---
kind: "section"
citation: "24 C.F.R. § 891.855"
title: "24"
number: "891.855"
heading: "Replacement reserves."
url: "https://uscodex.org/cfr/24/891.855"
---

# §891.855. Replacement reserves.

- (a) The mixed-finance owner shall establish and maintain a replacement reserve account for Section [202](/cfr/24/202.md) or [811](/cfr/24/811.md) supportive housing units. This account must meet all the requirements of [24 CFR 891.405](/cfr/24/891.405.md).
- (b) The mixed-finance owner may obtain a disbursement from the reserve only if the funds will be used to pay for capital replacement costs for the Section [202](/cfr/24/202.md) or [811](/cfr/24/811.md) supportive housing units in the mixed-finance development and in accordance with the terms of the regulatory and operating agreement. In the case of repairs to common elements, the [Section 202](/cfr/24/202.md)/811 replacement reserve can be used on a pro rata basis based on the percentage of Section [202](/cfr/24/202.md) or [811](/cfr/24/811.md) units in the building whose common elements are being repaired. In the event of a disposition of the mixed-finance development, or the dissolution of the owner, any Section [202](/cfr/24/202.md) or [811](/cfr/24/811.md) funds remaining in the replacement reserve account must remain dedicated to the Section [202](/cfr/24/202.md) or [811](/cfr/24/811.md) supportive housing units to ensure their long-term viability, or as otherwise agreed by HUD.
- (c) Subject to HUD's approval, reserves may be used to reduce the number of Section [202](/cfr/24/202.md) or [811](/cfr/24/811.md) dwelling units in the development for the purpose of retrofitting units that are obsolete or unmarketable.

## Notes

### Source

Source: 70 FR 54210, Sept. 13, 2005, unless otherwise noted.

### Authority

Authority: 12 U.S.C. 1701q; 42 U.S.C. 1437f, 3535(d), and 8013.

### Source

Source: 61 FR 11956, Mar. 22, 1996, unless otherwise noted.