Community-minded people often prefer to simply trust that others will act fairly. Many believe they can work things out later if and when problems might arise. Unfortunately, this can lead to misunderstandings of what the initial agreement was. You may have heard disheartening statistics about failure rates of intentional communities; what you may not know is that a similar number of business start-ups fail. Knowing the risks should be a motivation to be careful in discussing details of your agreements, to give your venture the best possible chance of succeeding. The information that follows should not be construed as legal advice. It is meant to alert you to potential opportunities and risks, which you are advised to discuss with a legal professional in your jurisdiction. Don’t let this information discourage you from realizing the many benefits of coliving with trusted others. Legal consultants listed on ICmatch can help you make workable legal agreements to succeed in creating an intentional community.
Make Written and Signed Agreements
We understand why so many people don’t make written agreements. People interested in community are often the type who want to create relationships based on trust and good will, not transactional relationships where you are keeping score and insistent on exact reciprocity. Sometimes in the beginning new friends are confident that their good will is going to carry them thru any challenges. Family members or love interests might even feel it would be an insult to ask for a written contract. While the good will is often genuine on both sides, the lack of a clear written agreement can lead to misunderstandings and feeling taken advantage of.
Brene Brown reminds us that “clear is kind.” Hashing out the details in writing is an important step. It makes sure you are on the same page about important issues, not operating from different assumptions. You might have found wonderfully compatible people, but unanticipated situations and serious disagreements can still arise. You can save yourself a lot of hassle by talking thru the difficult topics in advance, while you still are in an optimistic frame of mind. Working out a written agreement can either set you up for success or help you recognize a need to reconsider the plan. Still not convinced? Here’s more.
Written signed contracts allow you to refer back to the written agreement when your memory of the final decision doesn’t match someone else’s. For large or ongoing financial interactions, make signed and dated written agreements, with a copy for each party. Consult a lawyer for specifics on your situation. Make sure the legal advice is relevant to your state or province. Especially if it involves housing and zoning, make sure you know local jurisdictional requirements and limitations. When filing business documents, fill out and send the documents together with your partner(s)/group to ensure all names are on the forms.
Some ICs form an LLC for buying shares, with joint responsibility for mortgage, tax, and insurance. Others simply offer rent or time-share contracts. Here are a variety of resources for further understanding your options and contracts templates for a variety of options:
- Legal Structures for Intentional Communities lists pros and cons of a variety of agreement types.
- Templates by the Sustainable Economies Law Center give a head start in legal documents for a wide variety of organization types, including co-ops and co-owned LLCs.
- Co-operative ownership descriptions and examples by the NW Communities Association (serving the Pacific Northwest) (external website)
- Shared equity mortgages: The Canadian company Key describes innovative ways to resolve common challenges around the timing of buying and selling.
- Tenancy in Common: templates and sample agreements where ownership can be passed to inheritors.
- You can find additional contract templates of specific kinds by searching online. Try a search with the words business partnership, agreement or template, or joint venture agreement. Include your state or province to find those that take into account specific legislation that may apply.
- IC Bylaws Example: This page has IC bylaws established January 1996 and still functioning. Using these as a template or as a guide can help your founding community cover essential topics.
- Emergency Timeshare Contract: an example of an intentional community adjacent to a metropolitan area, offering disaster relief and temporary shelter as a contracted prepaid service
Importance of Legal Structures
Legal frameworks won’t completely protect you from those with unethical intent, or even from those with ethical intentions whose plans fail; however, getting a legal agreement in place can help you and the others involved to take a clear-headed look at risks. It is important to discuss how to fairly part ways if a partnership or project fails. If you stand to lose substantial time and resources from an allegation of wrongdoing, you’ll need to be quite cautious. You may stand to gain a lot from intentional community relationships too, so it’s worth the due diligence to get clarity up front. Our contract templates and legal consultants can help.
Many who are interested in intentional community have counter-culture attitudes and may underestimate the benefit of living in a society where the rule of law is prevalent. Some aren’t aware of the struggles that lawless societies have, and many forget that the sometimes annoying regulations help create a framework for prosperity. However much we may notice and have a grudge against unethical practices by which people can be taken advantage of in business dealings, the same motivations can be present in informal agreements, and with no recourse. We want to help you find resources to set up your legal structures in a way that gives you the best chance of success. Modest legal fees up front could prevent the need for much higher legal fees to resolve a dispute later, as well as possibly preventing painful losses.
This format offers a great amount of flexibility and is fitting for the egalitarian aspects of intentional communities. A partnership agreement, also called a general partnership or partnership contract, is a document used to dictate the terms of a business partnership between two or more partners. It includes information about capital contributions, management, and profit and loss distribution. It is important to include terms of dissolution in the partnership agreement. You will need to designate which rules you will follow if any of the partners wish to exit the agreement. This means setting terms for: (a) how much notice a partner must provide prior to exiting the partnership, and (b) whether one partner’s withdrawal will cause the partnership to dissolve for other members.
Bachman analyzed past legal cases about whether a partner should be deemed an “employee” and thus could legally file a complaint of discrimination. The following are indicators of the worker being a partner rather than an employee. Not all of them need to be met; for example, adding a partner to your group for a trial period shouldn’t require that they take on liability for the group’s debts nor share equally in all profits. They could share in the profits that are accrued for the specific period of time in which they are under contract as a partner. A group member is likely to be considered legally a partner if
- they are part of a small company in which they may have relatively more control over their work and compensation
- they have the same voting power as all other equity partners and no other partner owned a greater share of the firm or had a greater voting power
- they have equal authority to hire and fire others
- they take share in the profits of the company and are personally liable for its debts
- they have a high degree of independence in discharging their duties; although their work could be reviewed by other partners, the same is true of all partners’ work
- they have signed a partnership agreement
- they receive a K1 tax form rather than a W2
If you post a position for hire, in a traditional employment model, idealist.org is our recommendation. To help you avoid allegations of discriminating against applicants based on any protected characteristics, including, but not limited to, race, ethnicity, color, national origin, religion, age, sex, sexual orientation, gender identity, family status, disability, medical or genetic condition or any other basis protected under federal, state or local law. The generally accepted practice is to describe the requirements of the work, but not any characteristics of who you imagine would be an ideal applicant. For example, stating, “This job requires repeatedly lifting a weight of 75 pounds (a standard two-string hay bale) while in a standing position” does not make assumptions about the capability of a type of individual to perform the work. Use verbs (actions) not adjectives (characteristics). Use gender-neutral titles of positions. If applicable, rather than specifying that applicants must be citizens, consider saying that applicants will be required to complete a form to verify their eligibility to work in your nation.
If you are looking for a community member or project team member with certain skills and attributes, ICmatch.org can be an ideal platform for that. You need to structure your invitation not as paid employment. You can present a volunteer opportunity or a business partnership. After determining compatibility, present a contract for their review, which you might then collaborate on to refine the details. It is important to ensure your agreements and contributions with others are recorded. Always keep your own duplicate of contracts and records.
The U.S. National Labor Relations Board classifies an independent contractor thru a broad range of factors, such as what type of relationship the parties believe they are creating and the degree of control the company exercises over the work schedule. If you hire an independent contractor, make sure you do so with explicitly defined terms of compensation. If their schedule is tightly prescribed and they work 40 hours per week or more, they may be considered an employee.
In Canada, self-employed contractors are defined as setting their own terms and deciding how and when to perform the required work. They don’t have anyone overseeing their activities or mandating when or for whom they work. They may provide services to different payers at the same time.
Know the rights of volunteers and risks assumed by those who accept their contributions. In the U.S., a volunteer performs services for the organization without compensation, other than reasonable reimbursement or allowance for expenses actually incurred, or “any other thing of value in lieu of compensation, in excess of $500 per year.” Thus, housing that might be considered a value of $500 or less could be afforded to a volunteer as compensation for their participation.
Housing (Lease or Rent Agreements)
If you are looking for a residential intentional community member with certain characteristics, and wish to discuss membership opportunities with users of ICmatch, your invitation to join the community must be something other than a rental agreement. This is because ICmatch profile questions ask for information that is not legal to request from prospective tenants. Make your agreement for a time period that, should the situation not prove workable, you can tolerate the presence of those who accepted the agreement thru the duration of the contract, and give them enough notice that they can find an alternative situation before they leave. You might frame the offer in a number of ways, such as a partnership or a learning opportunity and volunteer position. The crucial point is to have a clear agreement and signed document, then be sure you have the capacity to provide the opportunities agreed on. If the trial period goes well, you might then decide to enter into a business partnership with shares, to structure your planned housing arrangement and to protect all parties if the planned venture fails.
For housing, if you request a credit check, require a deposit, and contract for a certain length of stay, then you’re likely to be seen by the law as framing the relationship as a transactional one that meets a typical landlord/tenant definition, not a personal agreement, even if you are establishing a roommate or housemate situation with yourself as part of the household. If you have not yet established trust, it’s best to use an intermediary service such as Airbnb, where agreements and accountability are built in. You then won’t need to create and sign your own contract or take the risk of a dishonored contract.
See also How to Stay Legal and Fair With Housing while creating like-minded community.
See also the FAQ: How do I avoid accusations of discrimination?
Companies that Mediate Property Purchase Contracts
There are online companies operating as platforms for facilitating joint property purchase as an investment. These presumably manage many of the contract issues thru pre-set agreements: Cobuy, GoCo, Mortgage Mates, Paradime, PairGap, Proppie, Shartini, Key (in Canada), and TicXListed. Search for “joint home ownership” and “shared home equity,” adding your location to the search terms.
Marriage and Prenuptial Contracts
Marriage is a relevant topic in intentional community, both from a personal and economic standpoint. Marriage and couple-forming has traditionally been at the core of community life. It’s a legal agreement that offers strictly defined benefits and obligations, as other forms of partnerships do. Because of the costs of dissolution of such agreements, and the failure rates, many millennial couples have increasingly chosen to avoid these “legal trappings.” Before you dismiss marriage as old-fashioned and unnecessary, take a look at statistics about marriage, the pros and cons, especially the legal benefits offered if children are planned or are already in the picture. Keeping separate bank accounts doesn’t necessarily protect you from divorce, or from separating joint possessions in a common law marriage, especially in community property states. A prenup may allow you to avoid becoming responsible for your spouse’s debts if they die. Also, as unromantic as prenuptial agreements sound, financial consultants state a prenup could actually make your relationship stronger. Instead of seeing it as “planning for failure,” it forces couples to discuss the details of their finances and how they think about money. Unfortunately, many who think of themselves as nice and generous people can be easily taken advantage of. When it comes to money, your capacity to ensure the well being of those you care about, including yourself, depends upon insisting on being a fair-minded person when it comes to finances.
Unfortunately, even people who consider themselves a good judge of character find themselves scammed sometimes. Remember that humans are complex. None of us are all good or all bad. Sometimes people will feel justified in going back on an agreement when unexpected circumstances arise. Some people who seem blatantly unethical see themselves as justified because of past perceived injustice, or see themselves as simply protecting themselves in a way that won’t necessarily hurt others. Mediation is best engaged in from a stance of recognizing that none of us sees the complete picture. Seeking mediation as a first resort can save on costs and expand the options for resolution. Often in court, monetary damages are the only type of compensation that can be awarded, and it may not be collectible if the one charged is destitute. Mediation, on the other hand, provides an opportunity to resolve a dispute through means other than immediate distribution of assets. An immediate financial obligation, which is the only recourse for standard court procedures, could actually be the worst outcome for those in litigation, as well as others they care about. While ICmatch lists some mediators familiar with intentional community issues, many more mediators can be found locally.
Agreements Are Not Mediated by ICmatch