A community land trust is a nonprofit model that enables affordable housing to remain affordable virtually forever. The premise of the model is to convey ownership using a 99-year ground lease, which intentionally limits appreciation. There are more than 250 CLT’s throughout the United States, and six in North Carolina.
Our homes remain affordable because we limit appreciation that can be realized by our homeowners. We are able to limit appreciation because we retain the deed to all of our properties. We convey an ownership interest in these properties using a 99-year ground lease, which is consistent with the community land trust model. Our objective is to keep our homes affordable to future home buyers who will need affordable housing options.
There are two key differences: Community Home Trust homeowners must reside in their homes, and they cannot sell their homes to anyone at any price. However, like private market owners, Community Home Trust homeowners have the security and tax advantages of ownership along with the financial obligations of the property including but not limited to: the mortgage, homeowner’s insurance, homeowner’s association dues and annual property taxes. Our homeowners are responsible for maintaining their homes and addressing repair needs (e.g. servicing the HVAC system, changing the air filters monthly, fixing leaks, etc.).
The ground lease is the document that transfers the rights to buy, own, possess, and sell a Community Home Trust property. It also provides some limits on the rights to alter, convey, and profit from that property. The ground lease requires the home be your primary residence.
Appreciation is not related to the actual market value of the homes. Buyers can earn between 0% – 1% per year of ownership on their investment in the home. Appreciation is tied to the median family income for a family of 4, which is published by HUD each year. Buyers also cannot lose money on their homes, so the worst case scenario involves a homeowner selling their home for the same amount for which they purchased it. Even with no appreciation, owners can still gain equity by paying down their mortgage each year.