Community Land Trust Fact Sheet
What is a community land trust?
A community land trust is a nonprofit, community-based organization that works to provide permanently affordable homeownership opportunities. A CLT acquires land and removes it from the
speculative, for-profit, real estate market. CLTs hold the land they own “in trust” forever for the benefit of the community.
A community land trust provides access to homeownership for people who cannot afford homes for sale on the competitive real estate market. CLTs provide greater housing security than renting. CLT residents benefit from stable monthly payments, security from eviction, and the opportunity to build equity through homeownership.
Like all nonprofits, CLTs follow local laws and zoning requirements. They also follow the organizational bylaws put in place when the CLT was established. CLTs are governed by a board of directors that is
made up of community members and CLT homeowners. Members of the CLT elect the board of directors.
There are over 200 communities that are currently operating CLTs in the United States.
How does CLT homeownership work?
Buyers who purchase through a CLT purchase only the house and enter into a long-term agreement with the CLT to lease the land. CLT homes are sold to families with limited incomes. These homes cost less than market rate homes because CLT homebuyers purchase only the house and enter into a long-term agreement – a 99-year ground lease – with the CLT for the use of the land. When a family decides to sell a CLT home, they sell only the house to another family with a limited income for the price that is determined by the resale formula in the ground lease. The home stays affordable for future generations.
By taking the cost of the land out of the real estate transaction, land trust homes are more affordable than houses on the open real estate market.
What are the benefits of purchasing a house through a community land trust?
- Affordability – Land trust homes are more affordable than homes purchased on the open real
- Mortgage – Consistent housing payments allow the homeowner to build equity and receive federal tax deductions for mortgage interest and property taxes
- Community – The 99-year Ground Lease ensures that CLT homeowners will have the support of the land trust community. CLT homebuyers are part of this larger community – they can choose to participate in the CLT community through voting, volunteering, and becoming a CLT board member
- Support – CLT homebuyers have the support of CLT staff for as long as they own their homes. CLTs provide a wide array of support to CLT homeowners – from informational newsletters to hands-on home improvement workshops. CLTs are also available to help CLT homeowners in dealing with financial problems and foreclosure prevention
- Stability – Homeownership provides stable housing costs and security from eviction. With this stability, some CLT homeowners have gone back to school and pursued better jobs
What is the ground lease?
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 exclusive use of the land, and they have full responsibility for the property.
The nominal lease rates are different for each CLT, but with all CLTs, the lease fee gives the homeowner full use of the land and support services from the CLT.
The ground lease is renewable, can be transferred to the family’s heirs, and ensures full rights of privacy.
The ground lease also provides a resale formula that is used to determine the sale price, if or when the family decides to sell their CLT home.
Why do CLTs use a resale formula to calculate the sales price?
CLTs provide access to homeownership for people that cannot afford houses that are for sale on the real
estate market. CLTs make homeownership affordable for today’s homebuyers as well as for future
generations of homebuyers.
CLT homes are affordable today because the CLT homebuyer receives financial assistance from the community land trust and other down payment assistance programs to buy down the amount needed to purchase the house.
The resale formula preserves the affordability for the next family who will buy the CLT house.
Essentially, by agreeing to the resale formula, CLT homebuyers are agreeing to help another limited income family purchase a house in the same way that they were helped in purchasing their house.
Who pays the property taxes?
The CLT homeowner pays all the taxes associated with the property. As with all homeowners, property taxes and mortgage interest are tax deductible.