2-4. EARLY TERMINATION OF A CONTRACT

• A. Non-MAHRA Contracts.

HUD will permit the early termination of a non-MAHRA contract (i.e., a contract that has not yet been renewed under MAHRA) for an owner wanting to enter into a MAHRA contract only if the owner:

1. Renews the Section 8 contract for 20 years under Option One, Two, Three or Four; and

2. Agrees to:

   • a. The Preservation Exhibit, as contained in HUD Notice 2013-17 which provides for the renewal of the HAP contract at the end of the 20 years for a term that is at least equal to the term of the original terminated contract.

Note: In determining the amount of time to put on the Preservation Exhibit, the AE should round down to the whole year for any term less than six months and up for any term six months or greater. For a contract with less than six months remaining, no Preservation Exhibit is required .

• b. Sign the HUD 93184 “Rider to Original Section 8 Housing Assistance Payments Contract.”

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• B. MAHRA Contracts.

Owners may request the early termination of an existing non-MUTM MAHRA contract only for the following reasons:

1. A for profit owner or a housing authority occupying the status of a “public body corporate and politic” under the state legislation under which it was created, wishes to renew the contract under Option One, MUTM.

2. Any owner wishes to renew the contract under Option Two and preserve long term affordability by signing a 20-year contract.

3. Under Option Three:

   • a. An owner has an Interim-Lite or Interim-Full M2M contract and Recap has completed processing before the expiration date of the interim contract.

   • b. An owner with a Watch List contract that meets one of the requirements listed in Section 5-6. B.4. of this Guide.

   • c. The contract was previously renewed as a Lite contract and the owner wishes to complete a full MTM debt restructuring.

   • d. An owner requests referral to Recap based on a RCS that demonstrates that current rents are above market.

   • e. An owner wishes to refinance the project and wishes to renew the contract for 20 years or the remaining term of the use agreement, whichever is less.

4. An owner with an Option Four contract who wishes to subsequently renew the contract under Option Four using a 20-year contract to preserve long-term affordability if the project is still eligible for renewal under Option Four at the time of the request for subsequent renewal.

5. An owner with an Option Five contract who wishes to renew the contract under Option Five using a 20-year contract to preserve long-term affordability. (See Sections 7.3 and 7.4 for more information.)

6. To combine multiple contracts or stages. (See Section 2-10.C.2 below.)

Note: An owner with a MUTM contract that has fulfilled the minimum five-year term, can terminate the contract early and renew the contract under any option for which the project is eligible for 20 years. An owner with a MUTM contract that has not fulfilled the minimum five-year term may terminate the contract early but only if the owner agrees to renew the contract under MUTM for 20 years, assuming the project is eligible for MUTM when the first contract is terminated.

• C. The owner’s request for early termination under A or B above must be in writing and submitted to the AE/CA.

• D. The owner agrees to the terms of the Preservation Exhibit, as contained in HUD Notice 2013-17 which provides for the renewal of the HAP contract at the end of the 20 years for a term that is at least equal to the term of the original terminated contract. If an owner of a project with an existing Preservation Exhibit wishes to terminate the contract and renew

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early, the new Preservation Exhibit will replace the existing Preservation Exhibit and include only the number of years remaining on the contract being terminated.

Note: In determining the amount of time to put on the Preservation Exhibit, the AE should round down to the whole year for any term less than six months and up for any term six months or greater. For a contract with less than six months remaining, no Preservation Exhibit is required.

• E. An owner is not allowed to terminate a contract early to Opt Out of the Section 8 program.

Note: The AE/CA should document the project file by including a note that reads: “By mutual agreement, the owner and the CA have determined to terminate the Renewal Contract that runs from _____ to _____ and, instead, to enter into a 20-year contract, which will run from to. The owner has also agreed to the terms of the Preservation Exhibit.