how does the deed restriction work?

The Challenge

Low inventory and high mortgage rates combined with high home prices means getting into a new home can be an American dream that’s out of reach. The Starter Home Project is designed to change all of that.

By working with local lenders, bankers, municipalities and other partners with a shared vision to build great communities, the Starter Home Project is a great way to begin building your future.

Goals of lasting affordability

Lasting affordability

Maintain affordable housing units with lasting affordability
Protect homes from the speculative market, setting land aside for housing that’s affordable forever.

in a lasting affordability model, the homeowners agree to resale price restrictions that will retain the original subsidy in the home and ensure that the home remains affordable to subsequent income-eligible homebuyers, not just the initial household served.

Lasting affordability helps stabilize communities that may otherwise be subjected to gentrification or displacement by keeping long-time residents and their heirs in their own homes.

Create homes that are as affordable to subsequent buyers as the first buyer without re-subsidizing the unit. “A one-time investment for multiple generations.”

For the homebuyer

The Deed Restriction is an enforceable, legally-binding document
The term of the Deed Restriction is 31 years
In order to keep the home affordable to future buyers, you agree to sell your home for a limited price when you decide to move
The maximum price is calculated based on what was paid plus an annual increase based on a specific resale formula
You are responsible for paying all property taxes and insurance
You may, with permission, make improvements to your home
You must live in your home and may not rent out your home
You agree to share the affordability that’s been created for you with the next homebuyer – for generations to come

protect affordability and build equity

Lasting Affordability

The concept is designed to help people access starter homes at starter home prices, rather than the price of housing in an inflated marketplace. By selling the home at actual costs, rather than Fair Market Value, and restricting

Length of Affordability

We are working with a 31 year model. But that can be 99 years if you were to choose. Always consult your organization's legal team to guide you.

Equity

A homebuyer using this model will still earn equity....

Maintaining a strong marketplace in the neighborhood

Because this model is designed to support affordability, it wouldn't be used in a traditional appraisal situation if neighbors were to sell their homes. ....

Title Companies and Passing the Model to Next Sale or Transfer

Great realtors are there to support their buyers, so they should be checking on deeds, among everything else, when they are advising clients. Either way, a deed restriction will be recorded at the county where the home resides, just like any other mortgage document.

Why does this model support homebuyers?

The Starter Home Project is designed to help get you started on the journey called Home Ownership. Because the home is sold at the cost to build, the price to purchase is often much less than most new homes entering the market. This opportunity is then passed on when a homeowner decides they need their next home. Through this model, homes are sold with the intention of continuing the affordability that was introduced at first sale.