12 U.S.C. § 1715z–4a — Double damages remedy for unauthorized use of multifamily housing project assets and income
submitted 38 years ago by Pub. L. 100-242 to r/title-12-BANKS-AND-BANKING · 881 words · no verdicts yet
This section lets the Secretary ask the Attorney General to recover property income or assets used in violation of specified housing controls or regulations. A successful action may recover twice the misused value and related costs, and this remedy supplements other remedies.
(a)(1) The Secretary of Housing and Urban Development may ask the Attorney General to sue in a United States district court to recover assets or income that anyone used in violation of: (A) a regulatory agreement for a multifamily project, nursing home, intermediate-care facility, board-and-care home, assisted-living facility, or hospital whose mortgage is or was insured or held by the Secretary under title II of the National Housing Act; (B) a regulatory agreement for a multifamily project whose mortgage is or was insured or held under section 1701q; (C) a regulatory agreement or other control imposed by the Secretary for a mortgage insured or held under section 1715z–22 but not reinsured there; or (D) an applicable regulation. Misuse includes a use for which the books and accounts do not show a reasonable operating expense or necessary repair, or for which records were not kept as the Secretary requires and in reasonable condition for audit.
(2) For mortgages covered by those provisions, “any person*” includes anyone or any entity that owns or operates property identified in the regulatory agreement, including: (A) a corporate stockholder with at least 25 percent; (B) a beneficial owner under a business or trust; (C) an officer, director*, or partner of an owning or controlling entity; (D) a nursing-home lessee or operator; (E) a hospital lessee or operator; (F) anyone else controlling the property, whatever their official relationship; and (G) an heir, assignee, successor in interest, or agent of anyone listed above.
(b) At the Secretary's request, the Attorney General has exclusive authority to approve starting proceedings under this section. Before final resolution, the court may grant temporary or preliminary relief, including restraining orders, injunctions, and satisfactory performance bonds, to protect the Secretary, stop prohibited use, and prevent loss of value in the real and personal property involved.
(c) If the United States wins, the Attorney General may recover twice the value of the assets and income the court finds were misused, plus all action costs, including reasonable attorney and audit fees. Despite other law, the Secretary may apply the recovery to the property or the applicable National Housing Act insurance fund. For a project whose mortgage is held under section 1701q, the Secretary may apply it to the project or to the Department for administrative enforcement costs in the appropriate office.
(d) Despite other limitations periods, the Secretary may request an action up to and including six years after the latest date the Secretary discovers the violation.
(e) This remedy is in addition to every other remedy available to the Secretary or the United States.
The Secretary of Housing and Urban Development (referred to in this section as the “Secretary”) may request the Attorney General to bring an action in a United States district court to recover any assets or income used by any person* in violation of (A) a regulatory agreement that applies to a multifamily project, nursing home, intermediate care facility, board and care home, assisted living facility, or hospital whose mortgage is or, at the time of the violations, was insured or held by the Secretary under title II of the National Housing Act [12 U.S.C. 1707 et seq.]; (B) a regulatory agreement that applies to a multifamily project whose mortgage is or, at the time of the violations, was insured or held by the Secretary under section 1701q of this title (including property subject to section 1701q of this title as it existed before November 28, 1990); (C) a regulatory agreement or such other form of regulatory control as may be imposed by the Secretary that applies to mortgages insured or held or, at the time of the violations, was 1 insured or held by the Secretary under section 1715z–22 of this title, but not reinsured under section 1715z–22 of this title; or (D) any applicable regulation. For purposes of this section, a use of assets or income in violation of the regulatory agreement, or such other form of regulatory control as may be imposed by the Secretary, or any applicable regulation shall include any use for which the documentation in the books and accounts does not establish that the use was made for a reasonable operating expense or necessary repair of the property and has not been maintained in accordance with the requirements of the Secretary and in reasonable condition for proper audit.
For purposes of a mortgage insured or held by the Secretary under title II of the National Housing Act [12 U.S.C. 1707 et seq.], under section 1701q of this title (including section 1701q of this title as it existed before November 28, 1990) and under section 1715z–22 of this title, the term “any person” shall mean any person or entity that owns or operates a property, as identified in the regulatory agreement, including but not limited to—
any stockholder holding 25 percent or more interest of a corporation that owns that property;
any beneficial owner of the property under any business or trust;
any officer, director*, or partner of an entity owning or controlling the property;
any nursing home lessee or operator;
any hospital lessee or operator;
any other person or entity that controls the property regardless of that person or entity’s official relationship to the property; and
any heir, assignee, successor in interest, or agent of any person or entity described in the preceding subparagraphs.
The Attorney General, upon request of the Secretary, shall have the exclusive authority to authorize the initiation of proceedings under this section. Pending final resolution of any action under this section, the court may grant appropriate temporary or preliminary relief, including restraining orders, injunctions, and acceptance of satisfactory performance bonds, to protect the interests of the Secretary and to prevent use of assets or income in violation of the regulatory agreement, or such other form of regulatory control as may be imposed by the Secretary, and any applicable regulation and to prevent loss of value of the realty and personalty involved.
In any judgment favorable to the United States entered under this section, the Attorney General may recover double the value of the assets and income of the property that the court determines to have been used in violation of the regulatory agreement, or such other form of regulatory control as may be imposed by the Secretary, or any applicable regulation, plus all costs relating to the action, including but not limited to reasonable attorney and auditing fees. Notwithstanding any other provision of law, the Secretary may apply the recovery, or any portion of the recovery, to the property or to the applicable insurance fund under the National Housing Act [12 U.S.C. 1701 et seq.] or, in the case of any project for which the mortgage is held by the Secretary under section 1701q of this title (including property subject to section 1701q of this title as it existed before November 28, 1990), to the project or to the Department for use by the appropriate office within the Department for administrative costs related to enforcement of the requirements of the various programs administered by the Secretary, as appropriate.
Notwithstanding any other statute of limitations, the Secretary may request the Attorney General to bring an action under this section at any time up to and including 6 years after the latest date that the Secretary discovers any use of a property’s assets and income in violation of the regulatory agreement, or such other form of regulatory control as may be imposed by the Secretary, or any applicable regulation.
The remedy provided by this section is in addition to any other remedies available to the Secretary or the United States.
Source credit: (Pub. L. 100–242, title IV, § 421, Feb. 5, 1988, 101 Stat. 1913; Pub. L. 105–65, title V, § 563, Oct. 27, 1997, 111 Stat. 1419; Pub. L. 108–447, div. I, title II, § 220, Dec. 8, 2004, 118 Stat. 3319; Pub. L. 109–115, div. A, title III, § 324, Nov. 30, 2005, 119 Stat. 2466.)
- 1988Enacted · Pub. L. 100-242 · 101 Stat. 1913
- 1997Amended · Pub. L. 105-65 · 111 Stat. 1419
- 2004Amended · Pub. L. 108-447 · 118 Stat. 3319
- 2005Amended · Pub. L. 109-115 · 119 Stat. 2466
A history note hasn’t been published yet. The record shows enactment by Pub. L. 100-242 on 1988-02-05.
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