Our Proposed Legal landscape

Our Legal Structure 

We are in the process of registering as a Company Limited by Guarantee – this acts as our legal holding structure. The Ecology Building Society are willing and keen to support co-housing projects like ours using this legal structure – and have lent to similar co-housing projects in the past.

We are using Mutual Home Ownership (MHO) agreements to make the project affordable, agile and member run. As in a cooperative, we imagine all adult members of the community will become members of the company, with an equal say in decision making. There is a trial period before potential members become members of the company and therefore have full objection rights.

In Mutual Home Ownership (MHO), the land and buildings are all owned by the company, and members have a licence agreement to reside on site as part of the equity certificate they own. They are not leasing from the company, and are not tenants. Members do not hold a freehold or any legal right to a particular property on site – the different spaces on site are allocated in relation to the value of each equity certificate held by members, and this is by community agreement and is not a legal agreement. This is intended to facilitate a relatively affordable and agile housing opportunity, with no stamp duty to pay when buying or selling the right to reside in the project, or when changing equity certificates and residential spaces between the members. 

You can find out more about MHO here – https://www.communityledhousing.london/wp-content/uploads/2020/07/CLHLondon-MHOS.pdf

The Joining Process

As a MHO company, members bring capital to the project when they join, or contribute to a communal mortgage while living on site, or both. Each residential unit has an agreed equity value that combines to make up the cost of the whole project. 

One key aspect of MHO is that when members leave they can get some, or all of their money back – they find someone else to buy their equity certificate, and fix the price by negotiation with the new member. 

There will also be a monthly community financial contribution that will be used for communal expenses such as the upkeep of communal buildings, communal services, communal food and equipment purchasing etc.

The Leaving Process

Anyone is welcome to leave at any time, or may be asked to leave using our Exclusion Process (see below). 

To sell your equity loan on, you need to find someone who will buy it from you, with the agreement from the community that they can move in on a trial basis. There will hopefully be a waiting list of folks who want to move in – it’s therefore in all our interests to make the project as attractive as possible for new members to buy into.

The price the new member pays is agreed by negotiation between the two of you. If there is a significant capital gain between what you paid and what you sell it for, beyond the current market value and any work and investment you have added in, the community may choose to take some of that increase. We are still developing our policies around this, so that it is as fair as possible given potential large price fluctuations in the future. We will prioritise getting clear around this soon, and welcome comments and suggestions from prospective members around this as we develop our strategy.

Prospective new members need to be agreed to by the community before they can buy a departing member out, and will need to buy in, then have a trial period of living on site before becoming full members.

Healthy flexible boundaries – our Exclusion Process

The health and future of our community requires us to be willing to hold healthy boundaries in relation to behaviours that are putting this at risk. Our Agreements provide reference points such that if a community member is consistently unable to bring themselves in alignment with our values, relational agreements and community agreements and this is having a significant impact within the community, we may need to suspend or exclude that member from the community. 

This may be temporary in order to create some space for the community member and/or community to find support around the challenge they are experiencing, or it may be permanent, depending on the situation, degree and nature of impact, and dynamics involved.

When we sign up as members we agree to respecting any consent-based decisions made by the community in regard to the need to suspend or exclude us.

The exclusion process runs like this – 

• Members already have sought one:one resolution through offering regenerative feedback grounded in radical self-responsibility and have had mediated support from a neutral person outside the group to explore the issues in person together.
• Member(s) bring concerns about another member(s) in written form to all members of the company, and then to a group meeting where as many members are present as possible. All parties are heard, and seek understanding of each other’s experiences and needs, and how the group agreements may be being broken. Proposals and intentions may be made, and requests may be given by the group for changes in behaviour, with timelines for that.
• A month after the topic has first been formally brought in writing to all members of the company , any member may propose a suspension or exclusion of the individuals from the community. This proposal needs to be communicated to all members of the group at least a week before the meeting happens where this will be discussed.
• The decision to suspend or exclude someone is decided by vote, (this is the only time we use voting rather than a consent round). To pass, it requires three fifths of the community with full objection rights to agree to the decision. Members being potentially excluded or suspended do not have voting rights in this matter, but will be given at least 5 minutes during the meeting to explain their situation before the vote is taken.

We recognise that this will likely be a very painful process for all involved and as a community we commit to keeping our hearts wide open and staying in relation with this pain – our own and that arising in others.

We will seek legal advice to ensure this is a legally binding agreement.