[Code of Federal Regulations]
[Title 24, Volume 2]
[Revised as of April 1, 2002]
From the U.S. Government Printing Office via GPO Access
[CITE: 24CFR291.415]

[Page 502-503]
 
                 TITLE 24--HOUSING AND URBAN DEVELOPMENT
 
 CHAPTER II--OFFICE OF ASSISTANT SECRETARY FOR HOUSING--FEDERAL HOUSING 
        COMMISSIONER, DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
 
PART 291--DISPOSITION OF HUD-ACQUIRED SINGLE FAMILY PROPERTY--Table of Contents
 
 Subpart E--Lease and Sale of HUD-Acquired Single Family Properties for 
                              the Homeless
 
Sec. 291.415  Lease with option to purchase properties for use by the homeless.

    (a) Certification. Eligible properties are available for lease to 
applicants, approved by HUD, that certify that the property will be 
utilized only for the purpose of providing transitional housing for the 
homeless during the lease term, and that the intended use of the 
property will be consistent with all local laws and regulations. The 
lease agreement will be in a form prescribed by the Secretary. Lessees 
must execute a sublease with occupants in a form prescribed by the 
Secretary limiting an occupant's tenancy to no longer than two years.
    (b) Term of lease. (1) A lease of an eligible property may be 
negotiated for such time as the lessee requires, not to exceed one year. 
Leases are renewable, at the option of the lessee and with the approval 
of HUD, at the end of the first lease term for up to four additional 
one-year terms, on a year-to-year basis, provided the lessee has met the 
requirements under this program.
    (2) Approvals for lease renewals will be denied if HUD determines 
that the lessee has not complied with the requirements of this part of 
the lease.
    (3) A property will not be leased to a lessee for a period longer 
than five years. At the end of the five-year period, if the lessee has 
not exercised the option to purchase, HUD will notify the lessee to 
vacate the property and, if necessary, will take appropriate action 
under the eviction laws of the jurisdiction in which the property is 
located. All property returned to HUD must be vacant, and will be placed 
on the market for sale to the general public.
    (4) Within 30 days of leasing a property from HUD or within 30 days 
after a property is vacated, a lessee must sublease the property to the 
homeless, unless a longer period is approved by HUD.
    (c) Rent. (1) The lessee must pay HUD a nominal rent of $1 for each 
one-year lease period.
    (2) A lessee may charge rent, including utilities, to an occupant at 
a rate appropriate to the financial means of the occupant. Unless HUD 
approves after consideration of such factors as the cost of operating 
housing in the area and the amount of the lessee's contributions to the 
program, such rent may not exceed the highest of:
    (i) Thirty percent of the family's monthly adjusted income 
(adjustment factors include the number of people in the family, age of 
family members, medical expenses, and child care expenses);
    (ii) Ten percent of the family's monthly income; or
    (iii) If the family is receiving payments for welfare assistance 
from a public agency and a part of the payments, adjusted in accordance 
with the family's actual housing costs, is specifically designated by 
the agency to meet the family's housing costs, the portion of the 
payments that is designated.
    (3) In no event may the rent charged an occupant exceed the 
occupant's pro rata share of the lessee's costs of operating the 
property.
    (d) Damage to leased properties. Any damage to leased property 
caused by the intentional or negligent acts of the lessee or occupants 
must be repaired by the lessee at its own expense. If the lessee does 
not make the necessary repairs within a reasonable time after the damage 
occurs, HUD may, at its option, make the repairs and charge

[[Page 503]]

the cost to the lessee. Failure by the lessee to make the necessary 
repairs or to reimburse HUD for the cost of repairs will constitute 
grounds for termination of the lease and may result in termination from 
the program.
    (e) Purchase of leased properties. (1) Lessees that desire to 
purchase leased properties during the lease term will be offered the 
properties at the lower of the fair market value established at the time 
of the initiation of the lease or at the time of the sale, less a 
discount determined appropriate by the Secretary but not less than 10 
percent, provided lessees agree to use the properties either to house 
low-income tenants for a period of not less than 10 years or to resell 
the properties to low-income buyers. If the lessee does not agree to 
such conditions, the lessee must purchase the properties at the higher 
of the fair market value at the time of the initiation of the lease or 
at the time of the sale, less 10 percent. Any repairs to or 
rehabilitation of a property done by a lessee during the lease term will 
not be reflected in the purchase price.
    (2) Sales of leased properties will be on as-is, all-cash basis. HUD 
will not pay a fee for a selling broker. HUD will pay the closing 
agent's fee. The purchaser must pay all other closing costs.

[61 FR 55715, Oct. 28, 1996]