Join Date: Oct 2003
Location: Temecula, CA
Thanked 0 Times in 0 Posts
Re: Semi O/T ...group buy on land question
The biggest problem that comes up in any kind of group buy situation is (and always will be) money. How do you setlle ownership? What if one person puts in more than the others? Technically, he owns more. What if one of the investors has a conflict with the group and wants out?
I think it makes sense to set it up as a corporation and dividing the corporation up in shares, with each participant buying in as much as he wants, and getting a representative percentage of shares in the holding company.
However, the issue of management comes up. Who makes the decisions? Who pays the taxes? Also, back to the question of what if someone wants out and the others don't have enough to buy him out? Then you have to sell the property, or an amount of the property equivalent to the value of that person's outstanding shares. Then the question is, which part of the property do you sell? Does one section have significant value over another? It could get tricky.
When multiple families buy property or homes together, they have (or should have) the ownership percentange drawn up clearly and documented. That way there is no ambiguity when they decide to sell, or if there is a falling out of any kind.