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Frequently asked questions

What is a Community Land Trust?

What is different about Community Land Trust homes?

How does the Land Trust keep prices lower?

How do you prevent a Land Trust home from being sold at market rate by the owner?

How does "limited equity" work?

Who runs the Land Trust?

How did The Community Land Trust of Cape Ann begin?

How can I contribute to the work of the CLTCA?

Answers

What is a Community Land Trust?
The Community Land Trust of Cape Ann is one of about eighty Land Trusts in the United States.  Their growth in popularity has arisen for a very good reason -- the land trust is a realistic, long-term response to the need for permanent, affordable housing.

The Land Trust movement believes that the land is a sacred trust to be used for the good of each person and the good of the community; that everyone has a right to the use of the land, but it is not a a commodity to be bought and sold.

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What is different about Community Land Trust homes?
They cost less.  A family can pay rent for 50 years and have nothing to show for it!  The mortgage on these Land Trust homes are less than rent - and you own the home.
Another difference is that while Land Trust homeowners own their houses and are eligible for all the legal and tax benefits of home ownership, they do not own the land.
Also, homes can be purchased with a very small and sometimes no down payment.  Many people who may not be able to purchase homes in the usual way are able to become homeowners through the Land Trust.
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How does the Land Trust keep prices lower?
The work of the Land Trust is possible because of community participation.   Individuals, churches, businesses, and civic groups contribute time, money, knowledge and skills.
Land Trusts are non-profit, tax-exempt corporations to which individuals and organizations can make tax-deductible donations.  The Land Trust can attract grants and low-interest loans not usually available to for-profit developers.  It can also receive bequests and outright gifts of land and homes.  All the benefits of the Land Trust are passed on to the home buyer in the form of reduced selling prices or rehabilitation of substandard buildings.
Administrative expenses of the Land Trust are low.  Professional help can be donated or offered at special low rates.  All these things enable a Land Trust to develop homes at well below market prices.
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How do you prevent a Land Trust home from being sold at market rate by the owner?
This is a basic point about how a Land Trust works: The buyer of a Land Trust home owns the house, but the land remains in the possession of the Trust, which leases it to the homeowner on a 99-year lease.  This allows the homeowner to leave the home to heirs or to sell it: but the homeowner cannot put the property on the open market.  The Land Trust homeowner has secure housing, and also equity, but it is a "limited equity."
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How does "limited equity" work?
At the time of purchase the homeowner agrees to a "limited equity formula."    Basically, this means that the homeowner builds up equity in the home through the initial down payment, the mortgagee principal, and whatever substantial improvements have been made (a new bathroom, for instance).  But the homeowner does not receive benefit for increased property values (for which he or she is not responsible).  The selling price of the house will be determined by the rate that local wages increase.   The result is that he homeowner has a significant financial advantage of lower monthly housing costs, and gets a fair return at the time of sale, but does not make a windfall profit.  What the Land Trust makes available is homes, not investments.
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Who runs the Land Trust?
The members do.  The membership of the Land Trust consists of people who own or rent (or hope to won or rent) Land Trust properties, and people interested in supporting the work of the Trust.  Members elect a Board of Directors, whose responsibility it is to set policy.  Staff runs the day-to-day business of the Land Trust.
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How did The Community Land Trust of Cape Ann begin?
The Land Trust was started by the leaders of Wellspring House, Inc., a shelter for homeless families which began in 1981 as a venture of seven people who wanted a home big enough to share with people in need.  Soon after they came together, homelessness became epidemic in America.  They understood that the cause of the crisis was that more and more people could not afford market rents, let alone the American Dream of home ownership.
Wellspring House community members began to research ways to develop affordable homes which could be sold to low-income families.  They learned of the growing Community Land Trust movement, coordinated through the Institute for Community Economics.
They educated themselves on Community Land Trust structures, developed by-laws, and with the help of the Institute for Community Economics and Gloucester attorney Rick Porter, established The Wellspring Community Land Trust of Cape Ann as an independent corporation in January, 1989.
The Wellspring Community Land Trust of Cape Ann later changed its name to "The Community Land Trust of Cape Ann" to distinguish itself from Wellspring House. 

Though our name has changed, the strong relationship between Wellspring House and The Community Land Trust of Cape Ann continues today:

Some members of each organization serve on the board of directors of The Community Land Trust of Cape Ann and Wellspring House.
The missions and work of each organization continue to compliment and support each other.

The Community Land Trust of Cape Ann continues to carry on the vision of its founders and will forever be grateful to Wellspring House for its support.

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How can I contribute to the work of the CLTCA?
The CLTCA is a membership organization.  Therefore the first way to contribute is by becoming a member
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For More Information Contact:

The Community Land Trust of Cape Ann, Inc.
159 Main Street
Tel: 978-281-8728
FAX: 978-283-5634
Internet: vicki@cltca.org

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