WHAT IS A COMMUNITY LAND TRUST?
A Community Land Trust (CLT) functions to preserve public investment and to recycle and protect affordability. The CLT is a non-profit organization, that acquires and retains ownership of land underneath the home while selling just the home to qualified buyers and leasing the land via a long-term, renewable ground lease to a homeowner. This arrangement between the owner and the CLT protects housing affordability in perpetuity by ensuring that the housing is made affordable to low- and moderate-income persons upon the sale of a single-family and multi-family homes. The resale price restrictions contained in the ground lease stipulate the resale price formula that provides for a fair return (not a “market” return) on the homeowner’s investment. Owners may sell their homes back to the Land Trust or to another qualified buyer for 100% of what they paid for the home + 25% of the increase in the home value during the period of ownership. By design, the CLT is committed to preserving the affordability of housing – one owner after another, one generation after another, in perpetuity.
HOW DOES CLT HOMEOWNERSHIP WORK?
Homebuyers receive affordability assistance from the land trust and enter into a long term land lease agreement to preserve the affordability of the home. CLT homes are sold to households with limited incomes. When a CLT household decides to sell a CLT home, they pass the home and the long-term affordability agreement on to another household with a limited income. The sales price is determined by using the NWMTCLT resale formula. The home stays affordable for future generations.
WHAT IS THE LONG-TERM AGREEMENT BETWEEN THE CLT
AND THE CLT HOMEOWNERS?
CLT homeowners enter into a long-term agreement called a Ground Lease with the CLT to preserve the affordability of the CLT home.
Ground Lease:
With single-family homes and townhouses, the CLT homeowner owns just the house and the CLT owns the land beneath the home. The CLT is holding the land in ‘trust’ for the benefit of the greater community. Because a CLT owns the land and the homeowner owns the home, a CLT and the homeowner sign a Ground Lease that defines the roles and responsibilities of both the CLT and the homeowner.
The Ground Lease allows the homeowner secure, long-term rights to use the land. CLT homeowners have full use of the land, and they have full responsibility for the property. NWMTCLT homeowners pay $25/month to the NWMTCLT as a Ground Lease payment. The homeowner is responsible for paying the property taxes on both the land and the home.
