Questions

• What Is a Community Land Trust (CLT)?
• How Does a CLT Benefit Society?
• How Does the Program Work?
• What Are the Benefits to the Homeowner?
• What Are the Costs of CLT Homeownership?
• What All Is Covered in the Ground Lease?

Answers

• What Is a Community Land Trust (CLT)?
  
  A CLT is a private, non-profit organization whose goal is to acquire and hold land for the benefit of the community and to provide secure affordable access to land and housing for community residents. CLTs attempt to meet the needs of those priced out of the housing market by helping to reduce speculation and absentee ownership of land and housing and by preserving the long-term affordability of housing.
  

  A CLT will purchase property, with or without a home, then build or sell the home to an income-qualified applicant in their program. The goal of a CLT is to ensure that the land within their trust is used for affordable housing. To accomplish this, the CLT and homeowner sign a long-term ground lease assuring the homeowner the property will remain available to them for as long as they remain within the parameters of their ground lease.
  
  In exchange for this, the homeowner agrees, if they ever wish to sell their home, that they will sell the home back to the CLT or to another income-qualified family. The price at which they agree to sell the home is based on a resale formula that allows the homeowner to realize a portion of the increase in value of the home while also keeping it affordable for the next income-qualified buyer.   back

• How Does a CLT Benefit Society?
  
  Community Land Trusts are a way for communities to:
• Gain control over local land use and reduce absentee ownership
• Provide affordable housing for the everyday people we all depend on, such as: ambulance drivers, technicians, staff people, and nurses
• Promote resident ownership and control of housing
• Keep housing affordable for future residents
• Capture the value of public investment for long-term community benefit
• Build a strong base for community action   back

• How Does the Program Work?
  
  EverEco Landworks, Inc. (ELW) acquires and builds affordable homes and limits the sales price on these homes. ELW, through the CLT, owns the land, and qualified people buy the homes. ELW and the homebuyer sign a 99-year renewable land lease that allows the buyer to use the land. Traditional financing is available for community land trust homes. Community lenders work with ELW to provide traditional financing. The ELW Land Lease is approved by FHA and Fannie Mae.   back

• What Are the Benefits to the Homeowner?
  
  CLT homeowners enjoy most of the same rights as market rate homeowners. The fundamental difference is that the CLT maintains some level of control over how the land will be used in the future. The CLT resale home price is determined by a formula based on the housing market. Limited resale prices ensure that homes are affordable to future buyers. ELW maintains an active list of qualified buyers.   back

• What Are the Costs of CLT homeownership?
  
  A nominal monthly land lease fee is paid to ELW to cover land taxes and CLT program administration. All CLT homeowners agree to limit the price of their homes when they sell.   back

• What All Is Covered in the Ground Lease?
  
  The ground lease is the legally binding agreement that gives the lessee/homeowner the right to use the land. The lease attempts to balance the interests of the lessee as a homeowner with the long-term interests of ELW and society. There are a number of important terms defined by the ELW's ground lease. These include:
• TERM - The lease is for 99 years, providing long-term security and access for the homeowner, and may be renewed by the homeowner – or their heirs – for an additional 99-year term.
• IMPROVEMENTS – The homeowner owns all buildings, structures, fixtures and any other improvements (such as landscaping) on the land. ELW, however, controls the use and sale of these Improvements.
• RESPONSIBLE USE – The homeowner can only use the land for residential purposes as permitted by the building and land use codes and regulations.
• OWNER OCCUPANCY – The homeowner must live in the home for a minimum of eleven months of each calendar year.
• SUBLETTING – The house (or Improvements) can only be leased or subleased to income-qualified persons approved by ELW for an amount that does not exceed the homeowner’s carrying costs.
• LEASE FEE – The homeowner pays a monthly ground lease fee of $50 to ELW in exchange for access to and use of the leased premises.
• TAXES AND ASSESSMENTS – The homeowner is responsible for the payment of all real estate taxes on the land and the Improvements.
• CONSTRUCTION AND ADDITIONS – The homeowner is allowed to build or change the Improvements in accordance with all applicable laws. Although ELW will not regulate Improvements, the homeowner must be aware of the limitations on the resale price; in some cases, investment may not be recovered.
• FINANCING – The homebuyers must secure a mortgage from lending institutions that comply with ELW’s and federally lending guidelines (e.g. Fannie Mae).
• TRANSFER TO HEIRS – The homeowner may leave, give, or sell their home to designated heirs.
• TRANSFER TO INCOME-QUALIFIED BUYERS – The homeowner may sell or transfer the Improvements (the house). Improvements can only be sold however, to ELW or to an income-qualified homebuyer for no more than a maximum resale price as described below.
• PURCHASE OPTION - In the event the homeowner elects to sell their home (rather than transfer to a designated heir) ELW has an option to purchase.
• RESALE FORMULA - ELW’s resale formula strikes a balance between the goal of allowing a fair rate of return for the seller (maximum of 4% annual appreciation) and the goal of limiting the resale prices to a level that will assure continued affordability. The resale formula will be consistent in all residential leasehold situations – so that ELW homeowners get the same deal.   back