Frequently Asked Questions (with short answers)
What is a community land trust (CLT)?
CLTs are nonprofit organizations whose mission is to provide permanently affordable housing opportunities. The heart of their work is the creation of homes that remain permanently affordable, providing successful homeownership opportunities for generations of lower income families.
What is permanently affordable homeownership?
Permanently affordable homeownership programs invest public and private funding into a property in order to make home purchase affordable for people of modest means. The organization supports residents to attain and sustain homeownership. In return, the homeowner agrees to sell the home at resale-restricted and affordable price to another lower income homebuyer in the future. Consequently, the homeowner is able to successfully own a home and build wealth from the investment, while the organization is able to preserve the public’s investment in the affordable home permanently to help low and moderate income households.
How does a Community Land Trust make housing more affordable?
When a property goes into the land trust, the cost of the land is removed from the home purchase, generally reducing the cost by 30% - 50%. Buyers purchase only the home itself with a mortgage. Community Land Trusts can also can also build or rehab homes.
If I put my property into the THLT, can I still sell the house?
The owner of a house located on a CLT’s land holds a deed for their building and a lease for the underlying land. The resale price is determined by a formula contained in the ground lease. This formula, which usually yields a resale price that is lower than the building’s market value, is designed to give the seller a fair return for their investment, while giving subsequent buyers fair access to a home at an affordable price. By design and by intent, the CLT is committed to preserving the affordability of housing one owner after another, in perpetuity.
What’s a ground lease?
A CLT does not sell its land. It leases land to homeowners using a “ground lease.” This kind of lease allows a homeowner to use the land for a very long time, typically 99 years and are inheritable and transferable. The ground lease contains special provisions related to future affordability of the home.
Are there examples of places where this is already working?
How does a CLT acquire land?
CLTs typically acquire land in three ways.
(1) They purchase land at its market price, using funds they receive from public sources and donations.
(2) CLTs receive land as a gift from a private donor or governmental entity.
(3) CLTs acquire land for a below-market price through a mechanism known as a “bargain sale,” where the seller accepts cash for a portion of the land’s value and claims a tax deduction for the remainder of the land’s value.
What is shared equity and how does it work?
In shared equity the homeowner holds some of the equity while the trust holds the rest. Homeowners are an essential part of perpetuating affordability. They build assets through principal reduction and sharing in the accrued equity of the home. No homeowner is required to sell their home, even if their income increases. But if they decide to sell the price is based on a formula. This “pay-it-forward” method means that the home stays affordable to the next buyer.
What area do we serve?
We serve all of Thurston County, Washington.
Is this cooperative housing?
CLT's are appropriate umbrellas for many forms of housing, including cooperative housing. THLT is happy to work with cooperative households that intend to own cooperatively with THLT holding the underlying ground lease. .
Where does the trust get its money?
THLT is a brand-new organization. We expect that we will receive support from various sources including public funders, private donors of property, and cash donations.
How are these properties protected from falling into the hands of speculation?
First, the resale price restrictions make CLT homes a very unattractive speculative investment. Second, we are in the process of developing our ground lease and it probably will contain provisions that require THLT approval of each new owner according to stated criteria including at least income. Finally, future homeowners remain bound to provisions of the ground lease, perpetually.