How do I Sell My CCLT Chicago Community Land Trust Property Condo or Home
Its Easy, get it listed for sale with the Chicago Community Land Trust (CCLT). Then wait for a buyer to get approved by the CCLT. Once approved, the buyer will be instructed to enter into a contract with you. Once the contract is entered into, you will hire an attorney such as myself to review the contract, pull title and prepare the transaction for closing. It typically takes as long as 90 days to close a CCLT sale because most buyers need their lender to do extensive underwriting thanks to the typical four mortgage financing used in most of these transaction. When pulling title, it is important your attorney have experience in working with the CCLT system and that they are using a Title Company and Title Insurance Provider that is able to fully understand the complexities of closing a four mortgage transaction.
How do you get four mortgages? The typical CCLT purchase will include a traditional first mortgage usually covering about 80% of purchase price. The second mortgage which actually behaves like a first mortgage is the affordability rider and restriction that are recorded by the CCLT to ensure that not transfer of the property can occur without CCLT approval. The third mortgage is typical a forgivable grant for $15,000 or more from the Illinois Housing Development Authority to assist with the purchase of the property. The fourth mortgage is often a $5000 grant for closing costs that is also usually forgiven after 5 years. Lastly, a fifth mortgage is often found as well which is often recorded in the first position. This mortgage is the assumption by the buyer of the sellers original affordability loan/mortgage usually originally issued by the Illinois Housing Development Authority. This is typically $40,000 is not forgiven for 30 years.
The Affordability Mortgage can be a real wake up call when selling your property. You may list your property for sale at $180,000 thinking you only need to pay off the first mortgage and your closing costs if you have lived in the unit for five years or more, but then are surprised to learn that the $40,000 affordability mortgage doesn't get forgiven for 30 years. Currently the Illinois Housing Development Authority is required to review and approve this assumption by a new buyer at two board meetings. This can often extend a closing to 6 months after the contract was entered into. It is important to have your seller's attorney carefully review title immediately after the contract is entered into to fully review all of the mortgages that must be paid off or assumed by the buyer. This can radically change the sales price for the buyer if the buyer only expects to live in the unit for 10 years and doesn't want to have to rely upon the Illinois Housing Development Authority to allow an assumption by the next buyer. In practicality, this assumption should always be allowed to keep the property “affordable” but you are relying upon a government agency in the future and some buyers may be advised by their attorneys to reject this.
Given what we've discussed today, only one rule needs to be followed when selling a CCLT unit – have an attorney who has experience with the CCLT.