Why is a CLT house more affordable than any other house?

In a Community Land Trust, the homeowner purchases the house but not the land, which lowers the cost. The price of the home is usually about 20% lower than the market rate because the land is not included.  (see Table 1) A house that normally would cost $60,000 (and has a 20% downpayment of $12,000) may now only cost $48,000 (and have a 20% downpayment of $9,600). The lower down payment can make a big difference!  The CLT can also work with lenders to ensure that a homebuyer can find a place to lend money to them for the mortgage for the home. 

 

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Can I pass this house on to my children and grandchildren?

The CLT home can be inherited by family members. The typical term of the lease on CLT land is 89 years and this can be renewed once for another 89 years. This ensures that the land stays in the homeowner’s family’s hands for a long time. 

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Do I pay Property Taxes as a CLT Homeowner?

Yes, you pay the taxes on the house and the CLT pays the taxes on the land. 

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How is this different from a land contract?

Land contracts are agreements between the homeowner and the renter for the renter to pay higher monthly payments, eventually pay off the debt of the house, and own the house. While land contracts can be beneficial for people who want to buy a house but do not qualify for a traditional mortgage, land contracts are often predatory. Renters who agree to land contracts assume all of the obligations of homeownership, but none of the rights and protections of homeownership.  Unlike in land contracts, in a CLT, you own the house from the beginning and so you have all the benefits of homeownership. In some cases, land contracts are intentionally difficult to understand and can contain sections that benefit the person offering the land contract and take advantage of the homeowner. 

 

In a CLT, an attorney is required to go over the agreement with the homebuyer to make sure that they are entering into the agreement with a complete understanding of the terms. The CLT is invested in seeing you succeed as a homeowner and as a member of the community! 

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Why would I want to buy a CLT home instead of renting?

Owning a home has a lot of advantages: stability, freedom, community, and wealth creation. 

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Stability: As a renter you are subject to the actions of your landlord - if they want to sell the house, for example, you may have to move at a time that is not desired or convenient.  

Freedom: There is something empowering about having the ability to make changes to your surroundings as desired (paint, remodel, create a garden), have long term guests (leases often prohibit guests), own pets, and other things that you can’t do in a rental. 

Community: Home owners are often more integrated into the community as they expect to be in the neighborhood for a long period of time.  This feeling of belonging and opportunity for contribution and friendship is one of the intangible benefits of home ownership.

Wealth Creation: As your home gains value, you are creating equity. When you are ready to move, you can sell the house according to the CLT resale formula and make a profit on the sale. You can also pass your home down to future generations since the CLT home can be inherited by family members.