author: [[Brayden McLean]], another member of [[Dreamship]] > [!Important] > We are not lawyers. This is not legal advice. The way to use this post is as an example agreement to start a discussion with your own lawyer (and hopefully help save some fees with a good starting point…). ## Introduction Below we share a blank/redacted LLC agreement document that four families at Dreamship used to establish joint co-ownership of a house in Berkeley, CA. This is not legal advice, but is shared for others to understand options that you might have for incorporating shared ownership. What we ended up with is fairly different from a TIC, and may have similarities and differences compared to the Radish ownership model (for which we haven't find a public ownership agreement reference). We hope that by contributing this document to the commons, more communities consider the right approach to joint ownership that could work for them, and contribute further legal options back to others so the broader ecosystem of community houses can build off of each other’s work. # Notable features of our agreement > [!Important] > If the bullets below don't align with what you are optimising for then our LLC model is likely to not be the best fit for your unique situation. ## Design considerations - Designed under the expectation that between three and six families would want to collectively own and live together under one roof in a "single family home", while reserving flexibility to support pure-renter community members as well. - Wanted flexibility to allow for folks to buy and own a separate percentage of the house that didn’t perfectly match the amount of the house that they were using (e.g. allow some folks to own a larger slice of the pie even if they had a small bedroom and collect excess rent, or allow some folks to own a smaller portion or even 0% of the house and pay more rent) - Wanted a pathway that maximised the chances that we could have a “No majority owner” situation. We felt that having a majority owner would be likely to lead to a single party or family having an oversized impact (real or perceived) on decision making or governance, and could lead to minority owners ‘leaning out’ and not investing as much time or energy. We cared a lot about a framework that would allow everyone to lean-in together, and not put the burden of ownership on a single party, since a main motivator for living together is to get the benefits that come with collective ownership mindset. - Things that we pre-agreed upon prior to designing and executing our legal framework: - We had found a house that we thought would work for the community, and collectively made a commitment to join this house if we could pull-off the purchase. - We had one family that was willing to take on the risk of buying the entire house for the first 12 months, with the explicit agreement and commitment that we would put in all the time needed to establish a solid legal framework for collective ownership and transfer the title of the house from the individual family over to the collectively owned LLC within 12 months. - Since we had already purchased the house, we had an agreed upon price and closing costs that the initial members would need to split. - We decided to forgo trying to get a home loan as a community - we struggled to get much progress on finding lenders that would work with our group of 5 family units with different financial positions. The initial party that bought the house was able to get a loan (not a mortgage) to cover part of the capital that was needed for the first 12 months before all other housemates bought into the LLC. We therefore didn’t need or seriously pursue a collective home-loan for the LLC. (Some regret from this decision mostly due to historically low interest rates that we missed out on locking in, but we couldn’t have known that at the time.) ## LLC Ownership Agreement Document: See here for the full LLC legal agreement: [Operating Agreement](https://docs.google.com/document/d/1YfUzHWgJM9gCgu-6QIJL5myENlJmuIF8/edit) ## How did we go? - It took ~500 hours over the first 12 months to complete the design and execution of our LLC agreement, which pushed right up against our self-imposed commitment deadline. The effort and timelines pressure did contribute to some relationship strain. Overall our final model is probably includes some needless complexities and most of the core parts of our agreement (how to make capital contributions and how shares in the LLC work, and governance) could have been detailed in a smaller doc for faster alignment. If you work with a different lawyer you might find someone much more willing to start with a lot less boilerplate! - Via this model we successfully implemented the shared ownership model with four parties, which we executed on the twelve month anniversary of moving into the house, to realize our shared ownership dream - The model smoothly supported us transitioning from having four owning parties down to three owning parties in 2023 when one of the families moved out, and smoothly supported a transition from a no-majority-owner situation to a majority-owner situation in a way that has not caused significant concern or drama. - We have a system where some rent is shared back to owners as rent-reductions, and other rent being contributed to an LLC joint bank account (Bluevine) that we use to pay for LLC expenses such as taxes and maintenance. ## What else? - The agreement details what type of agreements require majority agreement, unanimous agreement, or can be pursued unilaterally. We decided to base most of these decisions on one family getting one vote each, but also considered which decisions should instead be based on the size of your ownership stake. It wasn't obvious if there was an optimal configuration here but we are fairly happy with where things ended up, and rarely make formal decisions using the framework as, for the most part, smaller decisions are made day-to-day based on residents' preferences. - This agreement only scratches the surface of what it has taken to run our community for the past eight years. If you are interested in our approaches to setting or redistributing rent, or community systems, values, and norms, then please let us know so we can share some of these with you as well.