---
kind: "section"
citation: "42 U.S.C. § 1437aaa–4"
title: "42"
title_heading: "The Public Health and Welfare"
number: "1437aaa–4"
heading: "Other program requirements"
release: "119-102"
date: "2026-07-12"
url: "https://uscodex.org/usc/42/1437aaa-4"
units:
  - "Chapter 8 — Low-Income Housing"
  - "Subchapter II–A — Hope for Public Housing Homeownership"
---

# §1437aaa–4. Other program requirements

- (a) **Sale by public housing agency to applicant or other entity required—** Where the [Secretary](/usc/42/242q–4.md?p=2) approves an application providing for the transfer of the eligible [project](/usc/42/13641.md?p=2) from the public housing [agency](/usc/42/8262.md?p=1) to another [applicant](/usc/42/1437aaa–5.md?p=1), the public housing [agency](/usc/42/8262.md?p=1) shall transfer the [project](/usc/42/13641.md?p=2) to such other [applicant](/usc/42/1437aaa–5.md?p=1), in accordance with the approved [homeownership program](/usc/42/1437aaa–5.md?p=3).
- (b) **Preferences—** In selecting [eligible families](/usc/42/1437aaa–5.md?p=2) for homeownership, the [recipient](/usc/42/1437aaa–5.md?p=4) shall give a first preference to otherwise qualified current tenants and a second preference to otherwise qualified [eligible families](/usc/42/1437aaa–5.md?p=2) who have completed participation in an economic self-sufficiency program specified by the [Secretary](/usc/42/242q–4.md?p=2).
- (c) **Cost limitations—** The [Secretary](/usc/42/242q–4.md?p=2) may establish cost limitations on eligible activities under this subchapter, subject to the provisions of this subchapter.
- (d) **Annual contributions—** Notwithstanding the purchase of a public housing [project](/usc/42/13641.md?p=2) under this section, or the purchase of a unit in a public housing [project](/usc/42/13641.md?p=2) by an [eligible family](/usc/42/1437aaa–5.md?p=2), the [Secretary](/usc/42/242q–4.md?p=2) shall continue to pay annual contributions with respect to the [project](/usc/42/13641.md?p=2). Such contributions may not exceed the maximum contributions authorized in [section 1437c(a) of this title](/usc/42/1437c.md?p=a).
- (e) **Amounts from Operating Fund allocation—** Amounts from an [allocation](/usc/42/2021b.md?p=2) from the Operating Fund under [section 1437g of this title](/usc/42/1437g.md) shall not be available with respect to a public housing [project](/usc/42/13641.md?p=2) after the date of its sale by the public housing [agency](/usc/42/8262.md?p=1).
- (f) **Use of proceeds from sales to eligible families—** The entity that transfers ownership interests in, or shares representing, units to [eligible families](/usc/42/1437aaa–5.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/42/1437aaa–5.md?p=3), including operating expenses, improvements to the [project](/usc/42/13641.md?p=2), business opportunities for low-income families, supportive services related to the [homeownership program](/usc/42/1437aaa–5.md?p=3), additional homeownership opportunities, and other activities approved by the [Secretary](/usc/42/242q–4.md?p=2).
- (g) **Restrictions on resale by homeowners—**
  - (1) **In general—**
    - (A) **Transfer permitted—** A homeowner under a [homeownership program](/usc/42/1437aaa–5.md?p=3) may transfer the homeowner’s ownership interest in, or shares representing, the unit, except that a [homeownership program](/usc/42/1437aaa–5.md?p=3) 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/42/1437aaa–5.md?p=5), or cooperative has jurisdiction 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 over the unit or elects not to purchase and if the prospective buyer is not a low-income family, the public housing [agency](/usc/42/8262.md?p=1) or the implementation grant [recipient](/usc/42/1437aaa–5.md?p=4) 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/42/8262.md?p=1) 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/42/1437aaa–5.md?p=3) shall provide for appropriate restrictions to assure that an [eligible family](/usc/42/1437aaa–5.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/42/242q–4.md?p=2) 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/42/242q–4.md?p=2) through regulation and agreed to by the purchaser and the entity that transfers ownership interests in, or shares representing, units to [eligible families](/usc/42/1437aaa–5.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/42/1437aaa–5.md?p=3) shall provide for the recapture by the [Secretary](/usc/42/242q–4.md?p=2) or the program of an amount equal to the amount of the declining balance on the note described in [paragraph (1)(C)](#g-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/42/1437aaa–5.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, supportive services related to the [homeownership program](/usc/42/1437aaa–5.md?p=3), additional homeownership opportunities, and other activities approved by the [Secretary](/usc/42/242q–4.md?p=2). The remaining 50 percent shall be returned to the [Secretary](/usc/42/242q–4.md?p=2) for use under this subchapter, subject to limitations contained in appropriations Acts. Such entity shall keep and make available to the [Secretary](/usc/42/242q–4.md?p=2) all records necessary to calculate accurately payments due the [Secretary](/usc/42/242q–4.md?p=2) under this subsection.
- (h) **Third party rights—** The requirements under this subchapter regarding quality standards, resale, or transfer of the ownership interest of a homeowner shall be judicially enforceable against the grant [recipient](/usc/42/1437aaa–5.md?p=4) 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, resident management [corporations](/usc/42/2297h.md?p=2), [resident councils](/usc/42/1437aaa–5.md?p=5), public housing [agencies](/usc/42/8262.md?p=1), 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.
- (i) **Dollar limitation on economic development activities—** Not more than an aggregate of $250,000 from amounts made available under sections [1437aaa–1](/usc/42/1437aaa–1.md) and [1437aaa–2](/usc/42/1437aaa–2.md) of this title may be used for economic development activities under [sections 1437aaa–1(b)(6)](/usc/42/1437aaa–1.md?p=b-6)[^1] and 1437aaa–2(b)(9)[^1] of this title for any [project](/usc/42/13641.md?p=2).
- (j) **Timely homeownership—** [Recipients](/usc/42/1437aaa–5.md?p=4) shall transfer ownership of the property to tenants within a specified period of time that the [Secretary](/usc/42/242q–4.md?p=2) determines to be reasonable. During the interim period when the property continues to be operated and managed as rental housing, the [recipient](/usc/42/1437aaa–5.md?p=4) shall utilize written tenant selection policies and criteria that are consistent with the public housing program and that are approved by the [Secretary](/usc/42/242q–4.md?p=2) as consistent with the purpose of improving housing opportunities for low-income families. The [recipient](/usc/42/1437aaa–5.md?p=4) shall promptly notify in writing any rejected [applicant](/usc/42/1437aaa–5.md?p=1) of the grounds for any rejection.
- (k) **Capability of resident management corporations and resident councils—** To be eligible to receive a grant under [section 1437aaa–2 of this title](/usc/42/1437aaa–2.md), a resident management [corporation](/usc/42/2297h.md?p=2) or [resident council](/usc/42/1437aaa–5.md?p=5) shall demonstrate to the [Secretary](/usc/42/242q–4.md?p=2) its ability to manage public housing by having done so effectively and efficiently for a period of not less than 3 years or by arranging for management by a qualified management entity.
- (l) **Records and audit of recipients of assistance—**
  - (1) **In general—** Each [recipient](/usc/42/1437aaa–5.md?p=4) shall keep such records as may be reasonably necessary to fully disclose the amount and the disposition by such [recipient](/usc/42/1437aaa–5.md?p=4) of the proceeds of assistance received under this subchapter (and any proceeds from financing obtained in accordance with [subsection (b)](#b) or sales under subsections [(f)](#f) and [(g)(4)](#g-4)), the total cost of the [homeownership program](/usc/42/1437aaa–5.md?p=3) 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 the Secretary—** The [Secretary](/usc/42/242q–4.md?p=2) shall have access for the purpose of audit and examination to any books, documents, papers, and records of the [recipient](/usc/42/1437aaa–5.md?p=4) that are pertinent to assistance received under this subchapter.
  - (3) **Access by the 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/42/1437aaa–5.md?p=4) that are pertinent to assistance received under this subchapter.

## Footnotes

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

## Source credit

(Sept. 1, 1937, ch. 896, title III, § 305, as added Pub. L. 101–625, title IV, § 411, Nov. 28, 1990, 104 Stat. 4155; amended Pub. L. 105–276, title V, § 519(c)(2), Oct. 21, 1998, 112 Stat. 2561.)

## Notes

### Editorial Notes

### References in Text

This subchapter, referred to in subsec. (g)(4), was in the original “this subtitle”, and was translated as reading “this title”, meaning title III of act Sept. 1, 1937, ch. 896, as added by Pub. L. 101–625, to reflect the probable intent of Congress, because title III of act Sept. 1, 1937, does not contain subtitles.

Section 1437aaa–1(b)(6) of this title, referred to in subsec. (i), was redesignated section 1437aaa–1(b)(7) of this title by Pub. L. 102–550, title X, § 1012(h)(1)(A), Oct. 28, 1992, 106 Stat. 3906.

Section 1437aaa–2(b)(9) of this title, referred to in subsec. (i), was redesignated section 1437aaa–2(b)(10) of this title by Pub. L. 102–550, title X, § 1012(h)(2)(A), Oct. 28, 1992, 106 Stat. 3906.

### Amendments

1998—Subsec. (e). Pub. L. 105–276 substituted “Amounts from an allocation from the Operating Fund” for “Operating subsidies”.

### Statutory Notes and Related Subsidiaries

### Effective Date of 1998 Amendment

Amendment by title V of Pub. L. 105–276 effective and applicable beginning upon Oct. 1, 1999, except as otherwise provided, with provision that Secretary may implement amendment before such date, except to extent that such amendment provides otherwise, and with savings provision, see section 503 of Pub. L. 105–276, set out as a note under section 1437 of this title.