Ownership and Operation models for common areas and individual property
The Community will by it’s nature, involve some joint ownership. This means that many topics must be studied, decided, and then put into operation. Comparison of different types of ownership:
- University of Wisconsin: Comparison of Business Structures: https://uwcc.wisc.edu/about-co-ops/business-structure-comparison/
There are 7 (or more?) types of ownership we need to consider. Each is operated differently, has different pros and cons which will affect the management and all aspects of the community development and living.
Cooperative housing ownership / Management Board consists of owner members. In a housing cooperative, the cooperative corporation owns or leases the housing stock, which includes all land, dwelling units and common areas. Member-owners then purchase stock—sometimes called shares or membership certificates—in the cooperative corporation. Upon purchasing stock in the cooperative, the member-owner signs a perpetual lease, called a proprietary lease or occupancy agreement, giving the member-owner a legal and exclusive right to occupy a particular dwelling unit, on condition that all obligations to the cooperative are met. As the legal owner of the property, the cooperative corporation is responsible for meeting its financial obligations, including mortgage payments, property taxes and management and maintenance costs. The cooperative passes these costs on to the member-owners according to some equitable formula, generally based on a variable such as unit size. In turn, members pay a single monthly “assessment” or “carrying charge” to the cooperative, covering all fixed and operating expenses, including taxes, insurance, maintenance and replacement reserves, and the member’s pro-rata portion of any overall debt
- University of Wisconsin: A wealth of information on Cooperative Ownership Everything you need to know about Cooperative Ownership models
Condominium Ownership A condominium is one of a group of housing units where each homeowner owns their individual unit space, and all the dwellings share ownership of areas of common use. … All the land in the condominium project is owned in common by all the homeowners. Condo developments are managed by homeowners associations that collect monthly dues, maintain operations, and enforce policies.
Non-profit corporation ownership: Corporation Board owners and outside community members
LLC / Limited partnership ownership:
LLCs offer tax benefits and liability protection. A General Partner manages the property. All other owners are “silent partners,” or Limited Partners. Their liability is limited to the extent of their registered investment. LPs are not taxed at the business/corporate level and instead are “passed through” to only be reported on their personal tax returns. Limited Partners avoid “double taxation.”
Community land trust:
Under the CLT model, a community-controlled organization (a non-profit Corporation or the church) retains ownership of a plot of land and sells or rents the housing on that land to lower-income households. (The houses are owned by the buyers, the land is leased under a 99 year lease). In exchange for below-market prices, purchasers agree to resale restrictions that keep the homes affordable to subsequent buyers while also allowing owners to build some equity. The CLT also prepares home buyers to purchase property, supports them through financial challenges, and manages resales and rental units. CLTs thus bring sustainable home ownership within the reach of more families, supporting residents who want to commit to their neighborhoods for the long term. The CLT is especially used to develop affordable housing neighborhoods.
Individual (fee simple) ownership.
Each house is owned by each individual, each owner is free to buy, sell, and mortgage their property, subject only to deed restrictions placed on the property as the land is subdivided. Common areas could be individually owned or jointly owned.