[Code of Federal Regulations]
[Title 24, Volume 4]
[Revised as of April 1, 2003]
From the U.S. Government Printing Office via GPO Access
[CITE: 24CFR904.107]

[Page 302-305]
 
                 TITLE 24--HOUSING AND URBAN DEVELOPMENT
 
CHAPTER IX--OFFICE OF ASSISTANT SECRETARY FOR PUBLIC AND INDIAN HOUSING, 
               DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
 
PART 904--LOW RENT HOUSING HOMEOWNERSHIP OPPORTUNITIES--Table of Contents
 
               Subpart B--Turnkey III Program Description
 
Sec. 904.107  Responsibilities of homebuyer.

    (a) Repair, maintenance and use of home. The homebuyer shall be 
responsible for the routine maintenance of the home to the satisfaction 
of the HBA and the LHA. 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 code 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 
heater, heating equipment and other component parts of the dwelling. It 
also includes all interior painting and the maintenance of grounds (lot) 
on which the dwelling is located. It does not include maintenance and 
replacements provided for by the NRMR described in Sec. 904.111.
    (b) Repair of damage. In addition to the obligation for routine 
maintenance, the homebuyer shall be responsible for repair of any damage 
caused by him, members of his family, or visitors.
    (c) Care of home. A homebuyer shall keep the home in a sanitary 
condition; cooperate with the LHA and the HBA in keeping and maintaining 
the common areas and property, including fixtures and equipment, in good 
condition and appearance; and follow all rules of the LHA and of the HBA 
concerning the use and care of the dwellings and the common areas and 
property.
    (d) Inspections. A homebuyer shall agree to permit officials, 
employees, or agents of the LHA and of the HBA to inspect the home at 
reasonable hours and intervals in accordance with rules established by 
the LHA and the HBA.
    (e) Use of home. A homebuyer shall not (1) sublet the home without 
the prior written approval of the LHA and HUD, (2) use or occupy the 
home for any unlawful purpose nor for any purpose deemed hazardous by 
insurance companies on account of fire or other risks, or (3) provide 
accommodations (unless approved by the HBA and the LHA) to boarders or 
lodgers. The homebuyer shall agree to use the home only as a place to 
live for the family (as identified in the initial application or by 
subsequent amendment with the approval of the LHA), 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 the home unless the LHA 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.
    (h) Statements of condition and repair. When each homebuyer moves 
in, the LHA shall inspect the home and shall give the homebuyer a 
written statement, to be signed by the LHA and the homebuyer, of the 
condition of the home and the equipment in it. Should the homebuyer 
vacate the home, the LHA shall inspect it 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 
Sec. 904.110(j)(1)). The homebuyer, his representative, and a 
representative of the HBA may join in any such inspections by the LHA.
    (i) Maintenance of common property. The homebuyer may participate in 
nonroutine maintenance of his home and in maintenance of common property 
as discussed in Sec. 904.110(d) and Sec. 904.111(c).
    (j) Homebuyer's required monthly payment. (1) The term ``required 
monthly payment'' as used herein means the

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monthly payment the homebuyer is required to pay the LHA on or before 
the first day of each month. The homebuyer's required monthly payment, 
which is based upon family income, shall be an amount equal to the 
Tenant Rent as determined in accordance with part 913 of this chapter. 
If the Utility Allowance, as defined in part 913 of this chapter, 
exceeds the Homebuyer's Total Tenant Payment, as determined in 
accordance with part 913, the LHA will pay a utility reimbursement equal 
to that excess to the Homebuyer, or as provided in Sec. 913.108 of this 
chapter.
    (2) For purposes of determining eligibility of an applicant (see 24 
CFR parts 5 and 913, as well as this part) and the amount of Homebuyer 
payments under paragraph (j)(1) of this section, the LHA shall examine 
the family's income and composition and follow the procedures required 
by 24 CFR part 5 for determining citizenship or eligible immigration 
status before initial occupancy. Thereafter, for the purposes stated in 
this paragraph and to determine whether a Homebuyer is required to 
purchase the home under Sec. 904.104(h)(1), the LHA shall reexamine the 
Homebuyer's income and composition regularly, at least once every 12 
months, and shall undertake such further determination and verification 
of citizenship or eligible immigration status as required by 24 CFR part 
5. The Homebuyer shall comply with the LHA's policy regarding required 
interim reporting of changes in the family's income and composition. If 
the LHA receives information from the family or other source concerning 
a change in the family income or other circumstances between regularly 
scheduled reexaminations, the LHA, upon consultation with the family and 
verification of the information (in accordance with 24 CFR parts 5 and 
913 of this chapter) shall promptly make any adjustments determined to 
be appropriate in the Homebuyer payment amount or take appropriate 
action concerning the addition of a family member who is not a citizen 
with eligible immigration status. Any change in the family's income or 
other circumstances that results in an adjustment in the Total Tenant 
Payment and Tenant Rent must be verified.
    (3) The LHA shall not refuse to accept monthly payments because of 
any other charges (other than overdue monthly payments) owed by the 
homebuyer to the LHA; however, by accepting monthly payments under such 
circumstances the LHA shall not be deemed to have waived any of its 
rights and remedies with respect to such other charges.
    (k) Application of monthly payment. The LHA shall apply the 
homebuyer's monthly payment as follows:
    (1) To the credit of the homebuyer's EHPA (see Sec. 904.110);
    (2) To the credit of the homebuyer's NRMR (see Sec. 904.111); and
    (3) For payment of monthly operating expense including contribution 
to operating reserve (see Sec. 904.109).
    (l) Assignment and survivorship. Until such time as the homebuyer 
obtains title to the home, it shall be used only to house a family of 
low income. Therefore:
    (1) A homebuyer shall not assign any right or interest in the home 
or under the Homebuyers Ownership Opportunity Agreement without the 
prior written approval of the LHA and HUD;
    (2) In the event of death, mental incapacity or abandonment of the 
family by the homebuyer, the person designated as the successor in the 
Homebuyers Ownership Opportunity 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 LHA to 
meet all of the standards of potential for homeownership as set forth in 
Sec. 904.104(e)(2). Such person shall be designated by the homebuyer at 
the time the Homebuyers Ownership Opportunity Agreement is executed. 
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 
LHA may consider as the homebuyer any family member who was an occupant 
at the time of the event and who meets the standards of potential for 
homeownership.
    (3) If there is no qualified successor in accordance with paragraph 
(l) (2) of this section, the LHA shall terminate

[[Page 304]]

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 LHA 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.
    (m) Termination by LHA. (1) In the event the homebuyer breaches the 
Homebuyers Ownership Opportunity Agreement by failure to make the 
required monthly payment within ten days after its due date, by 
misrepresenting or withholding of information in applying for admission 
or in connection with any subsequent reexamination of income and family 
composition (including the failure to submit any required evidence of 
citizenship or eligible immigration status, as provided by 24 CFR part 
5; the failure to meet the disclosure and verification requirements for 
Social Security Numbers, as provided by 24 CFR part 5; or the failure to 
sign and submit consent forms for the obtaining of wage and claim 
information from State Wage Information Collection Agencies, as provided 
by 24 CFR part 5), or by failure to comply with any of the other 
homebuyer obligations under the Agreement, the LHA may terminate the 
Agreement. No termination under this paragraph may occur less than 30 
days after the LHA gives the homebuyer notice of its intention to do so, 
in accordance with paragraph (m)(3) of this section. For termination of 
assistance for failure to establish citizenship or eligible immigration 
status under 24 CFR part 5, the requirements of 24 CFR parts 5 and 966 
shall apply.
    (2) Notice of termination by the LHA shall be in writing. Such 
notice shall state
    (i) The reason for termination,
    (ii) That the homebuyer may respond to the LHA, 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 LHA will consult the HBA concerning this termination, 
and
    (v) That unless the LHA rescinds or modifies the notice, the 
termination shall be effective at the end of the 30-day notice period.
    (n) Termination by the homebuyer. The homebuyer may terminate the 
Homebuyers Ownership Opportunity Agreement by giving the LHA 30 days 
notice in writing of this intention to terminate and vacate the home. In 
the event that the homebuyer vacates the home without notice to the LHA, 
the Agreement shall be terminated automatically and the LHA may dispose 
of, in any manner deemed suitable by it, any items of personal property 
left by the homebuyer in the home.
    (o) 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. Accordingly, in the event 
it should develop that the homebuyer no longer meets one or more of 
these elements of homeownership potential, the LHA 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 LHA 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 reevaluation. 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 LHA shall 
invite the HBA to participate in all investigations and evaluations.
    (2) If the final determination of the LHA, after considering the 
views of the

[[Page 305]]

HBA, is that the homebuyer should be transferred to a suitable dwelling 
unit in an LHA rental project, the LHA shall give the homebuyer written 
notice of the LHA 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 LHA. 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 LHA 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 
LHA has consulted the HBA concerning this determination and offer of 
transfer.
    (3) When a Homebuyers Ownership Opportunity Agreement is terminated 
pursuant to this paragraph (o), the amount in the homebuyer's EHPA shall 
be paid in accordance with the provisions of Sec. 904.110(j).

(Approved by the Office of Management and Budget under control number 
2577-0083)

[39 FR 10966, Mar. 22, 1974. Redesignated at 40 FR 15580, Apr. 7, 1975, 
and at 49 FR 6714, Feb. 23, 1984, and amended at 49 FR 21490, May 21, 
1984; 49 FR 26719, June 29, 1984; 54 FR 39710, Sept. 27, 1989; 56 FR 
7544, Feb. 22, 1991; 60 FR 14848, Mar. 20, 1995; 60 FR 13626, Mar. 27, 
1996]