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Evidence Matters: Shared Equity Models Offer Sustainable Homeownership | Article3 Sidebar

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Fall 2012   


        Paths to Homeownership for Low-Income and Minority Households
        Individual Development Accounts: a Vehicle for Low-Income Asset Building and Homeownership
        Shared Equity Models Offer Sustainable Homeownership

A Hybrid Model

Common Ground, an award-winning, sustainable net zero energy project, is one of the five limited equity housing cooperatives developed by the Lopez Community Land Trust.
Common Ground, an award-winning, sustainable net zero energy project,
is one of the five limited equity housing cooperatives developed by the
Lopez Community Land Trust. © Mithun | Juan Hernandez
The Lopez Community Land Trust is one of few CLTs in the nation that combines a ground lease mechanism with the limited equity cooperative model of housing. Established in 1989, the land trust serves Lopez Island, Washington, a rural island community of about 2,200 year-round residents. The organization, structured as a tax-exempt nonprofit, acquires land and develops housing for island residents earning no more than 120 percent of the area median income. As with a typical CLT, the trust retains ownership of land to create and preserve affordability. The completed homes, however, are not sold to individual buyers but are instead conveyed to a limited equity housing cooperative. The cooperative owns the homes and leases the underlying land from the trust for a period of 99 years. Income-qualified buyers sign a 99-year occupancy agreement with the cooperative that gives them the right to occupy the homes and become voting members of the cooperative.

According to Sandy Bishop, executive director of the land trust, this hybrid model allows the nonprofit to serve households who may not have the credit history needed to secure a mortgage. “We discovered that many of the people that we serve are very creditworthy, but they may have never used credit cards, so even if they paid all their bills and were hard workers, they would not meet banks’ lending requirements,” she explains. In limited equity cooperative housing, the cooperative holds both the title to the property and the mortgage; residents make monthly payments to the cooperative that equal their share of the mortgage, property taxes, and other maintenance fees. Tying the cooperative housing model to the CLT ground lease also protects the long-term affordability of the homes. Because residents control the cooperatives, there is an inherent risk that residents will choose to opt out of the affordability restrictions, but the land trust mitigates this risk by building the restrictions into both the ground lease and the occupancy agreement, ensuring lasting affordability. Members also benefit from the supportive services and stewardship provided by the trust, including first-time homebuyer classes, homeownership counseling, and training in cooperative governance. In addition, the land trust ensures that potential buyers meet income requirements and steps in when needed to mediate disputes for the cooperative. To date, the trust has developed 37 affordable housing units in 5 limited equity cooperatives.1


  1. Interview with Sandy Bishop, August 2012.

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The contents of this article are the views of the author(s) and do not necessarily reflect the views or policies of the U.S. Department of Housing and Urban Development or the U.S. Government.