- About Cooperatives
- About Cumberland
- Membership Info
- Townhouse Styles
Select one of the frequently asked questions below to learn more about Cooperatives
A housing cooperative is formed when people join on a democratic basis to own or control the housing facilities in which they live. Usually, they form a not-for-profit cooperative corporation. Each month they pay a fee to cover their share of the operating expenses. Personal income tax deductions, lower turnover rates, lower real estate tax assessments (in some local areas), controlled maintenance costs, and resident participation and control are some of the benefits of choosing cooperative homeownership.
The main distinction between a housing cooperative and other forms of homeownership is that you don’t directly own real estate in a housing cooperative. But if you don’t own real estate, what exactly are you buying? You are buying shares or a membership in a cooperative housing corporation. The corporation owns or leases all real estate. As part of your membership (as a shareholder) in the cooperative, you have an exclusive right to live in a specific unit (this is established through an occupancy agreement or proprietary lease) for as long as you want, as long as you adhere to the cooperative’s rules and regulations. As part of your membership, you have a vote in the corporation’s affairs.
Lower monthly costs—Because cooperatives operate at cost, cooperative carrying charges are often 15 to 25 percent below rental market rates.
Tax deductions—For income tax purposes, cooperative members are considered homeowners. As such, they can deduct their share of real estate taxes and mortgage interest paid by the collective and any interest paid on a share loan.
Limited liability—Cooperative members have no personal liability and need not individually qualify for the cooperative blanket mortgage. The cooperative corporation is responsible for paying the blanket mortgage. This arrangement enables persons who usually don’t qualify for an individual mortgage to buy a membership in a cooperative.
Overall savings—Cooperative members beneﬁt from economies of scale inherent in cooperative operating costs and participation in a non-proﬁt enterprise. Bulk purchasing of significant building improvements provides members with substantial savings.
Community building—Cooperatives provide homes for members and build a community within the cooperative.
Security—Tenure is secure within the law’s guidelines, cooperative bylaws, and occupancy agreements.
The primary objective of every cooperative is to help improve the quality of life of its members. Towards this end, the collective shall aim to:
(a) Provide housing to its members to enable them to attain increased income, savings, investments, productivity, and purchasing power, and promote among themselves
(b) Provide optimum social and economic benefits to its members.
(c) Teach them efficient ways of doing things cooperatively.
(d) Propagate collaborative practices and new ideas in business and management.
(e) Allow the lower-income and less privileged groups to increase their ownership in the wealth of the nation; and
(f) Cooperate with the government, other cooperatives, and people-oriented organizations to further attain any of the primary objectives.
Cumberland is a limited-equity housing cooperative (LEC). There are restrictions on the proceeds members can get from selling their shares. These features make the housing more “affordable” to both initial and future residents. These restrictions are found in the cooperative’s bylaws. The documents may also establish maximum income limits for new members to target the remarkable benefits of the housing to families who need them the most.
Commitment to community and involvement are THE significant differences between cooperatives and other housing types. Members come together to collaborate to achieve goals — one of which is to reduce the costs of everyday management, maintenance, and repair, and another is to provide plenty of activities and opportunities for socializing. It is also fun and rewarding. Although participation on committees is not mandatory, it is strongly encouraged. With multiple committees available, there is sure to be one that suits your unique expertise or interests and on which you would enjoy volunteering.
Like any other organization, Cooperatives must have some rules to avoid chaotic situations. The significant difference between a cooperative and other housing options is that the people are making the rules and living at the joint and must abide by them. Therefore, the rules adopted are not arbitrary or unnecessarily strict. They are designed to address real issues and protect all members’ investment and quality of life. If a practice or policy no longer seems appropriate to a majority of the members, it can be changed through the democratic governance of the board of directors.
All members have the right to vote at the annual meeting for board members’ elections and any other questions brought before the membership. For each unit, there is only one vote on each question. Only one member from each team can be counted for the quorum.
No member shall be eligible to vote or be elected to the board of directors who is more than 30 days delinquent in payments due Cumberland Green Cooperative under the Occupancy Agreement. All member fees must be paid.
Cooperatives are governed by a board of directors that are elected democratically by the membership, from the membership, with one vote per member.
A board of directors can be composed of internal members and external directors. The latter option must be included in the bylaws. Cooperatives tend to have external directors to benefit from their previous working experience and independent view on cooperative issues. It can also be the case that only members can be elected to the board.
Cooperative living is affordable living in a not-for-profit community. Members collaborate to achieve goals, one of which is to reduce day-to-day management, maintenance, and repair costs. The monthly fee includes fund reserves to cover repairs, renovations, and replacement — and that means you won’t be surprised with extensive assessments. You typically won’t need to pay a real estate commission when it’s time to sell.
When you buy a share or membership in a housing cooperative, you pay for a percentage of the cooperative housing corporation. The purchase price will vary depending on the neighborhood, the unit’s size if the agreeable limits resale prices, and if the cooperative has an underlying mortgage for the entire property.
Cumberland is a limited-equity housing cooperative (LEC). There are restrictions on the proceeds members can get from selling their shares. These are imposed because the cooperatives’ members benefit from below-market interest rate mortgage loans, grants, real estate tax abatement, or other features that make the housing more “affordable” to both initial and future residents for a specified period.
These restrictions are found in the cooperative’s bylaws. The documents may also establish maximum income limits for new members to target the remarkable benefits of the housing to families who need them the most.
Cumberland the board of directors may select an outside ﬁrm to provide management services. Members develop and maintain the house policies, including criteria for screening, evicting, and foreclosing on problem members.
Cumberland charges residents a monthly carrying charge (often called a monthly maintenance fee). The amount of the monthly charge varies and typically covers your proportionate share of operating and maintaining the cooperative, which can include blanket mortgage payments, property taxes, management fees, maintenance costs, insurance premiums, utilities, and contributions to reserve funds
With the advice of the finance committee, the board of directors sets the annual budget to meet expected operating expenses and appropriate fund reserves. The board and committees are made of cooperative members, so the people setting the budget and monthly fee are people who will also be affected by the fee!
Typically, increases occur only when the costs of maintenance, insurance, taxes, and utilities. The master mortgage interest rate is locked in for the long term and is very unlikely ever to increase while you are a member. The fee includes payment into fund reserves to protect against sudden large increases in operational costs, so your costs remain relatively predictable and reasonable. You can help keep the increase down by conserving the utilities.
Fees won’t increase in a cooperative as they might in a rental or other for-profit housing, where rates represent whatever, the market will bear to maximize profits for the building owner.
A cooperative membership stands alone as the least risky from this standpoint. Cooperatives usually have a waiting list of people who can be called when a unit is available, and management works to keep an active waiting list through marketing, open houses, and special events at the cooperative. And because selling a cooperative share is not considered a real estate transaction, the manager of the cooperative is able to handle the sale documents without major costs to the seller, such as a real estate commission, that are typically associated with selling a home.
Yes, the member still owns the membership share and is responsible for the monthly fee until it is sold. This is no different than owning a single-family home, condominium, or townhome. In those cases, the owner has to continue paying taxes, property insurance, utilities, and the mortgage payment (if any), and make sure the lawn is mowed and the snow is shoveled until the home is sold.
In limited equity appreciation cooperatives (the great majority of senior housing cooperatives), equity grows according to a predetermined formula each year you live there, so your home value is protected from much of the volatility in the housing market. In limited equity appreciation cooperatives, you will generally recover your share price and any growth in equity when you sell your share.
Cooperative living is affordable living in a not-for-profit community. Members act collectively to achieve goals, one of which is to reduce costs of everyday management, maintenance, and repair. The monthly fee includes fund reserves to cover repairs, renovations, and replacement — and that means you won’t be surprised with large assessments. When it’s time to sell, you typically won’t need to pay a real estate commission.
Always read the co-op’s articles of incorporation, bylaws, subscription agreement, rules, and any other available documentation. Make sure you truly understand how the cooperative works, including how it is managed, what you will be required to pay for, and how much that payment will be. Ask about the policy toward pets, and your ability to make changes to your residence. There’s no harm in asking questions; a little extra effort upfront can go a long way toward ensuring a harmonious long-term living arrangement.