Voluntary or collective capital contribution:
an alternative for lowering your monthly cost
There are different names for a capital contribution: Repayment of the association’s loans / Split loans /
Takeover of the association’s loans.
Capital contribution is of interest for all cooperatives, but in particular for residents in cooperatives consisting of multi-family dwellings (apartment buildings). The individual member’s housing cost can be reduced by means of a voluntary or collective capital contribution.
Voluntary capital contribution entails that the member redeems his share of the association’s loans to the extent of his financial means.
Voluntary capital contribution
requires that each cooperative unit has two participatory shares: one for operation and one for capital. By adopting new bylaws and carrying out a new participatory share calculation, a voluntary capital contribution can be effected.
Collective capital contribution
entails that the members redeem the association’s debt or parts of the debt in relation to the participatory shares/capital stakes of the units.
Collective capital infusion may entail that the association compels members without the financial means to make a capital contribution, as a result of which the member may not be able to fulfil his obligation to the association.