WHAT LEGAL MODEL TO USE?
The majority of cohousing communities in Canada are registered legally as condominiums (operating very much like a typical condo/strata but with a different intention in the use of their shared amenity spaces and governance structure).
Before a cohousing community or building has been constructed, the legal organization and shared liabilities require the group to pool equity and form a limited liability corporation with by-laws that include provisions for the group’s general intentions, membership requirements, financial liability, legal representation for the group, buy in and buy out provisions, amendment procedures, and more.
Ottawa Cohousing can provide standard agreements based on examples from existing Canadian cohousing communities. Each group can fine tune these templates to suit their specific needs.
It may be fruitful to review alternative legal models used for holding land collectively, in context to specific values a community may have. However, structuring a cohousing community under a condo legal model is currently the most available and understood framework for developers, lenders, and permit granters in Ontario.
Legal issues around Governance
Setting up the legal framework gets the group started, but there will be many more governance issues with legal ramifications that a group will need to explore. Topics such as: shared group values to be encapsulated, capacities of the individuals within the community, how to determine individual equity and which equity model to use, preferred methodology for conflict resolution, and protocols around dispute resolution.
Further to this are the considerations of liabilities, insurance and tax implications. Each group will need to arrive at a determination of what will work best and what policies are in closest alignment with the group's values.
BUY INS and BUY OUTS
At any point in the development process an individual or household may drop out.
Early on in the forming stage, the Affinity group will have a chance to discuss all relevant provisions for Buy Outs from the community, beyond what is outlined in condominium legal requirements. These will include voluntary withdrawals, removal of members, death and inheritance issues. The agreed upon elements will be formalized into the groups community charter and will guide the group through any pertinent penalties, refunds, timing sequences, etc. that will need to be determined at the time of a Buy Out.
New members will be needed at some point.
Under a condominium legal registration, sale of units are fully within the owner's jurisdiction. The community will have a suggested onboarding process for prospective new owners, so that they have a clear understanding about how the community operates, as they consider their purchase within the community . Ottawa Cohousing will provide examples and guide the group through these conversations.
New members joining during the development phase will need to contribute an appropriate financial levy, suitable to the stage at which they join. As acceptance to the group is critical, the community may request an 'exploring' phase, so that fit can be evaluated by both parties prior to commitment.
What about Resale or Transfer of Property?
By buying into a cohousing property, you are making a sound real estate investment. In cohousing, (under a condo legal registration), when a private residence must be sold it is typically done so on the open market, at market rates. Existing cohousing communities in Canada and around the world have long wait lists of interested households. Units are in high demand and it doesn't take long to resell a cohousing unit. Ottawa Cohousing will have a waiting roster of potential purchasers.