Land Trust - Frequently Asked Questions
What is a Housing Land Trust and how does it work?
The Land Trust provides access to land and housing for people who are otherwise
priced out of the housing market. The model employed helps people to purchase homes on
affordable terms. The land beneath the homes is leased to the homeowners through a
long-term, 99-year, renewable lease. A key benefit is the ability to ensure prices stay
affordable. When the homeowners decide to move, they can sell their homes. The resale
formula is designed to give homeowners a fair return for their investment, while
keeping the price affordable for other lower income people. At the time of sale, the
homeowner has the benefit of having equity and a possible small gain from the sale
of the house.
How are the terms "very low", "low", and "moderate" income defined?
They reflect the applicable NJ terminology, commonly employed in statutes, regulations
and court decisions. The specific definitions – “very low” meaning less than 30% of the
area's median income, “low” less than 50% of median, and “moderate” 50% to 80% -
clearly target the land trust's activities to “low income” households as defined in
federal law, i.e. those with income below 80% of area median.
Why do we need the Land Trust?
When incomes do not rise as fast as housing prices, many people cannot afford to buy
a market-rate house. The median home price in Ocean County in 2000 was $149,900.
The Land Trust is a tool to help low and moderate income people with steady incomes
and good credit buy a home.
Will banks and other financial institutions make loans for homes on leased land?
Yes. Most of the largest banks in the country are regularly making Land Trust home loans.
A local lender who is well versed with the program and with all
documents needed to secure loan approval can be recommended by us.
How does a Land Trust make homeownership affordable?
The Land Trust owns the land and does not pass that cost to the homeowner. Taking the
price of the land out of the equation makes the home more affordable. In return, the home
is sold to the next family at a price they too can afford.
What happens if a leaseholder wants to move?
You can move at any time.
What about taxes?
The homeowner pays all the taxes associated with the property. As with all homeowners,
if you itemize, the interest portion of your mortgage payment and the property taxes paid
are tax deductible.
How do I find out more about Community Land Trusts?
