3.11.1.2 Housing for Persons Age 55+ (55+ Exemption)

A. The Fair Housing Act authorizes certain properties to restrict occupancy to families composed only of adults with a household head aged 55 or older, referred to here as the 55+ Exemption. HUD does not permit projects with occupancy restricted to age 55 and older under any market rate multifamily programs or under any New Construction or Substantial Rehabilitation programs. Existing affordable properties that restrict occupancy to households in which at least one person is at least 55 years old may be eligible for FHA mortgage insurance for refinancing, acquisition, or rehabilitation financing if they qualify for an exemption from the familial status provisions of the Fair Housing Act. To qualify as housing “intended and operated for occupancy by persons 55 years of age or older,” the housing provider must meet all three of the following criteria:

1. At least 80 percent of the occupied units are occupied by at least one person who is 55 years of age or older;

2. The housing community or facility publishes and adheres to policies and procedures that demonstrate the intent to serve persons 55 years of age and older; and

3. The housing facility or community complies with the rules issued by HUD for verification of occupancy.

B. The law at 42 U.S.C. § 3607(B)(2)(C)(i)-(iii), as implemented at 24 C.F.R. part 100 addresses these three requirements in greater detail: the 80 percent minimum occupancy requirement outlined in (i), above is addressed at 24 C.F.R. § 100.305; the assessment of intent outlined in Section 3.11.1.2.A.2 above is addressed at 24 C.F.R. § 100.306; and the verification requirements outlined in Section 3.11.1.2.A.3 above are addressed at 24 C.F.R. § 100.307.

C. Eligible properties must have complied with the Fair Housing Act’s conversion rules, including the rule covering properties intending to convert from non-exempt to exempt housing after May 3, 2000. In these projects, the owner/Borrower of an existing property must apply neutral admission policies (admitting head of household-age-eligible families with children) until the 80 percent threshold of the exemption is satisfied. For properties constructed after May 3, 2000, the new construction rules dictate that such properties may exclude families with children until 25 percent of its units are occupied. Once the 25 percent threshold is reached, at least 80 percent of the occupied units must have a resident who is 55 years of age or older. If the property does not meet the 80 percent requirement once the 25 percent

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Chapter 3 Programs 3.11 Age and Family Status Restrictions

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occupation threshold is reached, the owner/Borrower may not thereafter exclude or otherwise discriminate against familial status.

D. The Fair Housing Act prohibits “dual purpose housing facilities.” A housing facility or community may not avail itself of the 55 and older exemption if it designates some units, sections, or buildings for persons age 55 and older, while designating other units, sections, or buildings for families with children. See 54 Fed. Reg. 3232, 3252 (January 23, 1989) for more information on this issue. Furthermore, properties applying for purposes of FHA mortgage insurance must be “one marketable, manageable real estate entity”. Any property proposing one FHA insured loan, with separate management agreements and procedures for a portion of the units or buildings restricting occupancy to persons age 55 or older and another portion to other occupancy regimes generally will not be considered one manageable entity and thus not eligible for mortgage insurance.