Appendix II to Subpart B of Part 904 - Homebuyers Ownership Opportunity Agreement (Turnkey III)
24:4.1.3.1.4.2.5.23.3 : Appendix II
Appendix II to Subpart B of Part 904 - Homebuyers Ownership
Opportunity Agreement (Turnkey III) (Subpart B) part i
This Agreement, made and entered into _________, 19__, by and
between _____ (herein called the “Authority”), and _____ (herein
called the “Homebuyer”);
witnesseth:
In consideration of the agreements and covenants contained in
this Agreement and in Homebuyers Ownership Opportunity Agreement
Part II, which is hereby incorporated into this Agreement by
reference, the Authority leases to the Homebuyer the following
described land and improvements thereon together with an undivided
interest in all common areas and property (herein called the
“Home”) located in the ____ Development (Project No. __), which
Home is identified and located as follows: [Insert address and
legal description of location of Home, including rights with
respect to common areas and property, and making reference to Book
and Page No. in Recorder of Deeds Recorded].
A. Term of Agreement. The term of this Agreement shall
commence on _________, 19__, and shall expire at midnight on the
last day of this same calendar month. Said term shall be extended
automatically for successive periods of one calendar month for a
total term of __ 1 years from the first day of the next calendar
month unless the Homebuyer acquires title to the home pursuant to
section 16 or 17 of Part II, as applicable, or unless this
Agreement is terminated pursuant to section 24 of Part II.
1 Fill in term of years equal to term of Purchase Price Schedule
(and Additional Purchase Price Schedule, if applicable) (see
Section 16 or 17 of Part II as applicable).
B. Monthly Payment. 1. Until changed in accordance with
this Agreement, the Homebuyer's Monthly Payment shall be $__ per
month, due and payable on or before the first day of each month. If
liability for the Monthly Payment shall start on a day other than
the first day of a calendar month, or if for any reason the
effective date of termination occurs on other than the last day of
the month, the Monthly Payment for such month shall be
proportionate to the period of occupancy during that month.
2. The amount of the Monthly Payment may be increased or
decreased only by reason of changes in the Rent Schedule (see
section 7c of Part II) or changes in the Homebuyer's family income
or other circumstances (see section 7b of Part II). Any change in
Monthly Payment shall become effective by written notice from the
Authority to the Homebuyer as of the date specified in such notice,
and such notice shall be deemed to constitute an Amendment to this
Agreement.
C. Option to Purchase. In consideration of the covenants
contained herein, the Authority grants the Homebuyer an option to
purchase the Home for the applicable purchase price, to be
exercised in accordance with section 10d of Part II.
D. Purchase Price. The Initial Purchase Price of this
Home is $___ (this price has been determined in accordance with
section 16 or 17 of Part II as applicable); this amount shall be
reduced periodically in accordance with the schedule (hereinafter
called Purchase Price Schedule) for that amount, which Schedule is
hereby furnished the Homebuyer.
E. Amount of NRMR. The balance (or deficit) in the NRMR
on the date of this Agreement is $___.
F. Homebuyers Association. Upon the signing of this
Agreement, the Homebuyer's family automatically becomes a member of
the Homebuyers Association, as provided in section 5 of Part
II.
G.
Designation of Successor. For the purpose of section 25
of Part II, the designee and his address are: First Name Initial
Last Name Relationship
H. Entire Agreement. THIS AGREEMENT (COMPRISING PARTS I
AND II, THE PURCHASE PRICE SCHEDULE, THE NONROUTINE MAINTENANCE
SCHEDULE, AND THE PROMISSORY NOTE) IS THE ENTIRE AGREEMENT BETWEEN
THE AUTHORITY AND THE HOMEBUYER, AND, EXCEPT AS OTHERWISE PROVIDED
IN THIS AGREEMENT, NO CHANGES SHALL BE MADE OTHER THAN IN WRITING
SIGNED BY THE AUTHORITY AND THE HOMEBUYER.
THIS AGREEMENT is signed in duplicate, original for all
purposes. The Homebuyer hereby acknowledges receipt of one of these
signed copies.
WITNESSES: The Authority: By (Official Title) The Homebuyer(s):
Initial Subsequent part ii terms and conditions
1. Introduction - a. The Home. The Home described
in Part I of this Agreement is part of a Development, which the
Authority has acquired or caused to be constructed. This
Development contains a number of dwelling units including related
land, and may also include common areas and property as described
in Part I for occupancy by low-income families under lease-purchase
agreements, each in the form of this Homebuyers Ownership
Opportunity Agreement. This Development is financed by sale of the
Authority's notes which will be amortized over the period of years
specified in the Annual Contributions Contract relating to this
Development.
b. Annual Contributions Contract. The Authority has
entered into an Annual Contributions Contract (“ACC”) with the
Department of Housing and Urban Development (“HUD”) under which the
Authority will receive Annual Contributions provided by HUD, and
will perform certain operational functions, to provide housing for
the Homebuyers and assist the Homebuyers in achieving
homeownership.
c. Management. The Authority may enter into a contract or
contracts for management of the Development or for performance of
management functions, by the Homebuyers Association (see section 5)
or others.
d. Definitions.
(1) The term “Authority” means the local housing authority which
acquires or develops a low-rent housing development with financial
assistance from HUD, owns the Homes until title is transferred to
the Homebuyers, and is responsible for the management of the
homeownership opportunity program.
(2) The term “common property” means the nondwelling structures
and equipment, common areas, community facilities, and in some
cases certain component parts of dwelling structures, which are
contained in the Development: Provided, however, That in the
case of a Development that is organized as a condominium or a
planned unit development (PUD), the term “common property” shall
have the meaning established by the condominium or PUD documents
and the State law pursuant to which the condominium or PUD is
organized, under the terms, “common areas,” “common facilities,”
“common elements,” “common estate,” or other similar terms.
(3) The term “Development” means the entire undertaking
including all real and personal property, funds and reserves,
rights, interests and obligations, and activities related
thereto.
(4) The term “EHPA” means the Earned Home Payments Account
established and maintained pursuant to section 10 of the
Agreement.
(5) The term “Homebuyer” means the member or members of a
low-income family who have executed a Homebuyers Ownership
Opportunity Agreement with the Authority.
(6) The term “Homebuyers Association” (HBA) means an
organization as defined in section 5 of this Agreement.
(7) The term “Homeowner” means a Homebuyer who has acquired
title to his Home.
(8) The term “Homeowners Association” means an association
comprised of Homeowners, including condominium associations, having
responsibilities with respect to common property.
(9) The term “HUD” means the Department of Housing and Urban
Development which provides the Authority with financial assistance
through loans and annual contributions and technical assistance in
development and operation.
(10) The term “NRMR” means the Nonroutine Maintenance Reserve
established and maintained pursuant to section 11 of this
Agreement.
(11) The term “Project” is used to refer to the Development in
relation to matters specifically related to the Annual
Contributions Contract.
2. The Homebuyers Ownership Opportunity Agreement. Under
this Homebuyers Ownership Opportunity Agreement, the Homebuyer may
achieve ownership of the home described in Part I by making the
required monthly payments and providing maintenance and repairs to
build up a credit in his Earned Home Payments Account (hereinafter
called “EHPA”). While the Homebuyer is performing his obligations,
the purchase price will be reduced in accordance with the Purchase
Price Schedule, so that, while this purchase price is being
reduced, the Homebuyer is increasing the amount of his EHPA. The
Homebuyer may also make voluntary payments to his EHPA which will
enable him to acquire ownership more quickly. The Homebuyer may
take title to his Home when he is able to finance or pay in full
the balance of the purchase price as shown on the Purchase Price
Schedule plus the costs incidental to acquiring ownership, as
provided in section 16 or 17, as applicable.
3. Status of Homebuyer. Until the Homebuyer satisfies the
conditions set forth in section 10d precedent to the exercise of
his option to purchase the Home for the applicable purchase price,
the Homebuyer shall have the status of a lessee of the Authority
from month to month with an obligation to build up such balance in
his EHPA within the first two years of his occupancy and to
continue adding to his EHPA thereafter. For convenience the term
“Homebuyer” also refers to the occupant during his status as a
lessee.
4. Counseling of Homebuyers. The Authority shall provide
training and counseling, as required and approved by HUD. The
Authority's own staff and resources, existing community resources,
a private agency under contract with the Authority, or any
combination of the three, shall be utilized to prepare Homebuyers
for the rights, responsibilities, and obligations of homeownership
including participation in the Homebuyers Association. The
Homebuyer agrees to participate in and cooperate fully in all
official training and counseling activities.
5. Homebuyers Association. 2 Upon the signing of this
Agreement, the Homebuyer's family automatically becomes a member of
the Homebuyers Association having membership and purposes as set
forth in the Articles of Incorporation of said Association. In the
absence of a duly organized Homebuyers Association, the Authority
shall be free to act without the HBA action required by this
Agreement.
2 There may be cases, such as where the homes are on scattered
sites, where there is no Homebuyers Association but an alternative
method for homebuyer representation and counseling is provided (see
24 CFR 904.307). In such cases, section 5 and other portions of
this Agreement referring to the Homebuyers Association should be
modified to reflect the alternative method provided for homebuyer
representation and counseling.
6. Routine maintenance, repair and use of premises. a.
Routine maintenance. The Homebuyer shall be responsible for
the routine maintenance of his dwelling and grounds, to the
satisfaction of the Homebuyers Association and the Authority. This
routine maintenance includes the work (labor and materials) of
keeping the dwelling structure, grounds and equipment in good
repair, condition and appearance so that they may be utilized
continually at their designed capacities and at the satisfactory
level of efficiency for their intended purposes, and in conformity
with the requirements of local housing codes and applicable
regulations and guidelines of HUD. It includes repairs (labor and
materials) to the dwelling structure, plumbing fixtures, dwelling
equipment (such as range and refrigerator), shades and screens,
water heaters, heating equipment and other component parts of the
dwelling. It also includes all interior painting and maintenance of
the grounds (lot) on which the dwelling is located. It does not
include maintenance and replacements provided for by the Nonroutine
Maintenance Reserve described in Section 11.
b. Repair of damage. In addition to his obligation for
routine maintenance, the Homebuyer shall be responsible for repair
of any damage caused by the Homebuyer, members of his family, or
visitors.
c. Care of Home. The Homebuyer agrees to keep his
dwelling in a sanitary condition; to cooperate with the Authority
and the Homebuyers Association in keeping and maintaining the
common area and property, including fixtures and equipment, in good
condition and appearance; and to follow all rules of the Authority
and of the Homebuyers Association concerning the use and care of
the dwellings and the common areas and property.
d. Inspections. The Homebuyer agrees to permit officials,
employees, or agents of the Authority, and of the Homebuyers
Association to inspect his Home at reasonable hours and intervals
in accordance with rules established by the Authority and the
Homebuyers Association.
e. Use of Home. The Homebuyer shall not (1) sublet his
Home without the prior written approval of the Authority and HUD,
(2) use or occupy his home for any unlawful purpose nor for any
purpose deemed hazardous by insurance companies on account of fire
and other risks, or (3) provide accommodations (unless approved by
the Homebuyers Association and the Authority) to boarders or
lodgers. The Homebuyer agrees to use the Home only as a place to
live for himself and his family (as identified in his initial
application or by subsequent amendment with the approval of the
Authority), for children thereafter born to or adopted by members
of such family, and for aged or widowed parents of the Homebuyer or
spouse who may join the household.
f. Obligations with respect to other persons and
property. Neither the Homebuyer nor any member of his family
shall interfere with rights of other occupants of the Development,
or damage the common property or the property of others, or create
physical hazards.
g. Structural changes. A Homebuyer shall not make any
structural changes in or additions to his Home unless the Authority
has first determined in writing that such change would not (1)
impair the value of the unit, the surrounding units, or the
Development as a whole, or (2) affect the use of the Home for
residential purposes, or (3) violate HUD requirements as to
construction and design. Any changes made in accordance with this
paragraph shall be at the Homebuyer's expense, and in the event of
termination of this Agreement before the Homebuyer acquires title
to the Home, whether by reason of the Homebuyer's default or
otherwise, the Homebuyer shall not be entitled to any compensation
on account of his having made such changes.
h. Statement of condition and repair. When the Homebuyer
moves in, the Authority shall inspect the Home and shall give the
Homebuyer a written statement, to be signed by the Authority and
the Homebuyer, of the condition of the Home and the equipment in
it. Should the Homebuyer vacate, the Authority shall inspect the
Home and give the Homebuyer a written statement of the repairs and
other work, if any, required to put the Home in good condition for
the next occupant (see section 10k). The Homebuyer or his
representative, or both, may join in any such inspections with the
Authority and the Homebuyer Association.
7. Monthly payments by Homebuyer - a. Determination of
amount. Except as otherwise provided hereinafter, the Homebuyer
agrees to pay to the Authority, so long as this Agreement is in
effect, a required Monthly Payment as lease rental in an amount
determined in accordance with a schedule adopted by the Authority
and approved by HUD. Although the total monthly housing cost
consists of the sum of the break-even amount (see section 8) and
the debt service (payment of principal and interest) on the
applicable share of the capital cost of the Development, the
Homebuyer, so long as he qualifies as low income, is not required
to pay the full amount, but is assisted by HUD annual
contributions. The schedule shall provide for payments to be based
upon a percentage of the family's adjusted monthly income and shall
indicate allowances for those utilities which the Homebuyer will
pay for directly.
b. Changes in monthly payment due to changes in family income
or other circumstances. The required Monthly Payment may be
adjusted as a result of the Authority's regularly or specially
scheduled reexamination of the Homebuyer's family income and family
composition. Interim changes may be made in accordance with the
Authority's policy on reexaminations, or under unusual
circumstances, at the request of the Homebuyer, if both the
Authority and the Homebuyers Association agree that such action is
warranted.
c. Changes in monthly payment due to changes in rent
schedules. The required Monthly Payment may also be adjusted by
changes in the required percentage of income to reflect (1) changes
in operating expense as described in section 9b and (2) changes in
utility allowances.
d. Acceptance of monthly payment. The Authority shall not
refuse to accept monthly payments because of any other charges
(i.e., other than overdue monthly payments) owed by the Homebuyer
to the Authority; however, by accepting monthly payments under such
circumstances the Authority shall not be deemed to have waived any
of its rights and remedies with respect to such other charges.
e. Application of monthly payment. The Homebuyer's
Monthly Payment shall be applied by the Authority as follows:
First, to the credit of the Homebuyer's EHPA pursuant to section 10
below; second, to the credit of the Nonroutine Maintenance Reserve
for the Home pursuant to Section 11 below; and third, for payment
of Monthly Operating Expense, including contribution to Operating
Reserve, as provided in section 9 below.
8. Break-even amount - a. Definition. The term
“Break-even Amount” means the minimum monthly amount needed to
provide funds for:
(1) Monthly Operating Expense, including provision for a
contribution to Operating Reserve, pursuant to section 9a
below;
(2) The monthly amount to be credited to the Homebuyer's EHPA
pursuant to Section 10 below; and
(3) The monthly amount to be credited to the Nonroutine
Maintenance Reserve for the Home pursuant to section 11 below.
b. Monthly payment in excess of break-even amount. When
the Homebuyer's required Monthly Payment exceeds the applicable
Break-even Amount, the excess shall constitute additional Project
income and shall be deposited and used in the same manner as other
Project income.
c. Monthly payment below break-even amount. When the
Homebuyer's required Monthly Payment is less than the applicable
Break-even Amount, the deficit shall be applied as a reduction of
that portion of the Monthly Payment designated for Operating
Expense (i.e., as a reduction of project income). In all such
cases, the EHPA and the NRMR shall be credited with the amount
included in the Break-even Amount for these accounts.
9. Monthly operating expense - a. Definition and
categories of monthly operating expense. The term “monthly
operating expense” means the monthly amount needed for the
following purposes:
(1) Administration. Administrative salaries, travel,
legal expenses, office supplies, postage, telephone and telegraph,
etc.;
(2) Homebuyer services. Authority expenses in the
achievement of social goals, including costs such as salaries,
publications, payments to the HBA to assist its operation, contract
and other costs;
(3) Utilities. Those utilities (such as water), if any to
be furnished by the Authority as part of operating expense;
(4) Routine maintenance - Common property. For community
building, grounds, and other common areas, if any. The amount
required for routine maintenance of common property depends upon
the type of common property included in the Development and the
extent of the Authority's responsibility for maintenance (see also
section 9c);
(5) Protective services. The cost of supplemental
protective services paid by the Authority for the protection of
persons and property;
(6) General expense. Premiums for fire and other
insurance, payments in lieu of taxes to the local taxing body,
collection losses, payroll taxes, etc.;
(7) Nonroutine maintenance - Common property (contribution to
operating reserve). Extraordinary maintenance of equipment
applicable to the community building and grounds, and unanticipated
items for non-dwelling structures (see section 12).
b. Monthly operating expense rate. The monthly operating
expense rate for each fiscal year shall be established on the basis
of the Authority's HUD-approved operating budget for that fiscal
year. The operating budget may be revised during the course of the
fiscal year in accordance with HUD requirements. If it is
subsequently determined that the actual operating expense for a
fiscal year was more or less than the amount provided by the
monthly operating expense established for that fiscal year, the
rate of monthly operating expense to be established for the next
fiscal year may be adjusted to account for the difference (see
section 12). Such adjustment may result in a change in the required
monthly payment (see section 7c).
c. Provision for common property maintenance. During the
period the Authority is responsible for the maintenance of common
property, the annual operating budget and the monthly operating
expense rate shall include the amount required for routine
maintenance of all common property in the Development, even though
a number of the homes may have been acquired by homebuyers. During
such period, this amount shall be computed on the basis of the
total number of homes in the Development (i.e., the annual amount
budgeted for routine maintenance of common property shall be
divided by the number of Homes in the Development, resulting in the
annual amount for each Home; this figure shall in turn be divided
by 12 to determine the monthly amount to be included in the monthly
operating expense (and in the break-even amount) for routine
maintenance of common property). After the Homeowners Association
assumes responsibility for maintenance of common property, the
monthly operating expense (and break-even amount) shall include an
amount equal to the monthly assessment by the homeowners
association for the remaining homes owned by the Authority (see
section 11 for nonroutine maintenance of common property).
d. Posting of monthly operating expense statement. A
statement showing the budgeted monthly amount allocated in the
current operating budget to each operating expense category shall
be provided to the HBA and a copy shall be provided to the
Homebuyer upon request.
10. Earned Home Payments Account (EHPA) - a. Credits
to the account. The Authority shall establish and maintain a
separate EHPA for each Homebuyer. Since the Homebuyer is
responsible for maintaining his Home as provided in section 6, a
portion of his required Monthly Payment equal to the Authority's
estimate, approved by HUD, of the monthly cost for such routine
maintenance, taking into consideration the relative type and size
of the Home, shall be set aside in his EHPA. In addition, this
account shall also be credited with (1) any voluntary payments made
pursuant to section 10g and (2) any amount earned through the
performance of maintenance pursuant to paragraph e of this section.
All amounts received by the Authority for credit to the Homebuyer's
account, including credits for performance of maintenance pursuant
to paragraph e of this section, shall be held by the Authority for
the account of the Homebuyer.
b. Use of EHPA funds. The unused balance in the
Homebuyer's EHPA may be used toward purchase of the Home as
provided in section 16 or 17 as applicable, or shall be payable to
the Homebuyer if he leaves the Project as provided in paragraph k
of this section.
c. Charges to the account. (1) If for any reason the
Homebuyer is unable or fails to perform any item of required
maintenance as described in section 6, the Authority shall arrange
to have the work done in accordance with the procedures established
by the Authority and the HBA and the cost thereof shall be charged
to the Homebuyer's EHPA. Inspections of the Home shall be made
jointly by the Authority and the HBA.
(2) To the extent nonroutine maintenance expense is made
necessary by the negligence of the Homebuyer as determined by the
HBA and the Authority (see section 11), the cost thereof shall be
charged to the EHPA.
d. Exercise of option; required amount in EHPA. The
Homebuyer may exercise his option to buy the Home, by paying the
applicable purchase price pursuant to section 16 or 17, only after
satisfying the following conditions precedent:
(1) Within the first two years of his occupancy, he has achieved
a balance in his EHPA equal to 20 times the amount of the monthly
EHPA credit as initially determined in accordance with paragraph a
of this section;
(2) He has met, and is continuing to meet, the requirements of
this Agreement;
(3) He has rendered, and is continuing to render, satisfactory
performance of his responsibilities to the HBA.
When the Homebuyer has met these conditions precedent, the
Authority shall give the Homebuyer a certificate to that effect.
After achieving the required minimum EHPA balance within the first
two years of his occupancy, the Homebuyer shall continue to be
obligated to provide the required maintenance, thereby continuing
to add to his EHPA. If the Homebuyer fails to meet either his
obligation to achieve the minimum EHPA balance as specified or his
obligation thereafter to continue adding to the EHPA, the Authority
and the HBA shall investigate and take appropriate corrective
action, including termination of this Agreement by the Authority in
accordance with section 24.
e. Additional equity through other maintenance. Besides
the maintenance which the Homebuyer must provide pursuant to
section 6, the Homebuyer may earn additional EHPA credits by
providing in whole or in part any of the maintenance necessary to
the common property of the Development or maintenance for which the
Nonroutine Maintenance Reserve is established (see section 11).
Such maintenance may be provided by the Homebuyer and credit earned
therefor only pursuant to a prior written agreement between the
Homebuyer and the Authority (or the Homeowners Association,
depending on who has responsibility for maintenance of the property
involved), covering the nature and scope of the work and the amount
of credit the Homebuyer is to receive. Upon completion of such
work, the agreed amount shall be charged to the appropriate
maintenance account and credited to the Homebuyer's EHPA.
f. Investment of excess. When the aggregate amount of all
EHPA balances exceeds the estimated reserve requirements for 90
days, the Authority shall notify the HBA and shall invest the
excess in federally-insured savings accounts, federally insured
credit unions, and/or securities approved by HUD and in accordance
with any recommendations made by the HBA. If the HBA wishes to
participate in the investment program it should submit periodically
to the Authority a list of HUD approved securities, bonds, or
obligations which the HBA reecommends for investment by the
Authority of the funds in the EHPAs. Interest earned on the
investment of such funds shall be prorated and credited to each
Homebuyer's EHPA in proportion to the amount in each such reserve
account.
Periodically, but not less often than semi-annually, the
Authority shall prepare a statement showing: (1) the aggregate
amount of all EHPA balances; (2) the aggregate amount of
investments (savings accounts and/or securities) held for the
account of all the Homebuyers' EHPAs, and (3) the aggregate
uninvested balance of all the Homebuyers' EHPAs. This statement
shall be made available to any authorized representative of the
HBA.
g. Voluntary payments. To enable the Homebuyer to acquire
title to the Home within a shorter period, he may either
periodically or in a lump sum voluntarily make payments over and
above his required monthly payments. Such voluntary payments shall
be deposited to his credit in his EHPA.
h. Delinquent monthly payments. Under exceptional
circumstances as determined by the HBA and the Authority, the
Homebuyer's EHPA may be used to pay his delinquent required monthly
payments, provided the amount used for this purpose does not
seriously deplete the account and provided that the Homebuyer
agrees to cooperate in such counseling as may be made available by
the Authority or the HBA.
i. Annual statement to homebuyer. The Authority shall
provide an annual statement to the Homebuyer specifying at least
(1) the amount in his EHPA, and (2) the amount in his Nonroutine
Maintenance Reserve. During the year, any maintenance or repair
done on the dwelling by the Authority which is chargeable to the
EHPA or to the Nonroutine Maintenance Reserve, shall be accounted
for through a work order. The Homebuyer shall receive a copy of all
such work orders for his Home.
j. Withdrawal and assignment. The Homebuyer shall have no
right to assign, withdraw, or in any way dispose of the funds in
his EHPA except as provided in this section or in sections 16 and
17.
k. Application of EHPA upon vacating of dwelling. (1) In
the event this Agreement is terminated or if the Homebuyer vacates
the Home, the Authority shall charge against the Homebuyer's EHPA
the amounts required to pay; (i) The amount due the Authority,
including the monthly payments the Homebuyer is obligated to pay up
to the date he vacates; (ii) the monthly payment for the period the
Home is vacant, not to exceed 30 days from the date of notice of
intention to vacate, or if the Homebuyer failed to give notice of
intention to vacate, 30 days from the date the Home is put in good
condition for the next occupant in conformity with section 6; and
(iii) the cost of any routine maintenance, and of any nonroutine
maintenance attributable to the negligence of the Homebuyer,
required to put the Home in good condition for the next occupant in
conformity with section 6.
(2) If the Homebuyer's EHPA balance is not sufficient to cover
all of these charges, the Authority shall require the Homebuyer to
pay the additional amount due. If the amount in the EHPA exceeds
these charges, the excess shall be paid the Homebuyer.
(3) Settlement with the Homebuyer shall be made promptly after
the actual cost of repairs to the dwelling has been determined (see
paragraph k(1)(iii) of this section), provided that the Authority
shall make every effort to make such settlement within 30 days from
the date the Homebuyer vacates. The Homebuyer may obtain a
settlement within 7 days of the date he vacates, even though the
actual cost of such repairs has not yet been determined, if he has
given the Authority notice of intention to vacate 30 days prior to
the date he vacates and if the amount to be charged against his
EHPA for such repairs is based on the Authority's estimate of the
cost thereof (determined after consultation with the appropriate
representative of the HBA).
11. Nonroutine maintenance reserve (NRMR) - a. Purpose
of reserve. The Authority shall establish and maintain a
separate nonroutine maintenance reserve (NRMR) for the Home, using
a portion of the Homebuyer's monthly payment. The purpose of the
NRMR is to provide funds for the nonroutine maintenance of the
Home, which consists of the infrequent and costly items of
maintenance and replacement shown on the Nonroutine Maintenance
Schedule for the Home (see paragraph b of this section). Such
maintenance may include the replacement of dwelling equipment (such
as range and refrigerator), replacement of roof, exterior painting,
major repairs to heating and plumbing systems, etc. The NRMR shall
not be used for nonroutine maintenance of common property, or for
nonroutine maintenance relating to the Home to the extent such
maintenance is attributable to the Homebuyer's negligence or to
defective materials or workmanship.
b. Amount of reserve. The amount of the monthly payments
to be set aside for NRMR shall be determined by the Authority, with
the approval of HUD, on the basis of the Nonroutine Maintenance
Schedule showing the amount estimated to be needed for nonroutine
maintenance of the Home during the term of this Agreement, taking
into consideration the type of construction and dwelling equipment.
This Schedule shall (1) list each item of nonroutine maintenance
(e.g., range, refrigerator, plumbing, heating system, roofing, tile
flooring, exterior painting, etc.), (2) show for each listed item
the estimated frequency of maintenance or useful life before
replacement, the estimated cost of maintenance or replacement
(including installation) for each occasion, and the annual reserve
requirement, and (3) show the total reserve requirements for all
the listed items, on an annual and a monthly basis. This Schedule
shall be prepared by the Authority and approved by HUD as part of
the Submission required to determine the financial feasibility of
the Project. The Schedule shall be revised after approval of the
working drawings and specifications, and shall thereafter be
reexamined annually in the light of changing economic conditions
and experience.
c. Charges to reserve. (1) The Authority shall provide
the nonroutine maintenance necessary for the Home and the cost
thereof shall be funded as provided in paragraph c(2) and c(3) of
this section. Such maintenance may be provided by the Homebuyer but
only pursuant to a prior written agreement with the Authority
covering the nature and scope of the work and the amount of credit
the Homebuyer is to receive. The amount of any credit shall, upon
completion of the work, be credited to the Homebuyer's EHPA and
charged as provided in paragraph c(2) of this section.
(2) The cost of nonroutine maintenance shall be charged to the
NRMR for the Home except that (i) to the extent such maintenance is
attributable to the fault or negligence of the Homebuyer, the cost
shall be charged to the Homebuyer's EHPA after consultation with
the HBA if the Homebuyer disagrees, and (ii) to the extent such
maintenance is attributable to defective materials or workmanship
not covered by warranty, or even though covered by warranty if not
paid for through no fault or negligence of the Homebuyer, the cost
shall be charged to the appropriate operating expense account of
the Project.
(3) In the event the amount charged against the NRMR exceeds the
balance therein, the difference (deficit) shall be made up from
continuing monthly credits to the NRMR based upon the Homebuyer's
monthly payments. If there is still a deficit when the Homebuyer
acquires title, the Homebuyer shall pay such deficit at
settlement.
d. Transfer of NRMR. (1) In the event this Agreement is
terminated, the Homebuyer shall not receive any balance or be
required to pay any deficit in the NRMR. When a subsequent
Homebuyer moves in, the NRMR shall continue to be applicable to the
Home in the same amount as if the preceding Homebuyer had continued
in occupancy.
(2) In the event the Homebuyer purchases the Home, and there
remains a balance in the NRMR, the Authority shall pay such balance
to the Homebuyer at settlement. In the event the Homebuyer
purchases the Home and there is a deficit in the NRMR, the
Homebuyer shall pay such deficit to the Authority at
settlement.
e. Investment of excess. (1) When the aggregate amount of
the NRMR balances for all the Homes exceeds the estimated reserve
requirements for 90 days, the Authority shall invest the excess in
federally insured savings accounts, federally insured credit
unions, and/or securities approved by HUD. Income earned on the
investment of such funds shall be prorated and credited to each
Homebuyer's NRMR in proportion to the amount in each reserve
account.
(2) Periodically, but not less often that semi-annually, the
Authority shall prepare a statement showing (i) the aggregate
amount of all NRMR balances, (ii) the aggregate amount of
investments (savings accounts and/or securities) held for the
account of the NRMR and (iii) the aggregate uninvested balance of
the NRMRs. A copy of this statement shall be made available to any
authorized representative of the HBA.
12. Operating reserve - a. Purpose of reserve. To
the extent that total operating receipts (including subsidies for
operations) exceeds total operating expenditures of the Project,
the LHA shall establish an operating reserve up to the maximum
approved by HUD in connection with its approval of the annual
operating budgets for the Project. The purpose of this reserve is
to provide funds for (1) the infrequent but costly items of
nonroutine maintenance and replacements of common property, taking
into consideration the types of items which constitute common
property, such as nondwelling structures and equipment, and, in
certain cases, common elements of dwelling structures, (2)
nonroutine maintenance for the Homes to the extent such maintenance
is attributable to defective materials or workmanship not covered
by warranty, (3) working capital for payment of a deficit in a
Homebuyer's NRMR, until such deficit is offset by future monthly
payments by the Homebuyer or at settlement in the event the
Homebuyer should purchase, and (4) a deficit in the operation of
the Project for a fiscal year, including a deficit resulting from
monthly payments totaling less than the break-even amount for the
Project.
b. Nonroutine maintenance - _____ common property
(contribution to operating reserve). The amount under this
heading to be included in operating expense (and in the break-even
amount) established for the fiscal year (see sections 8 and 9)
shall be determined by the Authority, with the approval of HUD, on
the basis of estimates of the monthly amount needed to accumulate
an adequate reserve for the items described in paragraph a(1) of
this section. This amount shall be subject to revision in the light
of experience. This contribution to the Operating Reserve shall be
made only during the period the Authority is responsible for the
maintenance of any common property; and during such period, the
amount shall be determined on the basis of the requirements of all
common property in the Development in a manner similar to that
explained in Section 9. When the Operating Reserve reaches the
maximum authorized in paragraph c of this Section, the break-even
(monthly operating expense) computations (see Sections 8 and 9) for
the next and succeeding fiscal years need not include a provision
for this contribution to the Operating Reserve unless the balance
of the Reserve is reduced below the maximum during any such
succeeding fiscal year.
c. Maximum operating reserve. The maximum operating
reserve that may be retained by the Authority at the end of any
fiscal year shall be the sum of (1) one-half of total routine
expense included in the operating budget approved for the next
fiscal year and (2) one-third of total break-even amounts included
in the operating budget approved for the next fiscal year; provided
that such maximum may be increased if necessary as determined or
approved by HUD. Total routine expense means the sum of the amounts
budgeted for administration, homebuyer services. Authority-supplied
utilities, routine maintenance of common property, protective
services, and general expense or other category of day-to-day
routine expense (see section 9 above for explanation of various
categories of expense).
d. Transfer to Homeowners Association. The Authority
shall be responsible for and shall retain custody of the Operating
Reserve until the Homeowners acquire voting control of the
Homeowners Association (see sections 21c and 22f). When the
Homeowners acquire voting control, the Homeowners Association shall
then assume full responsibility for management and maintenance of
common property under a plan approved by HUD, and there shall be
transferred to the Homeowners Association a portion of the
Operating Reserve then held by the Authority, as determined by the
Authority with the approval of HUD.
e. Disposition of reserve. If, at the end of a fiscal
year, there is an excess over the maximum Operating Reserve, this
excess shall be applied to the operating deficit of the Project, if
any, and any remainder shall be paid to HUD. Following the end of
the fiscal year in which the last Home has been conveyed by the
Authority, the balance of the Operating Reserve held by the
Authority shall be paid to HUD, provided that the aggregate amount
of payments by the Authority under this paragraph shall not exceed
the aggregate amount of annual contributions paid by HUD with
respect to the Project.
13. Annual statement and copies of work orders to
homebuyer. a. The Authority shall maintain books of accounts
and provide a statement at least annually to each Homebuyer which
will show (i) the amount in his EHPA, and (2) the amount in the
NRMR for his Home.
b. During the year, any maintenance or repair done on the
dwelling by the Authority, which is chargeable to the EHPA or to
the NRMR shall be accounted for through a work order. The Homebuyer
shall receive a copy of all such work orders for his Home.
14. Insurance. a. Until transfer of title to the
Homebuyer, the Authority shall carry all insurance prescribed by
HUD including fire and extended coverage insurance upon the Home in
such form and amount and with such company or companies as it
determines. The Authority shall not carry any insurance on the
Homebuyer's furniture, clothing, automobile, or any other personal
property, or personal liability insurance covering the
Homebuyer.
b. In the event the Home is damaged or destroyed by fire or
other casualty, the Authority shall consult with the Homebuyer as
to whether the Home shall be repaired or rebuilt. If the Authority
determines that the Home should not be repaired or rebuilt but the
Homebuyer disagrees, the matter shall be submitted to HUD for final
determination. If the final determination is that the Home should
not be repaired or rebuilt, the Authority shall terminate this
Agreement upon reasonable notice to the Homebuyer. In such case,
the Homebuyer shall be paid the balance in his EHPA and (to assist
him in connection with relocation expenses) the balance in his
NRMR, less amounts, if any, due from him to the Authority,
including Monthly Payments he may be obligated to pay.
c. In the event of termination or if the Home must be vacated
during the repair period, the Authority will use its best efforts
to assist in relocating the Homebuyer. If the Home must be vacated
during the repair period, Monthly Payments shall be suspended
during the vacancy period.
15. Eligibility for continued occupancy. a. The Homebuyer
shall cease to be eligible for continued occupancy with the aid of
HUD annual contributions when the Authority determines the
Homebuyer's adjusted monthly income has reached, and is likely to
continue at, a level at which the Homebuyer's total payment equals
or exceeds the monthly housing cost (see paragraph b of this
section). In such an event, if the Authority determines, with HUD
approval, that suitable financing is available, the Authority shall
notify the Homebuyer that he or she must either: (1) Purchase the
Home; or (2) move from the Development. If, however, the Authority
determines that, because of special circumstances, the family is
unable to find decent, safe and sanitary housing within the
family's financial reach although making every reasonable effort to
do so, the family may be permitted to remain for the duration of
such a situation if it pays as rent a monthly payment consistent
with its adjusted monthly income, in accordance with applicable HUD
regulations prescribing rental payments for families in housing
assisted under the United States Housing Act of 1937. Such a
monthly payment shall also be payable by the family if it continues
in occupancy without purchasing the home because suitable financing
is not available.
b. The term “monthly housing cost,” as used in this section
means the sum of: (1) The monthly debt service amount shown on the
Purchase Price Schedule (except where the Homebuyer can purchase
the Home by the method described in section 16 below); (2)
one-twelfth of the annual real property taxes which the Homebuyer
will be required to pay as a Homeowner; (3) one-twelfth of the
annual premium attributable to fire and extended coverage insurance
carried by the Authority with respect to the Home; (4) the current
monthly per unit amount budgeted for routine maintenance (EHPA) and
routine maintenance-common property; and (5) the current Authority
and HUD approved monthly allowance for utilities paid for directly
by the Homebuyer plus the monthly cost of utilities supplied by the
Authority.
16. Achievement of ownership by initial homebuyer - a.
Determination of initial purchase price. The Authority shall
determine the initial purchase prices of the Homes by two basic
steps, as follows:
Step 1. The Authority shall take the Estimated Total
Development Cost (including the full amount for contingencies as
authorized by HUD) of the Development as shown in the Development
Cost Budget in effect upon award of the Main Construction Contract
or execution of the Contract of Sale, and shall deduct therefrom
the amounts, if any, attributed to (1) relocation costs, (2)
counseling and training costs, and (3) the cost of any community,
administration or management facilities including the land,
equipment and furnishings attributable to such facilities as set
forth in the development program for the Development.
The resulting amount is herein called Estimated Total
Development Cost for Homebuyers.
Step 2. The Authority shall apportion the Estimated Total
Development Cost for Homebuyers among all the Homes in the
Development. This apportionment shall be made by obtaining an FHA
appraisal of each Home, and adjusting such appraised values (upward
or downward) by the percentage difference between the total of the
appraisal for all the Homes and the Estimated Total Development
Cost for Homebuyers. The adjusted amount for each Home shall be the
Initial Purchase Price for that Home.
b. Purchase Price Schedule. The Homebuyer shall be
provided with a Purchase Price Schedule showing (1) the monthly
declining purchase price over a 30-year period, 3 commencing with
the initial purchase price on the first day of the month following
the effective date of this Agreement and (2) the monthly debt
service amount upon which the Schedule is based. This Schedule and
debt service amount shall be computed on the basis of the initial
purchase price, a 30-year period, 3 and a rate of interest equal to
the minimum loan interest rate as specified in the Annual
Contributions Contract for the Project on the date of HUD approval
of the Development Cost Budget, described in paragraph a of this
section, rounded up, if necessary, to the next multiple of
one-fourth of one percent ( 1/4 percent).
3 Change to 25-year period where appropriate pursuant to §
904.101(b)(3) of this subpart.
c. Methods of Purchase. (1) The Homebuyer may achieve
ownership when the amount in his EHPA, plus such portion of the
NRMR as he wishes to use for the purchase, is equal to the purchase
price as shown at that time on his Purchase Price Schedule plus all
Incidental Costs (“Incidental Costs” means the costs incidental to
acquiring ownership, including, but not limited to, the costs for a
credit report, field survey title examination, title insurance, and
inspections, the fees for attorneys other than the LHA's attorney,
mortgage application and organization, closing and recording, and
the transfer taxes and loan discount payment if any). If for any
reason title to the Home is not conveyed to the Homebuyer during
the month in which such circumstances occur, the purchase price
shall be fixed at the amount specified for such month and the
Homebuyer shall be refunded (i) the net additions, if any, credited
to his EHPA subsequent to such month, and (ii) such part of the
monthly payments made by the Homebuyer after the purchase price has
been fixed which exceeds the sum of the break-even amount
attributable to the Home and the interest portion of the debt
service shown in the Purchase Price Schedule.
(2) Where the sum of the purchase price and Incidental Costs is
greater than the amounts in the Homebuyer's EHPA and NRMR, the
Homebuyer may achieve ownership by obtaining financing for or
otherwise paying the excess amount. The purchase price shall be the
amount shown on his Purchase Price Schedule for the month in which
the settlement date for the purchase occurs.
d. The maximum period for achieving ownership shall be 30 years,
but depending upon increases in the Homebuyer's income and the
amount of credit which the Homebuyer can accumulate through
maintenance and voluntary payments, the period may be shortened
accordingly.
17. Achievement of Ownership by Subsequent Homebuyer - a.
Definition. In the event the initial Homebuyer and his
family vacate the Home before having acquired ownership, a
subsequent occupant who enters into a Homebuyer's Ownership
Opportunity Agreement and who is not a successor pursuant to
section 25 is herein called “Subsequent Homebuyer.”
b. Determination of Initial Purchase Price. The initial
purchase price for a subsequent Homebuyer shall be an amount equal
to (1) the purchase price shown in the initial Homebuyer's Purchase
Price Schedule as of the date of this Agreement with the subsequent
Homebuyer plus (2) the amount, if any, by which the appraised fair
market value of the Home determined or approved by HUD as of the
same date, exceeds the purchase price specified in (1). In the
event such appraised value has not been determined by the date of
execution of this Agreement, the amount of the Initial Purchase
Price shall be inserted in part I, section D after this
determination has been made, with appropriate initialling or
signing by the parties.
c. Purchase Price Schedule. The Subsequent Homebuyer's
Purchase Price Schedule shall be the same as the unexpired portion
of the initial Homebuyer's Purchase Price Schedule except that
where his purchase price includes an additional amount as specified
in paragraph b(2) of this section, the initial Homebuyer's Purchase
Price Schedule shall be followed by an Additional Purchase Price
Schedule for such additional amount based upon the same monthly
debt service and the same interest rate as applied to the initial
Homebuyer's Purchase Price Schedule.
18. Transfer of Title to Homebuyer. When the Homebuyer is
to obtain ownership, a closing date shall be mutually agreed upon
by the parties. On the closing date, the Homebuyer shall pay the
required amount of money to the Authority, sign the promissory note
pursuant to section 19, and receive a deed for the Home.
19. Payment Upon Resale at Profit - a. Promissory
Note. (1) When a Homebuyer (whether Initial or Subsequent
Homebuyer) achieves ownership, he shall sign a note obligating him
to make a payment to the Authority, subject to the provisions of
paragraph (a)(2) of this section, in the event he resells his Home
at a profit within 5 years of actual residence in the Home after he
becomes a Homeowner. If, however, the Homeowner should purchase and
occupy another Home within one year (18 months in case of a newly
constructed home) of the resale of the Turnkey III Home, the
Authority shall refund to the Homeowner the amount previously paid
by him under the note, less the amount, if any, by which the resale
price of the Turnkey III Home exceeds the acquisition price of the
new home, provided that application for such refund shall be made
no later than 30 days after the date of acquisition of the new
home.
(2) The note to be signed by the Homebuyer pursuant to paragraph
(a)(1) of this section shall be secured by a second mortgage. The
initial amount of the note shall be computed by taking the
appraised value of the Home at the time the Homebuyer becomes a
Homeowner and subtracting (i) the Homebuyer's purchase price plus
the Incidental Costs and (ii) the increase in value of the Home,
determined by appraisal, caused by improvements paid for by the
Homebuyer with funds from sources other than the EHPA or NRMR. The
note shall provide that this initial amount shall be automatically
reduced by 20 percent thereof at the end of each year of residency
as Homeowner, with the note terminating at the end of the five-year
period of residency, as determined by the Authority. To protect the
Homeowner, the note shall provide that the amount payable under it
shall in no event be more than the net profit on the resale, that
is, the amount by which the resale price exceeds the sum of (i) the
Homebuyer's purchase price plus the Incidental Costs, (ii) the
costs of the resale, including commissions and mortgage prepayment
penalties, if any, and (iii) the increase in value of the Home,
determined by appraisal, resulting from improvements paid for by
him as a Homebuyer (with funds other than from the EHPA or NRMR) or
as a Homeowner.
(b) Residency requirements. The five-year note periods
does not end if the Homeowner rents or otherwise does not use the
Home as his principal place of residence for any period within the
first five years after he achieves ownership. Only the actual
amount of time he is in residence is counted and the note shall be
in effect until a total of five years time of residence has
elapsed, at which time the Homeowner may request the Authority to
release him from the note, and the Authority shall do so.
20. Responsibilities of Homeowner. After acquisition of
ownership, the Homeowner shall pay to the Authority or to the
Homeowners Association, as appropriate, a monthly fee for (a) the
maintenance and operation of community facilities including utility
facilities, if any, (b) the maintenance of grounds and other common
areas, and (c) such other purpose as determined by the Authority or
the Homeowners Association, as appropriate, including taxes and a
provision for a reserve.
21. Homeowners Association - Planned Unit Development
(PUD) 4
4 If this Home is a Development of scattered sites, delete both
sections 21 and 22. If this Home is in a Planned Unit Development,
delete section 22. If this Home is in a Condominium, delete section
21.
If the Development is organized as a planned unit
development:
a. The common areas, sidewalks, parking lots and other common
property in the Development shall be owned and maintained as
provided for in the approved planned unit development (PUD)
program, except that the Authority shall be responsible for
maintenance until such time as the Homeowners Association assumes
such responsibility (see section 12 above).
b. The title ultimately conveyed to the Homebuyer shall be
subject to restrictions and encumbrances to protect the rights and
property of all other Homeowners. The Homeowners Association shall
have the right and obligation to enforce such restrictions and
encumbrances and to assess Homeowners for the costs incurred in
connection with common areas and property and other
responsibilities.
c. There shall be as many votes in the Association as there are
Homes in the Development, and at the outset all the voting rights
will be held by the Authority. As each Home is conveyed to a
Homebuyer, one vote shall automatically go to that Homebuyer so
that when all the Homes have been conveyed, the Authority shall no
longer have any interest in the Homeowners Association.
d. The Authority shall not lose its majority voting interest in
the Association as soon as a majority of the Homes have been
conveyed, unless the law of the state requires control to be
transferred at a particular time or the Authority so desires. If
permitted by state law, provisions shall be made for each Home
owned by the Authority to carry three votes while each Home owned
by a Homeowner shall carry one vote. Under this weighted voting
plan, the Authority will continue to have voting control until 75
percent of the Homes have been acquired by Homeowners. However, at
its discretion, the Authority may transfer voting control to the
Homeowners when at least 50 percent of the Homes have been acquired
by the Homeowners.
22. Homeowners Association - Condominium. 5 If the
Development is organized as a condominium:
5 If this Home is a Development of scattered sites, delete both
sections 21 and 22. If this Home is in a Planned Unit Development,
delete section 22. If this Home is in Condominium, delete section
21.
a. The Authority at the outset shall own each condominium unit
and the undivided interest of such unit in the common areas.
b. All the land, including that land under the housing units,
shall be a part of the common areas.
c. The Homeowners Association shall own no property and shall
merely maintain and operate the common areas for the individual
owners of the condominium units, except that the Authority shall be
responsible for maintenance until such time as the Homeowners
Association assumes such responsibility (see section 12 above).
d. The percentage of undivided interest attached to each
condominium unit shall be based on the ratio of the value of the
unit to the value of all units and shall be fixed when the
Development is completed. This percentage shall determine the
Homeowner's liability for the maintenance of the common areas and
facilities.
e. Each Homeowner vote in the Homeowners Association will be
identical with the percentage of undivided interest attached to his
unit.
f. The Authority shall not lose its majority voting interest in
the Association as soon as units representing more than 50 percent
of the value of all units have been conveyed, unless the law of the
state requires control to be transferred at a particular time or
the Authority so desires. For voting purposes, until units
representing 75 percent of the value of all units have been
acquired by Homeowners, the total undivided interest attributable
to the Homes owned by the Authority shall be multiplied by three,
if such weighted voting plan is permitted by state law. Under this
plan, the Authority will continue to have voting control until
units representing 75 percent of the value of all units have been
acquired by Homeowners. However, at its discretion the Authority
may transfer voting control to the Homeowners when units
representing at least 50 percent of the value of all units have
been acquired by the Homeowners.
23. Relationship of Homeowners Association to Homebuyers
Association. The Homebuyers Association and the Authority may
make arrangements with the Homeowners Association to permit
Homebuyers to participate in Homeowners Association matters which
affect the Homebuyers. Such arrangements may include rights to
attend meetings and to participate in Homeowners Association
deliberations and decisions.
24. Termination of Agreement - a. Termination by the
Authority - (1) In the event the Homebuyer should breach this
Agreement by failure to make a required Monthly Payment within 10
days after its due date, by misrepresentation or withholding of
information in applying for admission or in connection with any
subsequent reexamination of income and family composition, or by
failure to comply with any other Homebuyer obligation under this
Agreement, the Authority may terminate this Agreement 30 days after
giving the Homebuyer notice of its intention to do so in accordance
with paragraph (2) of this section.
(2) Notice of termination by the Authority shall be in writing.
Such notice shall state (i) the reason for termination, (ii) that
the Homebuyer may respond to the Authority, in writing or in
person, within a specified reasonable period of time regarding the
reason for termination, (iii) that in such response he may be
represented or accompanied by a person of his choice, including a
representative of the HBA, (iv) that the Authority will consult the
HBA concerning the termination, and (v) that, unless the Authority
rescinds or modifies the notice, the termination will be effective
at the end of the 30-day notice period.
b. Termination by the Homebuyer. The Homebuyer may
terminate this Agreement by giving the Authority 30 days notice in
writing of his intention to terminate and to vacate the Home. In
the event that the Homebuyer vacates the Home without notice to the
Authority, this Agreement shall be terminated automatically and the
Authority may dispose of, in any manner deemed suitable by it, any
items of personal property left by the Homebuyer in the Home.
c. Transfer to rental unit. (1) Inasmuch as the Homebuyer
was found eligible for admission to the Project on the basis of
having the necessary elements, of potential for Homeownership,
continuation of eligibility requires continuation of this
potential, subject only to temporary unforeseen changes in
circumstances. The standards of potential for Homeownership are the
following:
(i) Income sufficient to result in a required monthly payment
which is not less than the sum of the amounts necessary to pay the
EHPA, the NRMR, and the estimated average monthly cost of utilities
attributable to the Home;
(ii) Ability to meet all the obligations of a Homebuyer under
the Homebuyers Ownership Opportunity Agreement;
(iii) At least one member gainfully employed, or having an
established source of continuing income.
(2) Accordingly, in the event it should develop that the
Homebuyer no longer meets one or more of these elements of
Homeownership potential, the Authority shall investigate the
circumstances and provide such counseling and assistance as may be
feasible in order to help the family overcome the deficiency as
promptly as possible. After a reasonable time, not to exceed 30
days from the date of evaluation of the results of the
investigation, the Authority shall make a re-evaluation as to
whether the family has regained the potential for Homeownership or
is likely to do so within a further reasonable time, not to exceed
30 days from the date of the re-evaluation. Further extension of
time may be granted in exceptional cases, but in any event a final
determination shall be made no later than 90 days from the date of
evaluation of the results of the initial investigation. The
Authority shall invite the HBA to participate in all investigations
and evaluations.
(3) If the final determination of the Authority, after
considering the views of the HBA, is that the Homebuyer should be
transferred to a suitable dwelling unit in an Authority rental
project, the Authority shall give the Homebuyer written notice of
the Authority determination of the loss of Homeownership potential
and of the offer of transfer to a rental unit. The notice shall
state that the transfer shall occur as soon as a suitable rental
unit is available for occupancy but no earlier than 30 days from
the date of the notice, provided that an eligible successor for the
Homebuyer unit has been selected by the Authority. The notice shall
also state that if the Homebuyer should refuse to move under such
circumstances, the family may be required to vacate the Homebuyer
unit, without further notice. The notice shall include a statement
(i) that the Homebuyer may respond to the Authority in writing or
in person, within a specified reasonable time, regarding the reason
for the determination and offer of transfer, (ii) that in such
response he may be represented or accompanied by a person of his
choice including a representative of the HBA, and (iii) that the
Authority has consulted the HBA concerning this determination and
offer of transfer.
(4) When a Homebuyers Ownership Opportunity Agreement is
terminated pursuant to this paragraph 24c, the amount in the
Homebuyer's EHPA shall be paid in accordance with the provisions of
paragraph 10k of this Agreement.
25. Survivorship. (1) In the event of death, mental
incapacity or abandonment of the family by the Homebuyer, the
person designated as the successor in part I of this Agreement
shall succeed to the rights and responsibilities under the
Agreement if that person is an occupant of the Home at the time of
the event and is determined by the Authority to meet all of the
standards of potential for homeownership as set forth in section
24a. This designation may be changed by the Homebuyer at any time.
If there is no such designation or the designee is no longer an
occupant of the Home or does not meet the standards of potential
for homeownership, the Authority may consider as the Homebuyer any
family member who was in occupancy at the time of the event and who
meets the standards of potential for homeownership.
(2) If there is no qualified successor in accordance with the
above, the Authority shall terminate the Agreement and another
family shall be selected, except under the following circumstances:
where a minor child or children of the Homebuyer family are in
occupancy, then in order to protect their continued occupancy and
opportunity for acquisition of ownership of the Home, the Authority
may approve as occupants of the unit, an appropriate adult(s) who
has been appointed legal guardian of the children with a duty to
perform the obligations of the Homebuyers Ownership Opportunity
Agreement in their interest and behalf.
26. Nonassignability and Use of Reserves and Accounts -
a. Nonassignability. The Homebuyer shall not assign this
Agreement, or assign, mortgage or pledge any right or interest in
the Home or in this Agreement including any right or interest in
any reserve or account, except with the prior written approval of
the Authority and HUD.
b. Use of Reserves and Accounts. It is understood and
agreed that the Homebuyer shall have no right to receive or use the
money in any reserve or account created pursuant to this Agreement
except for the limited purposes and under the special circumstances
set forth by the terms of this Agreement. It is further understood
and agreed that both the Authority and HUD have a financial and a
governmental interest in the Earned Home Payments Account and other
reserves as security for the financial integrity of the
Development, as a means of savings in cost to the Government by
minimizing the amount and period over which HUD annual
contributions must be paid, and as a means of advancing the public
interest and welfare by assisting low-income families to achieve
homeownership.
27. Notices. Any notice required hereunder or by law
shall be sufficient if delivered in writing to the Homebuyer
personally or to an adult member of his family residing in the
dwelling unit or if sent by certified mail, return receipt
requested, properly addressed to the Homebuyer, postage prepaid.
Notice to the Authority shall be in writing, and either delivered
to any Authority employee at the office of the Authority or sent to
the Authority by certified mail, properly addressed, postage
prepaid.
28. Grievance Procedure. All grievances or appeals
arising under this Agreement shall be processed and resolved
pursuant to the grievance procedure of the Authority, which
procedure shall provide for participation of the HBA in the
grievance process. This grievance procedure shall be posted in the
Authority's Office.
[39 FR 10966, Mar. 22, 1974. Redesignated at 49 FR 15580, Apr. 7,
1975. Redesignated at 49 FR 6714, Feb. 23, 1984, and amended at 49
FR 21490, May 21, 1984]
Appendix I to Subpart D of Part 904 - Articles of Incorporation and By-Laws of _______ Homebuyers Association
24:4.1.3.1.4.4.5.10.7 : Appendix I
Appendix I to Subpart D of Part 904 - Articles of Incorporation and
By-Laws of _______ Homebuyers Association (Subpart D) Part I -
Articles of Incorporation In compliance with the
requirements of (reference to statute under which incorporation is
sought) the undesigned, all of whom are natural persons, residents
of __________, of full age, have this day voluntarily associated
themselves together for the purpose of forming a Corporation,
not-for-profit, and do hereby certify: Article I - Name The name of
the corporation is _______ Homebuyers Association (hereinafter
referred to as the “Association”). Article II - Office
The principal office of the Association is
located at Article III - Agent
____________, whose address is ____________, is hereby appointed
the initial registered agent of the Association.
Article IV - Duration
The period of duration of the Association is perpetual.
Article V - Membership
Membership in the Association shall be limited to families who
are entitled to occupancy of a Home in the Development pursuant to
a Homebuyers Ownership Opportunity Agreement and families who are
Homeowners in the Development, and all such families shall
automatically be members so long as they are in occupancy of a
Home. For purposes of these Articles, the term “Development”
includes the following described Development or Developments in the
Homeownership Opportunity Program of __________ (hereinafter
referred to as the Authority):
Article VI - Purposes
The purposes for which this Association is formed shall not
result in pecuniary gain or profit to the members thereof. These
purposes are to provide organization and representation for its
members in their relationships with the Authority in all matters
regarding the homeownership opportunity program and, if
appropriate, to perform management responsibilities for the
Development under contract with the Authority.
1. In order to carry out these purposes, the Association shall
perform the following functions:
a. Represent its members, individually and collectively, with
respect to any deficiencies in the Development or in the Homes and
with respect to fulfillment of the construction contract and
related warranties;
b. Represent its members, individually and collectively, in
their relationships with the Authority and others in regard to
financial matters such as monthly payments, credits to and charges
against reserves, settlement upon vacating a Home, and acquisition
of ownership, and other matters pertaining to operation and
management of the development;
c. Recommend policies and rules to the Authority for operation
and management including rules concerning use of the common areas
and community facilities;
d. Participate in the operation of official grievance
mechanisms;
e. Advise and assist its members regarding procedures and
practices relative to their Earned Home Payments Accounts and to
their acquisition of homeownership;
f. Participate with the Authority in periodic maintenance
inspections of the Homes after occupancy and make recommendations
in case of disagreement arising out of maintenance inspections;
g. Participate with the Authority in the selection of subsequent
homebuyers;
h. Coordinate, supervise, or manage the operation of credit
union, child care, or other supportive services established for the
Development;
i. Participate with the Authority in the establishment and
implementation of policies related to collection of monthly
payments, termination of occupancy, and resolution of hardship
situations;
j. Perform management services as specified under contract with
the Authority or with the Homeowners Association and participate in
other activities pursuant to agreement with the Authority or with
the Homeowners Association.
2. The Association may also offer special services such as:
a. The development of self-help such as consumer clubs,
furniture and other co-ops, credit unions, transportation pools,
and skill pools;
b. Assisting Homebuyers in acquiring group insurance;
c. Developing programs and contracting for services such as
child care centers to be located in the community facility, where
such a facility exists;
d. Assisting Homebuyers in their employment, especially by
participating in skill development and apprenticeship programs in
cooperation with local educational organizations; and
e. Assisting Homebuyers in planning the management role of the
Association and in negotiating any contract for management services
with the Authority.
Article VII - Powers
This Association shall have all the powers, privileges, rights
and immunities which are necessary or convenient for carrying out
its purposes and which are conferred by the provisions of all
applicable laws of the State of _________ pertaining to non-profit
corporations.
Article VIII - Voting
There shall be only one vote per Home regardless of the number
of persons in the family that occupies the Home.
Article IX - Board of Directors and By-laws
The affairs of the Association shall be managed by a Board of
Directors, all of whom shall be members of the Association. The
number of Directors shall be as provided in the By-Laws of the
Association. The following persons shall serve as the first Board
of Directors and as the first officers:
This Board shall manage the affairs of the Association until
election of their successors by the membership.
Promptly after 60 percent of the Homes are occupied, or one year
from the date the first Home is occupied, whichever occurs sooner,
the Board shall call the first annual meeting of the Association at
which the members shall adopt By-Laws and elect one-third of the
Board for a term of one year, one-third for a term of two years,
and one-third for a term of three years. At each annual meeting
thereafter the members shall elect one-third of the Board for a
term of three years.
Article X - Dissolution
After all members have acquired ownership of their Homes, the
Association shall be dissolved with the assent given in writing and
signed by not less than two-thirds of the members. The dissolution
shall be effective when all of the assets of the Association
remaining after payment of its liabilities have been granted,
conveyed and assigned in such manner as the Association and
Authority may mutually agree.
Article XI - Amendment
Amendment of these Articles shall require the assent of 75
percent of the entire membership.
In witness whereof, for the purposes of incorporating
this Association under the laws of the State of _______, we, the
undersigned constituting the incorporators of this Association,
have executed these Articles of Incorporation this ______ day of
_______, 19__.
[Witness, Notary, or Acknowledgment as required by state law] Note:
The following is a suggested form of By-Laws. Different format
and content to meet local needs may be used. For example, it may be
considered desirable to combine HBA offices, eliminate or change
functions of various committees, provide for other committees,
etc.
Part II -
By-Laws
The members of the _________ Homebuyers Association (hereinafter
referred to as the “Association”) do hereby adopt in accordance
with Article IX of the Articles of Incorporation the following
By-Laws:
Section 1. Organization - The affairs of the Association
shall be managed by a Board of Directors elected by and from the
members of the Association. The Board shall elect officers of the
Association, including a President, Vice President, Secretary, and
Treasurer, who shall carry out such functions and duties as are
prescribed by these By-Laws and the Board.
Sec. 2. Association meetings - A. Annual meetings.
The Association shall have an annual meeting at _______ (time) on
the _________ (day of week and month) each year for the purpose of
transacting such business as may be necessary or appropriate. If
the date of the annual meeting is a legal holiday, the meeting
shall be held at the same hour on the first day following which is
not a legal holiday.
B. Quarterly and special meetings. Between annual
meetings, quarterly meetings shall be called by the President and
be held for the purpose of advising the membership of activities of
the Board and enabling the members to bring up matters of common
concern. Special meetings may be called at any time (1) by the
President with the written concurrence of at least two of the other
officers or (2) by a petition filed with the Secretary stating the
purpose of the meeting and signed by at least one-fifth of the
total number of members in the Association.
C. Notice of meetings. Written notice of each annual,
quarterly or special meeting of the members shall be given by, or
at the direction of, the Secretary by mailing a copy of such notice
at least fifteen days before an annual or quarterly meeting or at
least seven days before a special meeting, addressed to each member
at the member's address shown on the records of the Association.
Such notice shall specify the place, date, and hour of the meeting
and, in the case of a special meeting, the purpose of such meeting.
No business shall be transacted at any special meeting other than
that stated in the notice unless by consent of at least one-half of
the total number of votes of the Association.
D. Quorum. A quorum at any meeting shall consist of
members entitled to cast votes which represent at least one-tenth
of the votes of the Association. If such a quorum is not present,
those present shall have the power to reschedule the meeting from
time to time without notice other than an announcement at the
meeting until there is a quorum. At any rescheduled meeting at
which a quorum is present, the only business which may be
transacted is that which might have been transacted at the original
meeting.
E. Voting. Each family shall designate in writing to the
Secretary the family member who is to cast the family vote. That
designee may appoint as a proxy for a specific meeting any other
member of the Association. A proxy must be in writing and filed
with the Secretary not later than the time that meeting is called
to order. Every proxy shall be revocable and shall be automatically
revoked when the person who appointed the proxy attends the meeting
or ceases to have voting privileges in the Association. Votes
represented by proxy shall be counted in determining the presence
or absence of a quorum at any meeting.
F. Agenda. An agenda shall be prepared for every
meeting.
Sec. 3. Board of Directors - A. Number of
directors. The affairs of the Association shall be managed by a
Board of ___ Directors, all of whom shall be members of the
Association. The number of Directors may be changed by amendment of
the By-Laws of the Association.
B. Term of Office. The Board of Directors shall be
elected at the annual meeting of the Association. At the first
annual meeting, the members shall elect ___ 1 Directors for a term
of one year, ___ 1 Directors for a term of two years, and ___ 1
Directors for a term of three years. At each annual meeting
thereafter the members shall elect ___ 1 Directors for a term of
three years.
1 Each group shall be one-third of the total number of
Directors.
C. Removal and other vacancies of Directors. Any Director
may be removed from the Board, for cause, by a majority of the
votes of the Association at any annual or quarterly meeting or any
special meeting called for such purpose, provided that the Director
has been given an opportunity to be heard at such meeting. In the
event of death, resignation or removal of a Director, his successor
shall be elected by the remaining members of the Board and shall
serve for the unexpired term of his predecessor.
D. Chairman of the Board. At the first regular Board
meeting after each annual meeting, the Board of Directors shall
elect a Chairman from among their number.
E. Compensation. No compensation shall be paid to the
Board for its services. However, any Director may be reimbursed for
his actual expense incurred in the performance of his duties, as
long as such expense receives approval of the Board and is within
the approved Association budget.
Sec. 4. Nomination and election of the board - A.
Nomination. Nomination for election to the Board of
Directors (other than for filling of vacancies under section 3. C.)
shall be made by the Nomination Committee; provided, however, that
nominations may also be made from the floor at the annual meeting
by motion properly made and seconded, or by a petition which states
the name of the person nominated, is signed by members representing
at least ten votes, and is filed with the Secretary not later than
the day prior to the annual meeting. Persons nominated must be
members of the Association.
B. Election. Election of the Board of Directors shall be
in accordance with Section 2.E., and by secret written ballot. The
ballots shall be prepared by the Secretary. Cumulative voting is
not permitted (that is, a voter who refrains from voting with
respect to one or more vacancies may not on that account cast any
extra vote or votes with respect to another vacancy). The persons
receiving the largest number of votes shall be elected.
Sec. 5. Meetings of Directors - A. Regular
meetings. Regular meetings of the Board of Directors shall be
held monthly at such time and hours as may be fixed from time to
time by resolution of the Board. Notice of time and place of the
meetings shall be mailed to each Director no later than seven days
before the meeting.
B. Special meetings. Special meetings of the Board of
Directors shall be held when called by the President of the
Association, the Chairman of the Board or by any two Directors,
after not less than three days notice to each Director.
C. Quorum. A simple majority of the Board shall
constitute a quorum for the transaction of business. Every act or
decision done or made by a majority of the Board present at a duly
held meeting shall be regarded as an act of the Board.
D. Action taken without a meeting. Any action which could
be otherwise taken at a Board meeting may be taken in the absence
of a meeting, by obtaining the written approval of all Directors.
Any action so approved shall have the same effect as though taken
at a meeting of the Board.
Sec. 6. Power and duties of the Board of Directors - A.
Power and duties generally. The Board of Directors shall
have and exercise all the powers, duties, and authority necessary
for the administration of the affairs and to carry out the purposes
of the Association, excepting only those acts and things as are
required by law, by the Articles of Incorporation, or by these
By-Laws to be exercised and done by the members or their
officers.
B. Powers. The Board shall have the power to: (1) Adopt
and publish such rules and regulations as are appropriate in the
exercise of its powers and duties, including but not limited to
rules and regulations governing the amount and payment of dues, use
of common areas and facilities and the conduct of the members and
their guests thereon, and the establishment of penalties for
violation of such rules and regulations; (2) appoint or designate
officers, agents, and employees, and make such delegations of
authority as in its judgment are in the best interest of the
Association; (3) declare the office of a member of the Board of
Directors to be vacant in the event such member shall be absent
from at least three consecutive regular meetings of the Board of
Directors.
C. Duties. It shall be the duty of the Board of Directors
to: (1) Cause to be kept a complete record of all its acts and
Association affairs, and to present a statement thereof to the
members at the annual meeting, or at any special meeting when such
statement is requested in writing by members representing at least
one-fifth of the votes of the Association; (2) cause to be prepared
an annual audit of the Association books to be made at the
completion of each fiscal year; (3) cause to be supervised all
officers, agents, and employees of the Association, and see that
their duties are properly performed; (4) procure and maintain
adequate liability and hazard insurance on any property owned by
the Association; (5) cause such officers or employees having fiscal
responsibilities to be bonded as the Board may deem appropriate;
(6) cause to be performed the functions listed in Article V of the
Articles of Incorporation.
Sec. 7. Association officers and their duties - A.
Election. The Board of Directors shall elect the following
officers of the Association: a President, a Vice President, a
Secretary, a Treasurer, and such other special officers as, in the
opinion of the Board, the Association may require. The President
and Vice President shall be elected from members of the Board. The
election of officers shall take place biennially at the first
meeting of the Board of Directors following the annual meeting of
the members.
B. Term. The officers shall hold office for two years
unless they shall resign sooner, be removed, or otherwise be
disqualified to serve; provided, however, that special officers
shall hold office for such period as the Board may determine, but
not to exceed one year.
C. Removal and resignation. Any officer may be removed
from office, for cause, by the Board. Any officer may resign at any
time by giving written notice to the Board, the President or the
Secretary. Such resignation shall take effect on the date of
receipt of such notice or at any later time specified therein; and
unless otherwise specified therein, the acceptance of such
resignation shall not be necessary to make it effective.
D. Vacancies. A vacancy in any office may be filled by
appointment by the Board. The officer appointed to such vacancy
shall serve for the remainder of the term of the officer he
replaces.
E. Multiple Officers. No person shall simultaneously hold
more than one of the offices required by these By-Laws.
F. Duties. The duties of the officers are as follows:
(1) President. The President shall preside at all
Association meetings; shall execute the orders and resolutions of
the Board; shall sign all leases, mortgage, deeds, and other
written instruments; and shall cosign with the Treasurer all checks
and promissory notes.
(2) Vice President. The Vice President shall act in place
and stead of the President in the event of his absence or
disability and shall exercise and discharge such other duties as
may be required of him by the Board.
(3) Secretary. The Secretary shall record the votes and
keep the minutes of all meetings and proceedings of the Board and
of the Association; shall keep the corporate seal of the
Association and affix it on all papers requiring said seal; shall
serve notice of the meetings of the Board and of the Association;
shall keep appropriate current records showing the names and
addresses of the members of the Association; and shall perform such
duties as may be required by the Board.
(4) Treasurer. The Treasurer shall receive and deposit in
appropriate bank accounts all funds of the Association and shall
disburse such funds as directed by resolution of the Board of
Directors; shall cosign with the President all checks and
promissory notes of the Association; shall keep proper books of
account; and shall prepare an annual budget and statement of income
and expenditures which shall be approved by the Board before
presentation to the Association at its regular annual meeting, and
furnish a copy to each of the members.
(5) Special officers. Special officers shall have such
authority and perform such duties as the Board may determine.
(6) Compensation. Officers may not be compensated except
as may be determined by the Board, in accordance with the approved
Association budget.
Sec. 8. Committees. A. Committees to be
established. The Board of Directors shall establish the
following committees:
(1) Representation Committee which shall represent
members, individually and collectively, with respect to: any
deficiencies in the Development or the individual Homes therein;
fulfillment of the construction contract and related warranties;
relationships with the Authority and others in regard to financial
matters such as monthly payments, credits to and charges against
reserves, settlement upon vacating the home, and acquisition of
ownership; matters pertaining to project management; and matters in
the Authority's official grievance mechanisms.
(2) Rules Committee which shall present to the Board for
recommendation to the Authority policies for operation and
management and, where appropriate, assist the Board in establishing
Association rules in that respect.
(3) Homeownership Committee which shall advise and assist
members in regard to maintenance and acquisition of ownership of
their homes, financial matters and other matters related to
homeownership and home management.
(4) Selection Committee which shall recommend proposed
homebuyers from a list of eligible applicants.
(5) Nominating Committee which shall consist of a
chairman, who shall be a member of the Board of Directors, and two
or more members of the Association, none of whom are Directors. The
Nominating Committee shall be appointed by the Board of Directors
prior to each annual meeting, to serve from the close of such
annual meeting until the close of the next annual meeting and such
appointment shall be announced at each annual meeting. The
Nominating Committee shall make as many nominations for election to
the Board of Directors as it shall in its discretion determine, but
not less than the number of vacancies to be filled.
B. Other committees. The Board may establish other
committees, permanent or temporary, which it deems necessary or
desirable to carry out the purposes of the Association.
C. Committee Chairman and Members. The chairmen of all
committees, except the Nominating Committee, shall be appointed by
and serve at the pleasure of the President. Committee members shall
be appointed by the chairman of the committee on which they are to
serve and shall serve until a new chairman is appointed.
D. Committee Reports. The chairman of each committee
shall make a report to the President in writing of committee
meetings and activities prior to each regular monthly meeting of
the Board of Directors.
E. Authority. Unless specifically authorized in writing
by the Board of Directors or the President, a committee chairman or
a committee shall have no authority to legally obligate the
Association or incur any expenditure on behalf of the
Association.
Sec. 9. Suspension of rights. The Board may suspend, by a
majority vote of the Board, the voting rights and rights to use the
recreational facilities, of a member, and his family and guests,
during any period in which the member shall be in default in the
payment of any dues or assessment imposed by the Association. Such
rights may also be suspended, after notice and hearing, for a
period not to exceed sixty days, for violation of the Association's
rules and regulations.
Sec. 10. Books and records. The books, records and papers
of the Association shall at all times, during reasonable business
hours, be subject to inspection by any member.
Sec. 11. Amendments. Amendments to these By-Laws may be
introduced and discussed at any annual or special meeting of the
Association, provided that copies of any proposed amendment shall
be mailed to all the members with the notice of the meeting at
which such amendment will be introduced. A vote on adopting such
amendment shall be taken at the first Association meeting held at
least two weeks subsequent to the meeting at which the amendment
was introduced. Amendments shall be adopted by a vote of a majority
of the members of the Association.
Sec. 12. Corporate seal. The Association shall have a
seal which shall appear as follows: [seal]
Sec. 13. Fiscal year. The first fiscal year of the
Association shall begin on the date of incorporation and shall end
on the last day of _____ (month, year). Each successive fiscal year
shall begin on the first day of _____ (month) and end on the last
day of _____ (month).
The foregoing By-Laws were adopted at the first annual meeting
of the Association held _____ by the undersigned members of the
Association.