Homeowner Handbook. 88 King Street Burlington, Vermont

Transcription

1 Homeowner Handbook 88 King Street Burlington, Vermont January 2012

2 Table of Contents Review of the Ground Lease Page 2 Review of the Housing Subsidy Covenant Page 3 Lease and Membership Fees Page 3 Taxes Page 4 Capital Improvement Credit Page 5 Homeowner s Insurance Page 5 Refinances and Home Equity Loans Page 6 Selling Your Home Page 6 Ongoing HomeOwnership Center Services Page 7 CHT Loan Fund Page 7 Champlain Housing Trust Membership Page 8 Keeping in Touch with CHT Page 8 Champlain Housing Trust Homeowner Handbook 1

3 Review of the Ground Lease for Single Family Homeowners The Ground Lease describes the long-term agreement between the Champlain Housing Trust (CHT) and the homeowner. This is a legally binding document which spells out the rights, responsibilities and requirements of homeowners. A plain-language summary of the key points contained in this document is below. Shared Appreciation: In exchange for the down payment assistance you received at purchase, you agree to share any appreciation on your home when you sell. Generally, you will receive 25% of the increase in value during the time you live in the home, plus any capital improvement credit that you receive. CHT s option to purchase: If you decide to sell your home, you agree to follow the resale process. CHT has the first option to buy your home. Duration of the Lease: The term of the lease is 99 years. Owner-Occupancy: You have agreed to use the property as your primary residence for at least six months of every year. You may not build any commercial structures or additional living space to rent out. Responsible use: You agree to use the property responsibly, in an ecologically sound manner, and to be responsible for the actions of others who you allow to use the property. Ground Lease Fee: You agree to pay a fee for the use of the land. The amount of the fee can be adjusted only every 5 years and shall not increase more than ten dollars ($10.00) per month over the ground lease fee charged during the preceding five year term. Taxes: You are responsible for all taxes and assessments on the land and home. Insurance: You agree to keep the home properly insured and to name CHT as an additionally insured party so we receive notification of any changes in insurance status. Improvements: You will own everything but the land (all buildings and structures). If you make any changes to or additions to the home or other structures, you are responsible for making sure they are up to Code (comply with local building and safety regulations). You agree to notify CHT before beginning any work. Termination: You can terminate the Ground Lease at any time by giving us 180 days notice, at which point you must either sell the home in accordance with CHT resale procedures or remove the home from the land. CHT can terminate the Ground lease if you intentionally violate any of the terms of the agreement. Forced Sale or Judicial Sale, Condemnation, and Eminent Domain: If the land is taken under any of these circumstances, the Ground Lease will be terminated and both the homeowner and CHT will be release from any liability. Indemnification: CHT is not liable for any loss, injury, death, or damage that happens on the leased land. Champlain Housing Trust Homeowner Handbook 2

4 Review of the Housing Subsidy Covenant for Condo Homeowners The Housing Subsidy Covenant (HSC) describes the long-term agreement between the Champlain Housing Trust (CHT) and the homeowner. This is a legally binding document which spells out the rights, responsibilities and requirements of homeowners. A plainlanguage summary of the key points contained in this document is below. Shared Appreciation: In exchange for the down payment assistance you received at purchase, you agree to share any appreciation on your home when you sell. Generally, you will receive 25% of the increase in value during the time you live in the home, plus any capital improvement credit that you receive. CHT s option to purchase: If you decide to sell your home, you agree to follow the resale process. CHT has the first option to buy your home. Owner-Occupancy: You have agreed to use the property as your primary residence for at least six months of every year. You may not build any commercial structures or additional living space to rent out. Responsible use: You agree to use the property responsibly, in an ecologically sound manner, and to be responsible for the actions of others who you allow to use the property. Membership Fee: You agree to pay a membership fee to CHT. The amount of the fee can be adjusted only every 5 years and shall not increase more than ten dollars ($10.00) per month over the ground lease fee charged during the preceding five year term. Insurance: You agree to keep the home properly insured and to name CHT as an additionally insured party so we receive notification of any changes in insurance status. Mediation and Arbitration: You agree to use mediation and arbitration to resolve any disputes that may arise between you and CHT. Lease and Membership Fees CHT charges a $35/month lease fee to owners of single family homes. CHT charges a $25/month membership fee to owners of condominiums. CHT s accounting department bills owners every month for this fee along with property taxes if applicable (see below). CHT keeps this lease fee as low as possible in an effort to not burden homeowners. *Note: Nonpayment of lease or membership fees is considered a default on your mortgage. Champlain Housing Trust Homeowner Handbook 3

5 Taxes Single Family Homes Taxes for single family home owners (leaseholders) are handled one of two ways, depending on the town in which you live. Some towns bill the leaseholder directly for taxes on the land and your home. If this is the case all taxes are paid directly to either the town in which you live or your mortgage lender (if you are escrowing). Most towns hold CHT responsible for paying and billing for taxes on the land since the land is owned by CHT. In these situations, the town will send CHT a bill for land taxes for all leaseholders at the start of each tax year. Property tax years run from July 1 to June 30, so we normally receive these bills towards the end of July or early August. CHT will then bill the leaseholder monthly for these bills, while paying the respective towns on a quarterly basis. Any adjustments, increases or decreases in tax amount, will be included with the first billing of the new tax year. This tends to be either August or September depending on when CHT received the tax bill. CHT will also enclose a copy of the bill for the leaseholders' records. Tax law and forms change regularly. CHT offers an annual Tax Workshop that provides an overview of tax issues for new homeowners. CHT staff strive to stay current on real estate tax issues that affect homeowners, but we cannot provide tax advice. It may be to your advantage to seek help from a tax professional in preparing your taxes once you are a homeowner. At the beginning of each calendar year, CHT will send all tax-paying leaseholders a statement of what they paid during the previous year. The payments will be broken out into what was applied to Taxes, Lease Fees, and any prior balances. It is important for leaseholders to keep current with the taxes paid to CHT, as they can only claim those taxes actually paid, when filing their Federal and State Income Tax forms. CHT will also send copies of the tax bills that correspond to the prior calendar year as reference. In an effort to make the filing of taxes for leaseholders more convenient, we will also send an informational letter describing how these statements affect your filing needs. In Vermont, homeowners are required to file a form every year by April 15 th to declare their residence as a Homestead. Each tax bill has a SPAN number that identifies an individual property. If you receive only one tax bill for your home and the land it sits on, all of the information you need in included on that bill and you have a single SPAN number. If you are being billed by CHT for taxes on the land under your home, there are two tax bills (one for land, one for home) thus there are two SPAN numbers. CHT and the Tax Department have decided that the leaseholder is responsible for filing a Homestead Declaration form each year for the home only. Use the SPAN number on the bill provided to you by either your town clerk s office or your mortgage lender. CHT is responsible for filing the form for the land portion, and will do so each year. At the end of each January, CHT will send out a statement to all homeowners who have separate land tax bills, indicating the total amount of tax that you have paid so you can claim it on your Homestead Declaration. The Tax Department provides a line for you to indicate the amount of Municipal Tax Allocated from Land Trust, Co-op, or Nonprofit Mobile Home Park, and one for Education Tax Allocated from Land Trust, Co-op or Nonprofit Mobile Home Park. Remember that you can only claim the amount of tax you have actually paid to CHT. Champlain Housing Trust Homeowner Handbook 4

6 Taxes - Condos Taxes for condominium owners are billed to the homeowner directly and condominium owners only have one SPAN number to use when filing the Homestead Declaration form. Because there is no ownership of land involved in owning a condominium, filing the Homestead Declaration form is fairly straightforward. CHT has no involvement in this process with condo owners. If you have questions about your taxes that relate to CHT, you can Janet Harvey-Coutrayer at Capital Improvement Credit Remember that if you are making significant improvements to your home, you should keep a record of the work you are doing. As it states in the documents you signed at purchase, CHT has a capital improvement credit policy. If you add market value to your home by upgrading and improving it, you can get 100% credit for the market value that you have added. If you do a major project, (like build an addition to or remodel your home), you should order a fair market fee simple appraisal of the value before you start the project. Then, immediately after the project is complete, you should have the appraiser return to determine the new value with the improvements. You will submit the two appraisals to CHT for our review, and we will determine your capital improvement credit. The increase in value will be credited to you when you sell or refinance, in addition to your share of the remaining appreciation as laid out in the formula in your agreement with CHT. We have a list of qualified local appraisers that we can share with you. It is important to remember the distinction between the value of your improvement and what you may have spent on the improvement. That is to say; you may have spent $5,000 on an improvement; however it may only add $2,000 of value your home. It is also important to remember that not every improvement will add market value to your home. Generally, a capital improvement is something that a subsequent buyer would pay extra for (for example, an extra bathroom). If you are doing small projects on your own over time, you should keep a file with before and after photos of your work, and receipts from materials and costs associated with the work. CHT does not reimburse for expenses, this is simply for the purpose of documenting the improvements. If you have good documentation of the work done on the home, CHT can ask the appraiser to review this at time of resale and try to establish a value for the improvements. We will credit you for capital improvements as established by the appraiser, as long as there is sufficient appreciation on the home to allow for it. Homeowner's Insurance You need to maintain homeowners insurance (sometimes called hazard insurance) on your home. If you own a single family home, your insurance policy must list CHT as an additional insured party. CHT s address is 88 King Street, Burlington, VT If you received a grant from the Vermont Housing and Conservation Board (VHCB), you need to Champlain Housing Trust Homeowner Handbook 5

7 have VHCB listed as a loss payee on your policy. VHCB s address is 58 East State Street, Montpelier, VT If you own a condominium, we ask that you request that CHT be listed as "additional insured" or additional interest on your policy, though not all insurance agents will honor this request. Remember that if you change insurance companies, you need to add us to your new policy as an additional insured. These measures assure CHT that your home is properly insured and that CHT will be notified if the insurance is cancelled or if there is an insurance claim on the home. This helps us make sure that you and your home are protected. Refinances or Home Equity Loans If you own a CHT single family home or condominium, you must contact CHT when you are thinking about refinancing or taking out a home equity loan. Not all lenders will refinance a CHT property and we can provide a referral list of lenders who have refinanced CHT homes. A CHT staff member will need to review your proposed loan and prepare documents for your closing. This process generally takes a few weeks and CHT charges a fee of $225, plus legal fees. Remember, because you have agreed to share your appreciation with the land trust, you can only borrow against the share of the equity in the home which is yours, not against the full market value of the home. If you are taking "cash out", CHT will need to review an appraisal in order to determine your share of the equity in your home. Home equity lines of credit are not allowed. CHT s review assures that you don t take more equity out of your home then is available and end up upside down. Please call Jaclyn Marcotte ( ) to start the conversation with CHT about refinancing. Selling your Home When you are ready to sell your CHT single family home or condominium, it is important to note that the process for selling your CHT home may take longer than it might if you were selling on the open market. Generally, the process will take at least three to four months unless there are extenuating circumstances. The benefit is that you do not incur the cost of hiring a Realtor, as we handle the sales process for you. Planning ahead, communicating with CHT, and allowing adequate time will make the process less stressful for you. If you decide to sell your home, you must notify us in writing of your intent to sell. Contact Jaclyn Marcotte at and she will send you a letter to read and return. If your marital status has changed since you purchased your home, please notify us of the change at this time. Once we have received your intent to sell, CHT will order an independent appraisal to determine the current value of your home. From the current value, we will determine price that CHT will buy your home (called the option price of your home). The cost of the appraisal is split by you and CHT. The option price is determined by the resale formula contained in the legal documents you signed at purchase. You will get 25% of the increase in the value of your home while you owned it. You will receive 100% of any established capital improvement credit. You will Champlain Housing Trust Homeowner Handbook 6

8 also receive 100% of any equity built by paying down principal on your mortgage. All other debts on the home (including closing cost loans, second mortgages, and other liens) must be paid upon sale of your home. If you choose not to sell, you ll need to reimburse CHT for the full cost of the appraisal. NOTE: It is possible that your home will not appreciate. This is a risk of homeownership. If your home depreciates, you will be responsible for the total amount of the depreciation. Once we have determined the option price, we will notify you in writing. If you continue with the sale, we will begin marketing the property. During the marketing period, we will arrange showing times with you and hold open houses for potential buyers. The initial showing period is usually one week. If after the initial showing period, we have one or more qualified and interested buyer, we will select a buyer. If not, we will continue to market the property. CHT has a set period of time to exercise its option to purchase the home, 180 days. After that period, the option period can be extended by mutual agreement between the homeowner and CHT. In a slow real estate market, selling within this time period may be difficult. Be assured that CHT will do everything in our power to sell your home in a timely manner. If your home does not sell in the option period, you can follow the procedure indicated in your legal documents, or in extreme circumstances, CHT will work with you and our funding partners to find an alternative solution. Once CHT selects an eligible buyer for your home, we will sign a tri-party contract between you, CHT, and the new buyer which lays out the terms of sale. The buyer is required to have an independent home inspection during the contract period, which CHT will coordinate with your schedule. As a seller, you will be expected to take responsibility forhaving the home in good condition to market, and resolving any health and safety and/or deferred maintenance issues that are raised at the inspection. CHT will be actively involved in the resolutions of inspection issues. Finally, you will need to attend the closing to sign the legal documents involved in the sale. If you are purchasing another home, CHT will do our best to coordinate with your schedule. There will be some closing costs associated with selling your home. These will be outlined in the letter of intent to sell. Ongoing Homeownership Center Services Once a Homeownership Center customer, always a Homeownership Center customer! CHT s Homeownership Center offers ongoing services and programs for new homeowners. Every winter we hold a workshop regarding federal and state income tax returns as a homeowner. We also provide workshops on home maintenance, repair, credit, refinancing, energy efficiency, and other issues of interest to homeowners. Visit our website ( or contact us at for more information. Champlain Housing Trust Homeowner Handbook 7

9 Champlain Housing Loan Fund Champlain Housing Trust manages a revolving loan fund to serve customers when funds are available for closing costs, rehabilitation, home improvement, and other products. The loan pool is capitalized by a variety of public and private sources each having its own eligibility criteria. All loan applications are subject to review and approval in accordance with eligibility requirements, CHT underwriting guidelines and fund availability. Please call Becca McNamara at x105 for information. CHT Membership Champlain Housing Trust is a membership organization. You will be a voting member of the organization as long as you are a homeowner. As a member of the Champlain Housing Trust, you have a voice in how the Housing Trust is run. You are encouraged to join a committee, elect board members or run for a seat on the board, help us with fundraising, and attend our annual meeting and annual resident events. We welcome your input! Keeping in Touch with CHT If you are not sure that CHT has your current work and home phone numbers, please call us. We make an effort to collect this information at time of purchase, but if you didn t have your new number at that point, or you have since changed jobs, we may not be able to contact you! Homeownership Staff to Remember Becca McNamara x105 Champlain Housing Loan Fund Jaclyn Marcotte refinance, selling, and contact information updates Janet Harvey-Coutrayer Homeowner counseling and tax questions Main CHT Line Champlain Housing Trust Homeowner Handbook 8