Housing Cooperatives and Trusts

Division 2, Part 2, Title 2, Chapter 5 of the Civil Code deals with housing cooperatives and housing cooperative trusts in California.

Section 817 provides a definition for the terms “limited-equity housing cooperative” and “workforce housing cooperative trust.”

The articles of incorporation or bylaws require the purchase and sale of the stock or membership interest of resident owners who cease to be permanent residents, at no more than a transfer value determined as provided in the articles or bylaws, and that do not exceed the aggregate of the specified items.

The articles of incorporation or bylaws require the board of directors to sell the stock or membership interest purchased to new member-occupants or resident shareholders at a price that does not exceed the “transfer value” paid for the unit. The term “corporate equity” is defined. Amendment of the bylaws and articles of incorporation requires the affirmative vote of at least two-thirds of the resident-owner members or shareholders.

Section 817.1 defines the term “workforce housing cooperative trust” that meets five specified requirements. A workforce housing cooperative trust is entitled to operate at multiple locations in order to sponsor limited-equity housing cooperatives. A workforce housing cooperative trust may either own or lease land for the purpose of developing limited-equity housing cooperatives. A workforce housing cooperative trust may be created when at least 51 percent of the occupied units in a multifamily property that is in foreclosure support efforts to buy the building or property.

Section 817.2 sets forth that the procedure for the dissolution of a limited-equity housing cooperative or workforce housing cooperative trust that receives or has received a public subsidy is as specified in this section.

Section 817.3 provides that each entity named as a sponsor organization of a workforce housing cooperative trust formed is to have the legal standing of a member unless it revokes, in writing, its sponsorship.

Section 817.4 states that, in any action against a board of directors and its members based upon a breach of corporate or fiduciary duties or a failure to comply with the requirements of this chapter, a prevailing plaintiff may recover reasonable attorney’s fees and costs.