Comparison of coop housing legal structures

Corporation Partnership Individual
Use by-laws from beginning Have to wait to use by-laws Have to wait to use by-laws
10% Down Payment 10% Down payment No down payment by tenants.
Requires either two years of profit/loss statements or higher down payment for bank to approve loan Requires significant tenant income for loan, and will operate for 2-3 years before transferring property to corporation Will operate for 2-3 years before transferring property to corporation
$800/year minimum franchise tax +property tax (except public benefit corporation) Property tax, but partners can deduct mortgage payments from income tax Property tax
Corporation could form early but would have to pay yearly tax, OR form quickly upon house purchase. Partnership forms upon house purchase with the signing of partnership agreement Requires legal agreements for eventual transfer of property and for leasing to the tenant run corporation
Potentially slow to move on issues requiring quick action (eg. house purchase) Potential personal power issues between the partners who purchased the house and other tenants. Potential power/ownership/kinship issues might arise.
Tenants protected from personal liability in case of lawsuit against the collective unless they act against the best interest of the collective. Partners personally liable in lawsuits. If nonpartner tenants participate in decisions affecting the operation of the house they may also be liable. Individual personally liable. If tenants participate in decisions affecting the operation of the house they may also be liable.

Comparison of different corporate structures

Mutual Benefit Nonprofit Public Benefit Nonprofit Limited Equity Housing Cooperative Limited Liability Company Land Trust
Only requires that tenants not receive direct monetary gain from the corporation At least 50-75% low income tenants, no monetary gain accruing to individuals. Requires the collective to incorporate as a nonprofit with only tenants involved in governance, thus reducing the collective's ability to maintain continuity Owners can be anyone, tenants or not.
Real estate and franchise taxes only Lower franchise tax only See nonprofit corps All taxes, profit, franchise, and real estate.
Requires Aritcles/Bylaws, documentation of decision making, and annual report. All requirements of mutual benefit nonprofit, and requires state and federal applications for tax exempt status. See nonprofit corps Requires Articles/Bylaws, documentation of decision making.
No specific requirements for dissolution of the corporation Corporate assets must go to a public benefit nonprofit on dissolution Corporate assets must go to a public benefit nonprofit on dissolution No specific requirements for dissolution
No limits on individual accrual of equity No limits on individual accrual of equity Individuals equity in the house may increase no more than 10% per year Difficult to limit tenants profiting on increasing house value
Requires a regular corporate loan: 25% down. Other loans (eg. from existing coops) disallowed without 2 years of profit loss statements. Many special loans/grants for public benefit nonprofits. If these are not available regular corporate loan required. See nonprofit corps Regular corporate loan required
Since there is no low income requirement, the collective may end up being only a resource for elites. No political organizing Articles and Bylaws changes require a 2/3 vote

Note: Any corporation can impose additional requirements through its bylaws and articles of incorporation, though these requirements can always be overturned by the amendment process (which must be specified in a corporation's bylaws).

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