1. Champlain Housing Trust: Ground Lease
Knowledge Building Across Community Land Trusts In Europe and the United States
Champlain Housing Trust: Ground Lease
Belgium – July 1, 2nd, 2013
Brenda M. Torpy, CEO

2. Presentation Overview
What is a Ground Lease?
Challenges in using a Ground Lease Model
Key Components of the Ground Lease
Best Practices in Drafting a Ground Lease
Critical Decisions- Resale Formula
Questions and Answers

3. Ground Lease ties the improvements & land together
Dual Ownership
Community Land Trust owns the land
Individual owns the home and the leasehold interest in land
Ground Lease ties the improvements & land together

4. Challenges to the Ground Lease Model in the US
Legal
Real Estate Finance & Industry Practice
Culture & Social

5. Rule Against Perpetuities –
Legal
Solution
Contract between two consenting parties
Term Limit (99 years) and renewable
Community in Community Land Trust – Legal Documents are not only protection of mission
Rule Against Perpetuities –
Prohibition against limiting commercial value of land

6. II. Real Estate Finance & Industry Practice
Challenge: Residential real estate never separates land and home
Many years to gain acceptance from lenders and realtors to offer mortgages to CLT buyers.
Challenge: Appraisers resist valuing house separately from land
Very difficult to change an industry that is philosophically wary, if not hostile towards our mission

7. III. Cultural & Social
In Vermont,
a rural state,
owning the land
had even greater
significance
and these
attitudes
needed
to be
overcome.
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.
CHT made CLT ownership as like the market as possible. This has deep and broad support now.

8. Key Components of Ground Lease
Owner can use land just as a typical homeowner would
Use of Land
99 years, can be renewed once
Term of Lease
CHT requires at least 6 months
Owner Occupancy
CHT charges $35/month. Market rates are approx. $300/month
Ground Lease Fee
To pay property taxes and insurance
Owner Responsibility
To maintain home
Including Capital Improvement Credits
Resale Formula

9. Stipulation Client Declaration Permitted Mortgages
Best Practices (Exhibits to Lease)
Signed document stating mutual understanding of unique nature of transaction
Purpose: to outline the intent of the parties in signing the lease
Stipulation
Acknowledgement by owner that he/she was represented by legal counsel
Acknowledgement that legal counsel reviewed all CLT closing documents
Client Declaration
Defines CLT and Lender’s rights and responsibilities
Guards against homeowner refinancing without CLT approval
Permitted Mortgages

10. Resale Formula- Critical Decisions
Appraisal Based
Index Based
Owner receives a guaranteed return (1% or 2% increase of purchase price when selling)
Goal: To guarantee home stays affordable
Advantages: Simplicity, owner gets increase even when market value decreased
Owner Receives a percentage (25%) of market appreciation
Goal: To try to mirror the open market as much as possible
Advantages: Easier to gain acceptance by lenders, owner benefits when market value increases

11. Capital Improvement Credits
Critical Decisions
Capital Improvement Credits
Made by CLTs to compensate owners who upgrade the home
Appraisal Based Formula:
Owner gets 100% of increase in value due to the work
Determined by third party appraisal at time of sale
Index Based Formula:
Owner gets 100% of cost of improvements (regardless of value)
Many CLT’s add depreciation from time work was done

12. Questions?