing we had limited
experience with "soft seconds", basically loans from the community
savings to individual homeowners with the provision that they would be
paid back after refinancing or sale.  These were successful for us at
least in part because interest rates fell to levels that encouraged
refinancing.  Both the Jamaica Plains question, and the mini coho
question are essentially the same.  You are not dealing in futures, you
are dealing with shares of a something like a real estate trust.
        If different members paying different amounts and thus starting
to own disproportionately more of the property is undesireable, then the
members who aren't able to come up with additional cash can agree that
their proportional share of the extra payment would be recorded as a loan
to the member making the payments.  In other words,  if   John and Sara
own a property together equally, and Sara wants to make an extra 5000
payment on the mortagage but John has no extra cash, he can let Sara go
ahead and they make a loan agreement that he owes Sara 2500 with loan
payoff and interest at  negotiated terms.
       The question about partners wanting to sell their shares before
the partnership is ready to sell the property is the quandary that besets
all investors in illiquid investments.  The partners can agree beforehand
to one of these two solutions (1) if one person wants to sell, the other
partners need to either buy him out or sell the entire property, (2) any
partner wishing to sell must find their own buyer.  There are variations
of these.  Of course any transfer of partial ownerships needs to be
accompanied by an agreement amongst the partners about the value of the
shares.  This does not necessarily mean a full appraisal, but that would
be the back-up if other methods were not satisfactory to all the
partners.
        Good luck,  Don Arkin  
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