4. Purchasing, financing and holding your property

Purchasing, financing and holding your property

Legal structures

Joint agreements

Mortgages

Deeds

Insurance

Photo © Andy Izenson

Someone has to have money. Not everyone has to have money, but someone has to have money. And you need to find a way to share it that doesn’t lead to resentment.

Cal
The Rêve

Purchasing, financing and holding property

Figuring out what size property you can afford is an equation with a lot of variables. Financial advisers often take groups buying houses together through a comprehensive financial assessment with projected short-and long-term costs to figure out what size and kind of property they can afford.

See the Appendix for an example of the kind of assessment you might go through with a financial planner.

Financial planner Hadassah Damien

Legal structures for co-ownership

There are a lot of options for legal structures for ownership. Before looking at the options, start by describing the way you want to live in plain language - with these people, in this kind of property, etc. Perhaps you want to all live in the same house, sharing a kitchen but each member having their own bedroom. Perhaps you want to buy a small apartment building, with one unit for each member. Perhaps you want to buy two townhouses next to each other and combine your backyards into shared space. Perhaps you want to buy a piece of land and build several small houses next to each other. The configuration you’re imagining will help point you towards a structure.

Some people set up the legal entity for owning property before starting the property search. Others let their choice of property, its price and how members will share the cost dictate which legal entity they choose. Either way, frontloading the discussions about whether you’ll need a mortgage, whether members will own their own units or whether you’ll share all spaces, and what happens when someone decides to leave the group (or passes away) will point you to the right legal entity and allow you to move quickly once you find a property you like.

Each state sets its own property laws and defines its own legal structures for co-ownership. This is an overview of the common types, but states may differ as to the types of privileges and restrictions they attach to their version of a particular legal structure.

Recording documents with county clerks

Properties with many units often record or register their charters with the state to make sure anyone who buys a house in the community is on notice as to the restrictions and obligations associated with the property. If someone chooses to dispute a restriction, they might be less successful if you can prove they had notice (which means they knew about the restriction) before they bought.

The only downside of recording is that any time you want to change your agreement, you have to re-file the documents and pay filing fees. For example, in 2025, Monmouth County clerk’s office in New Jersey charges $40 for the first page and $10 for each additional page.

Joint agreements

Many of these structures are created with a joint agreement which is signed by all the group members and sometimes filed with the state. This joint agreement can contain most of your group’s agreed-upon financial and legal decisions.

Joint Agreement Topics

Allocations

What percentage of the property does each member own or have access to? Who puts down the down payment, and how much will each member pay toward the mortgage? How will ownership expenses, like maintenance, be shared? Will sweat equity count towards financial equity in the property? How will these allocations change if one party dies or the parties no longer live together?

Exit Strategy

What happens if a member moves away? What if two members break up or get divorced? Can a member sell their share to anyone, or does the group have to approve? When and how will the property be sold? Under what circumstances can one owner force a sale? How will the pricing and sale process work if one owner is more anxious to sell? How will proceeds from the sale of the property be split?

Death

What happens if an owner dies? Does the deceased owner’s share pass to their heirs, who might not share the group’s values or want to live with the group? What power do these heirs have to compel the surviving owners to sell?

Holding Title

Who will be on the deed? Will the rights and duties of ownership be allocated according to how title is held, or will different groups of people be on the title versus the mortgage?

Disputes

What happens when the co-owners disagree? What happens when one co-owner is not paying or doing their share?

See more about group agreements, especially around exit strategy and death, in the Separation, Disentanglement, and Transitions section and in the Appendix: Internal Work: Joint Agreements section.

Visual field guide to

Legal structures for co-ownership

FIELD GUIDE TO LEGAL STRUCTURES FOR CO-OWNERSHIP

Example 1

Little or nothing shared

FIELD GUIDE TO LEGAL STRUCTURES FOR CO-OWNERSHIP

Example 2

All spaces shared

FIELD GUIDE TO LEGAL STRUCTURES FOR CO-OWNERSHIP

Example 3

Common spaces shared

Live Near Friends, a company that helps groups buy property together, also has a legal co-ownership structure explainer with diagrams you might find helpful.

FIELD GUIDE TO LEGAL STRUCTURES FOR CO-OWNERSHIP

Example 4

Lot owned by community land trust

Types of Legal Structures

The detailed guide

Tenancy in common

Joint tenancy

Tenancy by the entirety

LLC (limited liability corporation)

HOA (homeowner's association) / condo association

Housing coop / limited equity housing coop

501(c)(3) nonprofit

Disfavored structures

TYPES OF LEGAL STRUCTURES

Tenancy in common

Tenancy in common is a legal structure that allows each group member to own a percentage or financial share of a single piece of property (a single-family home or a whole multi-unit building). Some states require this to be exactly even (i.e. 4 people each own 25% of the property) and some allow for different percentages (i.e. one person could own 40% and the other three could own 20%).

How do you set it up?

With a lawyer, your group can create a tenancy in common agreement. If you don’t set up an agreement, some states will default you to a tenancy in common; some will default you to a joint tenancy.

Who goes on the mortgage?

Everyone who’s paying for the house goes on the mortgage.
Different states have different arrangements for this. In California, each person can get a separate loan for their part of a multi-unit property, even if the whole property is held via a tenancy in common. Other states may not allow this.
However, it’s often not possible for tenants in common to get a Federal Housing Administration (FHA) loan, so even if you each have your own mortgage, each person would need a larger down payment (often around 25%).

Who goes on the deed?

All the members of the ownership group go on the deed as individuals. Every time you change an owner, you have to re-record the deed (and potentially update your homeowner’s and title insurance) and pay the associated fees.

What happens if you die?

If you die, your share doesn’t automatically get passed on to your co-owners; it will go to your “estate” - i.e., whoever you name as your heir in your Will (or, if you don’t have a Will, your heir according to your state’s law). In legalese, we say tenancy in common does not include a right of survivorship because your co-owners (your “survivors”) don’t get a right to your share.

TYPES OF LEGAL STRUCTURES

Tenancy in common

How do property taxes work?

You’ll usually get a single tax bill and can divide it up amongst the co-owners as set out in your tenancy-in-common agreement. Each co-owner can deduct their tax payments on their income taxes.

What happens if a member can’t pay?

The first option is always that members can help each other cover payments if times are hard. You can outline in the tenancy in common agreement if that help is assumed to be a gift, or a zero-interest loan, and when the member must repay their co-owners.
Co-owners could buy out that member.
The member could sell their percent interest to another party (this does not require the approval of the other co-owners).
In the worst case, the other tenants (or an outside creditor) could file a lawsuit called a partition lawsuit that forces the entire property to be sold with the proceeds divided according to the percentage each person owns.
See “What if I can’t pay”.

Do you have to re-record a document with the county when someone leaves?

Yes, you have to re-record the deed to remove the departing member.

TYPES OF LEGAL STRUCTURES

Tenancy in common

Examples

California has well-developed law around tenancy in common. Many multi-unit buildings in the San Francisco Bay Area are owned this way.
Phil Levin, who runs the Supernuclear substack, recommends using tenancy in common to set up a friend compound, with separate units on an existing multi-unit property, using California’s tenancy-in-common law that allows any multi-unit property to be put into a tenancy in common.

TYPES OF LEGAL STRUCTURES

Joint tenancy

Joint tenancy is a legal structure that requires each group member to own an equal share of the house (you cannot have one person own 40% and one own 60% - it must be equally divided). If you don’t set up an agreement, some states will default you to a tenancy in common; some will default you to a joint tenancy.

How do you set it up?
With a lawyer, your group can create a joint tenancy agreement. Usually you don’t need to record it with the county; each person just keeps a copy.

Who goes on the mortgage?
Everyone goes on the same mortgage. Each joint tenant has to qualify individually for the mortgage, because each person is technically responsible for 100% of it if someone else doesn’t pay.

Note that the entirety of the mortgage counts against each person’s debt-to-income ratio. As people’s family situations change, the group might want to make improvements, and if the whole mortgage counts against the debt-to-income ratio, this might mean that no one has the ability to borrow money to make needed improvements.

Who goes on the deed?
All the members of the ownership group go on the deed as individuals. The deed will state that the property is owned in a joint tenancy. Every time you change an owner, you have to re-record the deed (and potentially update your homeowner’s and title insurance) and pay the associated fees.

What happens if you die?
If you die, your share automatically gets passed on to your co-owners, not your “estate.” In legalese, we say joint tenancy includes a right of survivorship. This is because your co-owners (your “survivors”) get a right to your share upon your death.

Joint tenancy’s right of survivorship also means that property owned this way doesn’t have to go through the lengthy process of probate court (the legal process of dividing up a deceased person’s estate according to their will).

TYPES OF LEGAL STRUCTURES

Joint tenancy

How do property taxes work?
You’ll get a single tax bill and divide it equally.

What happens if a member can’t pay?

If one member owes money to a creditor, the creditor can come after their share of the property, which might involve forcing a sale of the property to liquidate assets.
If a co-owner sells their interest to another person, that converts the ownership arrangement to a tenancy in common for everyone.
See “What if I can’t pay” below.

Do you have to re-record a document with the county when someone leaves?

Yes, you have to re-record the deed to remove the departing member (and it’s now a tenancy in common).

TYPES OF LEGAL STRUCTURES

Joint tenancy

Examples

In many states, if married couples buy a house together, it’s by default considered a joint tenancy. In other places, it’s tenancy by the entirety.
Creating a Life Together, which includes descriptions of many legal structures for co-ownership, does not recommend using either a tenancy in common or a joint tenancy because of the risk of losing the property by the actions of a single member. Read more in the Resources section.

TYPES OF LEGAL STRUCTURES

Tenancy by the entirety

Tenancy by the entirety is a legal structure available to married people in 25 states and D.C. as of 2025 in which each group member has an equal and undivided 100% interest in a single piece of property, as if each is a full owner. If the couple divorces, the property is converted into a tenancy in common.

In some states, if two people are married and purchase property, they by default hold it via a tenancy by the entirety. This can interact with other survivorship rights in unintended ways if not explicitly provided for (see the next page). It’s possible to intentionally change this presumption by laying out a different structure in your joint agreement.

How do you set it up?
In most states, this is only available to married people.

In some states (including New York), if two married people own real estate property, there is a legal presumption that they hold title as tenants by the entirety. In other states, it’s by default considered a joint tenancy.

You can avoid this by affirmatively laying out a different structure in a joint agreement.

Who goes on the mortgage?
Both members of the married couple go on the mortgage.

Who goes on the deed?
Both members of the married couple go on the deed.

What happens if you die?
When one spouse dies, the survivor automatically becomes the sole owner of the property.

How do property taxes work?
You’ll get a single tax bill.

What happens if a member can’t pay?
The other spouse is on the hook for the full mortgage (with, of course, all the options from What if I can't pay available to them).

Do you have to re-record a document with the county when someone leaves?
Yes. If the couple divorces, it becomes a tenancy in common and you need to re-record the deed if either of you leaves.

TYPES OF LEGAL STRUCTURES

Tenancy by the entirety

What if two of us are already married and others aren’t?

Say you’ve got three people on a deed. Two of them are married to each other. Everyone has an equal share of ownership.

Survivorship.

Say one married member dies.

If the married folks own their interest as tenants in common, each person in the group owns 1/3 of the property. Tenancy in common has no right of survivorship. If one of the married members dies, their share passes to their heirs (whoever they name in their will). The other two members still own 1/3 and the heir owns ⅓.
If the married folks own their interest as a joint tenancy, each person owns 1/3 of the property. Joint tenancy has a right of survivorship If one of the married members dies, their share passes to the surviving members. Each of them now owns ½ the property.
If the married folks own their interest as by tenancy by the entirety, the unmarried member owns 1/3 of the property and the married folks each own 100% of the remaining 2/3 (this is obviously not mathematically possible but it’s a legal fiction). If one of the married members dies, their spouse gets their share. Now the spouse owns 2/3 and the unmarried member owns ⅓.

	Initial Shares	Tenancy In Common	Joint Tenancy	Tenancy by the Entirety
Married 1	1/3	Dead	Dead	Dead
Married 2	1/3	1/3	1/2	2/3
Unmarried 1	1/3	1/3	1/2	1/3
Heir to Married 1	0	1/3	0	0

TYPES OF LEGAL STRUCTURES

Tenancy by the entirety

Asset protection

Say one married owes money to an outside creditor.

If the married folks own their interest as a joint tenancy, a creditor can come after the share owned by the married who owes money, potentially forcing a sale.
If the married folks own their interest via tenancy by the entirety, the creditor can’t come after that property share unless they have a judgment against BOTH the married spouses.

Best of Both Worlds Recommendation from Bill Singer, a property attorney in New Jersey who’s helped many nontraditional families buy homes: In a partnership agreement for a joint tenancy for three people, write that during life, the two married members will own their share via tenancy by the entirety for asset protection. If one member dies, it’s converted to a joint tenancy with the others. For the purposes of your partnership, if any member dies, the rest will be evenly distributed amongst the others. This creates the following division:

	During Life (Tenancy by the Entirety)	After Married 1 Dies (Joint Tenancy)
Married 1	Jointly own 2/3	Dead
Married 2	Jointly own 2/3	1/2
Unmarried 1	1/3	1/2
Heir to Married 1	0	0

TYPES OF LEGAL STRUCTURES

Limited liability corporation

A limited liability corporation is a business structure in which the LLC owns your house and you are an owner of the LLC. LLCs combine some legal advantages (i.e. liability protection, which means someone who sues your LLC can’t force you to pay with your personal assets; your LLC can declare bankruptcy without you personally declaring bankruptcy) and some tax advantages (instead of paying corporate tax, the LLC members pay income tax on that money instead). It’s easy for members to join and leave LLCs without changing the deed.

How do you set it up?
In many states, LLCs need to file articles of organization (usually including the LLC name and count) or something similar with the Secretary of State, just like any other company does when it incorporates. Some states, like New York, require you to publish this information in a newspaper. In addition, every member signs an LLC operating agreement, which outlines the percentage ownership as well as all the other joint agreement topics above, and each member keeps a copy. Once you create the LLC, you don’t need to file your operating agreement with the state.

Who goes on the mortgage?
Just the LLC. It can be difficult to get a mortgage with a reasonable interest rate on an LLC, because its limited liability status means the LLC can technically go bankrupt without any of the owners being affected. Usually, each person on the LLC has to personally guarantee the mortgage as a backstop. There’s still a slightly higher risk for a bank, so they often charge a higher interest rate to account for that risk.

Who goes on the deed?
Just the LLC. This means you can add and delete co-owners in the LLC without re-recording the deed or updating your title insurance. If you think you’ll have a lot of flux in your ownership group, this flexibility could be worth a slightly higher interest rate. Calculate how much you’ll spend on the extra loan interest with an LLC vs. how much you’ll spend on filing fees to change ownership without an LLC to see which is better financially.

What happens if you die?
It depends on what was decided in the operating agreement. Some options are outlined in this CorpNet blog post.

TYPES OF LEGAL STRUCTURES

Limited liability corporation

How do property taxes work?

You can choose whether to be taxed as a partnership (in which case all LLC owners file income taxes but no corporate taxes), a C-corporation (in which case the business files its own taxes) or an S-corp (in which case all owners file income taxes but not corporate taxes).
A tax lawyer can help figure out which is best for you.

What happens if a member can’t pay?

See “What if I can’t pay” below. If you’ve exhausted those options and the LLC defaults on a mortgage, the lender usually will file for foreclosure and repossess the house (the LLC’s asset). If the members personally guaranteed the LLC’s mortgage, then members may have their own personal assets seized to cover the loan amount.

Do you have to re-record a document with the county when someone leaves?

No; the LLC is on the deed so no need to re-record.

The LLC owns the house, and you own percentages of the LLC.

TYPES OF LEGAL STRUCTURES

Limited liability corporation

Examples

Occidental Arts & Ecology Center (OAEC) in California uses an LLC to own their land. See image on right. ➡️
In Jan 2025, the New York Times profiled two friends who bought a two-family townhouse in Harlem together using an LLC.
Many forming cohousing communities start off owning their land and bank accounts with an LLC, then switch to a homeowner's association or condo association after construction is finished. See Legal Structures for Intentional Communities in the United States, 173 Communities 46, 49 (Winter 2016).

TYPES OF LEGAL STRUCTURES

Homeowner's association (HOA) or condo association

An HOA is an entity that owns common areas of a property (roads, backyards, parking lots, common green areas, etc.) while allowing each member to own their own housing unit. It’s useful if you plan to have multiple housing units as part of your group’s land, and each person wants to own a physically distinct part of the property. Members pay HOA fees to maintain common infrastructure like driveways, roads, landscaping, trash removal, and insurance.

A condo association is very similar, except that instead of the HOA owning the common areas, all the members jointly own the common areas. The condo association doesn’t own anything by itself.

How do you set it up?
Each state has slightly different HOA and condo association laws. In most cases, you need to file with the state a master deed which sets up the covenants, conditions and restrictions (essentially the rules and joint agreements for your group). This creates the HOA or condo association as a corporation. Most HOAs and condo associations are registered as nonprofit corporations, and can register for tax-exempt status from the IRS. As a corporation, it needs board members to administer the organization.

Who goes on the mortgage?
Each member gets their own mortgage for their own unit.

The HOA or condo association is a corporation and so can’t get a residential mortgage for the cost of the shared spaces it owns, but it can get a commercial loan. Members can then help pay back the commercial loan as part of their HOA or condo fees.

Who goes on the deed?
Each member has their own deed for their own unit.

In an HOA, the HOA owns common areas like roads, paths, shared green spaces, parking lots, ponds, common green areas, etc.

In a condo association, each member’s deed also specifies that they own a joint share of the common areas.

TYPES OF LEGAL STRUCTURES

Homeowner's association (HOA) or condo association

What happens if you die?
Each homeowner’s house goes to their heirs unless otherwise provided in the covenants and conditions of the HOA or condo association. The heirs are then subject to the rules and regulations set forth by the HOA or condo association (the rules “run with the property”). HOAs and condo associations must comply with federal nondiscrimination laws for housing, which often means they must be open to anyone who can cover the costs. This is a pro and a con: it’s an extra protection against discrimination, but if you are a small group, you will have less power to choose your members. Cooperatives have more flexibility there.

How do property taxes work?
Each homeowner pays their own property taxes.

HOAs and condo associations may need to pay their own property taxes, depending on their accounting situation. HOAs are corporations and so technically pay federal and state corporate taxes, but they may be exempt as a nonprofit organization.

What happens if a member can’t pay?
The individual homeowner may follow all the steps in “What if I can't pay” and may choose to sell their unit individually. This doesn’t affect the ownership of anyone else in the group.

Do you have to re-record a document with the county when someone leaves?
No. The seller of their house will transfer the deed to the new buyer of their house, but if the HOA owns common spaces, the deed for those spaces doesn’t need to be re-recorded.

TYPES OF LEGAL STRUCTURES

Homeowner's association (HOA) or condo association

Examples

Sharingwood Cohousing in Washington State uses a condo association for individual lots and houses.
One attorney relays the story of a group of veterans of the Spanish Civil War who bought property in New Jersey in the 1930s and structured it as an HOA. They initially included a provision saying no one could make a profit by selling their land and recorded their HOA charter with the county clerk.
- Things changed once housing prices rose significantly. They ultimately amended their agreement to let members take advantage of the profits (and had to re-file with the county clerk).

Note: If you’re only a small number of people, it may not make sense to do a condo association (even if you have different units). It's lots of papers to file and update, all to make sure a potential new entrant is on notice about your agreements. If it’s just a few of you, you’ll know who moves in and communicate it to them.

TYPES OF LEGAL STRUCTURES

Housing cooperative (coop)

Some states have a type of corporation called a “cooperative.” In a cooperative, the members don’t technically own anything themselves; the coop owns the property. Members own shares in the coop and have a lease which entitles them to use a specific apartment or housing unit, plus shared parts of the property according to the cooperative’s founding documents (articles of incorporation, bylaws, or occupancy agreement). See more about living in housing cooperative with this article from the National Association of Housing Cooperatives. Cooperatives have more control over admitting new members than do HOAs.

How do you set it up?
Some states have a particular kind of corporation called a “cooperative.” In some states, like New York, they’re considered nonprofits; in others they’re a third “cooperative corporation” type that’s neither nonprofit nor for profit. Massachusetts has a law specifically defining housing cooperatives and their requirements.

Who goes on the mortgage?
The cooperative owns the land, so the coop is the only entity on the mortgage.

Because coops have limited liability protection (which means the bank can't take individual members’ assets to cover the mortgage), it can be hard to find a bank willing to loan to an HOA at a reasonable interest rate.

The National Co-op Bank (NCB) specializes in lending to coops, but usually charges higher interest rates than you’d find on individual residential mortgages. NCB has a more in-depth guide on the legal and financial specifics of starting a housing coop.

Individual members pay monthly fees to the coop that go to cover the mortgage, and to maintenance of common spaces. Often these fees are in proportion to the number of shares each member owns.

Who goes on the deed?
The coop is the only entity on the deed.

Individual coop members have deeds to shares in the coop and a lease that entitles them to use a specific housing unit.

TYPES OF LEGAL STRUCTURES

Housing cooperative (coop)

What happens if you die?
The question of what happens to a member’s shares if they die depends on how the coop’s founding documents say members hold their shares. Sometimes the document says members own their shares as tenants-in-common; sometimes as joint tenants; sometimes as tenants by the entirety if they’re married. Different states have different rules about what the default is if the documents don’t specify.

See What if two of us are already married? above for more analysis.

How do property taxes work?
The coop is responsible for paying property taxes, and the board administers those payments. Members often share the tax burden in proportion to the number of shares they own in the coop (and therefore their financial contribution), but you can allocate the tax burden between members any way you want in the cooperative’s bylaws.

What happens if a member can’t pay?
The coop is still on the hook for the mortgage even if a member doesn’t pay their share. The board can take any of the actions outlined in “What if I can't pay”; a member can sell their shares and another can take their place; or in the worst case, the board can decide to sell the property.

Do you have to re-record a document with the county when someone leaves?
No. The coop is on the deed so no need to re-record.

TYPES OF LEGAL STRUCTURES

Limited equity housing cooperative

A limited equity housing coop is a cooperative that limits the amount of appreciation (rise in home price) that a member can withdraw when they leave, with the intention of keeping the land affordable for all future members.

How limited equity housing coops work

When someone leaves a coop, they sell their shares. In order to price these shares, the coop or individual often hires an assessor to estimate the value of the property. Without a limited equity restriction, the departing member can price their shares at market value, which may be high if home prices have risen since they bought. With a limited equity restriction, they may only be able to price their shares at the price they bought them plus 15%, or whatever percentage markup the coop sets up.

Hypothetical limited equity coop with 15% markup limit	Example prices with limited equity restriction	Example market prices without limited equity restriction
2025: First buyer	$100,000	$100,000
2035: Second buyer	$115,000	$200,000
2050: Third buyer	$132,250	$350,000

TYPES OF LEGAL STRUCTURES

Housing cooperatives

Examples

The Walnut Street Coop in Oregon (seen on right) is a cooperative, as is the Los Angeles EcoVillage and the Miccosukkee Land Coop in rural Florida.
Cooper Square Mutual Housing Association in NYC and Columbus United Cooperative in SF are limited equity co-ops.

TYPES OF LEGAL STRUCTURES

501(c)(3) nonprofit

Nonprofits are usually not the most effective options for small groups of people, since they come with pretty major administrative and reporting requirements at the state and IRS level and require educational, charitable, scientific, literary or religious activities to be tax-exempt. In addition, any members’ financial contributions are essentially donations; you cannot take that money back out when you leave. Creating a Life Together outlines some more situations in which farm, ecological or educational activities might merit the creation of a nonprofit to minimize tax burdens, but these often make more sense for bigger groups.

Examples:

Lost Valley Educational Center in Oregon owns its land through a 501(c)(3) nonprofit.
Ecovillage at Ithaca in NY (image above ⬆️) owns its two roads, the water and sewer lines, three parking lots, the swimming pond, and the land around each housing co-op with a non-exempt nonprofit.
A land trust may also be a 501(c)(3) nonprofit. See Owning the Building vs. Owning the Land: Land leases and community land trusts.

TYPES OF LEGAL STRUCTURES

Trusts and maintaining privacy

If you have heightened security concerns because of your work or identity, you may prefer not to have your names listed publicly on property records identifying you with an address.

There are two main options for owning a home without having your name associated with it.

LLC with registered agent. If the LLC owns the house, your name isn’t on the deed registry. However, the names of the people who set up the LLC can sometimes be discovered. To retain privacy here, you can use a registered agent to register your LLC. Using a registered agent to set up an LLC is slightly cheaper than using a lawyer to establish a trust, but trusts are more flexible.
Trust. You can "grant" the house to a trust and designate yourself and your co-owners as beneficiaries of that trust. (You can be the grantor and the trustee and the beneficiary of the same vehicle.) The trust is then the entity on the deed.

A trust is not as autonomous as an LLC – it's just a holding bucket for property. For example, a trust cannot deduct mortgage interest from its income taxes, so you lose some financial benefits if the mortgage is not in the name of an individual.

It's best to put people on the mortgage and the trust on the deed.

TYPES OF LEGAL STRUCTURES

Owning the building vs. owning the land

Land leases
Land leases allow you to only own the building you live in, while someone else (a landlord, or a nonprofit) owns the land and grants you a lease. These leases are typically long, like 99 years. This can make your building cheaper, but can also introduce added layers of uncertainty. For example, your landlord can sell the land underneath your building without consulting you. The new owners are still required to abide by the terms of your lease, but you have less control.

Community land trusts
Community land trusts are nonprofit legal structures that ensure any appreciation in home value stays with the residents of the land. They can help fight gentrification by preventing speculators from purchasing homes to sell at a profit. A land trust might own the land under your building while you own just the building. This allows you to buy your unit at what’s often a below-market price, but if you sell it, you’re only entitled to a small percentage of its increase in value, as set out in the land trust’s founding documents. In this way, the land is kept affordable for the next people to live there.

Example: Valley Housing Coop in Franklin County, MA co-owns duplexes and leases their land from the Valley Community Land Trust.

TYPES OF LEGAL STRUCTURES

Owning the building vs. owning the land

Land leases and community land trusts can work together.

A community land trust might own the land and lease it to a cooperative or to individual homeowners who own the buildings on it.

TYPES OF LEGAL STRUCTURES

Disfavored structures: General partnerships

General partnerships can also be vehicles for co-owning property, but they’re not recommended. They’re somewhat cheaper to set up than LLCs, but they’re often used for joint venture investments, and less often for joint ownership of land (although some groups used them before the 1970s when states began passing laws recognizing LLCs). General partnerships, unlike LLCs, don’t pay their own taxes; each partner is taxed on any gains through the partnership as income tax.

No liability protection. With a general partnership, there is no legal shield for liability for the partners. If one partner is sued in connection with their ownership of the land, all partners could be personally liable. In addition, if the partnership is in debt, each individual’s personal assets could be seized to pay that liability or debt.
Dissolution upon death. In addition, general partnerships by default dissolve when any member dies or decides to withdraw from the partnership. You can contract around this by setting up rules for what happens in this scenario, but it’s not supported by default.

As LLCs have become easier to set up, they have become more popular than general partnerships for groups owning homes because of the liability shield for partners.

TYPES OF LEGAL STRUCTURES

Disfavored structures: Limited liability partnerships (LLPs)

Limited liability partnerships (LLPs) are a sort of middle ground between a general partnership and an LLC. They have a lot of the same paperwork requirements as LLCs. In some states, partners are liable for certain kinds of conduct by their partners (e.g. a tort, like fraud or property destruction), but not all (e.g. breach of contract). Because LLPs do offer some liability protection for members, they often must carry liability insurance, which would pay for damages if the members of the LLP themselves aren’t liable. LLPs are not frequently used to co-own land, and are more frequently used for business partnerships like law firms or dentist’s offices.

TYPES OF LEGAL STRUCTURES

The upshot

🏡

Tenancy in common with an operating agreement is probably the lowest lift option.

Some states allow each member to have their own mortgage with a tenancy in common.
There is some risk that outside creditors could seize the house as payment for a member’s external debts, so it does require trust and a high degree of financial transparency among members (as all healthy co-ownerships do!)
You can also start with a tenancy in common and then put the property in a trust, with all of the members as trustees and beneficiaries, to protect your privacy.

📄

LLCs can be useful if you either:

don’t need a mortgage or
you’re OK with personally guaranteeing the loan.

They're especially helpful if you anticipate lots of members entering and leaving.

🏘️

Cooperatives, if your state offers them,

can be a way to get the flexibility of a tenancy in common without the risk of outside creditors forcing a property sale for external debts.

It can be slightly harder to get a mortgage, but cooperative banks exist that lend specifically to coops.
The shares are often worth a little less than owning a home outright since they’re less liquid, but if you prefer to keep costs low for all future members, this could be a good option.

TYPES OF LEGAL STRUCTURES

The upshot: agency and value

Highest to lowest agency ⬇️	How much agency you have in selling your share of the property	How much $$ value you take with you when you leave
No co-ownership	High. You can sell your property whenever you want, with no permission from anyone else.	High. You can sell for market value with no restrictions.
HOA	High. You can sell your own unit whenever you want, subject to the HOA agreement.	High. You own your own unit, and you can sell it at market price (which includes any appreciation in your home value).
Condo Association	High. You own your own unit (technically the space inside it). You can sell it whenever you want, subject to the condo association agreement.	High. You can sell your unit at market price, including appreciation.

TYPES OF LEGAL STRUCTURES

The upshot: agency and value

	How much agency you have in selling your share of the property	How much $$ value you take with you when you leave
LLC	Medium-high. You own shares in the LLC. You follow the procedure in the LLC’s operating agreement to leave, which may allow you to sell whenever you want or may add a delay period for the other members to gather resources to buy you out.	Medium. You can sell your shares for market rate, but that market rate may be lower (less liquid) than a regular housing since whoever buys it still has to make joint decisions with your co-owners.
Tenancy in common	High. You can sell your percentage interest in the house at any time, without the permission of your co-owners (unless your tenancy-in-common agreement says otherwise).	Medium. Your percentage interest is less liquid (less easy to sell) since it means whoever buys it will still have to make joint decisions with your co-owners.
Joint tenancy	Medium. You can sell your equal interest in the house at any time, but doing so will convert the agreement into a tenancy in common.	Medium. Your percentage interest is less liquid (less easy to sell) since it means whoever buys it will still have to make joint decisions with your co-owners.

TYPES OF LEGAL STRUCTURES

The upshot: agency and value

	How much agency you have in selling your share of the property	How much $$ value you take with you when you leave
Housing cooperative	Medium-low. You own shares in the cooperative. You follow the procedure in the coop’s operating agreement to leave; often that means you need to get a new member approved by the coop board.	Medium. You can sell your shares for market rate, but that market rate is lower (less liquid) than a regular house since it means whoever buys them will still have to make joint decisions with your co-owners.
Limited equity coop	Medium-low. You own shares in the coop and follow the operating agreement to leave. This can include getting a new member approved by the board.	Low. You can’t sell your shares for market rate. The amount of appreciation you get when you sell your shares is capped to keep the housing affordable for the next person.
501(c)(3) or nonexempt nonprofit	None. You can leave whenever you want, but there’s nothing to sell because you don’t own anything.	None. You don’t own anything, even if you contributed money. The nonprofit is only allowed to transfer its assets to other 501(c)(3)s.

TYPES OF LEGAL STRUCTURES

The upshot: agency and value

How much agency you have in selling your share of the property

How much $$ value you take with you when you leave

Tenancy by the entirety

(only available for married couples in certain states)

Low.

In many states, you need your partner’s consent to sell the property. If you divorce, the arrangement converts to tenancy in common. If one person dies, the other person inherits it entirely, so it’s converted to a no co-ownership arrangement.

High.

If you both agree, you can sell the property for market rate with no restrictions.

Deeds and mortgages

The detailed guide

Deed vs. mortgage

Mortgages and loans

Multi-unit buildings

What if I can't pay?

Alternative Financing

Wealth sharing

Deeds

Insurance

DEED VS. MORTGAGE

MORTGAGES

Mortgages and loans

If you’re on the deed you own it.

If you’re on the mortgage, you owe it.

Most people don’t buy a house with cash. They get a mortgage, usually from a bank. (A mortgage is technically not the loan itself, it’s the lien on your property you give the bank in exchange for the loan, but most people say “I got a mortgage” so we’re using the word that way too.)

Over the last few decades, mortgages have gotten more complicated and less negotiable as houses have gotten more expensive and lending has become more of a corporatized business rather than a local enterprise. See Banks and Lenders for information on how to find a good lender and what to ask them.

Bill Singer, an attorney in New Jersey, advises people that it’s impossible to read every single mortgage document in a stack of 40 or 50 documents. Even if you read them all, mortgage agents are often not empowered to amend them if you find a provision you don’t like.

Getting a mortgage can be expensive. Banks require inspections (they want to know that the building they’re buying is in good shape), and this can cost money. It can also be a time of significant uncertainty.

MORTGAGES

Closing costs

Before buying a house together, Bill recommends setting aside money (usually about 1% of the home price) for closing costs. This includes appraisal, title fees, inspections and repairs for appliances that worked up until the day of closing and then conk out the week after everything’s all done.

These closing costs are negotiable with the seller if you have a good real estate agent, and lenders can sometimes wrap these expenses into the loan amount, but otherwise you’ll have to pay it in cash.

But there are also some programs to help with this. For example, as of 2025, Boston is piloting a specific program to help groups of people co-purchase multi-family buildings. See the Resources section for examples of first-time homebuyer programs that can assist with down payments or closing costs.

MORTGAGES

Inspections

The inspections and contingencies process always takes longer than you think (if you are in a market where contingencies are still commonplace.)

Contingencies refer to a period of time when you enter into a contract to reserve the right to buy the house while you conduct inspections and decide whether you ultimately do want to go through with the purchase. Since this takes the house off the market for the duration of the contingency period, some sellers in especially tight housing markets require that buyers “waive contingencies,” or forego this ability to do inspections before buying the house.

Resources on Inspections – who is responsible for what?

Usually the buyer is responsible for issues they could reasonably observe upon visiting the house. Anything that breaks before the closing is usually the seller’s responsibility to fix (or to cut the house price by the amount it would cost to fix it); anything that breaks after the closing is already done is the buyer’s responsibility.

Crack in the sidewalk? That’s probably on the buyer, because they could see it when they visited.
Water heater that breaks after closing? That’s on the buyer.
Roof leaks that weren’t obvious when the buyer visited? That’s on the seller.

MORTGAGES

Who can hold a mortgage?

Usually not more than about 4 people, says financial adviser Hadassah Damien, though some will go up to 5. Different mortgage companies can be more or less flexible. Each person who’ll be on the mortgage fills out a loan application individually, and on the back end, lenders create a model of how much each person can bring.

The limit on the number of people on a single mortgage is because underwriting a loan (investigating the last 2-3 years of the transactions, bank accounts, and credit of each person on the mortgage) is a lot of work for banks. Having more people on the mortgage isn’t better for them – at worst it can be more risk, since there are more potential points of failure – so there’s little reward for them in allowing more.

Banks offer interest rates according to the “riskiest” borrower, or the member of your group with the least robust credit. In addition, the best interest rates are for residential mortgages for individuals, not for LLCs or cooperatives. (You can get a commercial loan or a portfolio loan if an LLC will own your property, but interest rates are higher.)

Because of this, groups often choose to put just the person or two people with the best credit on the mortgage to secure a good interest rate. Then they have a separate agreement detailing how those not on the mortgage will contribute to costs. This is sometimes called a triple net lease. This agreement should be notarized, but it doesn’t need to be filed anywhere.

This doesn’t mean the others have no ownership stake - whoever is on the mortgage is automatically added to the deed, but you can also add people to the deed later without adding them to the mortgage. It does mean the person on the mortgage is taking on more financial risk, since they’re on the hook even if those not on the mortgage can’t cover their share. If one or two people are on the mortgage, it’s worth being intentional about how to talk about everyone’s share to ensure this arrangement doesn’t turn into a power trip for the mortgage-holders while everyone else is essentially a ‘renter.’

MORTGAGES

Multi-unit buildings

According to Hadassah Damien, in New York, you can get a residential loan (with its low interest rates) for a multifamily building of up to four units. You get one mortgage for the whole building and divide up responsibility in your operating agreement.

Above four-unit buildings, you’ll need a commercial loan, which requires at least 20% down unless you qualify for a Small Business Administration loan. This limit comes from the federal conventions about what kinds of mortgages Fannie Mae and Freddie Mac will underwrite. Private lenders tend to follow these public conventions.

It’s also possible to set up the building as a condo, but since the condo association would own the building and condo associations may not be eligible for residential loans, you may not be able to benefit from the advantageous interest rates on a residential loan.

As of 2025, Fannie Mae made a policy change making it easier to buy multifamily homes. Whereas it used to require a 15-25% down payment, it now accepts 5% down payments for owner-occupied 2, 3, and 4-unit homes, with a maximum loan amount of $1,396,800.

MORTGAGES

What if I can't pay?

Many people’s biggest fear in entering co-ownership is that one of their co-owners will stop paying the mortgage on time. For example, if there are three unmarried people on the mortgage and your two co-owners die, you’re still responsible for the mortgage. This can be scary. But if you find yourself in a situation where you can’t pay the amount you agreed to, there are many options before your house goes into foreclosure and you default on the loan.

Help. The first option is always that members can help each other cover payments if times are hard. You can outline in the tenancy in common agreement if that help is assumed to be a gift, a zero-interest loan with a scheduled repayment plan, or a purchase of more stake in the property.

Hardship forebearance. If the first option isn’t possible, (maybe co-owners can’t afford to help, are unwilling to help, or have passed away), you can call your mortgage company and ask for a hardship forbearance (e.g., a three-month pause). Most mortgage companies would rather let you delay payment for several more months, and tack those three months onto the end of your mortgage, than go through foreclosure.

Buyout. If the member doesn’t anticipate being able to catch up on payments, co-owners could buy out that member.

Sell the stake. The member could sell their percent interest to a third party. Depending on the legal structure you’ve adopted, you may need your co-owner's permission to do so (like in a coop) or you may not (like in a tenancy in common or an LLC).

Roommates. You can get new roommates to replace the members who are leaving or have died.

Sell the building. You can sell the building.

Foreclosure. Foreclosure comes into play when selling the building wouldn’t pay off your loan (e.g. if your home value has gone down, called being “underwater”) or when selling the building wouldn’t give you enough money to go live somewhere else. The bank will repossess and sell your house in order to recoup its losses on the loan that didn’t get paid back.

MORTGAGES

Foreclosure

The foreclosure process has different numbers of steps and takes varying amounts of time depending on the state, but as of 2023 it took a median of 2.5 years in the U.S. There are many ways to take action to avoid foreclosure, even if you find yourself in financial difficulty. See some options here.

ALTERNATIVES TO MORTGAGES

Alternative financing

Some groups decide against traditional mortgages altogether and create their own financing mechanisms.

The Walnut Street Coop in Oregon fundraised for a revolving loan fund, where friends and folks who wanted to support coops lent money to the coop (usually around $10-20k), at a personal interest rate each negotiated with the board. They’d lend the money for up to 5 years, and then the coop would have to pay them back or renegotiate. It got them the house, but it did cause a “big, time-consuming scramble” every five years as the co-owners had to pool enough money to cover the repayments that came due.

Eventually, Shared Capital Cooperative, a cooperative financial institution with experience lending to coops that channels profits back into coop lending, bought out many of the individual lenders and gave the coop a more consolidated loan.

Wealth sharing

Many groups intentionally choose to use their co-buying project to do some kind of wealth redistribution between members with more resources and members with less. See the Appendix for some examples of how groups have configured agreements like this.

DEEDS

Deeds

A deed is a legal document, kept on file with your local county Register of Deeds, that describes the boundary of a piece of property and records its transfer to your ownership. This is how you legally prove you own a piece of property.

How deeds work
When you buy a piece of property, you will likely need to go to a title company or real estate attorney who will perform a title search to make sure that the seller actually does own that land and has the power to sell it to you.

The title company will also often hold the money you’re using to buy the property in escrow (in reserve) and only transfer it to the seller after the closing, or the meeting where the paperwork is signed that actually completes the sale. You and the seller both sign the new deed at the closing.

You can change who’s on the deed whenever you want; you just have to pay filing fees at your county or city Registry of Deeds.

DEEDS

Who is on the deed vs. on the loan?

You don't need the same people on the deed and the loan, and you can have more people on the deed than the loan. For example:

If one member of your group has a lower credit score, you can put them on the deed but not on the mortgage, and sign a separate notarized agreement about how much they’ll contribute to paying the mortgage.
If a member of the group receives government benefits that come with a cap on income or assets, it may not be to that person’s advantage to be listed on the deed. In that case, a member might be understood to have obligations toward the mortgage and privileges to use the property the same way other co-owners do, but not be listed on the deed.

If you’re not on the deed, it’s true that you’re not legally an owner – it's not your asset.

But this is where our idea of rights and property breaks. Joint agreements mean the owners may have legal obligations to other people not on the deed - to let them use the land (often called a license or easement) or to pay them some amount of money when the house is sold (if you agree that someone else is building equity over time, for example). In a high trust, happy path scenario, this can be quite functional. If everyone understands their rights and obligations, and it doesn’t have to matter who is listed on the deed. If something goes wrong, then that’s where your separate notarized agreement about how someone not on the deed is entitled to use the property comes into play.

DEEDS

THREE REAL-LIFE EXAMPLES OF CO-OWNERSHIP STRUCTURES

1: The Rêve

Joint tenancy or trust with internal operating contracts

The Rêve is a small intentional community of partners and friends in New York’s Hudson Valley.

The Rêve chose a joint tenancy to begin with. Each person has an ownership stake that’s connected to a portion of the equity in the property. Members can direct that ownership stake to a beneficiary in a Will, but that beneficiary’s ability to move in is subject to the decision of the surviving co-owners.

If the surviving co-owners don’t all agree, then the surviving co-owners have the opportunity to buy someone out. If they can’t afford it, they can buy people out over time, or when they find a new person.

Over time, the Rêve decided to protect the privacy of their members by moving ownership from joint tenancy into a trust. The trust owns the land and each of the members is a trustee and beneficiary of the trust, but no individuals’ names need to go on public ownership documents.

THREE REAL-LIFE EXAMPLES OF CO-OWNERSHIP STRUCTURES

2: Walnut Street Cooperative

Cooperative owns a building and the land; member-owners own shares, and some residents rent

Walnut Street Cooperative is a 10-person intentional community house in Eugene, Oregon. It's organized as a cooperative corporation under Oregon law. The cooperative is the only entity on the deed and the loans.

The member-owners are on the coop board and own shares in the coop. Everyone else is a resident, pays rent, and does not own shares in the coop.
Gaining equity. Residents can gain equity in the coop by 1) joining the board, and 2) paying rent while on the board. That rent goes toward paying the principal on the mortgage, and in return the coop gives the resident equity (shares in the coop). Anyone who joins the board for six months ends up with a small amount of equity.
Cashing out. Once the house is sold, the money gets distributed according to a priority list established in their cooperative bylaws.
- First, all the people whose loans secure the property get paid. (That’s where the coop has offered the house as collateral in exchange for the loan.)
- Then, the smaller loans that don’t secure the property get paid.
- If there’s still money after that, all the co-owners with shares in the coop get paid back. If there’s money to cover the entire dollar amount they contributed while on the board, then they get that full amount. If not, they get a percentage proportional to the number of shares they own.
- And if there’s still money after that, the board will lend it out to another coop.
- To date, this has been largely theoretical – the coop still owns the house and no money has ever been paid out. Because there are also renters, this creates somewhat perverse incentives to raise the rent so the equity holders can get paid back. So far, group decisionmaking has allowed these incentives to stay in balance.
- However, everyone retains their shares if they move out. As of 2024, about 20 people own equity in the house, but the majority don’t live there anymore.
Gaining new members. If a resident or member moves out, they need to give the house 60 days (2 months) of notice so the house can find a replacement. If the house can’t find a replacement, they can stop paying rent. Each potential resident has to come to a certain number of dinners and house meetings before joining.
Maintenance costs. Residents’ rent goes into a collective “bucket of money” for paying for house repairs, maintenance and utilities.

the rent so the equity holders can get paid back. So far, group decisionmaking has allowed these incentives to stay in balance.
- However, everyone retains their shares if they move out. As of 2024, about 20 people own equity in the house, but the majority don’t live there anymore.
Gaining new members. If a resident or member moves out, they need to give the house 60 days (2 months) of notice so the house can find a replacement. If the house can’t find a replacement, they can stop paying rent. Each potential resident has to come to a certain number of dinners and house meetings before joining.
Maintenance costs. Residents’ rent goes into a collective “bucket of money” for paying for house repairs, maintenance and utilities.

THREE REAL-LIFE EXAMPLES OF CO-OWNERSHIP STRUCTURES

3: “In Harlem, Two Friends Joined Forces to Buy a Rowhouse”

LLC owns the house and land

In January 2025, the New York Times ran a story about two friends who bought a two-family building in Manhattan for $2.725 million.

The article specified that they set up an L.L.C to own the building. Each of them owns a 50% percentage stake in that LLC.

The article did not specify whether they got a mortgage or paid cash, but as mentioned above, mortgages are possible but can be more expensive for LLCs and often require a personal guarantee.

Their joint operating agreement covered “future possibilities, like if one wanted to rent out her half or sell. In the case of a potential sale, the other friend would have the right of first refusal.” The operating agreement also detailed how to cover common costs and documented that one of the members would split the cost of her unit with her partner. (The article doesn’t specify whether the partner was also part of the LLC.)

INSURANCE

Insurance

If your group is buying a single family home with all cash, homeowner’s insurance usually isn’t legally required (but is still a good idea). HOAs, condos or coops often require that their members purchase homeowner’s insurance, and if you get a mortgage, the bank will likewise often require you to purchase homeowners insurance and title insurance to protect their stake in the investment. If you get a mortgage with a down payment of less than 20%, you may also need private mortgage insurance to get the loan. You may also need flood insurance if your place is in a flood zone.

You may also consider life insurance to provide for your group members if you die; umbrella insurance for extra liability coverage if your property is damaged or someone gets hurt on your property; personal property insurance to cover your personal belongings, and disability insurance to replace your income if you can no longer work.

Here’s a more extensive list of types of insurance that co-owners might consider. (Note that this is from a for-profit business who makes money by helping co-owners find property and manage all their documents, including insurance policies, so the list is comprehensive. You likely don’t need every single type of insurance on the list.)

Title insurance can protect against title disputes that you didn’t know about when you bought the property but that might arise later. (Here’s Massachusetts’s explanation of what disputes might arise.) For example, if you buy property from someone who it turns out didn’t actually own it, this insurance will cover your legal fees to defend your claim and any losses you incur. Or if the last owners didn’t pay their contractors or HOA dues or property taxes, there may be a “lien” on the property, meaning there’s debt attached to the property that you became responsible for when you bought it. Title insurance can help defend you in court and cover the cost of that debt.
Homeowner’s insurance covers limited damage to your home – like damage from fire, lightning, hail, vandalism, theft,

INSURANCE

Insurance

Homeowner’s insurance covers limited damage to your home – like damage from fire, lightning, hail, vandalism, theft, explosion, glass breakage, smoke, water damage from plumbing or heating, ice, snow, and pipes bursting (among other perils). It usually does not cover damage from earthquakes or floods. (Here’s Massachusetts’s explanation of what might be covered under homeowner’s insurance.) Policies differ between insurance companies, and depending on your property, you may not qualify for certain types of insurance (e.g. if you live in an especially fire-prone area).

Insurance can also be difficult to find for cooperatives. The Walnut Street Coop, a 10-person house in Eugene, Oregon, had difficulty finding insurers who knew how to fit the house into the actuarial tables for life insurance, but they eventually found one who agreed to insure the house for fire, flood and liability (at slightly elevated rates).