NSP FAQ
Q

If a grantee institutes a lease-purchase program, will it be required to provide relocation assistance to a tenant who does not qualify to purchase the property at the end of the lease term?

Date Published: October 2012

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A

Generally, a grantee will not be required to provide relocation assistance to a tenant who does not qualify to purchase the property at the end of the lease-purchase agreement term, if the following conditions are met:

  • The lease-purchase agreement is executed with a new tenant, and not a tenant who was in the property at the time of the Initiation of Negotiations (ION) for acquisition, demolition, rehabilitation, or conversion of a lower-income unit for an NSP-funded project—someone the URA would consider a “subsequent occupant”; and
  • Before agreeing to occupy the unit, the tenant is provided with a Move in Notice (see 24 CFR Part 570.606(b)(2)(ii)(B)) that advises the tenant that the tenant will be occupying an NSP-funded project for a lease-purchase program and that, if the tenant is unable to meet the eligibility requirements to become an owner within the program’s time limit, then the tenant will not be eligible for relocation assistance as a displaced person under either the URA and/or Section 104(d) (see Appendix 29 of HUD Handbook 1378: Real Estate Acquisition and Relocation Policy and Guidance for a sample Move in Notice).

Note that the eviction for cause standards in the URA (49 CFR Part 24.206) applies. Whether the grantee can pursue a lawful eviction may depend on the specific provisions in the lease-purchase agreement that relate to down payment or other program eligibility requirements, and whether or not local law considers the failure to meet those lease terms by some specified point in time to be “material,” and the breach of these provisions to be “serious” or “repeated,” and, therefore, grounds for eviction.

It is critical that the grantee properly structure its program and its lease-purchase agreement in accordance with Federal, State, and local law. Further, the grantee should adequately pre-screen lease-purchase homebuyers before entering into an agreement with them to ensure that prospective homebuyers will be financially able to meet the terms of the lease-purchase program.


Tags: NSP Lease-purchase

FAQ ID:

862