Buying land together is the moment a community dream becomes real, and the moment it can go most wrong. The legal structure you choose decides who owns what, how families get mortgages, what happens when someone leaves, and whether the land is protected for your grandchildren.
This lesson won't make you a lawyer. It will help you understand the main options well enough to have a good conversation with one, and to choose a structure that matches your vision, not the other way around. California is one of the most demanding states, so we use it as the example, with notes for other states.
- 1Describe six common ways to own land together.
- 2Explain the California rules that shape your choice.
- 3Choose a structure that fits your group’s goals.
- 4Agree on a fair buyout formula before anyone needs it.
- 5Prepare good questions for an attorney.
Six ways to own land together
Each structure answers the same questions differently: Who's on the deed? Can families get ordinary mortgages? How easy is it to leave? Who protects the land?
One owner, others lease
One person or family owns the land and leases homes or sites to the rest.
Strengths. Simple and cheap to start.
Watch out. Everyone else has little security or say. This is the "landlord trap" from Lesson 1.
Tenancy in common
Several owners share one deed, each with a percentage, bound by a written TIC agreement.
Strengths. Everyone owns real property. Fairly simple for two to four households.
Watch out. Hard to finance. In California, five or more undivided interests usually require a state public report. Any owner can ask a court to force a sale unless the agreement clearly waives it.
Limited liability company
An LLC owns the land. Households own membership shares under an operating agreement.
Strengths. Flexible rules, limits personal liability, easy to transfer shares.
Watch out. California charges at least $800 a year. Selling memberships to raise money can count as selling securities. Members usually don’t get ordinary home mortgages.
Condominium or planned development
Each household owns its home or lot. An association owns the shared land and buildings.
Strengths. Normal home mortgages and resale. A common form for U.S. cohousing.
Watch out. Requires subdivision approval, and in California a public report for five or more units, plus HOA rules under the Davis-Stirling Act.
Housing cooperative
A cooperative corporation owns everything. Members own a share and an occupancy agreement.
Strengths. Strong shared control. A limited-equity co-op keeps homes affordable for good.
Watch out. Financing uses one blanket mortgage for everyone. Fewer lenders, and members carry shared risk.
Community land trust
A nonprofit owns the land forever. Families own their homes on a renewable 99-year ground lease.
Strengths. Protects the land and affordability for generations. In California, assessors must consider the resale limits when valuing a CLT home.
Watch out. Resale prices are limited by a formula, so households build less equity. Takes nonprofit governance.
The California rules that shape everything
Dividing land
Splitting one parcel into separate lots for separate owners needs county approval: a parcel map for four or fewer lots, and a full subdivision map for five or more.
The public report
Selling five or more lots, units or even undivided shares in one property generally requires a public report from the Department of Real Estate first. Some exemptions exist, such as interests held only among close relatives.
At least $800 a year
Every California LLC pays the $800 minimum franchise tax, including in its first year, plus a fee once yearly receipts pass $250,000.
The forced-sale risk
Co-owners in California have a strong right to ask a court to divide or sell a property. A written agreement can waive it, but courts read waivers strictly, so it must be clear and specific.
Most states have some version of these rules, but many are lighter. LLC fees are much lower in many states, and some don’t require a state report for small undivided-interest sales. Always check your own state’s real estate department and your county’s planning office before you buy.
The hybrid village
Many of today's most successful communities don't pick just one structure. They combine them, so families get the security of owning their own home, the village shares a true commons, and the wild land is protected no matter what happens later.
Which structure fits us?
A starting point for the conversation with your attorney, not a legal answer.
When someone leaves
Every community eventually has a household that moves away: a new job, aging parents, a change of heart. Without an agreed formula, the departing family may want today's market value while those staying can't afford to pay it. Agree on the formula now, when no one is leaving.
Fair buyout calculator
Agree on your formula now, while everyone is happy. Compare three common approaches.
| Formula | Buyout |
|---|
- How much notice a leaving household gives
- The buyout formula, and who orders the appraisal
- How long the community has to pay
- Whether the community or members get first chance to buy
- How new buyers are approved through your membership path
- What happens at death or divorce
A buyout fund, built a little each month from dues, means the community can pay a departing family on time without a crisis. Many groups also allow the leaving household to sell its share directly to an approved new member, which spreads the cost.
Working with professionals
This is the lesson where professional help is essential. A real estate attorney who has worked with cohousing, co-ops or land trusts is worth every dollar, along with an accountant and a title company. Bring your vision, your agreements from Lesson 2 and your decision process from Lesson 3. They'll shape the legal documents.
- Which legal structures fit our county’s zoning and subdivision rules?
- Will we need a public report from the Department of Real Estate?
- Are our membership shares securities, and is there an exemption?
- How will each household finance its part?
- What happens to a household’s share at death, divorce or leaving?
- What are the property tax and income tax effects?
- How do we protect the land if the group ever dissolves?
The Cohousing Association of the United States lists professionals who work with communities. Grounded Solutions Network supports community land trusts. The Foundation for Intentional Community has legal resources and stories from groups who've done it. Ask other communities who they used, and what they'd do differently.
Compare ownership structures for your land
Work through the structure fit tool and the buyout calculator together, agree on your top two structures, and take your questions to a qualified attorney.
You'll need
- The fit tool and buyout calculator above
- Your vision and agreements from Lesson 2
- A rough budget for the land and building
- The list of questions for an attorney
- Contact details for two or three attorneys
Do it together
- Each household takes the fit tool separately, then compare.
- Agree on your top two structures, or a hybrid.
- Run the buyout calculator together with realistic numbers.
- Choose a buyout formula and write it down.
- Call your county planning office about zoning and subdivision rules for your land.
- Interview two attorneys who have worked with communities.
- Record what you learned and the next decisions to make.
Include the young
- Walk the land together and talk about what should be protected forever
- Teens can run the buyout calculator and explain the difference
- Draw a map of the hybrid village for your own land
Save your structure comparison, buyout formula and attorney notes for your progress record.
Holding land in trust
However the deed reads, land shared well is held in trust: for each other, for the families who'll come after, and for the creatures and waters that were here long before any of us. A good legal structure is how a community makes that promise in a form that lasts.
Next: even the best structure can't prevent every disagreement. We turn to conflict, and how to repair what gets broken.
Your Lesson 4 worksheet
Work through these together. Your answers save on this device as you type, and print cleanly for your records.
Progress record
What this lesson practices:
- EconomicsProperty rights, equity, inflation and financing (Voluntary National Content Standards in Economics 1, 12, 13).
- CivicsState and local law: subdivision, real estate and business entity rules (NCSS theme 6).
- MathCompound growth, percentages and payment schedules.
- Life skillsFinancial literacy and planning for shared ownership.
Standards mapping is a draft. If you use charter or ESA funds, confirm it with your education specialist.
Sources for this lesson
- Andy Sirkin — California Subdivided Lands Act (part 1)
- California Department of Real Estate — Reference Book chapter 17: subdivisions and other public controls
- Jupid — California LLC taxes 2026: the $800 franchise tax and gross receipts fee
- Talkov Law — waiver of the right to partition in California
- California Revenue and Taxation Code § 402.1 — community land trust assessment
- Wikipedia — Community land trust
- Cohousing Association of the United States
- Grounded Solutions Network — community land trusts