FAQs For Prospective SJCLT Homeowners

Owning a SJCLT home is not for everyone. If you can afford to buy a market rate home that may be the best choice for you. However, if you are priced out of the expensive Lake Tahoe real estate market and want to enjoy most of the benefits of homeownership buying a SJCLT home may be the right thing for you. Below we address some of the common questions about owning a SJCLT home.

Why should I consider a SJCLT home?


SJCLT homeownership provides the majority of the benefits of traditional homeownership: long-term security of homeownership, fixed housing costs, tax deductions and the potential for equity and wealth acumulation. While SJCLT homeownership limits the appreciation a homeowner may realize upon the sale of the home, this investment is still likely to provide a significant return relative to renting. In addition to the potential for appreciation, SJCLT homeowners will realize equity acumulation with every mortgage payment.




Why does SJCLT sell only the home and not the land?


This is how the SJCLT can ensure permanent affordability of the home for future generations of working families. By retaining ownership of the land underneath the homes SJCLT removes land appreciation from the overall cost.




Can anyone buy a home from SJCLT?


Applicants must meet the following criteria:

  • Head of household must be at least 18 years of age
  • The household must meet the income eligibility criteria for the particular unit (this will generally be less than 120% of the County Area Median Income)
  • Qualify for a 30-year fixed rate mortgage
  • Contribute at least 3.5% to the total purchase price, including closing costs (downpayment assistance programs may be available to help)
  • Complete a homebuyer education course designated by the SJCLT that will include an overview of the rights and obligations of homeownership on SJCLT ground leased property.
  • Understand and agree to the provisions of the ground lease, including the resale restrictions that limit potential appreciation to the homeowner.




So, tell me more about the SJCLT ground lease?


SJCLT and the homeowner will enter into a 99 year ground lease that spells out the obligations of the SJCLT and the homeowner regarding maintenance and improvements by the homeowner, occupancy of the home, payment of the ground lease fee, real estate tax payment obligations and resale provisions governing subsequent sales of the home. The ground lease can be passed on to the homeowner's heirs. The heirs, if qualified, may remain in the home by accepting all of the terms of the ground lease, or will be entitled to the accumulated equity in accordance with the resale provisions in the lease.




Can I get mortgage financing for the purchase of the SJCLT home?


Yes, there are mortgage lenders that will issue mortgages on SJCLT properties. SJCLT and our partners will assist prospective SJCLT homeowners in obtaining a mortgage for the purchase of a SJCLT home.




What happens when I am ready to sell?


You must sell your home to a family in the same income qualifying category in place when you purchased your home. In addition, the sales price paid by the subsequent homeowner will be limited by the resale formula in the ground lease.




How does the resale formula in the ground lease work?


Upon the sale of your home the sales price will be limited by the percentage change in the County Area Median Income (AMI) from the time you purchased the home. Below is an example: Your purchase price: $300,000 Change in AMI from time of your purchase: 8% Resale price to income-qualified purchaser: $324,000 (3000,000 x 1.08) Your equity realized from resale price: $24,000 (324,000 - 300,000)




So, how does owning a SJCLT home help me accumulate wealth?


Owning a SJCLT home helps low and moderate-income households accumulate wealth from the following sources:

  • Potential appreciation in the home's value resulting from changes in Area Median Income minus transaction costs
  • Unlike rent that always seems to go up, housing costs are fixed (only fixed-rate mortgages are permitted)
  • A portion of each mortgage payment goes to reduce the principal which increases equity (value on resale minus declining loan balance due on sale)
  • Possible real estate tax deductions




How do I express my interest in owning a SJCLT home?


Contact SJCLT to express your interest in owning a SJCLT home or to get more information by clicking here.





© 2019 Saint Joseph Community Land Trust/ 1041 Lyons Avenue, South Lake Tahoe, CA 96150/ 530-541-8930