The Golden Girls Shared Housing Model – Comedy or Tragedy? It all comes down to planning!

By November 21, 2018 Real Estate

Television has popularized the notion of older adults living together in a shared housing arrangement born out of financial or other necessity, but evolving into a mutually supportive environment, capped off by ensuing hilarity.  In real life, however, the results of a shared housing arrangement can be significantly less fun, especially if proper planning isn’t employed at the outset. For example, how does the group deal with the failure or inability of a member to pay his or her share?  What is the effect of a death or decline of a member?  It’s not hard to imagine how these all-to-real events can impact an intertwined living arrangement, financially, practically and emotionally.  Legal planning probably can’t help to address directly the emotional impacts, but it can help to address the practical and financial ones, which can make the emotional impacts more manageable.

It is frequently noted that Maine’s population is the oldest in the country.  Maine State Housing Authority’s publication “Characteristics of Housing in Maine” published in January, 2016 notes that 60% of the housing stock in Maine was built prior to 1980, making large portions of available housing for older adults not easily accessible, not energy efficient and expensive to maintain.  As noted in that publication, “[T]he aging of Maine’s population will shape our housing needs in the future.”  Meeting these needs will require multiple existing and new strategies and a coordinated effort to pursue their implementation.

To aid in developing new strategies and coordinating their implementation, Maine Council on Aging, MaineHousing and Bath Housing Authority joined together in hosting a planning conference entitled “Housing Solutions for Maine’s New Age,” which explored 5 potential strategies, including “Shared Housing.”  See the Summary of Major Findings.  The Summary notes that shared housing arrangements could enable older homeowners to age in place by spreading the cost of homeownership over several people, while also offering the benefits of companionship and neighborhood continuity.

Perkins Thompson’s Melissa Murphy served on the Shared Housing Planning Team for the conference, and discussed multiple legal structures through which a group of individuals could own a home together and deal with the related legal, financial and practical issues.  These include:

  • The group owns the real estate together as tenants in common and enters into an agreement among themselves to allocate use and expenses and to determine how to deal with deaths of the owners and/or sale of their interests.
  • The group forms an LLC or a co-op to own the real estate and their LLC agreement or co-op bylaws provide that membership or share ownership entitles the member or share owner to sole use of a bedroom and common use of the common areas, allocate expenses, and outline a mechanism for dealing with the death of members or share owners or sales of their interests, with some control in the other members or share owners as to who buys in.
  • The group buys the real estate together as tenants in common or through an LLC or other entity, but after the property is constructed, the group or entity declares a condominium, with each bedroom being a “unit” and the remainder of the property being the common elements, and conveys a unit to each member of the group.  As with other condominiums, the declaration and bylaws would provide the mechanism for allocation of use and expenses and could include a mechanism for control over who “buys in.”

Varying financial contributions could be dealt with in each of these scenarios.  For example, someone paying more upfront or with more stable ongoing resources might get a larger bedroom (or even a suite), and receive a larger share or percentage interest and bear a larger share of the ongoing expenses.

Other considerations and conflicts besides legal ones, of course will have impacts on the structure used, but thoughtful legal planning can help to make a shared housing arrangement successful, and possibly even fun!