Arrangement Choice Services

Coliving Counsel can help you choose an arrangement for holding your property. An arrangement may involve ownership, rental, or a mix of both. Arrangements include:

  • master leases, leases, and subleases,

  • tenancies in common,

  • limited liability companies,

  • housing cooperatives,

  • condominiums, and

  • mutual benefit corporations.

Client Story: Housing Co-ops

  • Question: We’re building a 20-unit limited equity housing co-op project. We’d like this it to anchor a city-wide housing co-op project. That project will grow through acquisition. Resident control over resident selection is critical. How should we structure this multi-site cooperative?

  • Answer: Let’s review the legal constraints giving rise to the main housing co-op forms in California. These are resident-operated nonprofits (“RONs), limited equity housing co-ops (“LEHCs”), and limited equity condo projects (“LECs”).

    With that shared understanding, let’s look at your city’s condo conversion ordinance. It bans conversions to LEHCs and LECs. So, your existing LEHC project can’t anchor the larger project.

    Let’s scale up and consider the emergent challenges for a large RON. The main issue is the $20 million welfare tax exemption cap. You can take government financing and avoid it. Yet, then you must use lottery selection and sacrifice resident control.

    Let’s review (a) a multi-entity RON operating under the $20 million cap, (b) a RON with creative financing offsetting the limited welfare tax exemption, and (c) lobbying your city council to allow LEHC conversions like other cities.

Client Story: 3 Couples, 1 Property

  • Question: We’re three couples buying a property. One couple will buy. One will rent for a year. Another will join later. We’re open to a triplex or buying a duplex and adding an ADU. How do we get from here to there? What’s the best co-ownership structure for us?

  • Answer: You should consider a tenancy in common with fractional loans (“fractional TIC”) or a limited liability company (“LLC”) for your co-ownership structure. More than four borrowers takes a group mortgage TIC off the table. The initial owners can convert the property to fractional TIC readiness. Or, they can create an LLC and have the others join. Let’s review the pros and cons with respect to ease of entry and exit, control over resident selection, traditional homeownership benefits, and loan availability and terms.

    If you pursue a fractional TIC, let’s consider purchase options for the future co-owners. That way, they’ll have a right to buy a fractional undivided interest at a later time.

    Would you like advice on development support too? If you buy a duplex, consider buying a property that is SB 684 eligible. That would allow more optimized ownership structures. You could split the lot and add a unit. That unit could be owned fee simple. The duplex could be owned through a group mortgage TIC.

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