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Limited equity cooperatives overview

A limited equity cooperative (LEC) is a homeownership model in which residents purchase a share in a development (rather than an individual unit) and commit to resell their share at a price determined by formula—an arrangement that maintains affordability at purchase and over the long term.

When the LEC is created, initial affordability is typically achieved with some form of government assistance, including construction subsidies and low-interest financing. The price restrictions built into the resale formula limit the equity that LEC residents can gain when they sell their ownership share; it is this feature that also helps to maintain affordability, especially in strengthening housing markets. Some limited equity cooperativeA type of equity homeownership arrangement that allows low-income families to purchase a "share" in a cooperative. An individual with a share is entitled to one unit in the cooperative, and a say in the decision-making regarding the development. At the time of a resale, the return that share owners can earn is limited in order to maintain the affordability of the shares for future purchasers.s allow little or no build-up of equity by homeowners, while others adopt a shared equity approach, balancing the twin goals of long-term affordability and individual wealth creation.

Additional Resources

Administering agencies

Local department of housing and community development

Policy objectives

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