The questions and answers below are meant to help you become more familiar with the Humboldt Community Development Land Trust. Call us for dates and times of our Home Buyer Workshops.
What is the Humboldt Community Development Land Trust?
The Humboldt Community Development Land Trust (HCDLT) gives families, who priced out of the traditional real estate market, an opportunity to purchase a home at an affordable price. The HCDLT also keeps the homes affordable from one buyer to the next.
How does the HCDLT program Work?
Housing Humboldt, a non-profit organization, develops homes and retains ownership as the steward of the land. The homes built on the land are sold to qualified income-eligible households at an affordable price.The homeowner owns the home and has the right to use the land in a responsible way as long as she/he wants to live in the home. In exchange for the opportunity to purchase the home at an affordable price the homeowner agrees to sell the home at an affordable price to another income-eligible household.A re-sale formula determines the sale price of the home at the time the homeowner wants to sell the home. The formula gives the homeowner an opportunity to gain a limited return on the original investment, while maintaining the affordability of the home to low-income households.
How does "Community Land Trust" homeownership compare to "Traditional" homeownership?
Similarities
- The homeowner has a mortgage (home loan) with a bank.
- THe homeowner accumulates equity.
- The home can be deeded or passed on to heirs.
- The homeowner pays property taxes.
- The homeowner can make alterations and improvements.
- The homeowner receives federal mortgage tax deduction.
Differences
- The purchase price is lower, usually about 30-50% below the market rate, because the land is already paid for.
- The non-profit owns the land, and the homeowner leases the land from non-profit for a nominal ground lease fee.
- The “community land trust” homeowner agrees to sell the home at a price affordable to another low-income household.
How does the Ground Lease work?
The homeowner owns the home and has the right to use the land as evidenced by a Ground Lease. The homeowner leases the land from the nonprofit for a monthly fee ($50/month for the first year). The fee increases each year by the percentage increase in the Consumer Price Index (usually around 3%).The Ground Lease specifies the rights and responsibilities of the homeowner and the nonprofit (owner/steward of the land). The Ground Lease is renewable, can be transferred to heirs and ensures full rights of privacy. The Ground Lease also addresses the re-sale of the home.
What is the process for selling the home?
If a homeowner wants to sell the home in the future, he/she agrees to sell the home at an affordable price to another low-income household.The sale price is determined by a formula that gives the homeowner a modest return on the original investment while keeping the home affordable.
What about property taxes?
The homeowners pay all the taxes associated with the property. As with all homeowners, the interest portion of a mortgage payment is tax deductible. If federal income taxes are itemized, the property taxes that are paid are also tax deductible.
How does the "Community Land Trust" help residents and the community?
The “community land trust” makes it possible for people who cannot afford homes in today’s market the opportunity to become homeowners at an affordable price.Homeownership provides greater housing security than renting. Homeowners benefit from stable monthly payments, security from eviction, and the opportunity to build limited equity.