GUIDE TO THE
GROUND LEASE
March 2020
PF
PLEASE READ BACK COVER
BEFORE USING THIS GUIDE
WHAT IS THE GROUND LEASE ?
The ground lease describes you as the Homeowner
and Amherst Community Land Trust (ACLT) as the
owner of the land. It is a legal agreement between
you and ACLT that describes the responsibilities
and rights you and ACLT each have in relation to
the home and the land. Before buying the home,
you need to review the ground lease with your
attorney.
WHO ELSE IS INVOLVED?
In addition to you, the Homeowner, and ACLT,
other parties have interests and rights that are
described in the ground lease. Both the
Massachusetts Department of Housing and
Community Development and the Town of Amherst
hold certain rights of enforcement, to protect the
long-term affordability of the home because
Community Preservation Act funding provided the
subsidy used to make the Home affordable.
1
WHAT IS IN THE GROUND LEASE ?
The ground lease is a long document with a
number of separate sections that all together make
up the legal agreement. These include:
1 Table of Contents
(Page 1 of the ground lease)
2 Seven “recitals,” (statements) that
explain ACLT’s purpose in making these
homes available, and make it clear that you
are not making a typical home purchase.
(Page 2 of the ground lease)
3 Definitions of words that have a
specific meaning in the ground lease and are
important to understand.
(Pages 2-3 of the ground lease)
4 Thirteen “articles,” or sections,
each describing a different aspect of the
lease agreement.
(Pages 3-20 of the ground lease)
5 Signature page (Page 20 of GL)
6 Seven “exhibits,”
or attachments
that are included at the end of the document,
after the signatures, but are referenced in the
main part of the ground lease and treated as
part of the entire agreement.
(Pages 22 to end)
2
THE GROUND LEASE
SECTION BY SECTION
Recitals (A through G)
This section of the ground lease explains that the
ACLT is a charitable organization working to make
housing permanently affordable for low- and
moderate-income people by holding land in a
community trust. It explains that the special rules
and restrictions related to owning this home are
established to serve these purposes.
SPECIAL NOTE
:
Recital D states that the home and
the leased land are subject to (restricted by) an
agreement between ACLT, the Commonwealth of
Massachusetts, the Town of Amherst, and you, the
Homeowner, making the ground lease an
affordable housing restriction under Massachusetts
law. Among other things, this gives the Town and
State certain enforcement powers related to the
property.
Definitions
The following terms are defined in this section:
Leased Land Home
Base Price Purchase Option
Purchase Option Price Lease Fee
Permitted Mortgage Event of Default
GL pg 2
GL pgs 2-3
3
ARTICLE 1:
Homeowner’s Letter of Agreement and
Attorney’s Letter of Acknowledgment
This article describes two letters that are attached
to the lease as Exhibit A to show that you
understand what you are agreeing to.
The
“Letter of Acknowledgement”
, signed by
your attorney, says that the attorney has gone
through the lease with you and explained its
meaning.
The
“Letter of Agreement”
, signed by you, says
you understand and accept the requirements of
the ground lease.
ARTICLE 2:
Leasing of Rights to the Land
Section 2.1 states that ACLT is leasing the land
(described in Exhibit B) to you, and that you agree
to accept it “as is” at the time you sign the lease.
Section 2.2 says that you need written permission
from ACLT before cutting any trees on the land.
Section 2.3 makes clear that ACLT does not give
you the right to remove any minerals or other
resources that may be found underground.
GL pg 3
GL pg 3
4
GL pgs
4-6
ARTICLE 3:
Term of Lease, Change of Land Owner
Section 3.1 sets the term of the lease (the period
you have to use the land) as 99 years.
Section 3.2 gives you the right (which you can pass
to an income-qualified heir) to renew the ground
lease for another 99 years.
Section 3.3 says that if ACLT decides to sell the land
to anyone except a nonprofit or a government
agency , you would have a priority if you wanted to
purchase it. This right is described in Exhibit E.
ARTICLE 4: Use of Leased Land
This article describes how you many use the land:
You agree to use the property only for legally
allowed residential and related purposes, in a
way that will not harm or disturb others, and to
maintain the home in good condition.
The home must be your principal residence and
you must live there at least 10 months each
year, unless ACLT grants an exception.
You cannot sublease without written permission
from ACLT. Occupancy longer than 3 months by
anyone other than your immediate family is
considered a sublease.
ACLT may inspect your leased land, but not the
inside your home (except when you plan to sell).
You have a right to enjoy your home without
any unnecessary disturbance
GL pg 4
5
GL pgs 8-9
ARTICLE 5: Lease Fee
This article says that you will pay ACLT a monthly
lease fee of $50. The fee is due on first day of each
month. ACLT may increase the fee, but no more
often than once every five years. The article also
describes how lease fee rules can change and what
happens if you don’t pay the fees.
ARTICLE 6: Taxes and Assessments
This article states that you, the Homeowner, are
responsible for paying all taxes and assessments on
the home you own and on the leased land. It
describes both your and ACLT’s rights and
responsibilities related to taxes.
ARTICLE 7: The Home
Sections 7.1 and 7.2 explain that:
You purchase the home when you sign the
ground lease. Ownership of the home includes
all structures on the leased land. Your deed of
ownership is Exhibit C of the ground lease.
Your ownership rights have certain limits such as
restrictions on sale of the home and prohibition
on removing the home from the land.
Section 7.3 allows you to make changes to the
home, but changes to its size, shape or location or
any new structures, must first be approved by ACLT.
You must pay all construction costs and comply
with building codes, zoning and other laws.
GL pgs 7-8
GL pgs 6-7
6
GL pgs 9-11
Section 7.3 also requires you to pay all construction
costs for work done on the home, and to comply
with building codes, zoning and other laws.
Section 7.4 requires, if someone you owe money
to files a lien against your home, that you resolve
the problem so the lien is removed within 60 days.
If you can’t, you must notify ACLT.
Section 7.5 says you are responsible for paying for
utilities, maintenance, and all home repairs.
Section 7.6 states that when the lease expires or is
terminated for any reason, ACLT will take
ownership of the home and must pay you (or your
mortgage holder) the “Purchase Option Price
”
described in Article 10).
ARTICLE 8: Financing
This article explains your right to borrow money to
buy the home, including what mortgages are
permitted and rules about refinancing. Permission
from ACLT is required before you can mortgage the
home, but ACLT is required to permit a “Standard
Permitted Mortgage” as described in Exhibit D.
Article 8 also explains lenders’ rights and what
happens if a bank forecloses on you (if you cannot
repay the money you borrowed to buy the house.)
Exhibits D and F provide more details about the
relationship between you, your lender, and ACLT.
These are complex rules so you should review them
carefully, inform ACLT before borrowing against the
home, and tell potential lenders about the lease.
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ARTICLE 9:
Liability, Insurance, Damage and
Destruction, Eminent Domain
Sections 9.1-9.3 say that, as Homeowner and
lessee, you take full responsibility if anything
happens on the property for which someone can
be held liable (for instance, if someone is injured
on the property). If ACLT has to pay costs that are
your responsibility, then you must reimburse ACLT.
Section 9.4 requires you to insure your home
against loss for its full replacement value and to
maintain liability insurance for yourself and ACLT.
Section 9.5 describes your responsibilities if the
home has fire or is damaged in other ways.
Sections 9.6-9.8 describe what would happen in
the unlikely event that a government agency takes
some or all of the property for some public use
(e.g., highway construction) or if the lease is ended
due to irreparable damage to the home.
ARTICLE 10:
Transfer of the Home
NOTE: Exhibit F also has rules about sale or
transfer of the home including restrictions not
found in Article 10, so both must be read carefully.
Section 10.1 emphasizes that these rules and price
limits related to sale of the home are to keep it
affordable for buyers with incomes similar to yours.
GL pgs 11-13
GL pgs 13-17
8
Section 10.2 says you can only transfer or sell the
home to ACLT or to an income-qualified person.
Section 10.3 says that if you die, the home can be
transferred to your heir(s) but under Exhibit F only
a surviving spouse or an income-qualified heir may
keep and live in the home. Any other heir must sell
the house as described in the following sections.
Section 10.4 requires you to notify ACLT and the
Town of Amherst in writing if you want to sell your
home. You may recommend a buyer if you wish.
Sections 10.5 gives ACLT an option to buy the
home when you say you want to sell.
Section 10.6 gives you the right, with certain limits,
to find a buyer if ACLT doesn’t buy the home.
Section 10.7 gives ACLT the right to sell your home
for you if you no longer live there and have tried to
sell for over a year without finding a buyer..
Sections 10.8-10.10 define the maximum price that
you can sell the home for (the “Purchase Option
Price”) and explain how it is calculated. This price
is based on the original cost of the home to you
adjusted for inflation.
NOTE: The purchase option price is the maximum
allowed price. There is no guarantee that you will
actually get that amount when you choose to sell.
Sections 10.11 and 10.12 require the buyer to sign
a new ground lease with ACLT, and allow ACLT to
charge the buyer a transfer fee to cover costs.
Section 10.13 states that you, as Homeowner, must
pay for any repairs needed when the home is sold.
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ARTICLE 11: Default
Sections 11.1-11.4 explain that if you don’t make
required payments, or follow other lease rules, or
are declared bankrupt or insolvent, and if you don’t
resolve the situation, ACLT may terminate the lease
and purchase the home.
Section 11.5 explains what is considered a default
(failure to meet its obligations) by ACLT.
ARTICLE 12:
Mediation and Arbitration
Article 12 says that you and ACLT may. if you both
agree, use any process of mediation or arbitration
to resolve any dispute. If you do so, you and ACLT
will share the costs evenly.
ARTICLE 13: General Provisions
Section 13.1 makes you a voting member of the
Amherst Community Land Trust (ACLT). Members
elect the board of directors, and must approve any
changes to the resale formula for ACLT homes,
changes to the ACLT bylaws, and any sales of land.
Currently members meet four times each year.
Section 13.2 states how you and ACLT need to
communicate, and provides contact information.
Sections13.3-13.13 contain various provisions that
establish or clarify certain points about the ground
lease and your relationship with ACLT, including:
GL pgs 17-18
GL pg 18
GL pgs 18-
20
10
Even if ACLT fails to enforce a particular rule or
requirement, that does not mean that ACLT has
lost the right to enforce it in the future.
ACLT has the right to take legal action to protect
not only its own rights to the land, but also your
interest in the leased land.
The lease can only be changed if both you and
ACLT, through its legal representative, sign a
written agreement making those changes.
EXHIBITS
The following exhibits are attached to and treated
as part of the ground lease.
Exhibit A: Two letters signed by you and by your
attorney saying the attorney has reviewed the
ground lease with you and that you understand
and accept its terms, including:
You understand and support the goal to keep
the home affordable from one owner to the next
You know you can only sell the home to ACLT or
to another income-qualified person and that the
lease limits the price you can sell it for.
You understand that the home is for you and
your family to live in, and that if you move out
permanently you must sell it.
Exhibit B: A description of the land you are leasing
from ACLT, including a map of the property.
Exhibit C: The legal deed of ownership that shows
you own the home.
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Exhibit D: A 4-page document with three sections
adding to the terms of Article 8 (Financing):
Obligations of a permitted mortgage holder
Rights of a permitted mortgage holder
Standard terms for a permitted mortgage.
Exhibit E: A description of “rights of first refusal”
that you and ACLT each have in different situations
that could arise, but are unlikely:
If ACLT plans to sell the leased land, you may
have first right to buy as stated in Section 3.3.
If ACLT’s purchase option is disallowed, then
ACLT may use this right to purchase your home
if you decide to sell, as stated in Section 13.5.
Exhibit F: An added 10-page agreement signed by
you and ACLT that strengthens the affordability
protections and gives the Town of Amherst (called
the “Municipality”) some rights to enforce the re-
sale restrictions on the home. It provides more in-
formation about your rights and responsibilities as
Homeowner related to selling the home and com-
municating with ACLT and the Municipality.
Exhibit G: The appraisal showing the home’s value
at the time of your purchase, which is used to cal-
culate the Purchase Option Price when you sell.
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KEY THINGS TO REMEMBER
ABOUT YOUR HOME AND
GROUND LEASE
1. Living in the home
As Homeowner, you and your family have the
right to live in and enjoy your home. You have
sole use of the home and leased land and a
right to privacy.
You are expected to live in the home. You may
not rent it, or continue to own it, if you move
out. You may have guests, but no one except
your family may stay in the home for more than
three months without ACLT permission.
2. Caring for the property
As Homeowner, you are responsible for repairs,
yard maintenance, waste disposal and keeping
the home and leased land in good condition.
You are responsible for whatever happens in the
home or on the leased land.
3. Making changes
You may decorate your home, plant gardens,
and make other changes and improvements.
Major changes, such as putting an addition on
the home or putting a permanent structure in
the yard require permission from ACLT.
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4. Mortgaging your home
The mortgage you are using to buy your home
has been approved by ACLT.
Any refinancing, or new mortgage, or borrowing
against your home requires ACLT approval. You
should always inform potential lenders about
the ground lease.
5. Costs of ownership
In addition to mortgage payments and home
repairs, you must pay a monthly lease fee and
property taxes, and keep the property insured.
6. Selling your home
You can only sell your home to ACLT or an
income-eligible buyer and the ground lease sets
the maximum price you can receive.
When you wish to sell your home, you must
notify ACLT and the Town of Amherst in writing.
ACLT will work with you to find a qualified buyer.
7. Membership in ACLT
As Homeowner, you are an ACLT member with
the right to vote on policies and board
members, or to seek election as an ACLT officer.
ACLT can help you find assistance when dealing
with contractors, or lenders, or issues related to
your home, including zoning, permits, or taxes.
If you have questions about your rights in
relationship with ACLT and the ground lease,
you should get independent legal advice.
DISCLAIMER
READING THIS GUIDE IS NOT A SUBSTITUTE
FOR READING THE GROUND LEASE.
This guide to the ground lease is provided by
Amherst Community Land Trust (ACLT) to assist
Homeowners, and others working with them, to
gain an overview of the ground lease and to more
easily find relevant information within it. The
information in this guide is general in nature and
by intention does not include many of the very
important details found in the ground lease.
Additionally, this guide was prepared by volunteers
and may contain errors and omissions.
HOMEOWNERS SHOULD READ THE ENTIRE
GROUND LEASE AND REVIEW IT WITH AN
ATTORNEY TO BE SURE THAT THEY
UNDERSTAND ALL THE TERMS OF LEASE AND
ALL THEIR RIGHTS AND RESPONSIBILITIES.
