Are Community Land Trusts permitted to charge monthly ground lease fees to HOMEassisted homeowners?

Yes. Generally, Community Land Trusts may charge ground lease fees to HOME-assisted homeowners.
However, HOME funds may not be used to pay for these fees because the ongoing costs of home ownership are
not eligible HOME program costs.
Ownership in fee simple title of a dwelling with a ground or land lease of 50 years or longer from a C L T meets the
definition of Home ownership  of the HOME rule. CLT commonly charge monthly ground lease fees to
homeowners who lease from the C L T the land on which their homes are situated. The definition and structure of a
C L T inherently require that there be ground lease payments, and this monthly fee is expected to be paid by
HOME-assisted homeowners who purchase their homes through a C L T.
Pursuant to the requirements of  each Participating Jurisdiction  must have and follow
home buyer underwriting policies that support sustainable home ownership for HOME-assisted home buyers. As a
recurring monthly cost of maintaining housing, the CLT ground lease fee must be considered a housing cost to be
included in the underwriting of the home buyer. Greater monthly ground lease fees also typically reduce the
borrowing power of homeowners for a mortgage, or could increase the cost burden for borrowers, thereby
requiring a greater initial HOME subsidy. Depending on the PJ’s home buyer underwriting policies and its
standards for evaluating the appropriateness of the amount of the HOME assistance, there may be situations in
which the lease fee, in combination with other monthly debt obligations, would be considered by a PJ to be too
expensive for a particular home buyer.


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