Help us explore financial structures for one-house intentional community
May 24, 2020 3:49 PM Subscribe
Friends and I are looking into buying a house together to live together informal coop style. We need to figure out how to structure the agreement around how people leave down the road, ideally such that they can get their money out ideally without forcing everyone else to sell also. It would help us to see examples of other small intentional communities' agreements and financial structures. Do you have one you could share, or can you recommend a resource along those lines?
I have never done anything like this, but here is how I think it could be structured. I'm assuming the house would be bought with a mortgage but even without a mortgage the idea would be the same. Every one is buying an equal share of the house. A share would be valued the amount of equity in the house + any appreciation in value divided by the number of shares. When some one decides to move on the value of the share is determined and either the remaining members purchase that share or it is sold to a new member.
I would also suggest that decision making be done by coming to a consensus rather then voting. I think that by relying on voting people may feel that their concerns were not heard, if the vote goes against their point of view. It will be hard to come to a consensus but everyone should be happy with the decision in the end.
posted by tman99 at 4:30 PM on May 24, 2020
I would also suggest that decision making be done by coming to a consensus rather then voting. I think that by relying on voting people may feel that their concerns were not heard, if the vote goes against their point of view. It will be hard to come to a consensus but everyone should be happy with the decision in the end.
posted by tman99 at 4:30 PM on May 24, 2020
Starting your research, take a look at the CA model for Tenancy In Common.
Vs. Joint tenancy or other forms of Concurrent Estate.
You're already ahead of the game by starting with planning for the end - how would (will, it will happen) someone get out.
Ok, I'm moving to Tasmania, you three need to buy out my share.
With what? All our money's in the house!?
Ok, then I'll find someone to buy my share and take my place.
Wait, You get to decide who we live with after you leave, according to who's got money to pay you off? No deal.
Etc.
Some of the worst fights and relationship anxieties in a marriage are over money. Intentional Communities are no different. Except maybe for the part where everyone's got their identity tied up in a model that money isn't important; until suddenly IT REALLY IS, ACTUALLY, and the knives come out.
Everyone's perception of, and comfort level with, the existence of an Eject Button, and the stakes involved with breaking the glass and pushing it, is going to affect every House Meeting, whether you know it right now or not.
I'm not trying to put you off the idea. Just passing on that one of the best things you can do starting out is to make sure everyone has a clear picture (crucially, THE SAME picture) of where they stand. To use an awful paraphrase, Finances Don't Care About Feelings.
It would seem counterintuitive thinking of hippie communes, but the most long-lasting and stable communities I've lived in are ones that set aside time and emotional space to Run The House Like A Business, where theres a regular Treasurer Report or what have you, and everyone stays informed of common Income, Expenses, Assets, and Debts for 'The House' itself.
posted by bartleby at 5:39 PM on May 24, 2020 [9 favorites]
Vs. Joint tenancy or other forms of Concurrent Estate.
You're already ahead of the game by starting with planning for the end - how would (will, it will happen) someone get out.
Ok, I'm moving to Tasmania, you three need to buy out my share.
With what? All our money's in the house!?
Ok, then I'll find someone to buy my share and take my place.
Wait, You get to decide who we live with after you leave, according to who's got money to pay you off? No deal.
Etc.
Some of the worst fights and relationship anxieties in a marriage are over money. Intentional Communities are no different. Except maybe for the part where everyone's got their identity tied up in a model that money isn't important; until suddenly IT REALLY IS, ACTUALLY, and the knives come out.
Everyone's perception of, and comfort level with, the existence of an Eject Button, and the stakes involved with breaking the glass and pushing it, is going to affect every House Meeting, whether you know it right now or not.
I'm not trying to put you off the idea. Just passing on that one of the best things you can do starting out is to make sure everyone has a clear picture (crucially, THE SAME picture) of where they stand. To use an awful paraphrase, Finances Don't Care About Feelings.
It would seem counterintuitive thinking of hippie communes, but the most long-lasting and stable communities I've lived in are ones that set aside time and emotional space to Run The House Like A Business, where theres a regular Treasurer Report or what have you, and everyone stays informed of common Income, Expenses, Assets, and Debts for 'The House' itself.
posted by bartleby at 5:39 PM on May 24, 2020 [9 favorites]
There's a lot of peril here for the viability of the friendships.
We need to figure out how to structure the agreement around how people leave down the road, ideally such that they can get their money out ideally without forcing everyone else to sell also.
How do you plan to structure this? Can the person leaving just sell their share to anyone or does the rest of the group have to approve the new person? Does one person get veto power on anyone new? What if they refuse absolutely everyone? What if someone does get approved and moves in (legally owning 1/nth of the property) and everyone ends up detesting them? What if someone stops paying rent, either because they can't or just decide not to?
posted by Candleman at 7:21 PM on May 24, 2020
We need to figure out how to structure the agreement around how people leave down the road, ideally such that they can get their money out ideally without forcing everyone else to sell also.
How do you plan to structure this? Can the person leaving just sell their share to anyone or does the rest of the group have to approve the new person? Does one person get veto power on anyone new? What if they refuse absolutely everyone? What if someone does get approved and moves in (legally owning 1/nth of the property) and everyone ends up detesting them? What if someone stops paying rent, either because they can't or just decide not to?
posted by Candleman at 7:21 PM on May 24, 2020
A lot of NASCO's stuff is focused on Rochdale Principles co-ops, which actively limit how much money you can get back out if you sell your shares. (It's a way of keeping membership affordable, and of pushing people to treat membership as a living arrangement rather than an investment. But it sounds like it's actively not what you want.)
You should probably look at their archive anyway — they're a great organization that's been around for decades and has a lot of credibility in the co-op world. Just keep the distinction in mind.
posted by nebulawindphone at 7:36 PM on May 24, 2020 [1 favorite]
You should probably look at their archive anyway — they're a great organization that's been around for decades and has a lot of credibility in the co-op world. Just keep the distinction in mind.
posted by nebulawindphone at 7:36 PM on May 24, 2020 [1 favorite]
I've walked several groups through this ideation process. There's a lot more to this than just how much money each person puts down and pays monthly, and how they can exit the co-op of the want to.
Things to think about: creating a pool of money for repairs and improvements, and agreements about how to decide when and how to use that money. Guidelines on what changes people can make on their own and which have to be approved by the group. How many people constitute a quorum? Does everyone have to agree or just a majority? How will you handle disputes if someone does something that causes community problems or physical damage to the house? If a share gets sold, do the others have the right to approve the new buyer? What if someone dies? Are owners allowed to rent their rooms out? Have others stay with them?What are the applicable state laws, and how will they affect the enforcement of your contract? Tenancy in common, like in California, is a great starting point but every state has different laws about this.
You're creating a community here, which means governance systems and decision making processes.
posted by ananci at 9:41 PM on May 24, 2020 [2 favorites]
Things to think about: creating a pool of money for repairs and improvements, and agreements about how to decide when and how to use that money. Guidelines on what changes people can make on their own and which have to be approved by the group. How many people constitute a quorum? Does everyone have to agree or just a majority? How will you handle disputes if someone does something that causes community problems or physical damage to the house? If a share gets sold, do the others have the right to approve the new buyer? What if someone dies? Are owners allowed to rent their rooms out? Have others stay with them?What are the applicable state laws, and how will they affect the enforcement of your contract? Tenancy in common, like in California, is a great starting point but every state has different laws about this.
You're creating a community here, which means governance systems and decision making processes.
posted by ananci at 9:41 PM on May 24, 2020 [2 favorites]
You might want to look into Danish co-housing (bofællesskab) communities. They have a pretty standard way to handle this based on what’s called the shared housing (andelsbolig) model. Andelsbolig is a common way to set up apartment buildings in cities; then people give it some extra twists to cover intentional communities.
posted by whitewall at 10:08 PM on May 24, 2020
posted by whitewall at 10:08 PM on May 24, 2020
In addition to the tenancy-in-common model, there are others as well. I live in a limited-equity co-op, and my partner lives in a mutual housing association. I know a few folks locally who own apartments in a land trust, which means the land itself is owned by the trust and the below-market-rate units are owned individually. In every case, there are limits on how (or if) a member-owner can profit off of their unit. (In my limited-equity co-op, I bought a share of the co-op equal to the square footage of my unit for around $10k; when I move out, I'll have earned a few years worth of interest on it, so in theory will be breaking even (though in practice, interest rates are so low that I won't be).)
I should be working on a project for my co-op right now (I'm on the board), so I don't have a lot of spare bandwidth to informatively rant and rave. But one thing I've noticed in the past few years of living in this limited-equity co-op (which is sort of famously dysfunctional) is how much a few bad apples really do spoil the entire bunch. In my 22-unit building, three deeply broken people (all of whom have lived here for more than twenty years, and one of whom was a founding member in the early eighties) are behind 95% of the stress for the rest of the membership: they want to have say in e-v-e-r-y-t-h-i-n-g no matter how small, introduce arcane bureaucratic tasks or agenda items into every meeting or project (why just replace a sink when you can draw up elaborate specs governing the theory of sink replacements, that will then dictate all sink replacements forevermore!), fixate on edge-case legal questions or interpretations of our ancient and convoluted bylaws, occasionally threaten lawsuits or write harassing letters targeting other members, and generally ruin things for all the other well-intentioned members. They mostly don't mean to ruin things, but they do--consistently, over and over again, for decades now. (FWIW I'm not just being a jerk here; if you asked everyone else in my building which folks cause the most stress and difficulty in proportion to the amount of work they contribute to the community, I'm 99% sure literally everyone else would name the same three folks, too.) In my partner's 26-unit co-op, which is much more working class and has an entirely different set of problems, there are also basically three households that create most of the drama and difficulty. In both co-ops, it takes a lot of time, energy, spare bandwidth, and give-a-shit to overcome the sorts of obstacles these bad apples create, and because self-managing an entire building is itself an enormous task, it's hard to do both while still holding down a job and having a social life, family, art practice or whatever, etc. I deeply wish these three in my co-op would get raptured or whatever, and the rest of us could rejoice for a minute and then go get down to the business of managing the roof replacement or finding a new bookkeeper without constant interference, but it just seems like an impossibility. I like to joke that if there's anything that's made me more conservative in the past decade, it's living in self-managed housing cooperatives.
So, although I think you might've been looking for guidance in creating a little sliver of utopia, here's my much more dour recommendation: make sure your bylaws provide for a way to incentivize, or compel, awful people to leave the community.
posted by tapir-whorf at 12:01 AM on May 25, 2020 [11 favorites]
I should be working on a project for my co-op right now (I'm on the board), so I don't have a lot of spare bandwidth to informatively rant and rave. But one thing I've noticed in the past few years of living in this limited-equity co-op (which is sort of famously dysfunctional) is how much a few bad apples really do spoil the entire bunch. In my 22-unit building, three deeply broken people (all of whom have lived here for more than twenty years, and one of whom was a founding member in the early eighties) are behind 95% of the stress for the rest of the membership: they want to have say in e-v-e-r-y-t-h-i-n-g no matter how small, introduce arcane bureaucratic tasks or agenda items into every meeting or project (why just replace a sink when you can draw up elaborate specs governing the theory of sink replacements, that will then dictate all sink replacements forevermore!), fixate on edge-case legal questions or interpretations of our ancient and convoluted bylaws, occasionally threaten lawsuits or write harassing letters targeting other members, and generally ruin things for all the other well-intentioned members. They mostly don't mean to ruin things, but they do--consistently, over and over again, for decades now. (FWIW I'm not just being a jerk here; if you asked everyone else in my building which folks cause the most stress and difficulty in proportion to the amount of work they contribute to the community, I'm 99% sure literally everyone else would name the same three folks, too.) In my partner's 26-unit co-op, which is much more working class and has an entirely different set of problems, there are also basically three households that create most of the drama and difficulty. In both co-ops, it takes a lot of time, energy, spare bandwidth, and give-a-shit to overcome the sorts of obstacles these bad apples create, and because self-managing an entire building is itself an enormous task, it's hard to do both while still holding down a job and having a social life, family, art practice or whatever, etc. I deeply wish these three in my co-op would get raptured or whatever, and the rest of us could rejoice for a minute and then go get down to the business of managing the roof replacement or finding a new bookkeeper without constant interference, but it just seems like an impossibility. I like to joke that if there's anything that's made me more conservative in the past decade, it's living in self-managed housing cooperatives.
So, although I think you might've been looking for guidance in creating a little sliver of utopia, here's my much more dour recommendation: make sure your bylaws provide for a way to incentivize, or compel, awful people to leave the community.
posted by tapir-whorf at 12:01 AM on May 25, 2020 [11 favorites]
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posted by uninjured landlord at 4:11 PM on May 24, 2020