Champlain Housing Trust: Ground LeaseKnowledge Building Across Community Land Trusts In Europe and the United States

Belgium July 1, 2nd, 2013

Brenda M. Torpy, CEOPresentation OverviewWhat is a Ground Lease?Challenges in using a Ground Lease ModelKey Components of the Ground LeaseBest Practices in Drafting a Ground LeaseCritical Decisions- Resale FormulaQuestions and Answers

Ground Lease ties the improvements & land togetherCommunity Land Trust owns the landIndividual owns the home and the leasehold interest in landDual Ownership

Legal

Real Estate Finance & Industry Practice

Culture & SocialChallenges to the Ground Lease Model in the US

LegalII. Real Estate Finance & Industry Practice

Challenge: Residential real estate never separates land and home Challenge: Appraisers resist valuing house separately from land

Very difficult to change an industry that is philosophically wary, if not hostile towards our missionMany years to gain acceptance from lenders and realtors to offer mortgages to CLT buyers.

III. Cultural & Social

Property law and industry practice reinforced cultural value of private ownership and freedom to profit.

Solution: Affordability and access to the highly prized ownership of a home. In Vermont, a rural state, owning the land had even greater significance and these attitudes needed to be overcome.

CHT made CLT ownership as like the market as possible. This has deep and broad support now.

Key Components of Ground Lease

Best Practices (Exhibits to Lease)

Resale Formula- Critical Decisions

Capital Improvement CreditsCritical DecisionsMade by CLTs to compensate owners who upgrade the homeAppraisal Based Formula: Owner gets 100% of increase in value due to the work Determined by third party appraisal at time of saleIndex Based Formula: Owner gets 100% of cost of improvements (regardless of value) Many CLTs add depreciation from time work was doneQuestions?