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Michigan Cooperative Law Primer for New Cooperative Board Members

By Randall A. Pentiuk

Welcome Aboard!

        Congratulations on being elected to serve on the Board of Directors of your Cooperative. The mere fact that you were selected by your fellow Cooperative Members speaks well of your character and should be a source of pride to you and your family. You are now entrusted with the responsibility of leading a corporation worth millions of dollars. Beyond the economics, though, is a whole lot more. You now have the awesome duty to care for the welfare of the Members and their families, who depend on you to make the right decisions. After all, this Cooperative is their home. This is where they live and sleep, and raise families. Many look forward to making this their residence for the rest of their lives. They have invested their hard earned dollars in this place, and deserve to have it protected and preserved. Indeed, the quality of their lives now rest with you.

        Even more staggering than all of the foregoing is your duty to carry on the tradition of a way of life and philosophy known as the Cooperative movement. This form of home ownership did not happen by accident: it was deliberately conceived as a conscious effort to create a special sense of community and cooperation among people seeking to meet one of life’s most basic needs – having a home. Through the years, it found its way into the National Housing Act as Congress determined that it was a special and important form of home ownership that ought to be fostered and encouraged. Thus, a national policy was created to encourage its development, and the United States Department of Housing and Urban Development (“HUD”) was given charge to create programs to promote it.

        Consequently, a number of Cooperatives were formed throughout the country, supported by low interest mortgages insured and backed by HUD. Many were built to provide homes for low and moderate income families, with support of federal funds. A whole regulatory scheme was adopted to oversee these fledgling new Cooperatives.

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