Oakland Community Land Trust
Homebuyer Purchase Manual
Updated May 2024

MANUAL OVERVIEWThis manual is intended to provide prospective Oakland Community Land Trust (OakCLT)
homeowners with an overview of the guidelines, responsibilities, restrictions, and process for
OakCLT homeownership. More detailed information about these restrictions and responsibilities
are provided in documents that you will sign when you purchase your OakCLT home. These
documents include:●●●

Ground Lease and Purchase Option (Ground Lease) – this document provides
specific details on buyer responsibilities and restrictions related to OakCLT
homeownership
Memorandum of Ground Lease – a document that provides public notice that thisproperty is subject to an affordability covenant and resale restriction
Letter of Stipulation – this document is a letter to OakCLT from you indicating thatyou understand and agree to the key provisions of the ground lease.

OakCLT homeownership opportunities are often supported through subsidies provided by local,
state, or federal programs. Therefore, in addition to following any program goals that OakCLT
has established, all OakCLT rules and guidelines must also adhere to any provisions establishedby either the City of Oakland, County of Alameda, State of California, or the Federal
government, depending upon the source of public subsidy for each home. This manual provides a
non-exhaustive overview of those provisions, and at times excerpts directly from theseguidelines. Notwithstanding these requirements, OakCLT may adjust these requirements asneeded to fulfill the mission of the organization. OakCLT understands that some people haveunique circumstances that do not always fit neatly into program requirements. If you have any
questions about eligibility requirements before you purchase, you must communicate them to
OakCLT before you submit your application. If you have questions about limitations once you
are a homeowner, you should reach out to a staff member at OakCLT. We are here to supportyou!
This manual is to be reviewed prior to purchasing your OakCLT home and can be used as a
general reference guide after you have purchased your OakCLT home. This manual does not
replace the terms and conditions outlined in the documents listed above. You should readand understand the legal documents before signing them.
PLEASE READ THROUGH THE ENTIRE MANUAL. YOU WILL BE ASKED TOACKNOWLEDGE THAT YOU HAVE READ AND UNDERSTOOD THIS DOCUMENT.

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Table of Contents
Manual Overview
Table of ContentsCommunity Land Trusts
Permanent Affordability
Discounted Home Price
Restrictions on Transfer and Resale
Purchasing an OakCLT Home
Homeownership Eligibility & Requirements
Low Income Restrictions
Determining Household Size
Sources of Income

1
3
5
5
5
6
6
6
6
6
7

Documenting Income and Assets

7

Minimum Household Size Related to Bedroom Count
Mortgage & Financing Requirements
First Loan Requirements
Credit Capacity
Down Payment Requirement
Gifts

8
8
9
9
9
9

Down Payment AssistanceFirst Time Homebuyer Status – Not Required to Purchase an OakCLT Home
Homebuyer Education
OakCLT Homebuyer Information Sessions
Homebuyer Selection Criteria
OakCLT Purchase Process
1. Prepare for Homeownership
2. Review Available Home(s)3. Submit Application
4. OakCLT Screens Applicants for Baseline Eligibility + Selection Criteria
5. OakCLT Identifies Buyer + Enters into Contract
6. City Reviews Buyer (if City Assisted Project)

7. Applicant Prepares for Closing
8. Closing
Owning an OakCLT Home
Overview of Restrictions and Considerations
Price Restrictions

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10
10
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11
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12
12

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Buyer Resale Restriction
Ground Lease Fee
Financing Limitations
Owner Occupancy / Not an Investment Property
Willing an OakCLT Home
Accountability
Overview of Benefits
Ability to Become a Homeowner
Reduced Cost of Ownership
Price Stability and Appreciation
Building Equity Through the Reduction of Loan Principal

13
13
13
13
13
13
13
13
14
14
14

Shared Ownership, Shared Partnership

14

Building and Preserving Community
Homeownership Rules and Compliance
Responsibilities of Ownership
Make housing related payments on time
Homeowners Insurance
Maintaining the Home
Not an Investment or Rental Property
Defaults
Financial default
Technical defaults (non-financial defaults)
Remedies for Default
Resales, Refinancing, and InheritanceCalculating the Resale Price
Capital Improvements
Deferred Maintenance

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14
15
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Maximum Affordable Sales Price

18

Refinancing Guidelines
Heritability
Exhibit A - Income Qualification, Inclusions & Exclusions
Exhibit B - Computing Assets & Annual Income

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Community Land Trusts
Community Land Trusts (CLTs) are nonprofit organizations that acquire and steward land thatserves many community needs - namely housing - with the intent to keep low-income
communities rooted and stable in the face of displacement pressures.
One of the primary objectives of OakCLT is to create permanently affordable homeownership
opportunities on community-owned and governed land in Oakland. CLTs are able to create
permanent affordability by separating the cost of the house from the cost of the land. To do so,
OakCLT sells the house to the homebuyer, but retains ownership of the underlying land.
OakCLT leases the underlying land to the OakCLT homebuyer through a 99-year renewableground lease. This removes the land from market conditions and any potential for speculation,
keeps the building permanently affordable for current and future low-income households, andprevents it from being sold to investors. CLTs thus help residents to build wealth andself-determination through affordable ownership and bring stability to the overall community.

Permanent Affordability
Discounted Home Price
OakCLT homes are sold at a reduced price to make them affordable to households experiencing
low incomes. The primary factors that establish the purchase price of an OakCLT home include:●●●

Income levels and household size — OakCLT is designed to reach households earningat or below 80% of the area median income (AMI). The AMI is established annuallyby the US Department of Housing and Urban Development (HUD) and the California
Department of Housing and Community Development (State HCD).
House Size (# of Bedrooms) — the greater the bedroom count the larger the household
size a housing unit can accommodate. A larger sized household is assigned a higher
level of income for qualifying purposes; therefore, increasing the overall price of theunit.
Homeownership costs — to determine an affordable price, OakCLT considers the fullrange of expenses that homeowners need to pay on a monthly basis. Costs applied
towards establishing the OakCLT purchase price include: the mortgage (which
incorporates current interest rates and a modest down payment), the ground lease fee,
property taxes, insurance, and an allowance for maintenance and utility costs.

By selling a home at a discounted price, OakCLT is helping to keep monthly costs lower
than a market-rate home, and therefore assuring the home’s permanent affordability forhomeowners within OakCLT.

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Restrictions on Transfer and Resale
Permanent affordability also means that OakCLT homes, upon resale, must be sold to anotherhousehold earning at or below 80% AMI at a price determined by the resale formula (not bymarket conditions). The affordability requirement stays with the house forever and will betransferred to all future homebuyers. See details around resales below.
This resale structure allows an OakCLT homeowner to build personal wealth while keeping thehouse affordable for the next household to purchase. It also ensures that the home goes to anotherlow-income homebuyer and not to an investor, and prevents any speculation on the future valueof the house by decoupling its value from market conditions.

Purchasing an OakCLT Home
Homeownership Eligibility & Requirements
Note that home sales with public subsidy are subject to review and final approval of applicants
and loan products by the City of Oakland and/or other applicable agencies. OakCLT reserves theright to modify these policies at its discretion.

Low Income Restrictions
The qualifying income for purchase of an OakCLT home is at or below 80% of AMI as
established by the US Department of Housing and Urban Development (HUD), and is updated
on an annual basis. AMI calculations are based on gross income levels, not take-home pay. The
matrix below represents the 2023 HUD-defined gross income levels for Oakland based onhousehold size. Households that exceed the figures below are ineligible to purchase an OakCLT
home, unless they are currently renting a unit from OakCLT, in which case they are eligible topurchase the unit that they are currently living in regardless of income level.
Household
Size

1

2

3

4

5

6

7

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80% AMI(2024)$84,600$96,650$108,750$120800$130,500$140,150$149,800$159,500

OakCLT homeowners will retain their ownership eligibility even if their incomes increase andexceed the maximum income allowance after purchase of the property. Changes in household
size also do not adversely affect ownership eligibility of an OakCLT home after purchase.
Determining Household Size
All household members are considered when determining household size except the following:

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1.
2.
3.
4.

Foster children
Live-in aides and their children
Unborn childrenChildren being pursued for legal custody or adoption who are not currently living in thehousehold.

A child who is subject to a shared-custody agreement may be counted if the child resides withthe household at least 50% of the time. Potential applicants with shared custody must reasonably
document this in order to qualify their child as a household member.
Household members should include dependents claimed on the buyer’s tax return and co-buyersthat will be on title, but not roommates or house guests. Dependents and co-buyers must residein the home once purchased. OakCLT recognizes that “household” and “family” are not always
interchangeable, and household compositions are not always simple. Applicants should provide
an explanation for any household arrangements that fall outside of these guidelines. In mostcases all adult and minor dependents will appear on Federal Income Tax Returns. Recent changes
in household composition or household members that exist outside of tax returns must be
verified by other means.
Sources of Income
OakCLT considers the gross income from all household members 18 years and older living in
the unit when establishing the household gross income, regardless of whether they are borrowers
on the first mortgage. This includes any known changes in projected income, such as a scheduled
pay raise or a new job. Sources of income applied to the earnings qualification calculation,
include, but are not limited to: salary, wages, retirement income, workers compensation,
unemployment, disability compensation, part time employment, rental income from investment
property, alimony, child support, interest or dividend income, capital gains, or any other regularand consistent payments. For a complete list of included and excluded income sources see
Exhibit A.
Documenting Income and Assets
For all adult household members, OakCLT will review tax returns from the previous three years,
the previous three year’s W-2s, and pay stubs for all employed household members for the threemost recent consecutive pay periods with year to date totals. OakCLT will use this information toproject household income for the purpose of meeting income qualification guidelines.
For self-employed household members without W2s or 1040s, income will be determined byaveraging the adjusted gross income from the previous three years' federal income tax returns(applicants may request that two years be considered if there is a strong rationale) or byreviewing a year-to-date profit and loss statement and balance sheet to project annual income forthe next twelve months (unless evidence to the contrary is provided), whichever is greater. Notethat deductions for depreciation, depletion and business use of the home are added back to gross7

income. Negative net self- employed income may not be used to reduce wage or other income
when calculating household eligibility.
Household members with disability, pension, and/or retirement income will need to produce theirmost current statements and award letters to demonstrate monthly and annual income.
All household members must provide two months of statements from all asset accounts,
including real property, stocks, checking, savings, mobile payment services (e.g. Zelle, Venmo,
CashApp, Paypal), and any other forms of capital investment.
For borrowers with over $5,000 in assets post-closing (i.e. what has not been used for down
payment and closing costs), the amount above $5,000 will be multiplied by 2% (the current State
HCD passbook rate) or the actual income from those assets will be used, if greater than 2%, andthe result will be added to borrower’s income to determine borrower eligibility. Qualified
retirement income will not be included. For post-closing assets over $10,000, the multiplier willbe 10%, and for post-closing assets over $20,000, the multiplier will be 20%. Pre-purchase assets(including gifts, excluding retirement) may not exceed 50% of the purchase price. To calculate
how your assets may impact your income, see Exhibit B.

Minimum Household Size Related to Bedroom CountThe size of a unit that a given household is eligible for depends on the number of bedrooms inthat unit and the size of that household. The relationship between the minimum household size
and maximum bedroom allowance is as follows:
Number of Bedrooms in Home

1

2

3

4

Minimum Household Size

1

1

3

4

Note that this is the minimum household size for purposes of eligibility. The OakCLT Homebuyer
Selection Criteria gives extra weight to applicants whose household size meets and/or exceeds
the bedroom count.

Mortgage & Financing Requirements
All potential home buyers must qualify for a first mortgage with an OakCLT-approved lender.
All-cash purchases are not permitted. OakCLT is working to expand its list of approved lenders,
however most lenders will not approve a mortgage where the structure is purchased without theland. For our updated list of lenders, see the property disclosure packet or attend a home buying
information session.

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First Loan Requirements
Financing for OakCLT home purchases must come from institutional lenders or public agencies
that have a thirty (30) year, amortizing term with a reasonable fixed interest rate, based on
current market conditions. The loan cannot include any of the following terms: negative
amortization, balloon payments, interest only, or any other provision which may create future
hardships or additional monthly housing cost obligations.
Mortgage financing is also limited by monthly debt payments and housing costs as they relate tomonthly gross income. The total ratio of monthly housing costs (principal, interest, taxes,
insurance, and ground lease) to monthly gross income (“front-end-ratio”) should not be less than
20%, though OakCLT may make exceptions depending on funding sources. The ratio of all of
the total existing monthly debt payments plus new monthly housing payments compared to grossmonthly income (“back-end ratio”) cannot exceed 40-45%, depending on the specifics of that
housing opportunity.
For an OakCLT home that has been supported with funds from the City of Oakland, the City
housing department must approve all OakCLT homebuyer loans (in addition to buyer’s income
eligibility). Minimum and maximum requirements established by the City or OakCLT may notalways match up with the requirements of a lender.
Credit Capacity
The buyer must have established good credit. Generally, a minimum FICO score of 640 isrequired to obtain a standard “A rated” first loan. If the buyer does not have an established credit
history, lenders will look at alternative credit sources, such as rental history and utility payments
to assess the buyer/borrowers’ past credit capacity.
Down Payment Requirement
Down payment requirements are influenced by the presence of public subsidy and associatedagreements on the use of that subsidy. Generally, OakCLT homebuyers are required to contributea minimum of 3% of the purchase price of the home. For a City-assisted project, this 3% may berequired to go exclusively towards the down payment, or may be applied to closing costs. Theseobligations must come from the buyers’ own funds (i.e. not from down payment assistance orgifts). If no public subsidy is present in the home for sale, OakCLT may adjust this minimum.
Review all disclosures and/or marketing materials to determine specific requirements. Somelenders may have their own minimums.
Gifts
In order for a gift to be considered as part of the eligible contribution applied towards a homepurchase, lenders require the following:

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1)

The gift must come from a parent, grandparent, sibling, aunt, and/or uncle. Federal
guidelines for our lenders are such that no other relationships are considered.

2)

The grantor of the gift must produce bank statements showing the account fromwhich the gift dollars were drawn and that the gift funds were available in the giftprovider’s bank account for over sixty (60) days. If the gift is received from aninternational bank, statements must be on bank stationary and in English.

Down Payment Assistance
Purchasers of OakCLT homes may be eligible for down payment assistance programs that help
reduce a homebuyer’s monthly expenses and that can bridge the gap between a homebuyer’s
down payment and a first mortgage. In many cases down payment subsidies can be combined
and layered to increase impact, though the presence of down payment assistance may impact a
property’s resale formula. Review the ground lease and associated riders for more details.
First Time Homebuyer Status – Not Required to Purchase an OakCLT HomeOakCLT home purchasers do not have to be first-time homebuyers. However, in order to beeligible for many subsidies or down payment assistance funds, buyers may need to be afirst-time homebuyer (meaning that they have not owned a property that they reside in for the
past three years). The key test is if the purchaser resided in a property for which they have mademonthly mortgage payments. Land and investment property (investment property must be held
outside of Oakland) do not impact first-time homebuyer status.

Homebuyer Education
To purchase an OakCLT home, each co-buyer must receive homebuyer education in an 8-hourclass from a HUD-certified homebuyer education provider. There are numerous providers of
HUD-certified homebuyer education throughout the Bay Area, as well as several online options.
OakCLT can refer you to a specific agency or program. Certificates of completion must be
submitted with an application to be deemed eligible, and therefore education requirements mustbe fulfilled prior to the submission of an application to purchase. Down payment assistanceprograms may have additional requirements around homebuyer education.

OakCLT Homebuyer Information Sessions
At least one borrower within an applicant household must attend an OakCLT Homebuyer
Information Session, which OakCLT hosts periodically, though OakCLT strongly recommends
that all borrowers attend. OakCLT internally tracks who has attended these sessions and willverify attendance while screening applicants.

10Homebuyer Selection Criteria
Eligible buyers do not have to live and/or work in Oakland. However, OakCLT uses a scoring
criteria to weight potential buyers based on six categories for single-family homes andlimited-equity condominium sales:
1.
2.
3.
4.
5.
6.
7.

Existing OakCLT Lessees
Oakland Resident At Risk of Displacement/Displaced Oakland Resident
Eligible for Section 8 Homeownership Program
Current Oakland Resident
Current Oakland Worker
Household Size Relative to Bedroom Count
Previous Eligible Applicants

For more information, review the OakCLT Homebuyer Selection Criteria.

OakCLT Purchase Process
The stages of purchasing an OakCLT home are summarized below. For a more detailed
description of this process review the OakCLT Home Sale Process document.
1. Prepare for Homeownership
In this stage, potential applicants should decide if they are ready for homeownership, attend an
OakCLT homebuyer information session, complete a HUD-certified 8-hour homebuyer
education course, find a realtor (you may work with OakCLT’s realtor if you choose), get
pre-approved for a mortgage from an OakCLT-approved lender, and financially prepare forhomeownership.
2. Review Available Home(s)Potential applicants schedule a tour of the home with their realtor, read all disclosures, anddetermine whether they would like to apply.
3. Submit Application
Applicants prepare their application, which includes information related to household size,
income, assets, information related to OakCLT’s Homebuyer Selection Criteria, a mortgage
pre-approval letter, and proof of completion of homebuyer education.
4. OakCLT Screens Applicants for Baseline Eligibility + Selection Criteria
OakCLT reviews all applications to ensure that all applicants meet the eligibility requirements,and scores each candidate using the selection criteria. This scoring process creates a ranked orderof applicants.

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5. OakCLT Identifies Buyer + Enters into Contract
OakCLT reaches out to the top scoring applicant(s) and may request additional documentation to
verify their stated information. If that information is verified, the top scoring applicant is invited
to submit a contract to purchase, and lenders are notified of the applicant choice. If the home isCity-assisted, applicants will need to be approved by the City of Oakland.
6. City Reviews Buyer (if City Assisted Project)
If the project has City funding in it, the City must review applicant’s income, assets, andmortgage loan terms to ensure they meet the requirements established in the City’s affordability
agreement.
7. Applicant Prepares for Closing
Once the applicant's contract is accepted by OakCLT, the applicant is stewarded through thepurchase process by their realtor, their lender, and the title company. OakCLT is there to support
as needed. The contract period can take anywhere from 45-60 days depending on circumstances.
8. Closing
The applicant becomes a homeowner and signs a ground lease with OakCLT!

Owning an OakCLT Home
Overview of Restrictions and Considerations
Owning an OakCLT home comes with responsibilities, benefits, and restrictions. Many of theseare similar to homeownership on the open market, but many are not. A prospective OakCLT
homebuyer should carefully evaluate all of the following before purchasing a home. More detailis described in the following pages and in the OakCLT ground lease. Restrictions the buyer must
consider include:
Price Restrictions
The resale price of the home/unit will always be restricted and disconnected from the pressuresof the housing market. The resale price of the home will increase by the annual level that theconsumer price index (CPI) rises in the area or 2%, whichever is higher - provided that such anincrease does not exceed an affordable price for a low-income family based AMI at the time ofsale (see ground lease for more details). For example, if one year CPI rises 7% and the next year
it falls .5%, the OakCLT home would increase in value by 7% and then 2%, respectively. In
contrast, a non-restricted home may see higher appreciation or larger losses depending on what
happens in the housing market.

12Buyer Resale Restriction
The unit may only be sold to a qualified low-income buyer that is approved by OakCLT. In
contrast, open market homes can be sold to anyone.
Ground Lease Fee
OakCLT homeowners are responsible for paying a ground lease fee each month that they live intheir OakCLT home. Because this fee is related to the ground lease and not the mortgage, it willcontinue even after the mortgage is paid off or if the house transfers by will to heirs. The current
monthly ground lease fee for a 2-bedroom home is $50 or $85 for a 3 or 4-bedroom home. This
monthly expense is considered in the calculation of the affordable housing cost.
Financing Limitations
OakCLT residents are able to refinance their homes and/or take out a home equity line of credit(HELOC) like any other homeowner, but in line with their restricted resale value not the market
value. All refinance activity must be approved by OakCLT.
Owner Occupancy / Not an Investment Property
The home can never be converted to an investment property. It cannot be rented and must be
occupied by the purchaser for the entirety of ownership. Homeowners are permitted to rent out aroom in their home so long as they continue to occupy the home as their primary residence.
Willing an OakCLT Home
The home can be passed on to a beneficiary (or beneficiaries) at the time of death; however, abeneficiary can only occupy the home if they meet OakCLT purchase parameters. If abeneficiary does not qualify to live in the property, the beneficiary can sell the property at the
restricted resale formula price. OakCLT homeowners can also sell their homes to friends andfamily members, so long as they meet income and eligibility requirements.
Accountability
In order to prevent a default and maintain quality housing stock for future OakCLT homebuyers,
OakCLT owners are required to physically maintain their homes. Additionally, on an annual
basis, homeowners must provide OakCLT a copy of their current homeowner’s insurance policy
and certify owner occupancy.

Overview of Benefits
Ability to Become a Homeowner
An OakCLT home purchase makes ownership available to buyers who typically would not beable to afford a home on the open market.

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Reduced Cost of Ownership
OakCLT homes provide an opportunity for buyers to pay much less up front and each month forownership than they would most likely be paying for a comparable home in the region. In somesituations the cost of ownership may even be more affordable than renting.
Price Stability and Appreciation
Even though price restricted homes have not historically appreciated at the same rate as open
market rate homes, they still do appreciate at approximately the rate that incomes or theConsumer Price Index rises. Over the past ten to twenty years, incomes have risen at an average
between three to four percent a year. Keep in mind, however, that there are times when incomes
do not rise. There are also times when market-rate homes do not appreciate, and in fact may evendrop in value, such as the Great Recession in 2008. Since the resale formula for OakCLT homes
sets a minimum of 2% appreciation, the value of an OakCLT home will always increase, even if
market rates and incomes do not rise.
Building Equity Through the Reduction of Loan Principal
As monthly payments are made, homeowners reduce the principal balance owed on their home.
In approximately seventeen years, a homeowner pays off one-half of the balance on their first
loan. In thirty years the loan would be paid off in its entirety. All of this equity/money, plus any
appreciation realized will be the homeowners at the time they sell or choose to refinance thehome.
Shared Ownership, Shared Partnership
Homeownership can be daunting, especially for new homeowners. OakCLT is the long-term
steward of the property and it is the mission of the organization to support the sustainability andsuccess of OakCLT homeowners and their homes. OakCLT will always be there to support
residents in whatever challenges they may face, from recommending a contractor, to navigating
property tax refunds, to intervening to prevent foreclosure. We have our residents’ backs!
Building and Preserving Community
There are over 160 residents within the Oakland Community Land Trust. OakCLT strives to put
the “community” in “community land trust” and by purchasing an OakCLT home, newhomeowners are buying into a community-centered model that is keeping housing out of thehands of investors and putting it in the permanent control of the community.

Homeownership Rules and ComplianceIn addition to establishing certain purchase and resale restrictions, OakCLT requires homeowners
to follow certain rules during their tenure to promote its primary objective of creating
permanently affordable homeownership opportunities.

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Responsibilities of Ownership
The same responsibilities of ownership that apply for unrestricted market-rate homes generally
also apply for OakCLT homes:
Make housing related payments on time
Homeowners must make all housing payments on time. Housing payments include the mortgage,
all property taxes, insurance and ground lease payments as well as basic utility costs(gas/electric, water, garbage, and sewage). Homeowners who run into problems making
payments should notify OakCLT immediately. The earlier OakCLT is notified the greater the
likelihood that OakCLT will be able to assist in resolving any difficulties.
Homeowners Insurance
Homeowners are responsible for maintaining adequate coverage on their property. Adequate
coverage should be able to cover the replacement cost of the home in case of a fire or damages
and/or liability caused through other insurable incidents. In addition, if a business is run out of
the home then adequate commercial coverage applicable to the business is also required. The
specific guidelines for insurance are in the ground lease.
Maintaining the HomeOakCLT homeowners must maintain their home in good condition including making certain that
there are no water leaks, and that the systems, such as heating and plumbing, are in working
order. All maintenance and repairs of the home are the responsibility of the homeowner, not
OakCLT.

Not an Investment or Rental Property
An OakCLT home is intended to serve as the homeowner’s sole, exclusive and permanent placeof residence and cannot be rented, leased, or subleased. However, to respond to emergencies or
temporary changes in circumstances, an OakCLT homeowner is permitted to sublet their homefor up to 12 months in each 5 year period. All sublets must be approved in advance by OakCLT
and any rental activity in excess of the 12 month period or without prior permission will trigger adefault under the ground lease that could result in a lease termination. All OakCLT homeowners
must certify their occupancy annually.
The property must also be occupied by the purchaser as a permanent residence within 60 days
from the day the transaction closes escrow.

Defaults
An OakCLT homeowner is required to adhere to the guidelines and restrictions discussed in thismanual and in the ground lease and related policies. The failure to do so may cause a homeownerto incur either a technical and/or financial default on their home.
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Financial default
Financial defaults are related to situations created through non-payment of a financial obligation
which include and are not limited to:
●
●
●
●
●
●

Mortgage payment – on the first and any junior subsidy loans
Property taxes
Ground lease fees
Property insurance payment – creating a lapse in coverage
Involuntary liens placed on the property which can be incurred through taxes,
mechanics liens, and other forms of liens from unpaid bills or financial obligations.
Bankruptcy proceedings

Technical defaults (non-financial defaults)
If an OakCLT homeowner is current on all their financial obligations, they may still be in default
due to an activity or inactivity related to the home. Technical (non-financial) defaults include:●●●●

Transferring title/ownership of an OakCLT to a non-eligible title holder
Renting and/or non-occupancy of the home
Not maintaining the home in good condition
Refinancing and or securing additional debt on the home through a refinance orequity line without notification and consent by OakCLT

Remedies for Default
If an owner does not cure a default, OakCLT may:●●

After appropriate notification, financially cure or physically repair any financial or
physical deficiencies and charge the owner for any costs incurred by OakCLT
When appropriate, exercise its option to purchase the property, in which case theowner will need to sell and vacate the property

The amount that an owner/seller derives in proceeds from the sale of their home could be
adjusted by the following factors:●●

Damages – proceeds from sales would be applied towards any expenses that need to
be incurred by OakCLT to place the property into saleable condition as reasonably
determined by OakCLT – including costs for deferred maintenance.
Money owed to or expenses covered by OakCLT – including paying delinquent
ground lease fees, mortgage payments, taxes, assessments, insurance premiums andany other costs associated in maintaining the physical condition and financial
integrity of the property.

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Resales, Refinancing, and Inheritance
OakCLT homeowners are entitled to sell their home at any time, so long as they notify OakCLT
beforehand and sell to a buyer that meets the criteria outlined above. OakCLT also maintains afirst right of purchase when a homeowner decides to sell. As mentioned above, the sales price ofan OakCLT home is determined by a formula, not the housing market. Review the ground leasefor more details.

Calculating the Resale Price
The resale formula is set forth in the ground lease and is as follows:●

Resale pricing of the unit will be established based on the annual change in theConsumer Price Index (CPI) over the time that the homeowner(s) have owned the
OakCLT home. For example, if the change in CPI is 7% in a given year, then thehome’s resale price will increase by 7% in that year.

●

If the annual change in CPI is ever below 2%, OakCLT will honor a 2% minimum
increase. For example, if the actual change in the CPI was 0.5% over the course ofthat year, for purposes of calculating the resale price, OakCLT would use 2% for that
year.

●

The presence of down payment assistance loans may impact the resale calculation.
For example, a home purchased with a significant down payment assistance loan thatneeds to be repaid may exclude that loan from the base price when applying the resale
formula. In such a situation, the base price would be the amount of down payment
from the buyer in addition to the amount of the first mortgage.

Assuming that a homeowner maintains their home in good condition, this resale formula
guarantees a modest increase in the resale price every year.
Capital Improvements
Certain costs associated with the upgrade of an OakCLT home may be deemed as “eligible
capital improvements.” A portion of the cost of eligible capital improvements can be added to
the value of the home when it is sold. In order to be deemed an eligible capital improvement, theimprovement must be a substantial structural or permanent upgrade requiring issuance of permitsby the City of Oakland. The homeowner must obtain approval from OakCLT for the installation
or a major capital improvement and appropriate permits from the City of Oakland. The value ofthe property will be increased by the depreciated value of the cost of the eligible capital
improvement (up to 50% of the total cost of those improvements), however the increase incapital improvements cannot exceed 20% of the calculated price before the inclusion of eligible
capital improvements.

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Replacement of items/systems due to deferred maintenance or personal preference are notconsidered to be an eligible capital improvement. For example, re-painting, replacing thefurnace, or replacing counters would not be considered as an eligible capital improvement cost.
Deferred Maintenance
The purchase option price will also include a downward adjustment for any deferred
maintenance, violations of applicable building codes, and any other repairs necessary to put thehome into sellable condition. The amount of the downward adjustment due to deferred
maintenance will be based on a pest control report, inspection report, or other reasonableestimate of repair costs.
Maximum Affordable Sales Price
The OakCLT resale formula is designed to maintain a level of deep affordability for current andfuture homeowners. Therefore, a homeowner’s resale price (outlined above) cannot exceed theprice that would be affordable for a household making 80% AMI based on considerations forinterest rates, AMI, ground lease fees, utility allowances, and insurance costs at time of resale.
The resale formula is designed to stay below this threshold, and it is unlikely that this affordable
sales price threshold will come into play.

Refinancing Guidelines
All OakCLT homeowners must first inform OakCLT of any intent to refinance or take out anequity loan on their home and obtain prior approval of that loan from OakCLT. The two main
reasons for this requirement are to ensure that:
1) The refinancing lender understands the community land trust model; and
2) The new loan amount does not exceed the value of the home (based on the formula).
The value of the home is particularly important if a homeowner is looking to extract cash
through the refinancing, otherwise known as a “cash-out” refinancing. Cash-out refinancing
occurs when an owner draws cash through a new or additional loan in excess of the balance on
the existing first loan. The owner can only cash-out refinance when equity has been establishedthrough an increase in price or repayment of principal on a loan. To determine any increase inequity from appreciation, an OakCLT homeowner must contact OakCLT to determine the current
value of the home, based on the resale formula. An OakCLT homeowner cannot use the market
price of homes selling in the surrounding community to determine the value of their home or
the amount of money that they are able to access through the refinancing. For example, if themarket price of a similar non-OakCLT home was $600,000 and the formula price for the
OakCLT home was $300,000, the OakCLT borrower may only possibly access cash based on the
maximum formula price of $300,000.

18Heritability
Property can be transferred to an OakCLT homeowner’s heirs as long as the heirs have lived in
the home for at least one year prior to the owner’s death. If they have not lived there for at least ayear prior to the homeowner’s death, they may assume ownership of the property so long as theirhousehold income is at or below 100% of AMI adjusted for their household size. If they do notmeet these requirements, they may sell the property to an eligible homebuyer.

Please Remember:If you have questions or problems at any time before or during your tenure as an OakCLT
homeowner, please do not hesitate to contact OakCLT staff. OakCLT wants to help ensure thatyou are a successful homeowner. We are here to help.
Oakland Community Land Trust
101 Broadway, Suite 310
Oakland, California 94607
510-463-2887

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Acknowledgement
The undersigned hereby acknowledges that they have received a copy of the Oakland
Community Land Trust Purchase Manual and have read and understood the information
presented in the manual. The undersigned, also, hereby acknowledges that they understandOakland Community Land Trust homeownership comes with a number of restrictions andresponsibilities, many of which that have been represented in the manual and further presented ingreater detail in the documents that the OakCLT homebuyer will be provided and executing at
the time they purchase their OakCLT home.

_______________________OakCLT Homebuyer____________
Dated_______________________OakCLT Homebuyer____________
Dated

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Exhibit A - Income Qualification, Inclusions & Exclusions
Inclusions●

The gross amount, before any payroll deductionof wages and salaries, overtime pay,
commissions, fees, tips and bonuses●

The net income from operation of a business or
profession or form of rental or real personal
property (for this purpose, expenditures forbusiness expansion or amortization of capitalindebtedness shall not be deducted to determine
the net income from a business)●

Interest and dividends, capital gains●

The full amount of periodic payments received
from social security, annuities, insurance policies,
retirement funds, pensions, disability or death
benefits and other similar types of periodic
receipts●

Payments in lieu of earnings, such as
unemployment and disability compensation,
worker’s compensation and severance pay●

Exclusions

Public Assistance. If the public assistancepayment includes an amount specificallydesignated for shelter and utilities which is
subject to adjustment by the public assistanceagency in accordance with the actual cost of
shelter and utilities, the amount of public
assistance income to be included as income shallconsist of:●Casual, sporadic or irregular gifts●

Amounts which are specifically for or in
reimbursement of the cost of medical expenses●

Lump-sum additions to family assets, such as
inheritances, insurance payments (including
payments under health and accident insurance andworker’s compensation) capital gains andsettlement for personal or property losses●

Amounts of educational scholarships paid directly
to the student or to the educational institution, andamounts paid by the government to a veteran foruse in meeting the costs of tuition, fees, books
and equipment. Any amounts of such
scholarships, or payments to veterans not used forthe above purposes of which are available forsubsistence are to be included in income●

The special pay to a serviceman head of a family
away from home and exposed to hostile fire●

Relocation payments made pursuant to federal,state, or local relocation law●

Foster child care payments●

The value of coupon allotments for the purchaseof food pursuant to Food Stamp Act of 1964
which is in excess of the amount actually charged
the eligible household

1.

The amount of the allowance or grant exclusiveof the amount specifically designated for shelter
and utilities, plus●

Payments received pursuant to participation in thefollowing volunteer programs under the ACTION
Agency:2.

The maximum amount which the public
assistance agency could in fact allow for thefamily for shelter and utilities.

1.

National Volunteer Antipoverty Programs which
include VISTA, Service Learning Programs andSpecial Volunteer Programs.

●

Periodic and determinable allowances such as
alimony and child support payments, and regularcontributions or gifts received from persons notresiding in the dwelling2.

●

All regular pay, special pay and allowances of amember of the Armed Forces (whether or not
living in the dwelling) who is head of the familyor spouse

National Older American Volunteer Programs for
persons aged 60 and over which include Retired
Senior Volunteer Programs, Foster Grandparent
Programs, Older American Community Services
Program and National Volunteer Program to
Assist Small Business Experience, Service Corpsof Retired Executive (SCORE) and Active Corpsof Executives (ACE)21

Exhibit B - Computing Assets & Annual Income
Computing Assets & Annual Household Income
1. Primary Applicant Name:

Email:

Secondary Applicant Name:

Email:ASSETSHousehold Member
Name

Current Cash Value of
Asset

Asset Description

Actual Income from
Assets3. Net Cash Value of Assets.......................................
4. Total Actual Income from Assets..............................................................................
5. Assets going towards down payment & closing costs...........................
6. Subtract line 5 from line 3
7. If line 6 is greater than $5,000, multiply line by 2%. If line three isgreater than $25,000, multiply by 10%. If line 3 is greater than $40,000,
multiply by 20%. Otherwise leave blank.

ANTICIPATED ANNUAL INCOME
Household Member

Wages/
Salaries

Benefits/
Pensions

PublicAssistance

Other
IncomeAsset
IncomeEnter thegreater oflines 4 or 7

8. Totals.........
9. Enter totals in line 8. This is the Total Household Income..............

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