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April 28, 2011

IFA Voluntary Acquisition Compliance

Recently, the IFA HOME Program underwent a wellness review conducted by HUD entitlement program consultants. During the wellness review an issue was raised concerning compliance with the voluntary acquisition requirements for home buyer assistance projects.

Effective immediately, the IFA HOME program is implementing a policy requiring that each homebuyer file contain two completed forms:

Notice to Seller(s) - Voluntary Acquisition Notice including evidence that the notice was issued to the seller prior to execution of a sales contract.  The notice could be issued by the sub-recipient or non-profit directly to the seller or be provided to the buyer to deliver.  Evidence of the issuance of the notice can be documented by a signature of receipt by the seller or a certified mail receipt

Seller(s) Occupancy Certification which requires the seller's disclosure of possible occupancy that could trigger relocation requirements for tenants or personal property.

Acquisition assisted with IFA HOME funds must comply with the Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970 (URA)  and current regulations effective February, 2005. These requirements apply whether the HOME funds are provided to a non-profit or for profit entity as a part of a HOME project or they are provided to an income-eligible household to purchase a home.

Non- government organizations and individual buyers utilizing HOME funds awarded from IFA do not have the power of eminent domain. Under such circumstances the requirements for URA are limited but require appropriate documentation.   In these types of purchases, the buyer, who could be a private citizen, a developer, or an organization, must inform the seller of three things in writing:

  • The buyer does not have the power of eminent domain
  • Federal funds are involved in the acquisition of their real estate, and the owner will not be eligible for relocation benefits
  • An estimate of the fair market value of the property.

After the buyer/grantee has determined the property's market value and has notified the owner of this amount in writing, the buyer may negotiate freely with the owner in order to establish the purchase price. If the seller refuses to accept the offer, the buyer/individual must look for another property to purchase.

The seller must be notified of the preceding information. If, for any reason, the seller is not informed of these facts prior to closing, the seller should be immediately informed and allowed to withdraw from the purchase agreement without penalty.

These notice requirements may appear to only protect the seller in a voluntary transaction; however, they also help to protect the grantee from after-the-fact claims by sellers. The notice assists the grantee/ buyer to document that the owner-occupant was fully advised that their purchase price was voluntarily negotiated and they will NOT be eligible for relocation assistance. All organizations and individuals with IFA funds need to comply with these requirements.

Maximum Purchase Price or

After-rehab Value Limits for HUD

HUD has issued new Maximum Purchase Price or After-rehab Value Limits  ("95% limits") for 2011 that are effective January 1, 2011.  Participating Jurisdiction's (PJ) whose actual 95 percent limit is below the February 2008 Section 203(b) limit may choose to continue to use the higher February 2008 limit.  PJs whose actual 95 percent limit is higher than the

February 2008 Section 203(b) limit may choose to use the higher 95 percent limit. PJs that obtain HUD Field Office approval of a PJ-determined 95 percent limit using the methodology described in the HOME regulations at 24 CFR 92.254(a)(2)(iii) may continue to update and use these locally-determined limits.
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