The goal of the NMCDC’s Land Stewardship Program is to ensure that attainable homeownership opportunities exist for individuals at all income levels, creating diverse and inclusive neighborhoods, now and into the future. NMCDC Community Land Trusts (CLTs) provides a stock of below market rate homes that are reserved for purchase to income-qualified buyers.
Frequently Asked Questions about CLTs
What is the long-term agreement between the CLT and the CLT homeowner?
CLT homeowners enter into a long-term, legally-binding agreement with NMCDC in order to preserve the affordability of their home permanently. This agreement is a 75-year ground lease that grants the homeowner full access to the land. The ground lease is renewable and inheritable.
What is a ground lease?
With single-family homes and townhouses, the CLT homeowner owns the house and other property improvements and the CLT owns the land beneath. The land is held in ‘trust’ for the benefit of the greater community. Recognizing this unique relationship, the CLT and the homeowner sign a ground lease that defines the roles and responsibilities of both parties. The Ground Lease allows the homeowner secure, long-term rights to occupy and use the land. CLT homeowners have full responsibility for the property. NMCDC homeowners pay $30/month to NMCDC as a ground lease payment.
How does CLT homeownership work?
Homebuyers with CLT programs purchase a home at a subsidized price from the land trust and enter into a long-term agreement (a ground lease) to preserve the affordability of the home. CLT homes are sold to households with threshold income levels. After purchase, the homeowner’s income is unrestricted but when that household decides to sell, they pass the original subsidy and its long-term affordability agreement on to another household under the threshold income. The sales price is determined by using the easy-to-understand NMCDC resale formula. In this way, homes stay affordable for future generations. See pages 9-10 for a detailed example of how the resale formula works.
The CLT Perpetual Affordability Cycle
Benefits of buying a CLT home through NMCDC
- Affordability – CLT homes are more affordable than homes purchased on the open real estate market because the CLT provides affordability assistance to its homebuyers.
- Mortgage – stabilized, consistent, and affordable housing payments.
- Community – CLT homeowners are important to NMCDC — as part of a larger community of CLT homeowners, they are encouraged to apply for membership on NMCDC’s board of directors.
- Support – CLT homebuyers have the support of the NMCDC and its staff as long as they own their homes.
- If a homeowner is having trouble paying their mortgage and is entering foreclosure, NMCDC can help expedite a sale to a new homebuyer to help the homeowner out of a bad situation.
- Stability – homeownership provides stable housing costs and security. With this stability, homeowners have a solid foundation that can allow them the pursuit of other dreams, educational, vocational, or recreational.
- Equity — CLT homeowners retain their earned equity and earn 1.5% per year on the value of the home.
- Tax benefits — homeowner may receive federal tax deductions for mortgage interest and property taxes.