Eight years ago four of us bought a two-family house together. Ruthy and I have lived in one side of the house with many different housemates. We’ve always expressed the intention of considering further co-ownership with these housemates after living with them for a year, but none of them have taken us up on it.

Over the years they’ve contributed money, some of which pays interest on debt, taxes, insurance and maintenance of the house, but some of which goes toward equity in the house. My question is, how should this equity be treated ethically, and could we set up a cooperative legal structure to represent this shared equity?

First, I’d argue we should subtract from this contributed equity money for the extra work we’ve done to take care of the house. We could estimate the work we’ve done and figure out a fair wage to pay ourselves for that. The rest should be considered collective equity,

Worker cooperatives in Italy take a portion of their surplus each year and place it into an internal collective equity account. They can use this money to expand their business or to borrow against if times are hard. But they can’t distribute it to themselves. If the business folds, the collective equity goes to a cooperative development organization to start a new cooperative.

What if we set up a cooperative with equity shares for me and Ruthy, and a collective equity account for the rest? If we sell the house, we could stipulate that collective equity has to go toward another cooperative housing situation or a non-profit that supports cooperative housing.

What if new housemates that we are living with want to buy in? Would they buy out the collective equity account? Perhaps that money would then go towards starting a new cooperative house, with the same cooperative arrangement, creating a growth model.

In order to stop us from changing the bylaws of the cooperative later and pocketing the money, one option could be to require permission from some outside person or organization to approve bylaw changes. I’m not worried about Ruthy or me doing this on purpose, but what if someone sues us? We don’t want them to get access to this money. And if we try to expand this model, it should be robust enough to handle any situation.