---
kind: "section"
citation: "42 U.S.C. § 12875"
title: "42"
title_heading: "The Public Health and Welfare"
number: "12875"
heading: "Other program requirements"
release: "119-102"
date: "2026-07-12"
url: "https://uscodex.org/usc/42/12875"
units:
  - "Chapter 130 — National Affordable Housing"
  - "Subchapter IV — Hope for Homeownership of Multifamily and Single Family Homes"
  - "Part A — HOPE for Homeownership of Multifamily Units"
---

# §12875. Other program requirements

- (a) **Preferences—** In selecting [eligible families](/usc/42/12876.md?p=2) for homeownership, the [recipient](/usc/42/12876.md?p=8) shall give a first preference to otherwise qualified current tenants and a second preference to otherwise qualified [eligible families](/usc/42/12876.md?p=2) who have completed participation in an economic self-sufficiency program specified by the [Secretary](/usc/42/12704.md?p=16).
- (b) **Cost limitations—** The [Secretary](/usc/42/12704.md?p=16) may establish cost limitations on eligible activities under this part, subject to the provisions of this part.
- (c) **Use of proceeds from sales to eligible families—** The entity that transfers ownership interests in, or shares representing, units to [eligible families](/usc/42/12876.md?p=2), or another entity specified in the approved application, shall use the proceeds, if any, from the initial sale for costs of the [homeownership program](/usc/42/12876.md?p=4), including operating expenses, improvements to the [project](/usc/42/13641.md?p=2), business opportunities for [low-income families](/usc/42/12704.md?p=10), supportive services related to the [homeownership program](/usc/42/12876.md?p=4), additional homeownership opportunities, and other activities approved by the [Secretary](/usc/42/12704.md?p=16).
- (d) **Restrictions on resale by homeowners—**
  - (1) **In general—**
    - (A) **Transfer permitted—** A homeowner under a [homeownership program](/usc/42/12876.md?p=4) may transfer the homeowner’s ownership interest in, or shares representing, the unit, except that a [homeownership program](/usc/42/12876.md?p=4) may establish restrictions on the resale of units under the program.
    - (B) **Right to purchase—** Where a resident management [corporation](/usc/42/2297h.md?p=2), [resident council](/usc/42/12876.md?p=9), or cooperative has [jurisdiction](/usc/42/12704.md?p=3) over the unit, the [corporation](/usc/42/2297h.md?p=2), council, or cooperative shall have the right to purchase the ownership interest in, or shares representing, the unit from the homeowner for the amount specified in a firm contract between the homeowner and a prospective buyer. If such an entity does not have [jurisdiction](/usc/42/12704.md?p=3) over the unit or elects not to purchase and if the prospective buyer is not a [low-income family](/usc/42/12876.md?p=6), the [public housing agency](/usc/42/12704.md?p=18) or the implementation grant [recipient](/usc/42/12876.md?p=8) shall have the right to purchase the ownership interest in, or shares representing, the unit for the same amount.
    - (C) **Promissory note required—** The homeowner shall execute a promissory note equal to the difference between the market value and the purchase price, payable to the [public housing agency](/usc/42/12704.md?p=18) or other entity designated in the homeownership plan, together with a mortgage securing the obligation of the note.
  - (2) **6 years or less—** In the case of a transfer within 6 years of the acquisition under the program, the [homeownership program](/usc/42/12876.md?p=4) shall provide for appropriate restrictions to assure that an [eligible family](/usc/42/12876.md?p=2) may not receive any undue profit. The plan shall provide for limiting the family’s consideration for its interest in the property to the total of—
    - (A) the contribution to equity paid by the family;
    - (B) the value, as determined by such means as the [Secretary](/usc/42/12704.md?p=16) shall determine through regulation, of any improvements installed at the expense of the family during the family’s tenure as [owner](/usc/42/13641.md?p=4); and
    - (C) the appreciated value determined by an inflation allowance at a rate which may be based on a cost-of-living index, an income index, or market index as determined by the [Secretary](/usc/42/12704.md?p=16) through regulation and agreed to by the purchaser and the entity that transfers ownership interests in, or shares representing, units to [eligible families](/usc/42/12876.md?p=2) (or another entity specified in the approved application), at the time of initial sale, and applied against the contribution to equity.

    Such an entity may, at the time of initial sale, enter into an agreement with the family to set a maximum amount which this appreciation may not exceed.

  - (3) **6–20 years—** In the case of a transfer during the period beginning 6 years after the acquisition and ending 20 years after the acquisition, the [homeownership program](/usc/42/12876.md?p=4) shall provide for the recapture by the [Secretary](/usc/42/12704.md?p=16) or the program of an amount equal to the amount of the declining balance on the note described in [paragraph (1)(C)](#d-1-C).
  - (4) **Use of recaptured funds—** Fifty percent of any portion of the net sales proceeds that may not be retained by the homeowner under the plan approved pursuant to this subsection shall be paid to the entity that transferred ownership interests in, or shares representing, units to [eligible families](/usc/42/12876.md?p=2), or another entity specified in the approved application, for use for improvements to the [project](/usc/42/13641.md?p=2), business opportunities for [low-income families](/usc/42/12704.md?p=10), supportive services related to the [homeownership program](/usc/42/12876.md?p=4), additional homeownership opportunities, and other activities approved by the [Secretary](/usc/42/12704.md?p=16). The remaining 50 percent shall be returned to the [Secretary](/usc/42/12704.md?p=16) for use under this part, subject to limitations contained in appropriations Acts. Such entity shall keep and make available to the [Secretary](/usc/42/12704.md?p=16) all records necessary to calculate accurately payments due the [Secretary](/usc/42/12704.md?p=16) under this subsection.
- (e) **Third party rights—** The requirements under this part regarding quality standards, resale, or transfer of the ownership interest of a homeowner shall be judicially enforceable against the grant [recipient](/usc/42/12876.md?p=8) with respect to actions involving rehabilitation, and against purchasers of property under this subsection or their successors in interest with respect to other actions by affected [low-income families](/usc/42/12704.md?p=10), resident management [corporations](/usc/42/2297h.md?p=2), [resident councils](/usc/42/12876.md?p=9), [public housing agencies](/usc/42/12704.md?p=18), and any [agency](/usc/42/8262.md?p=1), [corporation](/usc/42/2297h.md?p=2), or authority of the United States Government. The parties specified in the preceding sentence shall be entitled to reasonable attorney fees upon prevailing in any such judicial action.
- (f) **Dollar limitation on economic development activities—** Not more than an aggregate of $250,000 from amounts made available under sections [12872](/usc/42/12872.md) and [12873](/usc/42/12873.md) of this title may be used for economic development activities under sections [12872(b)(6)](/usc/42/12872.md?p=b-6) and [12873(b)(9)](/usc/42/12873.md?p=b-9)[^1] of this title for any [project](/usc/42/13641.md?p=2).
- (g) **Timely homeownership—** [Recipients](/usc/42/12876.md?p=8) shall transfer ownership of the property to tenants within a specified period of time that the [Secretary](/usc/42/12704.md?p=16) determines to be reasonable. During the interim period when the property continues to be operated and managed as rental [housing](/usc/42/12704.md?p=8), the [recipient](/usc/42/12876.md?p=8) shall utilize written tenant selection policies and criteria that are approved by the [Secretary](/usc/42/12704.md?p=16) as consistent with the purpose of improving [housing](/usc/42/12704.md?p=8) opportunities for [low-income families](/usc/42/12704.md?p=10). The [recipient](/usc/42/12876.md?p=8) shall promptly notify in writing any rejected [applicant](/usc/42/12876.md?p=1) of the grounds for any rejection.
- (h) **Records and audit of recipients of assistance—**
  - (1) **In general—** Each [recipient](/usc/42/12876.md?p=8) shall keep such records as may be reasonably necessary to fully disclose the amount and the disposition by such [recipient](/usc/42/12876.md?p=8) of the proceeds of assistance received under this part (and any proceeds from financing obtained or sales under subsections [(c)](#c) and [(d)](#d)), the total cost of the [homeownership program](/usc/42/12876.md?p=4) in connection with which such assistance is given or used, and the amount and nature of that portion of the program supplied by other sources, and such other sources as will facilitate an effective audit.
  - (2) **Access by Secretary—** The [Secretary](/usc/42/12704.md?p=16) shall have access for the purpose of audit and examination to any books, documents, papers, and records of the [recipient](/usc/42/12876.md?p=8) that are pertinent to assistance received under this part.
  - (3) **Access by Comptroller General—** The Comptroller General of the United States, or any of the duly authorized representatives of the Comptroller General, shall also have access for the purpose of audit and examination to any books, documents, papers, and records of the [recipient](/usc/42/12876.md?p=8) that are pertinent to assistance received under this part.
- (i) **Certain entities not eligible—** Any entity that assumes, as determined by the [Secretary](/usc/42/12704.md?p=16), a mortgage covering [eligible property](/usc/42/12876.md?p=3) in connection with the acquisition of the property from an [owner](/usc/42/13641.md?p=4) under this section must comply with any low-income affordability restrictions for the remaining term of the mortgage. This requirement shall only apply to an entity, such as a cooperative association, that, as determined by the [Secretary](/usc/42/12704.md?p=16), intends to own the [housing](/usc/42/12704.md?p=8) on a permanent basis.

## Footnotes

[^1]: See References in Text note below.

## Source credit

(Pub. L. 101–625, title IV, § 425, Nov. 28, 1990, 104 Stat. 4168.)

## Notes

### Editorial Notes

### References in Text

Sections 12872(b)(6) and 12873(b)(9) of this title, referred to in subsec. (f), were redesignated sections 12872(b)(7) and 12873(b)(10) of this title, respectively, by Pub. L. 102–550, title X, § 1012(i), Oct. 28, 1992, 106 Stat. 3906.