What is a Community Land Trust? |
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CLT At a Glance (Adobe PDF file - requires Adobe Acrobat Reader)
What is a Community Land Trust?
Community Land Trusts help low and moderate income families benefit from the equity built through home ownership, and at the same time preserve the affordability of these homes so that future residents will have the same affordable home ownership opportunities. The Community Land Trust model is utilized by First Homes:
- to provide individuals and families access to land and housing who are otherwise denied
- to increase long-term community control of neighborhood resources
- to empower residents through involvement and participation in the organization
- and to preserve the affordability of housing permanently.
A Community Land Trust (CLT) creates affordable housing by taking the cost of land out of the purchase price of a home. It keeps housing affordable for future buyers by controlling the resale price of houses on CLT land through a ground lease and resale formula. Home owners leasing CLT land under their home enjoy the security, control, tax advantages and ability to build equity just like any home owner. If they sell their home, the resale formula insures that the home remains affordable for the next family.
How does a Community Land Trust help buyers by making home ownership affordable?
First, by owning the land, First Homes is able to greatly reduce the initial housing cost to the potential buyer. First Homes’ CLT uses various kinds of subsidies to make housing and land more affordable for people who cannot compete in the real estate market. Since First Homes maintains ownership of the land in perpetuity, the CLT keeps housing affordable for future generations by controlling the price owners receive when they sell their homes.
Second, the land ‘ground lease’ contains a resale provision which ensures that if the house is sold, it goes to another low or moderate income person. In our case it works like this: the sellers receive the amount they originally paid for the house, plus fifty percent (50%) of how much it appreciated in value during the time they owned it. That new amount is essentially what the next buyer pays. Therein lies the advantage of a CLT: its ability to preserve affordability for future generations. Home buyers are required to make monthly mortgage payments and the monthly lease fee for the land.
What happens if you want to sell your home?
Should you ever decide to sell your home, you will work with the First Homes to ensure that your home will remain affordable for future qualified families in the Community Land Trust. First Homes can help you through the home selling process to ensure a sale with a qualified buyer.
Does the CLT ever sell the land?
You will not be able to purchase the land on which your home is built. At First Homes, we provide a 99-year renewable land lease to the home owner. As the house is truly their own, it provides the home owners with the same permanence and security as a conventional buyer, and they can use the land in the same way as any other home owner.
What happens to the CLT's land and lease arrangements if the CLT is dissolved?
If First Homes is dissolved and ownership of the land is transferred, the new owner is obligated to honor the long-term lease agreements between First Homes and its leaseholders. Should the land ever be offered to a non-charitable buyer, the resident has the right of first refusal to buy the land.
