Buying land to subdivide it to form a community

I have heard through podcasts about buying land and subdividing it to community members. For those who have done it or have any knowledge, what are the pros and cons? Is doing this through an LLC a better way?

Thanks.

I noticed, browsing the FIC classifieds that there’s a DC lawyer partnered with the FIC. She advertises that she’s well versed in communities such as these. Below is her link.

3 Likes

Wow. This is helpful, thank you!

1 Like

Hey there, I added the tags ‘legal’ and ‘property’ to this topic!

1 Like

Hey! What did you have in mind for the property? Happy to connect! My email is jonathan.dean@compass.com

The pro of an LLC is that everyone who owns a house can be part-owner in the LLC that holds the land, but they can each own their own house itself, so if they decide to leave they can sell their house/unit (to someone that will fit into the community) and thus have some money to go buy their next house, and they’re also selling their share in the LLC so the next person who owns the house will have that.

I’ve heard that the negative is more expenses re. property taxes, insurance etc.

I’ve heard that owning the land as a 501C3 nonprofit means less taxes, but it also means other types of constraints that an LLC won’t have.

One thing I’ve heard a lot of communitarians caution about is where one person buys the land and everyone in the community is renting, they say people are less likely to work as hard if they’re all renting, because they won’t necessarily feel as much connection to the land in some cases.

In my ideal scenario we’d have the LLC model and people would own their homes, and we’d set aside some units for rentors because I think having some rentors, though not all, could be good for the community, and maybe if they rent long enough then they have bought their home and are thus owners now?

Yesterday I went and toured an ecovillage which uses the condo/HOA system, and as I suspected that system has some serious flaws. The only pro I can see is less paperwork, but they have very little control of who gets in, because legally they can’t vet people, the condos go to whomever can afford them and wants to move in. They can’t even enforce their community rule of 9 hours of community work per month, they just have to hope that the people who buy in will participate. Most people do, as they bought a space in an intentional community intentionally, but some people move in and become a problem for the community because they aren’t suited to that life, and there’s nothing to be done.

Moral of the story, whatever land-holding structure you choose, I’d encourage you _hard not to do an HOA model.