42 U.S.C. § 12875 — Other program requirements

(a) Preferences: When choosing eligible families to become homeowners, the recipient^* must give first preference to current qualified tenants, and second preference to qualified eligible families who finished an economic self-sufficiency program the Secretary^* specifies.

(b) Cost limitations: The Secretary may set limits on the cost of eligible activities under this part.

(c) Use of proceeds from sales to eligible families: The entity that sells ownership shares to eligible families (or another entity named in the approved application) can use the money from that first sale for program costs — operating expenses, project^* improvements, business opportunities for low-income families, related support services, more homeownership opportunities, and other activities the Secretary approves.

(d) Restrictions on resale by homeowners: A homeowner can transfer their ownership interest, but the program can restrict resales. If a resident management corporation, resident council^*, or co-op has authority over the unit, it gets first right to buy the unit from the homeowner at the price set in the homeowner's firm sale contract with a buyer. If that entity doesn't have authority or chooses not to buy, and the buyer isn't a low-income family^*, the public housing agency^* or grant recipient gets the same right to buy at that price. The homeowner must sign a promissory note for the difference between market value and the price they paid, secured by a mortgage, payable to the public housing agency or other named entity.

For a transfer within 6 years of buying in, the program must limit how much profit the family can keep — capped at the family's equity contribution, plus the value of any improvements the family paid for (valued as the Secretary decides by regulation), plus appreciation based on an inflation rate tied to a cost-of-living, income, or market index that the Secretary and the transferring entity agree on at the time of the first sale. The entity can also agree with the family on a cap for that appreciation amount.

For a transfer between 6 and 20 years after buying in, the program must let the Secretary or the program recapture an amount equal to the declining balance still owed on that promissory note.

Of any sale proceeds the homeowner doesn't get to keep, 50% goes to the transferring entity for project improvements, business opportunities, support services, more homeownership opportunities, and other Secretary-approved uses. The other 50% goes back to the Secretary for the program, subject to what Congress appropriates. The entity must keep records the Secretary can use to check these payments are calculated right.

(e) Third party rights: The rules on quality standards, resale, and ownership transfer can be enforced in court — against the grant recipient for rehabilitation-related actions, and against property buyers (or their successors) for other actions — by affected low-income families, resident groups, public housing agencies, and federal agencies. Whoever wins such a case is entitled to reasonable attorney's fees.

(f) Dollar limitation on economic development activities: No more than $250,000 total from sections 12872 and 12873 money may go to economic development activities under sections 12872(b)(6) and 12873(b)(9), for any one project.

(g) Timely homeownership: Recipients must transfer ownership to tenants within a time the Secretary decides is reasonable. While the property is still run as rental housing in the meantime, the recipient must use written, Secretary-approved tenant selection rules aimed at improving housing for low-income families, and must promptly tell any rejected applicant^* in writing why they were rejected.

(h) Records and audit of recipients: Recipients must keep records showing how they used the grant money and any related sale or financing proceeds, the total program cost, and what other funding sources contributed — records good enough to support a real audit. The Secretary can inspect the recipient's books and records related to this assistance. The Comptroller General (or their representatives) can inspect them too.

(i) Certain entities not eligible: If an entity takes over a mortgage on eligible property^* when buying it from an owner^* under this section, and the Secretary determines that entity plans to own the housing permanently (like a cooperative association), it must keep following the low-income affordability rules for the rest of the mortgage's term.