What is a Community Land Trust?
This short video from our partners at Grounded Solutions explains the concept of Community Land Trust. HRDC has been operating with this model since the mid 1990’s for low and moderate income households. HRDC currently holds 51 homes in Bozeman and an additional 10 in Livingston using the Community Land Trust model.
Can I rent out my home?
The home must be occupied by the homeowner. Renting a room while the home remains owner-occupied is possible with permission and approval from the CLT.
Can I make alterations to my home?
Yes, with consent from the CLT. However, the footprint, square footage, or height of the home cannot be altered. The Homeowner is responsible for all costs. Cosmetic upgrades will not be considered when calculating the home's resale value.
How do I finance my home?
As part of your homebuyer’s education and counseling, you will learn more about financing options for your home, including an exploration of your monthly budget, and credit, and how that impacts your ability to finance a home. All homes purchased through the program must utilize a conventional or government-insured fixed-rate first mortgage with a term of 15 to 30 years.
Can I refinance?
Yes, with permission and approval from the CLT.
Do I have to pay taxes and insurance?
Yes, you are responsible for all taxes and insurance. However, homeowners pay reduced taxes on the land portion of their tax bill by owning in a CLT.
What happens to the home if the homeowner passes away?
The home can be transferred to certain heirs: the spouse of the Homeowner, the child or children of the Homeowner, and member(s) of the Homeowner’s household who have resided in the Home for at least one year immediately prior to the Homeowner’s death. If it is not transferred to any of these specific heirs, then the home will be sold and the money will go to the estate.
Do I have to fix my home before I sell it?
Yes, you are responsible for repairs and maintenance throughout the entire time you live in the home. If you have been putting off repairs and maintenance, then you will need to make them prior to selling. A home inspection will be performed once the home is under contract.
GLOSSARY OF KEY TERMS
The parcel of land that is leased to the homeowner.
The total price that is paid for the home by the homeowner.
The monthly fee that the homeowner pays to the CLT for the continuing use of the leased land.
The potential maximum resale price that is determined by the resale formula. In the case of our CLT, the formula price shall be equal to the amount of the homeowner’s base price plus simple interest at a rate of 2% annually on the anniversary date of purchase.
Increase in the value of an asset such as real estate.
First Time Homebuyer
As defined by the Montana Board of Housing (MBOH), which states that an applicant cannot have owned a home within the past three years. Exceptions to this definition may occur when:
An applicant who has previously owned a home but has been displaced due to death of a spouse, divorce, or legal separation.
The applicant owns a dwelling unit which is not in compliance with state or local building codes and cannot be brought into compliance with such codes for less than the cost of constructing or purchasing a complying structure.
The applicant owns a mobile/manufactured/modular home that is not affixed to a permanent foundation in accordance with applicable regulations.
The home is occupied by a disabled adult or child and the unit cannot be readily adapted to meet their specific needs for less than the cost of constructing or purchasing a suitable structure.
Area Media Income (AMI)
The median household income in each county is calculated annually and adjusted for household size by HUD – typically, half of the households in the county earn more than the median, and half earn less than the median.
Individuals or families earning 80% or less than the current Area Median Income (AMI) for our region are considered low-moderate income.
The residential structure and other permanent improvements located on the leased land and owned by the homeowner, including both the original home and all permanent improvements added by homeowner at homeowner’s expense.
Purchase Option Price
The maximum price the homeowner is allowed to receive for the sale of the home and the homeowner’s right to possess, occupy and use the leased land.
The price that is established when the ground lease is signed that will be used to calculate the formula price at the time of sale.
When applied to real estate: buildings and other permanent products of human effort that increase the usefulness or value of a parcel of land as distinguished from replacements and repairs that replace but do not increase value.
Front End Ratio
What percentage of your gross monthly income will go towards housing expenses.
Back End Ratio
Compares what portion of your income is needed to cover all of your monthly debts.
Housing affordability is defined by the U.S. Department of Housing & Urban Development (HUD) that households pay at or below 30%-33% of their annual income towards gross housing costs. Housing costs include rent, mortgage payments, homeowner’s association fees, utility and heating costs, property and renter’s insurance, taxes, etc.