A limited equity cooperative is a type of cooperative housing where the ownership of the property is shared among a group of residents who collectively own the building and land. In a limited equity cooperative, the amount that each member pays for their ownership share is limited, which means that they cannot sell their share for a profit. Instead, the value of the share is determined by the original purchase price plus any agreed-upon increases in value over time.
The purpose of a limited equity cooperative is to provide affordable housing for its members. By limiting the amount that members can profit from the sale of their ownership shares, the co-op can maintain the affordability of the units over time. This type of cooperative can be a good option for people who want the benefits of owning their own home, but who cannot afford the high costs associated with traditional home ownership. Additionally, limited equity cooperatives are often democratically governed by their members, giving residents a voice in the management and upkeep of the property.
Better Futures Housing Trust creates limited equity co-ops as one of our preferred organizational structures when establishing affording homes.