15-5. BASIC REQUIREMENTS

• A. Use Agreement.

At renewal, the owner must agree to accept a 20-year recorded Use Agreement requiring the current and future owners to accept any Section 8 contract offered by HUD for the next 20 years. (See HUD-Form 90055)

Note: If the project has an existing Use Agreement: The term must be extended for an additional 20 years. For example, if the current Use Agreement ends in 2015 the term will be extended to 2035. There are various conditions imposed by the use agreement, therefore the existing Use Agreement may have to be modified to include the conditions imposed by the Use Agreement.

• B. 20-Year Contract:

The owner/purchaser must agree to accept a twenty-year Section 8 contract, subject to annual appropriations.

• C. Early Termination of an existing Section 8 contract.

  1. HUD and the owner may terminate by mutual agreement most existing original HAP contracts and Section 524 MAHRA Contract(s) that have rents at or below market to take advantage of these programs as long as the new contract equals 20 years, the owner agrees to renew the contract at the end of the 20 years for a term that equals the remaining term of the original terminated contract and, for nonMAHRA contracts, the owner agrees to sign the HUD-93184 “Rider to Original Section 8 Housing Assistance Payments Contract”. (See 15-5 C.3.)

  2. The following contracts cannot be terminated early to take advantage of these programs:

     • a. Section 514 or 515 MAHRA contract

     • b. Section 524 (e)(1) MAHRA Demo Contract

     • c. Section 524(e)(2) MAHRA Preservation Contract

     • d. Rental Assistance Demonstration (RAD) Contract

  3. Owners of projects with rents above market that are currently subject to a HAP contract provision that allows for (i) a discretionary comparability adjustment within each five-year term or (ii) a fifth-year comparability adjustment, may request that project rents be reduced to market to participate in Chapter 15 and

Chapter Fifteen – Published March 2023

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renew under Option Two in accordance with the following requirements and procedures:

• a. At the time of the discretionary comparability adjustment or at the fifth year adjustment, at which point the AE/CA would reduce rents to market.

• b. The Section 8 HAP contract would then be terminated and renewed for 20 years under Option Two, in accordance with the procedures in Section 156.B.,

• c. The AE would attach HUD-93181 or HUD-93182 (formerly known as Appendix 15-2A and 15-2B respectively) to the contract which would provide a determination of the “as is” and “after rehab” rents for the project.