Shared equity models represent one sustainable alternative to conventional homeownership; they include community land trusts (CLTs) and limited equity cooperatives (LECs). At their core, shared equity models are defined as follows: resale-restricted, owner-occupied housing where the “bundle” of property rights is divided between the homeowner and the community. The subdivision of building and land rights allows households to access affordable ownership opportunities and enables the community—via a non-profit steward—to retain a stake in the land, maintaining permanent affordability and mitigating speculative market forces.
In a CLT, a household retains ownership of its dwelling unit—typically a single-family home, while the CLT, as a non-profit organization, retains title to the underlying land. A ground lease connects the homeowner to the CLT and is used to enforce the shared equity affordability controls. The constant presence of a non-profit steward provides support at all phases of homeownership, including access to pre-purchase education and non-predatory financing options, ongoing maintenance training, and pre-foreclosure counseling to help homeowners avoid defaulting on their loans. Yet, while CLTs can provide stability and access to affordable homeownership, they often require households to qualify for conventional loans, which can exclude segments of the low-income population.
In an LEC, several households collectively own multiple dwelling units—usually in a multi- family building—via a cooperative corporation (co-op). Each household purchases one share of Page 1 the co-op, entitling them to a dwelling unit and a vote in the co-op’s governance; the share also enforces the co-op’s limited equity (i.e., affordability) controls. Low-income tenants often pursue this model of ownership when their landlords threaten them with eviction and/or building disrepair. An LEC provides a means for low and very low-income households to gain autonomy over their housing circumstances, preserve affordable rents, and earn very modest equity. It also, however, requires a significant amount of fiscal and organizational capacity to maintain the co- op; many LECs risk dissolution over the long term.
This paper explores an innovation in the shared equity field: The merger of CLTs with LECs to respond to their individual challenges and leverage their strengths. The research draws from case studies of five CLTs, representing fifteen LECs, across the US and asks: are emergent CLT-LEC projects able to fill the gaps left by CLTs or LECs alone? It considers the motivations for a CLT to pursue an LEC (or vice versa) and appraises the characteristics of hybrid projects. While the number of CLT-LEC projects is limited, the cases illustrate an emergent practice in the field and speak to the organizational adaptability of the broader shared equity model.
While the research assesses the organizational framework of CLT-LEC partnerships, the subject is rooted in homeownership, broadly, and shared equity homeownership, specifically. The paper begins with a review of debates surrounding low-income homeownership. Subsequently, it delves into shared equity homeownership as an alternative; this includes in-depth discussions of the CLT and LEC models, including their independent strengths and weaknesses. These sections provide the basis for exploring CLT-LEC partnerships through comparative case studies.
Read the rest at the Lincoln Institute of Land Policy
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