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Buying an Island

topic posted Fri, November 24, 2006 - 7:25 AM by  		Share/Save/Bookmark
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I'm looking at putting together a group to collectively purchase an island. Here:

www.caribbeanislandbrokers.com/is...aye

This group would be loosely affiliated to the burningman project, and you can read all of the details about that in our tribe.

tribes.tribe.net/floatingman

I was wondering if there are any lawyers who go to burningman, or anyone else, who would be interested in joining our project and doing some pro-bono work setting up the "Floatingman Island" organization.

If not, can anyone point me in the right direction towards legally setting up an organization? What sort of organization would we need? How do we set it up? How much does it cost?

Thanks!
-Adam
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  • Weazie
    Weazie
    offline 168

    Re: Buying an Island

    Fri, November 24, 2006 - 10:26 AM
    Before you go lawyer shopping, I'd suggest y'all ask youselves some very basic questions.


    1. Who will actually own the island (a person, a group, a corporation)?
    2. What rights will the owners/investors have (esp. if not everyone on the island is an owner/investor)?
    3. If the people who invest money want to pull out, how easy should that be? Will the other owners/investors have the ability to veto or otherwise override an investor from selling?
    4. Property ownership requires money above the purchase money. Taxes will have to be paid, and you'll prolly want some sort of insurance. What is your revenue stream, and what is the obligations of the owners/investors to that revenue stream? (And that's just to continue owning; capital for maintainence and improvements will also be needed.)


    Thinking about these issues will help you and a legal advisor decide on what models works best for y'all; the more work y'all can do on your own time (and not the lawyer's), the better.


    Also, the island you are looking at is part of Belize. You may want to look into hiring a Belizian lawyer who specializes in real estate, to make sure your ideas can work under Belizian law. And help you decide whether it is possible/required (and advantageous) to set up your organization under Beleizian versus law.


    Having said all that, off-the-top-of-the-head, it looks like the co-op model of ownership will prolly be the fit for what y'all want and what'll work in Belize.

    Co-ops: en.wikipedia.org/wiki/Cooperative

    Co-ops are common enough in New York, so I'd focus on there on your search for legal help.
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    • Re: Buying an Island

      Sat, November 25, 2006 - 4:43 AM
      > 1. Who will actually own the island (a person, a group, a corporation)?

      What could a "group" be if it was not a corporation?

      So... it would be held by the Floatingman Corporation. And it basically seems that it would be a housing co-op.

      And, should we ever sell the property, the proceeds from the sale would almost undoubtedly be distributed among the owners. So, at least according to this quote, I guess that we could not be a not-for-profit corporation. Is that right?

      "But it is distinctive in two ways: (1) the corporation cannot be organized for any person’s private gain, and (2) should it dissolve it must distribute its assets to a similar tax-exempt nonprofit group."

      business-law.freeadvice.com/corp...n.htm

      > 2. What rights will the owners/investors have (esp. if not everyone on the island is an owner/investor)?

      The primary advantage that they would have is that they'd have a voting share in the corporation, and would probably get a return if the island is ever sold.

      > 3. If the people who invest money want to pull out, how easy should that be? Will the other owners/investors have the ability to veto or otherwise override an investor from selling?

      Each member would contribute $500 to the project. Any additional funds contributed by members to help speed the purchase of the island would be treated as loans and would be paid back by the corporation as new members joined - though members may get extra voting shares in exchange for the loans.

      I don't believe that anyone would be able to pull out their $500 share without a majority vote of the shareholders, and that would probably only happen in the case of selling the island.

      > 4. Property ownership requires money above the purchase money. Taxes will have to be paid, and you'll prolly want some sort of insurance. What is your revenue stream, and what is the obligations of the owners/investors to that revenue stream?

      Unclear yet.

      However... the property taxes are very cheap ($300/yr). And as this is related to the burningman project any improvements and infrastructure will be very limited. Everyone will be expected to be completely self-sufficient.

      Hmmm... I wonder if it makes more sense to set up this corporation in the US, or in Belize (or Nicaragua - an alternate Island we're considering).
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      • Weazie
        Weazie
        offline 168

        Re: Buying an Island

        Sat, November 25, 2006 - 12:29 PM
        > What could a "group" be if it was not a corporation?

        Groups of people need not incorporate to go into business together. Joint ventures, partnerships, unincorporated associations are such examples.


        People do not necessarily need to incorporate to buy property together. Tenancy-in-common and joint tenancy are forms of joint ownership where the nature of the ownership guides the rights of the joint owners.


        There are trade-offs to the differing forms of organization and ownership--something your lawyer can evaluate for your specific situation.
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        • Træ
          Træ
          offline 57

          Re: Buying an Island

          Sun, November 26, 2006 - 12:19 AM
          i am part of this project, which is why i chime in now.

          i am looking for the least amount of red-tape possible, while still making people feel safe in the fact that the money they are investing si either returnable or an investment. it seems that if we become an NPO people can not expect to make even an equal return on their investment, so a corp. we become. (until someone offers another answer at least.)

          the biggest question at this point (before we have any paperwork drawn up), is whether to use a foreign lawyer, or a local one. im sure each seperate version of a corporation or a co-op or a npo is different per nation... but should we look at an american lawyer to do this or an out of country one?
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  • Fant...
    FantasyFreddy
    offline 26

    Re: Buying an Island

    Tue, January 16, 2007 - 12:41 AM
    Hi Adam! The project sounds like a beautiful dream!
    I am a burner (6) and lawyer, admitted (and up on dues) in NY, studying for CA bar right now, and would love to help pro bono. Have never done anything like this before, but willing to learn and to help.. Pretty busy for next six weeks studying, but willing to help! Awesome idea!! :)
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