Frequently Asked Questions
Who is eligible to purchase COCLT homes? What does "affordable" mean?
Generally, purchasers of CLT homes cannot earn more than 120% of the Median Income for their household size. This number is calculated annually by the U.S. Department of Housing and Urban Development (HUD). In 2019, 120% of the Median Income for a household of four was $93,600.
CLT homeownership is more affordable than market homeownership because the homeowner is purchasing the home only, and not the land. In addition, the property taxes on the home and the land are lower than they otherwise would be under a traditional market appraisal because the taxing authority, Franklin County Auditor, takes both the resale restrictions on the home and the low lease fee into account in appraising CLT properties.
COCLT strives to ensure that CLT homeowners spend no more than 33% of their gross income on total housing costs, including mortgage payments, taxes, insurance and CLT fees, unless demonstrated compensating factors make it reasonable to extend that limit based on individual circumstances.
How do I finance the purchase of my COCLT home? (Article 8)
CLT homeowners typically obtain a mortgage from a bank to finance the purchase of their CLT home. The terms of the mortgage must be approved by COCLT, and COCLT will assist the homeowner in applying for the mortgage. The specific requirements for the mortgage are set forth in Article 8 of the Ground Lease and in the
CLT’s Permitted Mortgage & Refinancing Policy. Any future refinancing or home equity financing is also subject to prior approval by the COCLT.
Are there any fees associated with the COCLT program? (Article 5 and XXX)
Yes. The homeowner pays a fee of $25 each month to COCLT.
This amount is made up of both the Ground Lease Fee and the Exterior Repair and Replacement Reserve Fee (also called the “Maintenance Fee”):
Ground Lease Fee
In exchange for occupancy and use of the land beneath the home, the CLT homeowner pays COCLT a monthly Ground Lease Fee, due on the first day of each month. This fee is $25 each month, as set forth in the Ground Lease in Section 5.1. The Ground Lease Fee may be adjusted for inflation by COCLT
no more than once per year.
Exterior Repair and Replacement Reserve Fee or the “Maintenance Fee”
To preserve the physical condition of the major exterior systems of the home, the CLT homeowner pays HCLT a Maintenance Fee of $50 each month. Maintenance Fee payments are deposited by HCLT into a reserve fund dedicated specifically to that home. Maintenance Fee reserve funds may be used by the current homeowner, or subsequent owners of the home, to maintain and repair the roof, exterior siding, exterior paint, and finishes or similar features of the home. The Maintenance Fee reserve funds remain with the home until they are withdrawn for needed repairs or maintenance by a current or future homeowner. A homeowner cannot withdraw unused Maintenance Fee reserves when the home is sold. Maintenance Fee payments are due on the first day of each month and may be adjusted for inflation by HCLT no more than once per year.
What if I want to make changes to my home? (Article7)
The homeowner may make changes to the home as long as any construction activities are performed in a professional manner in compliance with all laws and regulations, and any changes are consistent with residential use. The homeowner is expected to cover all costs of the proposed modifications. The homeowner may not make modifications that affect the footprint, square footage, or height of the home or that add new structures to the land (such as a garage or fence) without written approval from COCLT. Homeowners may apply for approval by submitting a written request to COCLT that includes:
COCLT then has two weeks to give the homeowner its written consent to the new construction or to give the homeowner its reasons for not consenting in writing.
A written statement of the reasons for undertaking the construction,
A set of drawings showing the dimensions of the proposed construction,
A list of necessary materials and quantities needed, and
A statement of who will do the work.
What if I want to finance or refinance my COCLT home? (Article 8)
Most CLT homeowners secure mortgage financing to purchase their home. COCLT permits homeowners to take out standard, fixed-rate mortgages that meet certain requirements, such as being from an approved lender and having a maximum term of 30 years. These requirements can be found in
COCLT’s Permitted Mortgage & Refinancing Policy.
Once the homeowner has purchased the home, the homeowner may refinance their mortgage or obtain a home equity line of credit only with COCLT’s written permission.
What happens if the homeowners fail to comply with the Ground Lease? (Article 12)
If the CLT homeowner fails to pay the Lease Fee to COCLT, and the fee is left unpaid for 30 days following notice from COCLT, then the homeowner is in default under the Ground Lease. If the homeowner pays two-thirds of the amount owed to the CLT within 30 days of receiving notice, then they will receive an additional 30 days to make good on the entire debt to avoid default. If the homeowner violates a non-monetary obligation in the ground lease (for example, an unapproved sublease), then they have 60 days to come back into compliance with the Ground Lease, or begin a good faith attempt to comply, to avoid default.
A homeowner’s default under the Ground Lease gives COCLT the right to terminate the Ground Lease and sue the Homeowner for repossession of the home.
What if I have a dispute with COCLT? (Article 13)
COCLT and the homeowners can take their dispute to mediation. The costs of the mediation will be split equally among the parties. If the dispute is not resolved in mediation, the issue will be submitted to binding arbitration.
How much can I sell my home for? (Article XXX)
The maximum price that the CLT homeowner can sell the home for is restricted to a fixed rate of increase per year (1.25% simple interest) above the initial sale price. The cap on the home’s sales price allows the home to maintain its long-term affordability.
What happens if I want to sell my home? (Article 10)
COCLT’s goal is to maintain the availability of affordable housing for low- to moderate-income households, and that goal is reflected in the sales process.
In general, the homeowner may only sell her home to COCLT or an income-qualified person. An income-qualified person is a person whose gross annual household income is less than or equal to 120% of the median household income in the area. Upon being made aware of the homeowner’s intent to sell, COCLT will have the option to purchase the home before the homeowner can sell directly to a buyer. If COCLT’s purchase option expires and the homeowner finds a buyer for the home, COCLT must confirm in writing that the buyer is an income-qualified person and provide written approval of the terms of the sale.
All sales or transfers of the home must be approved by COCLT.
The homeowner may transfer their home to her heirs after her death under the conditions of Article 10. Article 10 provides that a homeowner’s spouse, children, or members of the homeowner’s household who have resided in the home for at
least one year immediately prior to the homeowner’s death may inherit the CLT home and use it as their primary residence, regardless of whether they are income-qualified. Any heir who wishes to reside in the home must go through the process of entering into a new ground lease with COCLT. All other heirs must be income-qualified in order to use the home as their primary residence, but all heirs are entitled to receive their designated share of the proceeds from the sale of the home back to COCLT.
The homeowner provides COCLT with a Notice of Intent to Sell.
COCLT will exercise its Purchase Option on the home, which is the right to buy the home at the resale formula price or assign its right to buy the home to an income-qualified buyer identified by COCLT.
If COCLT does not exercise its Purchase Option, the homeowner can sell their home at the resale formula price to any income-qualified buyer that is approved by COCLT.
What costs will the homeowner pay when selling the COCLT home? (Article XXX)
The homeowner will pay all closing costs related to the purchase, any costs of curing title objections made by the purchaser, all outstanding Ground Lease and Stewardship Fees owed to HCLT, and any amounts necessary to discharge any liens against the home.
What happens if COCLT sells or transfers the land my home is on? (Article 3)
COCLT does not intend to sell or transfer the land underneath the CLT homes. In the unlikely event that the COCLT dissolves or must transfer the land to another entity, then the homeowner’s Ground Lease on the land would continue for the remainder of its term. However, if the land were to be transferred to an entity other than a non-profit corporation, a charitable trust, a government agency, or an organization with goals similar to those of COCLT, then before the transfer occurred, the homeowner would have a right of first refusal to purchase the land underneath the home.
How long will the COCLT home be affordable?
The intent is that CLT homes will be affordable forever. The term of the lease is 99 years and the lease may be renewed by anyone who rightfully inherits it for an additional 99 years. Any subsequent purchasers of the home will receive a new 99-year lease. Each future CLT home buyer will enjoy the home at an affordable purchase price and will pass that affordability on to the next CLT home buyer.
How does buying a house from a Community Land Trust work?
Very simply, you buy the house but you don’t buy the land. You rent the land from Central Ohio Community Land Trust under a 99-year (renewable) ground lease, which provides long-term protection to the homeowner. This makes the home less expensive to purchase, because you don’t have to finance the cost of the land. And in exchange for getting a good deal on your land trust home, we ask that you pass along the deal to the next homeowner, so that the home continues to be affordable for generations to come.
How do land trust homes remain affordable over time?
A land trust home is a good deal – not just for the first buyer but for each successive buyer also. The buyer of a land trust home promises to “pass along the good deal” to the next homeowner. They do this by sharing the increase in the home’s value with the next buyer through something called the Resale Formula below.
What is the Resale Formula - and how does it work?
The resale formula outlines how we calculate the maximum price at which a COCLT homeowner can resell their home. Essentially, in exchange for buying a home at an affordable price, the homeowner agrees to sell the home at an affordable price. The resale formula is a way to provide our homeowners a way to capture a portion of a home’s appreciated value, while ensuring the home remains affordable for future buyers. Therefore, when you sell your land trust home, you get (a) 100% of the equity you have gained by paying down your mortgage, plus (b) 25% of the increase in the market value of your home. *(See note below)
*NOTE: The resale formula sets a maximum sale price, and does not guarantee a certain sale price. While many COCLT homes have sold at the price calculated using the resale formula, the actual sale price may vary depending on housing market conditions.
EXAMPLE: You buy a home from the land trust for $150,000. At that time, the house had an appraised value (i.e. market value) of $200,000. Seven years later, you want to sell the home, and now it has an appraised value of $250,000. Plugging these numbers into the resale formula, this house could be resold for (a) original purchase price ($150,000) plus (b) 25% of the increase in appraised value ($50,000 x 0.25 = $12,500) for a total resale price of $162,500.
What are the advantages of owning a land trust house verus renting?
You get all the tax advantages of home ownership. All mortgage principal payments build your equity in your house. You get 25% of the increase in appraised value of your house. And no one can make you move — it is your home!
Should I still consider conventional homeownership?
Land trust houses are for people with modest incomes who simply cannot afford a market-based house. If you can afford to buy a house on the conventional market – go for it! You would keep 100% of the increase in the value of your house.
What is a ground lease- and how does it work?
The ground lease is a very long document that describes all the rights conveyed to the homebuyer when they purchase a land trust home. It states that as a land trust homeowner, you have full use of the land for 99 years, which is renewable at the option of the homeowner for another 99 years — which is a very long time! And it is a lengthy document because it has to cover all the different things that can come up over 200 years. And it also contains language to make sure that the house remains affordable to future generations of homeowners.The key element of the ground lease is that the purchaser buys the house, but not the land under the house. The land is leased from the Community Land Trust. If you ever sell your land trust home, the sale price will be based on a resale formula designed to maintain affordability for future owners. The resale formula is pretty simple — if you ever sell your land trust home, you will get (a) what you paid for the house when you bought it, plus (b) 25% of the increase in market value of your home.T
he Community Land Trust has a three page summary of the ground lease available. The summary has some of the legalese translated into plain English. In addition, the Community Land Trust requires that you go over the ground lease with a lawyer of your own choosing to make sure that the agreement is entered into with full understanding.
Sample Ground Lease (pdf)
Outline of Ground Lease (pdf)
Why does the land trust sell the house but not the land under it?
Retaining ownership of the land accomplishes several goals. First, it means that the buyer does not have to finance the cost of the land when purchasing the home. Second, it ensures that the land trust will have the right to repurchase the home whenever it comes up for sale, at the resale formula price.
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. CLT homeowner must homestead their property.