On Rental Cohousing

Why

I have a vision of a happy future for a lot of people. People like people. They like to live together, some of them. They like the benefits of living together. The company, the entertainment, the wisdom, the food.

The lower cost.

Now not everyone likes to live with other people, lots of people want to be in the farthest wilderness where noone else can be seen or heard. But many people like the supportive and close community. It's a natural way for people to live.

What

I've made a sweet living space out of my house in North Seattle. It now has six bedrooms and two bathrooms, an outside office space, several gathering areas, two fireplaces, even gardening beds and sort of outdoor room areas, like the side yard under the trees, or the back yard around the fire pit. It's a nice place for people to be, and to be together, at least I hope it is.

I made a lease to support the community that I see has come into being at "1210 Haus". It's a normal lease, most of its terms came from a landlord who rents to UW students. But it has some special terms in it. It tries to make it easy and safe to substitute new members for departing members, and to extend the term by another year, with rents changing by an independently set rate. It aims for community longevity.

How

Here's the process:

The Beginning

  • I fix up my home and make it sweet, and put an advertisement on Craigslist.
  • One or more people that see it, find each other and start a dialog about their values and what they'd like in a place they might live together.
  • Others come together into that dialog. A community begins to form.
  • The group contacts me and asks to rent my house.
  • I give them a rental application, and everyone fills it out.
  • I do background checks and let them know the result. If everyone is happy, I give them the lease to review and sign.
  • The money amounts and dates are negotiated and given in the lease but they expect to put something down so I don't have to find other renters, and to have the rent and deposits paid before move-in day.
  • Then the group lives together. Moves in. Takes care of each other. Life goes on. Community forms, storms, norms, and performs, that's the natural thing.

The Middle

Hopefully the middle lasts indefinitely. That requires substituting new people, extending the lease, and community-internal process.

Substitution

The key to community longevity is community fluidity. Change is inevitable. Will it break you as soon as possible? Or will you deal with it in a positive way?

On a regular 12-month lease, change is frozen and pent up until the end. After 12 months, a lease is up. It's a lot of pressure, makes the group brittle. Anyone who wants to go makes it a big deal for everyone else to struggle and find a new group.

So I want to make it super easy to leave early. If substitution can be done clean and easy, then the community can recreate itself over and over, and ultimately last longer and longer.

So the main innovation here is the substitution addendum. The substitution addendum is mentioned in the lease, which says it's okay to substitute a departer for an arriver in good order. I want it to be easy to leave, but of course I want them to leave in good order. So I define what good order is, and I make it easy to know what to do, and not too hard to do it. Then it's not such a big deal to substitute somebody out, and someone else in. Anyone that wants to leave, that's fine, just we have to find a good replacement, someone that passes the background checks and everyone agrees to, then clean up after the move out, make it nice for the new person, and then once again create a community again by all signing responsibility for each other. And maybe a graduation and welcoming party.

If leaving is no big deal, and everyone is used to having new people come in and become part of the group, it makes the group resilient, self-healing. Substitution equals fluidity.

Oh here's a neat trick to motivate it, invented by a money guy. I divide each tenant's Deposit into a non-refundable part and a refundable part. I mean, when people move out you have to clean the carpets and send the landscaper over to do the natural primping that time requires. You can leave it as clean as you want but I would still feel I need to steam the carpets, kind of thing. So that's what the non-refundable part is for. Then if you leave a lease-described, definite mess behind that requires paying the housecleaner or the painter or whatever, that's the refundable part, which might not all get refunded when so much cleaning needs to be done. Okay, so as the landlord I let all the tenants know that if they move out in good order, then I'll give them their non-refundable deposit too. I'll come look at the room, I want the new person to feel welcomed by a clean and fresh space, and if it's good, the departer gets their deposit, and because they found an arriver to put in a new deposit, I'll use the last replacing group's non-refundable part at the end of the last extension, to clean up then, and let the clean-good-order departers have their non-refundable part back.

In short I'm paying the departers when they leave! Why? Because they left with a replacement in good order, and that's valuable to me as the landlord. It means I don't have to find anybody, and I didn't have to go clean up and fix after them. I'm happy. They're happy. The not-so-subtle implication there is that the group that ends the group is going to pay more. It's not a big amount, but it's a point that reveals what I want: I want group continuity.

Extension

Renegotiation at the time of renewal is another high-pressure point of brittleness in the continuity of a rental arrangement. Who knows what the other side may demand? It's a natural time to worry, and definitely not time to make or rely on a decision until the negotiations are well underway. A good negotiator has to be ready to walk away. Which just increases the probability of termination. I want to minimize this. I want to make renegotiation as minimal and predictable as possible. So as with substitution, there is an extension addendum. It's also less than a page, and says the change will be the minimum change. Change the end date. Change the rent by just following the market, the Zillow rent index for this town. That's it. It's minimal, and who can argue that it's fair. Since everyone knows it in advance and nothing is controversial, it's easy to extend.

And there's no reason not to extend, because anyone that wants to leave can use substitition, and the rest of us can continue under the extension for another year. Most people most of the time will stay for now, and with substition and extension, there's no need to terminate.

Internal Self-Government

Yes the group also has to govern itself.

This is an important point, and the boundaries should be clear. I'm Tom, I'm the landlord; it's not my business how you want to regulate each other, my business is to care about the house, the lease, the rent, I'm outside the community, although I am not nobody, and although I strongly wish for a happy and wise group that can figure out how to live well together, it's not my job to make that happen, it's the members of the house.

So I think they would do well to adopt a consensus driven house-meeting system like I experienced at Columbae House at Stanford when I went to school there. But the group can do what they want.

Here's the thing. A group lease has deep hooks into renters. A group lease says that each renter is "individually and severally liable" for the whole lease. This is perfectly standard and normal, but many people might not know what it means. For example, if five get run over by a truck, it means the sixth is liable for the whole lease and has to pay the whole rent. They might hustle about and get five replacements to help, but it's on them, or they have to move out. Each person is not just responsible only for themselves and forget the others. No, everyone is responsible for everyone.

This might seem like a surprise or a big deal, but it's actually normal enough. For example, a partnership is a legal entity in which each member is responsible for the actions of each of the others. Partnerships are pretty normal. But it's a good to recognize what's going on, to go in with eyes open, and to make some contingency plans for what should happen if the road is rocky. So people who might go into a regular partnership, might think about it and establish some internal governance policies and procedures. Like, I'll be responsible for this, and you'll be responsible for that. Here's the rights and responsibilities of the members. Here's how we'll decide if there's a controversy. That's a wisely-designed partnership.

So for example, if I was to join a group like this, I'd kind of like to know that my partners are also responsible, and have them know and trust that I am, too. I am signing up to stand behind them, so I want to have knowledge of them and traction with them. I might like to see their background check information, because I will be subject financially to their financial behavior. And I'd like to have a group agreement that says, if someone can't come up with the rent for the next month, then they would be willing to move out and get replaced right away in order to have a financially sound house again -- and let the rest of us know early enough, before anybody misses a payment, so that the rest won't have to pay for it or all face eviction. If we all want to loan each other rent month to month, that is one way to do it, but pretty sloppy and pretty easy to get out of control with someone exploiting the others. Instead we should all agree in advance that if it's looking like a problem for next month, to let everyone know as early as possible, and to trigger a substitution, to get the non-payer out and a new payer into their place to help us move forward.

This is some heavy traction. It's not a lease condition between landlord and tenants. This is internal governance. The lease terms are a separate legal process. The law in Seattle provides for 3 day pay-or-vacate notification, then a court judgement of unlawful detainer, then a sheriff eviction; that's all after the rent isn't paid. That's between landlord and the tenant group as a whole. But between the tenants themselves, it's not about the law of tenancy. It's about mutual agreement of how the group wants to operate. The group has to decide their own deadlines and how confident they want to be that each other's rents will be there before saying, Hey, let's arrange a substitution because before the end of this month we have to have you replaced and the new person vetted and ready to move in and pay the rent at the beginning of the next month. If member Z can see they won't make it, two weeks in advance, then everyone has two weeks to find someone to join. That's doable. If you have a good internal governance system, you can find a nice solution that works.

Another nice idea, I think, is for the tenants to all contribute to a rainy-day savings fund, in the amount of one person's rent for a month. Then if you need it, you can use it to buy a month to move out. But if you use it, you have to move out. That way no-one will take it lightly. And if someone did take it lightly, they want the money that badly, they'd rather move out than pay their share of the rent, hey, that's a person that might be better somewhere else not in our community, where we ultimately have to rely on each other.

Footnote. This is a little painful to think about because it means considering someone among us in financial difficulty and not being able to just help them out. But maybe we can help each other in lesser ways. Like, hey I know there's a job over here, or so-and-so might give you a raise, or a side job, or something. If everyone is motivated for everyone to succeed, we all do better. It's great to try to have each other's back.

I think this kind of mutual support creates a deeper relationship, more reality-based, more connected, than just living in the same place. It makes the members an economic unit, in a way. They depend on each other. When they see how they've depended on each other, they'll see their true friends. It will bring a high quality of community cohesiveness. I'd like to live in a place like that.

The End.

All good things come to an end, eventually. So a normal lease has a process for termination. Just don't sign the next year's extension, either side, and it comes automatically to its end, that's how you can end it. No problem. That's how normal leases end, and that's how either side can end this lease too. Leave it clean, walk through with the Landlord, checking off the comparison with the start day list, landlord steam cleans the carpets, does whatever's needed.
 

Copyright © 2017, Thomas C. Veatch. All rights reserved.
Modified: October 9, 2017.