12 USC 4116 - Resident homeownership program

U.S Code last checked for updates: May 02, 2024

§ 4116.

Resident homeownership program

(a)

Formation of resident council

(b)

Other program requirements and limitations

(1)

Sales to residents

As a condition of approval of a plan of action involving homeownership program under this subchapter, the resident council shall prepare a workable plan acceptable to the Secretary for giving all residents an opportunity to become owners, which plan shall identify—

(A)

the price at which the resident council intends to transfer ownership interests in, or shares representing, units in the housing;

(B)

the factors that will influence the establishment of such price;

(C)

how such price compares to the estimated appraised value of the ownership interests or shares;

(D)

the underwriting standard the resident council plans to use (or reasonably expects a public or private lender to use) for potential tenant purchasers;

(E)

the financing arrangements the tenants are expected to pursue or be provided; and

(F)

a workable schedule of sale (subject to the limitations of paragraph (8)) based on estimated tenant incomes.

(2)

Approval of method of conversion and limitation on conditions of approval

(3)

Required conditions

The Secretary shall require that the form of homeownership impose appropriate conditions, including conditions to assure that—

(A)

the number of initial owners that are very low-income, lower income, or moderate-income persons at initial occupancy meet standards required or approved by the Secretary;

(B)

occupancy charges payable by the owners meet requirements established by the Secretary;

(C)

the aggregate incomes of initial and subsequent owners and other sources of funds for the project are sufficient to permit occupancy charges to cover the full operating costs of the housing and any debt service;

(D)

each initial owner occupies the unit it acquires; and

(E)

the low-income affordability restrictions shall continue to apply to any rental units in the housing for any period during which such units remain rental units.

(4)

Use of proceeds from sales to eligible families

(5)

Restrictions on resale by homeowners

(A)

In general

(i)

Transfer permitted

(ii)

Right to purchase

(iii)

Promissory note required

(B)

6 years or less

In the case of a transfer within 6 years of the acquisition under the program, the homeownership program shall provide for appropriate restrictions to assure that an eligible family may not receive any undue profit. The plan shall provide for limiting the family’s consideration for its interest in the property to the total of—

(i)

the contribution to equity paid by the family;

(ii)

the value, as determined by such means as the Secretary shall determine through regulation, of any improvements installed at the expense of the family during the family’s tenure as owner; and

(iii)

the appreciated value determined by an inflation allowance at a rate which may be based on a cost-of-living index, an income index, or market index as determined by the Secretary through regulation and agreed to by the purchaser and the entity that transfers ownership interests in, or shares representing, units to eligible families (or another entity specified in the approved application), at the time of initial sale, and applied against the contribution to equity.

Such an entity may, at the time of initial sale, enter into an agreement with the family to set a maximum amount which this appreciation may not exceed.

(C)

6–20 years

(D)

Use of recaptured funds

(6)

Protection of nonpurchasing families

(A)

Eviction

(B)

Rental assistance

(C)

Relocation assistance

(7)

Qualified management

(8)

Timely homeownership

(9)

Records and audit of resident councils

(A)

Maintenance

(B)

Access

(C)

Audit

(10)

Assumption conditions

(Pub. L. 100–242, title II, § 226, as added Pub. L. 101–625, title VI, § 601(a), Nov. 28, 1990, 104 Stat. 4267; amended Pub. L. 102–550, title III, § 309, Oct. 28, 1992,

cite as: 12 USC 4116