Regional Housing Legal Services attorneys have begun providing the legal services necessary to help community organizations set up Community Land Trusts with the goal of preserving housing affordability, while also creating opportunities for low and moderate-income families to access the wealth-building benefits of homeownership. Community Land Trusts can be a valuable tool in neighborhoods where housing prices are rapidly rising because it is a valuable strategy for the decommodification of land.
What is a Community Land Trust (CLT)?
A Community Land Trust (CLT) is a nonprofit organization that holds land on behalf of a place-based community. It can serve as a steward for affordable housing, community gardens, civic buildings, commercial spaces, or other community assets on a long-term basis. One of the most common CLT programs is shared-equity homeownership, in which homeowners hold the deed to their home while the CLT owns the land beneath it. A long-term ground lease defines the relationship between them.
If a homeowner sells a CLT home, the sale price is determined by a formula in the ground lease, rather than the market. The formula balances the homeowner’s right to accrue equity with the community’s interest in preserving the affordability of the home for the next buyer. CLTs balance the needs of individuals who want the security of tenure in occupying and using the land and housing, with the needs of the surrounding community, striving to secure a variety of social purposes such as maintaining the affordability of local housing, preventing the displacement of vulnerable residents, and promoting economic and racial inclusion.
There is enormous diversity among CLTs in the ways that real property is owned, used, and operated and the ways that the CLT itself is guided and governed by people living on and around a CLT’s land.
How does it preserve long-term affordable housing?
Many CLTs use publicly-funded subsidies to acquire or maintain the land or to construct or rehabilitate housing on the property. The CLT’s ownership of the land prevents the loss of these subsidies that would occur if the home and land were sold in usual circumstances. CLTs play a key role in protecting housing units from rapid appreciation in gentrifying neighborhoods. Families who purchase a home on a CLT property can then live or remain in neighborhoods where conventional homeownership and rents are out of reach.
Foreclosure rates are far lower for CLT homebuyers, thanks in part to the ability of the CLT to intervene and participate in a workout if the buyer defaults. Pre-purchase support and counseling from the CLT help buyers prepare financially and avoid expensive or predatory loan products. Unfortunately, buyers in CLT-owned properties are still subject to conventional mortgage qualification, a barrier that continues to block the very poor or homeless from accessing homeownership.
How can I learn more about creating a CLT in my community?
RHLS can provide representation to community stakeholders interested in learning more about this process. You can fill out the intake form on our website.