SummaryofLegalDocs
This paper was submitted to the U.K. Network Cohousing Website by the Community Project, Laughton Lodge, Lewes, in January 2001
Introduction
The Community Project is a company limited by guarantee. The company owns the freehold of all the buildings and land on site. Members purchase individual properties from the company by leasehold. All leaseholders are directors of the company. We were always keen to ensure that the project was water-tight from a legal point of view, and so the main structure has been set up with legal documents (memorandum and articles and leases, financial guarantee deed, loan offer document) These would ultimately provide recourse to the law if members did not meet their obligations. We believe clarity in this area is crucial. Short summaries of these documents follow.
1. Memorandum and Articles
This is a Company Limited by Guarantee. All leaseholders are directors of the company. Associate membership is available for people not holding a lease for the property but being resident. Associate membership is available for prospective residents.
Decision making
Immense efforts are made to reach decisions by consensus and we will, where necessary, return to difficult issues over many meetings in order to find an outcome acceptable to everyone. However, although to date we have never had to use it, voting can be used as a last resort. The procedure is 1) first strive for consensus, 2) if cant be achieved defer to next meeting 3) finally if no consensus can be achieved put to vote and decide by simple majority.
Categories of membership
There are 2 categories of members - full and associate. Only full members able to vote.
2. Lease
The lease includes amongst other things a definition of the communal land and buildings; occupiers rights; a nuisance clause.
Selling
When an occupier wants to sell, the company gets 3 months to find a buyer and if no-one is found in that time the occupier finds his own as long as they agree terms of the lease and become a member of the company.
Service charges
There are 2 categories : a) maintenance - towards upkeep of the land and buildings and b) development -to enable the development of the land and the common buildings and communal activities. Much of this money is allocated to budgets which are managed by the various sub-groups. Each member's charge is based on square footage of unit.
Index link price
We were aware that the community might prove to add significant additional value to the houses over and above the normal movements associated with the local property market. To prevent people making windfall profits effectively at the community's expense and in the process pricing some prospective members out, we have a system which means that houses can only be sold at a level compatible with the local property market.
Exclusion policy
If it were necessary to exclude someone, it is not possible to eject them from their house but only dismiss them as a director. The normal civil remedies otherwise apply to breaches of the lease ( ie probably an injunction forbidding the person from continuing the offending behaviour)
3. Loan Offer documents ( for members putting money into the project)
A document was drawn up for use between the company and each member. It was individualised by detailing the specific sum involved for each individual.
4. Financial Guarantees
A Deed signed by each member of the Community Project during the purchase and development stage to ensure no member bears a disproportionate loss in the event of the collapse of the project. The principle is that losses would be shared: those who have made smaller investments in the Project make payments to those who have suffered larger losses as a result of making larger investments. This gives confidence to individuals who may have larger sums to invest that should the project collapse they would not bear a disproportionate loss.
When it operates
On the insolvency of Company or forced sale of site by bank
1. not more than £5000 per unit - they are shared equally 2. more than £5000 but less than the total guarantees, the excess over £5000 is shared in proportion to guarantees 3. each member promises to pay his or her share of any loss no more than three months from the date of receipt of the Treasurer's written request for that sum. Resigning as a member of the Community Project does not absolve any member of liability under this agreement.
Legal advice
We worked closely with lawyers to draw up the above documents. Our solicitors were: (Malcolm Lynch of Industrial Common Ownership, ICOM, Vassalli House, 20 Central Road, Leeds LS1 6DE Tel 0113 242 9600
Availability of copies of the above documents
Copies of the documents are available and we are requesting a payment of £30 each. After careful thought we have decided to charge a fee for these. This is because we spent many months and thousands of pounds on legal and other professional advice in order to work out what was needed and to draw up these documents. Our community is very new and we are badly in need of funds to develop the land and common buildings. We hope that by sharing some of our learning and making this available to other groups we can save them time, expense and possibly heartache. We hope that the suggested cost of these documents is seen as reasonable. However, we would accept consider a reduced fee or waiving it altogether where appropriate.
Consensus
We spend a large amount of time and effort trying to improve the way we reach decisions. We have compiled some extracts of documents on consensus which we have found helpful. Please see separate document entitled 'Consensus'.