pursuant to 24 CFR § 982.628, regardless of the type of housing the family selects, the following conditions apply to the program:
own the unit outright, but has an “ownership interest” in the unit (homeownership
voucher owner-occupied).
• The unit must be a single- (or one-) family unit or a one-unit property that provides housing for only one family. This includes semi-detached homes, row homes, or one-family units in condominium or co-op buildings or developments, as long as they provide housing for only one family. It does not include, for example, duplex or triplex properties in which the owner occupies one unit and rents the other available space to help pay the mortgage or earn additional income.
• The unit must meet HUD’s housing quality standards (hqS) at the time the unit is purchased. This precludes the purchase of a “fixer-upper” that does not meet the HQS, even if the family is able to obtain a mortgage covering the cost of acquisition and rehabilitation. The family may wish to make improvements to the home after purchase, and the PHA may include the cost of financing for major improvements in the family’s monthly housing expense, but at the time of the unit purchase, it must meet the minimum HQS.
• The unit must exist or already under construction at the time family enters into the contract of sale. HUD considers a unit under construction once the footers have been poured.
• The unit should be either owner-occupied or vacant at the time the contract of sale is executed. While HUD regulations do not expressly prohibit the purchase of units occupied by a renter at the time of sale, HUD recommends that PHAs do not allow families to enter contracts on such units unless the PHA is willing to assume relocation expenses for the existing tenant under the Uniform Relocation Act, if necessary.
ONE UNIT PROPERTy
A one-unit property within the context of the program regulations, provides living space for one family, and is built on land owned by the family (or the family has the right to occupy the land for at least 40 years). The unit may be a detached unit, a semi detached or twin unit, a townhouse, or a row home. The characteristic that distin guishes this unit from a co-op or a condominium is that the family is purchasing the unit and the land on which the unit is built. These units are commonly owned in fee simple, a legal term for the form of homeownership in which the house and property (land) are owned by a single person or family.
BUYING A SINGLE-FAMILY HOME Single-family units are generally sold on the open market. The seller is typically repre- sented by a real estate agent that advertises the property, shows the home, and handles the sales transaction for the seller. The sell- er’s agent may list the home with a Multiple
Listing Service, so that other real estate agents can access information about the home and pass it along to prospective buyers.
The seller with the help of the agent establishes the asking price for the unit. The ask ing price is generally based on the prices for recent sales (comparables) in the same area, and/ or what the seller thinks the seller can get for the unit. Sales prices are nego tiable between the seller and the prospective buyer until the contract of sale is executed.
FINANCING
In a fee simple purchase, the purchase price includes the cost of the “real property and improvements” (i.e., the land and the home). The title to the property is trans ferred to the purchaser at settlement, subject to liens placed by the mortgage lender(s) who provide the funds used to purchase the unit.
HOUSING ExpENSES
After purchasing the unit, the buyer is responsible for all expenses associated with the purchase, use, maintenance, and repair of the unit.
The purchaser’s monthly payments include:
• Mortgage payment(s). The payment on the first mortgage generally includes amounts to be credited to PITI. If the family is required to take out mortgage insurance, the mortgage insurance premium will also be included in the family’s mortgage payment. If the family has taken out a second mortgage on the property, monthly payments on the second loan generally consist only of principal and interest payments. • Utilities. In a single-family house, the homeowner is responsible for the payment of
all utilities. The PHA provides a utility allowance for the family, using the same utility allowance schedule that it uses in the rental program. If the unit is not connected to a municipal water or sewer system, there is no monthly (or quarterly) charge for water and sewer, but the PHA may still provide an allowance for water and sewer. This is because there will be utility expenses associated with the well and septic system. • Routine maintenance of the unit, repairs, and replacement of major building systems and components. The homeowner is responsible for the costs associat ed with routine maintenance of the unit, and the repair or replacement of major systems or appliances. In determining the monthly homeownership expenses for purposes of calculating the monthly homeownership assistance payment, the PHA must provide allowances — similar to a utility allowance — that would in theory be used by the family to establish reserve(s) for maintenance and/or for repairs and replacement. The PHA does not have to require the family to make deposits into a reserve account, or to maintain a reserve. However, as a PHA option, it may require maintenance of a reserve for repairs as a condition of continued assistance. If the PHA adopts such
• Principal and interest on debt incurred to finance major repairs, replacements or improvements for the home. If a member of the family is a person with disabil ities, such debt may include debt incurred by the family to finance costs needed to make the home accessible for such person, if the PHA determines that allowances of such
costs as homeownership expenses are needed as a reason able accommodation so that the homeownership option is readily accessible to and usable by such person, in accordance with 24 CFR Part 8.
CONDOMINIUM UNITS (or PLanneD Unit DeveLoPmentS)
Condominiums are single-family units held under a form of homeownership in which the purchaser buys a one-family unit in a multi-family building or development. The “unit” that the buyer purchases actually consists of the living space enclosed by the exterior walls of the units, including interior partitions, cabinets, appliances and fix tures. The exterior walls of the unit — including the roof, plumbing and wiring — and the common areas and grounds, are owned and maintained collectively by the condominium owners through a condominium association. The owner of a condo minium unit pays a monthly fee to an association to cover the cost of exterior and common area maintenance and repairs.
BUYING A CONDOMINIUM
During construction and initial occupancy, condominium units are generally offered for sale by the developer. Existing condominium units are generally sold on the open market, in much the same way as single-family homes. The seller determines the ask ing
price for the property, usually with the assistance of a real estate broker. However, the condominium association must generally approve the buyer.
The contract of sale for a condominium unit is similar to the contract typically used for the sale of single-family units. However, by agreeing to purchase the condomini um unit, the purchaser is also agreeing to be a party to the master deed for the build ing or devel- opment, and subject to the bylaws of the condominium association and the association’s “house rules.” The contract of sale should include a contingency clause allowing the family and the PHA to review these documents, and to cancel the contract of sale if the terms of the document are unacceptable.
FINANCING
Financing the purchase of a condominium is also similar to financing the purchase of a single-family home. The family takes out an individual mortgage loan for the pur chase of the unit. Most lenders will make inquiries into the financial condition of the condominium association before they approve a loan. Many lenders provide prospec tive condominium purchasers with a questionnaire for the condominium association to complete. Some lenders require families purchasing condominium units to make higher down payments than families purchasing single-family units, particularly for condominium units in buildings or developments in which more than 60 percent of the units are occupied by renters, rather than homeowners.
The lender will typically include the monthly condo fee in the borrower’s monthly mort- gage payment, along with the principal, interest, taxes, and insurance.
HOUSING ExpENSES
• The monthly and periodic costs to the purchaser of a condominium unit include: • Monthly mortgage payments for the purchase of the unit (principal and interest). • Taxes on the unit, and contents and personal liability insurance for the unit. • Condominium fees for the management and maintenance of common areas. The
actual cost of these fees may be included in the homeownership expense calculations of an assisted family’s homeownership expense.
• Utility expenses. The PHA provides a utility allowance for the family, using the same utility allowance schedule that it uses for families receiving rental assistance. • Maintenance and repair costs for the unit interior. The PHA must establish allowances for routine maintenance of the unit and for repairs and replacements of appliances and fixtures.
such debt may include debt incurred by the family to finance costs needed to make the home accessible for such person, if the PHA determines that allowances of such costs as homeownership expenses are needed as a reason able accommodation so that the homeownership option is readily accessible to and usable by such person, in accordance with 24 CFR Part 8.