People and The Process

Link to full CoHousing Agreement (pdf, 175 Kb, 37 pages)
CoHousing Agreement Summary
What is it? A legal agreement between each purchaser of Earthsong Eco-Neighbourhood ("Earthsong") and Cohousing New Zealand Limited ("CNZL") as vendor. It provides a clear basis in which purchasers can advance deposit money to CNZL in order to build Earthsong and develop the site.
When do you sign the agreement? At the time of becoming a full member. Payment of the $2,000 full membership fee is made at this time.
What is it for? Standard for-profit developers fund their developments independently and usually at great cost, and can therefore accept deposits from purchasers and hold them in a third party trust account.

Earthsong, however, is a self funded initiative and relies on homeowners-to-be funding some of the early construction costs, much in the way you would if you were building your own house. Think of this as a collection of people building their own houses but using a common contractor for economies. The only reason Earthsong uses a company is because we found no other entity suitable for the purpose.

Signing the Cohousing Agreement when you pay your deposit enables you to become a stakeholder in your home's development, as a 'close business associate' with the other shareholders of CNZL. It is not aimed at attracting investments from other than purchasers

By purchasers making their (usually 20%) deposit in the form of a loan advance to CNZL equity is established in the company, which in turn enables the balance of the funding to be obtained from a standard residential construction loan. This avoids expensive 'venture' or 'mezzanine' funding.
How does my deposit as a loan advance differ from being in a trust account? Having your deposit money in a trust account means you remain a client of the vendor, being at less risk if the venture was to fail. However you would not be able to be as involved in creating your own home.

By making your deposit available as a loan to CNZL and signing the Cohousing Agreement you become a shareholder with a full say in company decisions, in consensus with the other shareholders.
What other purposes does the Cohousing Agreement serve ?
  1. To give legal standing to the project vision, and the agreements, procedures and commitments the shareholders have made with each other and with the company.
  2. To build trust and security among the shareholders because the benefits and risks associated with the venture are shared equally and each shareholder can count on the commitments made by the others.
What does signing the Agreement give me? The right to become a shareholder in CNZL (one share per $1,000 loaned or promised to the company), and consensus participation in all meetings. If a 75 % majority vote is needed (if consensus is not reached after two meetings on a matter) each share entitles you to one vote.
What are the main commitments contained in the Agreement that I would be making?
  1. To use the consensus decision-making process for all decisions requiring the consent of the shareholders.
  2. To follow the dispute resolution process if difficulties arise
  3. To leave financial contributions with CNZL until taking possession of your unit, or until the project is finished if not purchasing a unit
What commitments does the Company make to me?
  1. To be the developer of Earthsong for you as a purchaser of a home plus a share of the common neighbourhood facilities.
  2. To use your loan contribution and that of the other purchasers plus any development funding obtained for the above purpose.
  3. To keep records of your contribution and credit you for that amount as part of the payment for your dwelling.
  4. To pay interest on a pro rata basis to you upon completion of the project, if the budgeted contingency and margin allows.
This is a brief summary only of a 37-page document, and is not intended to replace that document. All intending purchasers need to read the full agreement prior to signing. We invite you to discuss the agreement with your legal advisor before signing if you wish.

26 September 2000

Link to full CoHousing Agreement (pdf, 175 Kb, 37 pages)
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