[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: 24CFR906.7]

[Page 349]
 
                 TITLE 24--HOUSING AND URBAN DEVELOPMENT
 
CHAPTER IX--OFFICE OF ASSISTANT SECRETARY FOR PUBLIC AND INDIAN HOUSING, 
               DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
 
PART 906--SECTION 5(h) HOMEOWNERSHIP PROGRAM (Eff. until 4-10-03)--Table of Contents
 
Sec. 906.7  Methods of sale and ownership.

    (a) Permissible methods. Any appropriate method of sale and 
ownership may be used, such as fee-simple conveyance of single-family 
dwellings or conversion of multifamily buildings to resident-owned 
cooperatives or condominiums.
    (b) Direct or indirect sale. A PHA may sell dwellings to residents 
directly or (with respect to multifamily buildings or a group of single-
family dwellings) through another entity established and governed by, 
and solely composed of, residents of the PHA's public housing, provided 
that:
    (1) The other entity has the necessary legal capacity and practical 
capability to carry out its responsibilities under the plan; and
    (2) The respective rights and obligations of the PHA and the other 
entity will be specified by a written agreement that includes:
    (i) Assurances that the other entity will comply with all provisions 
of the HUD-approved homeownership plan;
    (ii) Assurances that the PHA's conveyance of the property to the 
other entity will be subject to a title restriction providing that the 
property may be resold or otherwise transferred only by conveyance of 
individual dwellings to eligible residents, in accordance with the HUD-
approved homeownership plan, or by reconveyance to the PHA, and that the 
property will not be encumbered by the other entity without the written 
consent of the PHA;
    (iii) Protection against fraud or misuse of funds or other property 
on the part of the other entity, its employees, and agents;
    (iv) Assurances that the resale proceeds will be used only for the 
purposes specified by the HUD-approved homeownership plan;
    (v) Limitation of the other entity's administrative and overhead 
costs, and of any compensation or profit that may be realized by the 
entity, to amounts that are reasonable in relation to its 
responsibilities and risks;
    (vi) Accountability to the PHA and residents for the recordkeeping, 
reporting and audit requirements of Sec. 906.17;
    (vii) Assurances that the other entity will administer its 
responsibilities under the plan on a nondiscriminatory basis, in 
accordance with the Fair Housing Act and implementing regulations; and
    (viii) Adequate legal remedies for the PHA and residents, in the 
event of the other entity's failure to perform in accordance with the 
agreement.