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8.1 INTRODUCTION

The quality of property management 

has a direct bearing on the performance of a 

GRRHP loan. While providing for 

acceptable property management is the 

responsibility of the borrower, the lender is 

responsible for ensuring that the asset value 

is preserved. In this role, the lender has an 

obligation to establish standards and to 

review the borrower’s actions in developing a management plan and selecting a property 

manager or management agent. Throughout the life of the loan, the lender must monitor 

property management through, among other means, review of financial reports and periodic site 

visits to assess property operations and physical conditions.

SECTION 1: LENDER ROLE IN PROPERTY MANAGEMENT

8.2 RESPONSIBILITIES OF THE LENDER

The Agency and the lender have a mutual interest in assuring that GRRHP properties are 

managed to:

• Protect the economic value of the property, which will support timely repayment of 

the loan and minimize losses; and 

• Ensure that the property is operated in compliance with the program requirements and 

continues to provide decent, affordable housing in rural areas.

The lender must monitor GRRHP loans to verify that properties are well managed. To 

accomplish this, the lender must evaluate key management issues. These issues are briefly 

summarized below. Major issues such as the management plan, project manager qualifications 

and performance, management agreement, and occupancy requirements are discussed in more 

detail in the remaining sections.

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CHAPTER 8: PROPERTY MANAGEMENT

Key Topics in this Chapter

• Lender Role in Property Management

• Management Plan

• Property Manager

• Management Agreement

• Occupancy Requirements

• Tenant Protection and Grievance Procedures
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A. Management Plan

The management plan specifies the borrower and property manager’s plan for 

operating the property. The lender must approve the management plan. Part of the plan 

will be site-specific and part of the plan will be a generic description of the property 

manager’s procedures and staffing. To determine if the property will be well-managed, 

the proposed management plan must be appropriate for the property type and market

area.

B. Property Manager Qualifications

The lender must examine the property manager’s qualifications to operate the 

property successfully and in compliance with the Agency’s requirements. The manager 

should have experience with similar properties, and the staffing and organizational 

capacity to meet all of the property management requirements. 

C. Management Agreement

The lender must review the management agreement or contract between the borrower 

and the property manager covering the terms and conditions under which the property 

manager will provide services. Section 4 of this chapter details the issues the lender must 

review or require in the management agreement.

D. Site Visits

The lender must inspect the property annually to ensure that it is being

maintained in compliance with program requirements, local codes, and the 

management plan [7 CFR 3565.351 (e)].

E. Occupancy and Rent

The GRRHP contains a number of unique program requirements on tenant eligibility 

and rent restrictions. These include a limit on the income of tenants at initial occupancy, 

unit rent restrictions, and average project rent restrictions. The specific provisions are 

detailed in Section 5 of this chapter. The lender must ensure that the borrower and 

property manager thoroughly understand and comply with these requirements. 

F. Affirmative Fair Housing Marketing Plan

The lender must review and the Agency must approve the borrower’s 

Form HUD 935.2A, as a part of the management plan and determine if it is 

appropriate for the specific property and market area. It must be reviewed and 

approved annually and modified when necessary if the goals of the plan are not 

being met. Instructions for review of this plan can be found in Chapter 4.

G. Reporting

The lender must obtain periodic reports from the borrower on the condition of the 

property. At a minimum these reports must include:
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• On an annual basis, an audited annual financial statement conducted in accordance 

with Generally Accepted Government Auditing Standards (GAGAS) or OMB 

Circular A-133. This report will include a balance sheet, income and expense 

statement, and a statement of borrower compliance with program requirements.

• On a quarterly basis, once the loan note guarantee is issued, the lender must submit 

Form RD 1980-41 to the Agency via the Lenders Interactive Network Connection 

(LINC).

• On a monthly basis, for properties that are delinquent or in default, the lender must 

provide the Agency with a delinquency report including information about:

◊ The amount of any monetary delinquency;

◊ The physical condition of the property;

◊ The financial status of the property;

◊ The status of any non-monetary compliance problems; and

◊ Proposed actions and a timetable to resolve the delinquency, default, or noncompliance issues.

H. Relationship Reporting

The management agent must complete a Form HUD 9832 that provides information 

about the management agent and each member of the management team. Any identity of 

interest (IOI) relationship with the property manager or subsequent property manager 

must be fully disclosed in Form HUD 9832. IOI is defined in Paragraph 1.9.

I. Pre-Rent-up Instructions

After the lender has been invited by the Agency to proceed with GRRHP application 

processing, the lender will hold a teleconference with the Agency’s processing staff and 

the borrower to discuss compliance issues related to rent-up of the property. This 

meeting should take place before the management company begins leasing the property. 

During the teleconference, Agency staff will inform the borrower and lender of the 

following required compliance items: (1) the posting of the AFHMP; (2) the need to 

maintain documentation that demonstrates fulfillment of the AFHMP; (3) the 

maintenance of a standardized, non-discriminatory application and waiting list for 

prospective tenants; (4) the non-discriminatory logo, clause, and statements in pamphlets, 

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brochures, and newsletters; (5) handicap accessibility to public areas, including, but not 

limited to, the rental office; (6) the collection of race and national origin data on tenants 

to be reported by the borrower in the annual Fair Housing report (see Paragraph 7.14 B.);

(7) knowledge and correct usage of current median income limits; and (8) the need for 

site managers that are properly trained on the aforementioned GRRHP requirements. The 

lender will be responsible for ensuring borrower compliance with these requirements.

SECTION 2: MANAGEMENT PLAN

8.3 OVERVIEW

The management plan is the borrower’s and property manager’s plan for operating the 

property. It should address all aspects of property operation, maintenance, and compliance with 

applicable laws, regulations, and other program requirements. Standards and deadlines for 

performance must be included in the plan. The lender should assess the management plan for 

responsiveness to the specific requirements of the program [7 CFR 3565.351] as well as for the 

specific nature of the property. 

The Agency requires that certain provisions be included in the management plan. These 

components are identified below. Attachment 8-A provides additional detail on the content of 

the required provisions.

8.4 MANAGEMENT PLAN REQUIREMENTS

The management plan is the document that tells the lender how the property will be 

operated over the life of the loan. The lender must review the plan to determine if it is 

appropriate for the property and that the property will be operated within program requirements. 

It is the responsibility of the lender to monitor the management of the property for compliance 

with the management plan. A copy of the current plan must be kept on file in the lender’s office. 

The Agency may request a copy of the management plan. 

A. Management Plan Contents

The lender must decide if the proposed management plan is suitable to meet the 

property’s needs and if it addresses the minimum requirements identified below. Lenders 

may add additional requirements to address specific circumstances or market 

conditions. Remember that the management plan is an active document. The 

management plan can and should be revised as circumstances warrant.

It is anticipated that GRRHP properties may have supplemental financing or housing 

subsidies, with related occupancy or management requirements. Some of the other 

financing programs, such as low income housing tax credits, may have more restrictive 

income or tenant eligibility rules. The borrower has the responsibility to maintain 

compliance with all of these requirements. The Agency, in most cases, will defer to the 

most stringent requirements imposed as a result of alternative financing sources. 
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However, this may not be appropriate in all cases. For example, if a project’s occupancy 

is suffering due to inadequate numbers of qualified tenants under the “most stringent 

rules” and may result in a default on the GRRHP loan, the Agency may require the lender 

to adhere to Agency occupancy standards to avoid a default.

Key components to look for in the management plan are summarized here. They are 

described in more detail in Attachment 8-A.

• Occupancy. Has the property manager shown how it will perform standard 

operations such as rent collection and tenant screening, and how it will maintain 

compliance with the AFHMP and unique tenant eligibility rules?

• Maintenance. Are there effective maintenance programs and good routines to 

respond to tenant work orders? Are utility costs monitored and energy conservation 

practices encouraged?

• Personnel management. Is the staffing appropriate for the size and services of the 

property? Are the job descriptions clear regarding on-site versus main office 

personnel? Is the bundle of services included in the management fee distinguished 

from the charges to operations for on-site staff?

• Financial management. Are there adequate administrative procedures for money 

management, rent collection, reporting, recordkeeping, and data systems? What are 

the procedures for monitoring the operating and reserve accounts and insurance 

policies?

• Tenant services. Does the plan address the quality of services for the tenants, 

including safety and security, maintenance services, and communication with the 

property manager?

B. Agency Review

Although the Agency does not approve the management plan, the Agency

must approve the initial HUD Form 935.2A, which is to be prepared for the 

specific property and market area. Approval standards for this plan are detailed in 

Chapter 4.

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SECTION 3: PROPERTY MANAGER

8.5 OVERVIEW

This section describes issues related to the property manager that must be 

reviewed by the lender. Under the direction of the borrower and within the parameters 

of the management plan, the professional property manager has the direct responsibility 

for the property’s daily operations. As a result, property managers play a key role in successfully 

marketing the property and in maintaining property values over time. The quality of their work

also directly affects the quality of services to tenants.

The lender must review and approve the qualifications of the property manager selected 

by the borrower. Form HUD 9832, required of the management agent, will provide important 

information about the ownership of the property management firm and its prior experience.

The Agency, the lender, and the borrower all have a keen interest in ensuring the highest 

quality management of the property and compliance with GRRHP regulations. The lender 

should be aware that the Agency relies on the lender to monitor the operations at the property. 

The lender should be sure that property managers are familiar with some of the key features of 

this program, including:

• The risk-sharing nature of the program which provides that the lender and the 

borrower will lose money if the loan defaults due to failure to comply with all loan 

and program requirements;

• Statutory income restrictions that must be certified at initial occupancy;

• Rent restrictions that limit unit rents and average project rents, and rents and utility 

allowances that must be certified annually; and

• The likelihood that secondary or supplemental financing will be involved and may 

require additional occupancy and rent restrictions.

Additional detail on the program occupancy requirements are provided in Section 5 of 

this chapter.

8.6 KEY PROPERTY MANAGER ISSUES

Some of the key property manager issues the lender should review include:

• Relationship to the lender. Does the lender have hiring and firing authority over the 

property manager if the borrower fails to act in a timely manner to resolve 

management deficiencies? Is the management agreement assignable to the lender, 

and ultimately to the Agency, in case of a default on the loan?
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• Management compensation. Is the management fee clearly expressed? Are fees 

customary and typical for the market area for similar housing?

• Industry knowledge and management training. Is the property 

manager current on affordable housing issues and requirements? Is there a 

training program in place for training staff on GRRHP, other housing 

program requirements, and property management techniques? Is the 

property manager using current data management and recordkeeping technology?

• On-site management. Are there clear written job descriptions and responsibilities 

for on-site staff? Are management policies clearly documented? If the property is 

too small for on-site management, is the property manager’s headquarters close 

enough to the property to effectively manage on a daily basis?

8.7 PROPERTY MANAGER EXPERIENCE

The property manager must be qualified to fulfill the management plan 

requirements and have experience managing small rural housing developments. The 

property manager must provide evidence of knowledge of the GRRHP and the laws 

and standards governing the property’s operations such as: fair housing, local 

property standards, environmental hazards, equal employment, accessibility laws, and related 

laws on equal opportunity and maintaining a drug-free workplace.

Because GRRHP properties are likely to have additional sources of project financing, the 

property manager must also have adequate experience managing the income and occupancy 

requirements of each financing program. These may include: LIHTCs and HOME funds,

Community Development Block Grant Funds, and State or local affordable housing assistance. 

The property manager must have a process to stay current on affordable housing issues and 

requirements.

Because the GRRHP may guarantee loans financing new construction or rehabilitation, 

the property manager must have appropriate experience in leasing newly constructed or 

rehabilitated rural properties. 

The property management firm must have at least one person in a supervisory position 

with a minimum of two years of experience and satisfactory performance directing and 

overseeing the management of multifamily properties serving a similar resident clientele.

The lender is encouraged to visit the sites currently managed by the proposed property 

management firm as a reference check.

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8.8 PREVIOUS PARTICIPATION AND OTHER FEDERAL REQUIREMENTS

The lender must obtain a Form RD 1944-37 from the initial and subsequent 

property managers and retain the original in the files.

In accordance with 2 CFR §180.300, lenders must verify and provide documentation to 

the Agency that the borrower’s management agent and the management agent’s principals are 

not excluded or disqualified by:

(a) Checking SAM Exclusions (https://sam.gov); or

(b) Collecting a certification; or

(c) Adding a clause or condition to the covered transaction.

If a borrower wants to use a debarred or suspended property management firm and 

believes it has a sufficiently good reason, the borrower may appeal to the lender. If the lender

agrees, then the appeal must be forwarded to the Agency. The Agency reserves the right to 

reject a property management firm based on previous participation.

SECTION 4: MANAGEMENT AGREEMENT

8.9 OVERVIEW

The management agreement details the contractual relationship between the borrower and 

the property manager. It must require the property manager to conduct its operations according

to the Agency’s requirements and applicable laws. The lender must review and approve the 

management agreement and confirm that the terms comply with the Agency requirements, 

applicable laws, and are reasonable and customary. Also, the lender must obtain an assignment 

of management agreement from the borrower in the event that the mortgage goes into default for 

monetary or non-compliance reasons and the property management agreement must be assigned 

to the lender or the Agency, as appropriate. The executed management agreement and an 

executed assignment of management agreement must be kept on file with the lender.

8.10 TERMS AND CONDITIONS

The management agreement commits the manager to managing the property in 

accordance with the management plan and other requirements. The agreement provides the legal 

authorization for the property manager to act as the borrower’s agent in carrying out authorized 

activities. The principal authorized activities include: budget preparation, entering into contracts 

for work at the property, collection of rents, and eviction of tenants.

Additional provisions of the agreement typically include: an indemnification of the property 

manager for good faith actions taken to carry out the borrower’s policies and an acknowledgment 

that the property manager is not financially obligated to fund the project expenses.
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In the event that the property manager does not comply with the terms of the loan, 

management agreement, or the management plan, the lender must have the authority to require 

the borrower to replace the management agent with a qualified and competent management 

agent. The lender’s loan documents and the management agreement must include this 

requirement and, upon failure to comply, provide for the lender or the Agency, as appropriate, to 

take control of the property as mortgagee-in-possession with the ability to terminate the 

management agreement.

8.11 MANAGEMENT FEE

The management fee, including any incentives or bonuses to be paid from property funds 

to the property management firm or any other party, must be reasonable and customary for 

similar properties in the market area. The total management compensation should be specified in 

the management agreement. 

SECTION 5: OCCUPANCY REQUIREMENTS

8.12 OCCUPANCY REQUIREMENTS AND LENDER REVIEW

[7 CFR 3565.202 and 3565.203]

The lender must ensure that the property is managed in conformance with the following 

occupancy requirements.

A. Income of Residents

Units are to be available only to households whose incomes (as defined in Paragraph 

8.12 C.), at the time of initial occupancy, do not exceed 115 percent of the area median

income. After initial occupancy, a tenant’s income may exceed this limit [7 CFR 

3565.202].

B. Tenant Income Certifications

The initial tenant certifications must contain certain basic information required by the 

Agency such as types of income and sources. Annual recertification of tenant income is

not required under the GRRHP. When certifying or recertifying a tenant's income, any 

industry accepted certification form may be used if it provides all of the information 

required by the Agency. For example, if the property is also a tax credit property, the tax 

credit certification form may be used to calculate income for GRRHP purposes. If the 

property has no other subsidies attached, “Form RD 3560-8, Tenant Certification”, must 

be used.

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When completing the income certification form, the property manager should only 

complete the portions of the form that are applicable to the GRRHP, such as name, 

address, telephone number, household members, and source and amount of income of all 

adults. Applicants are not eligible to claim deductions from income as permitted by 

Section 515 and certain other programs.

When required by the Agency, the lender may be instructed to submit to the Agency 

any certification form used and completed by the management agent for other financing 

or housing assistance programs.

C. GRRHP Definition of Income

Income should be calculated per household as follows:

• The sum of all income of each adult member of the household for the prior year,

including any interest income from any assets. Income must include all transfer 

payments such as child support and alimony.

• No adjustments to income will be made, such as exclusions for lump sum, Social 

Security Income (SSI) payments, student financial aid, adoption assistance payments, 

local employment training program participation, payments in support of a 

developmentally disabled family member at home, or similar payments.

D. Reporting of Income

To document statutory compliance and to provide required fair housing reports, the 

lender must periodically provide information on the characteristics of tenants, such as 

tenant incomes and household size. Because some tenants will have incomes recertified 

annually due to other program requirements, this requirement may be fulfilled by 

submission of these recertifications. However, the lender must also obtain tenant income 

and household information on all other tenants [7 CFR 3565.202].

To assure tenants that they are not subject to annual recertification of

income, property managers should make clear, in writing, that a tenant whose 

income has increased from the time of initial occupancy continues to be eligible 

for occupancy at the property.
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E. Restrictions on Rent

The Agency has established certain rent restrictions to preserve affordability of 

GRRHP units over time. The rent restrictions for the program are as follows:

• The monthly rent for any individual housing unit, including any tenant-paid utilities, 

must not exceed an amount equal to 1/12th of 30 percent of 115 percent of AMI, 

adjusted for family size (based on the most recent published income limits. Income 

limits can be found at: Multifamily Housing Loan Guarantees.

• On an annual basis, the average monthly rent for a project, taking into account all 

individual unit rents, including any tenant-paid utilities, must not exceed 1/12th of 30

percent of 100 percent of annual AMI, adjusted for family size [7 CFR 3565.203].

To comply with these rent restrictions, the borrower must establish an 

estimate of tenant-paid utility costs. The calculation for tenant-paid utilities 

for each unit size and type of heating fuel must be made at initial occupancy 

when the rent structure is established. Form RD 3560-7, “Multiple Family Housing

Project Budget/Utility Allowance”, may be used for this purpose.

The analysis must be updated annually or when information is received from utility 

companies of a utility cost increase. This process should reduce the administrative effort 

to track utilities on a unit and household basis, yet maintain an appropriate allowance for 

utilities paid by tenants in the rent calculation. If the lender believes that the rent 

structure has become distorted over time due to inaccurate utility expense estimates, then

the property manager may undertake a utility survey. Utility surveys are not required by 

the Agency if the tenant-paid utility allowance appears to be accurate.

F. Use Restrictions

The goal of the program is to provide and maintain the supply of affordable housing 

for low- and moderate-income residents of rural areas. GRRHP properties must not be

operated as temporary or transient housing or for use as migrant housing. Nor can the 

property be operated as a health facility or student housing. The initial and subsequent 

terms of the lease must be 12 months or greater, unless special servicing issues warrant a

shorter lease term. 

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SECTION 6: TENANT PROTECTION AND GRIEVANCE PROCEDURES

8.13 OVERVIEW

The lender must receive confirmation from the borrower or property manager 

that the tenants have been informed in writing of their rights under the grievance and 

appeal section of the regulations [7 CFR 3565.351]. In addition, the lender must 

ensure that the borrower or property manager provide rejected applicants with relevant 

civil rights information. Tenants must receive and sign for receipt of a packet of information at 

lease signing that includes the grievance and appeals information. Tenants should also receive 

information about property rules and regulations, how to contact the property manager, and basic 

community information.

Some areas of the country have concentrations of non-English speaking residents. In 

such markets, or if the property has a large number of non-English speaking applicants or 

tenants, the borrower or property manager must make reasonable efforts to provide tenant 

information in the tenants’ native language. 

8.14 TENANT PROTECTION

The lender must verify that the property manager maintains a process for addressing 

tenant concerns about the management and maintenance of the property. An action or possible 

inaction by the borrower or property manager may adversely affect tenants of the project. 

Tenants are entitled to the benefits of the Agency grievance process or to pursue grievances 

under applicable local, State, and Federal law.

8.15 GRIEVANCE PROCEDURES

The lender must ensure that the borrower or property manager notifies the tenants that 

they have access to an approved grievance process and appeals system. Borrowers are required

to post the Fair Housing Poster in accordance with 24 CFR 110 and other Agency information in 

accordance with 7 CFR 3560.160 that informs tenants of their rights under the grievance 

procedures. Exhibit 8-2 provides a flowchart of the process. Attachment 8-B provides details on 

the hearing process.

When there is a grievance, it is important to determine whether the grievance is 

appropriate for the Agency’s grievance process. Often the grievance is more properly addressed 

in other venues, such as a civil court in the case of personal disputes between tenants or by the 

Secretary of Housing and Urban Development or the Secretary of Agriculture in the case of 

alleged civil rights discrimination (as discussed in Paragraph 8.16). Tenant complaints which are 

appropriately addressed under the Agency grievance process include unauthorized rent changes 

or lease modifications, inequitable enforcement of terms of the lease, and inadequate 
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maintenance of the unit or property. Exhibit 8-1 lists the circumstances in which a tenant may or 

may not be able to file a complaint under the grievance process for this program.

Exhibit 8-1

Tenant Grievances – Allowable Circumstances

A complaint may not be filed if: A complaint may be filed if:

• There is a proposed rent change that is authorized 

by the Agency.

• A tenant or prospective tenant believes that 

he/she has been discriminated against. This issue 

cannot be resolved through the appeals process;

however, if a person believes that discrimination 

has occurred, they should file a complaint with 

the Secretary of HUD or Agriculture.

• A project has formed a tenants’ association and 

all parties involved have agreed to use this 

association as a method of settling grievances.

• There are changes in the rules that are required by 

the Agency and proper notice has been given.

• The tenant is in violation of the lease and those 

violations result in termination of tenancy.

• Disputes between tenants that do not involve the 

borrower.

• The grievance is related to displacement or other 

effects as a result of Agency-approved 

prepayment of a guaranteed loan.

• The property is not maintained in a manner 

that is decent, safe, and sanitary.

• The borrower violates lease provisions or 

occupancy rules.

• Lease modifications are made.

• Occupancy rules changes are made.

• Rent charges not authorized by the Agency 

are implemented.

• Tenants are denied approval for occupancy.

The grievance process should only be employed after informal discussions 

between the aggrieved party and the property manager or borrower have failed and 

the Agency is asked to intervene. The parties will select a hearing panel or hearing 

officer to govern the hearing which will be held within 15 calendar days of the request by either 

party for a hearing. Exhibit 8-2 illustrates the grievance and appeals process.

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Exhibit 8-2

Tenant Grievance and Appeals Process Flowchart

for the GRRHP

within 10 calendar days

Cause for grievance

Owner or manager 

proposes an 

adverse action

(in writing)

Applicant/tenant

presents grievance

or response to

notice of proposed

adverse action.

Informal meeting

to resolve.

Applicant/tenant

requests a hearing

Borrower and 

tenant select

hearing officer

or hearing panel

Schedule 

hearing

Hold 

hearing

Hearing panel

delivers written

decision to

borrower, 

applicant, tenant

and Agency

RESOLUTION

within

10

calendar

days

Within

10

calendar

days

within 10 calendar days

within 15 calendar days

8.16 CIVIL RIGHTS [7 CFR 3565.8]

A. Lender Obligations

The lender must require certification from the borrower that the property manager 

will conduct its activities without regard to race, color, religion, sex, familial status, 

national origin, age, or disability in accordance with Section 504 of the Rehabilitation 

Act of 1973, Title II of the Americans with Disabilities Act of 1990, as amended. This 

includes any actions in the sale, rental, 

or advertising of the dwellings.

Compliance with the Fair Housing 

Amendments Act and the Americans 

with Disabilities Act is required for all 

participants in the program. These 

Federal laws direct lenders, borrowers, 

and their agents, specifically including 

property managers, to:

Examples of Unit Features That May Be

Modified to Accommodate Tenants

• Doorknobs/handles

• Bathroom fixtures

• Light switches

• Appliance handles/knobs

• The size of doorways
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• Make accommodations in rules, policies, practices, or services to provide a person 

with a disability an opportunity to use or continue to use a dwelling unit and all public 

and common use areas.

• Allow an individual with a disability to modify a unit at his or her expense to make it 

more suitable or enjoyable. The tenant can be required to escrow funds to restore the

unit to its original condition if the modifications are not suitable to the rental market.

Property managers should provide training to their staff on these subjects and 

establish an internal monitoring program to routinely check compliance with these 

requirements.

B. Penalties

Lenders, borrowers, or their agents who fail to comply with the 

requirements of Title VIII of the Civil Rights Act of 1968, as amended by the 

Fair Housing Amendments Act of 1988 (the Fair Housing Act), are liable to 

sanctions authorized by law, including, but not limited to, cancellation of the

guarantee and investigation by the U.S. Attorney and/or HUD or the Agency..

8.17 HOUSING DISCRIMINATION

To file a complaint of discrimination, write to USDA, Assistant Secretary for Civil 

Rights, Office of the Assistant Secretary for Civil Rights, 1400 Independence Avenue, S.W., 

Stop 9410, Washington DC 20250-9410, or call toll-free at (866) 632-9992 (English) or (800) 

877-8339 (TDD) or (866) 377-8642 (English Federal-replay) or (800) 845-6136 (Spanish 

Federal-relay). USDA is an equal opportunity provider and employer.

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Attachment 8-A

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ATTACHMENT 8-A

MANAGEMENT PLAN REQUIREMENTS 

FOR THE

GUARANTEED RURAL RENTAL HOUSING PROGRAM

There is no required form to be used for the management plan for the GRRHP; however, this 

exhibit provides detailed guidance on each of the required management plan components 

identified in Paragraph 8.4. The lender must ensure that the borrower has provided for 

acceptable property management services and practices. References to the regulations are noted

where applicable.

GRRHP MANAGEMENT PLAN REQUIREMENTS

1. Occupancy Requirements and Monitoring

This part of the plan includes a statement of the occupancy requirements for the property, 

including the GRRHP requirements and the requirements of any other financing program that is 

applicable. The plan should describe how the property management firm will implement the 

requirements and ensure compliance over time. 

Because of the important statutory and program requirements, the lender must carefully 

review this part of the management plan.

• Non-contiguous or scattered sites with one loan. Scattered sites are to be managed 

under one management plan and must be located within an area small enough to allow 

convenient, efficient management. The plan should detail how this will be accomplished 

and whether on-site or off-site management is planned.

• Plans and procedures for marketing units and maintaining compliance 

with the AFHMP. The completion of Form HUD 935.2A is a statutory 

requirement. The plan must take into account the unique circumstances of the 

property and market area and must be able to be implemented by the property 

manager over the life of the guaranteed loan. The initial plan must be reviewed by the 

lender and forwarded to RHS for approval. The plan must be reviewed

annually by the lender thereafter [7 CFR 3565.353]. An approved AFHMP 

must be posted in the rental office so that eligible persons and families will be 

made aware of the availability of affordable multi-family rental housing in the 

GRRHP.
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Attachment 8-A

Page 2 of 4

• Procedures for determining applicant eligibility. Property managers must 

demonstrate knowledge of the unique income eligibility rules of the program 

[7 CFR 3565.202]. Due to the likelihood of GRRHP properties being 

developed with multiple sources of financing, the property manager must be 

able to interview and document prospective tenants under the requirements of the other 

programs while meeting all of the GRRHP requirements. Some of the other programs will 

have more limitations on tenants’ incomes than this program so the property manager 

must know and manage the distinct rules appropriately.

• Leasing and occupancy policies. Property managers must demonstrate the 

capacity to manage the unique leasing occupancy restrictions of the GRRHP

program and other applicable programs [7 CFR 3565.203]. For projects 

financed with Options Two or Three, the property managers must demonstrate the ability 

to lease-up newly constructed or rehabilitated properties in accordance with a schedule

that will facilitate the timely conversion from a construction to a permanent loan. Some 

programs will have requirements, which exceed those of the GRRHP, such as the annual 

rent recertification requirement of the tax credit program, and managers must be

knowledgeable of those requirements.

• Rent collection. How and where the tenant pays the monthly rent must be described 

(whether by mail, to a lock box, or collected on-site). Clear and consistent rules on 

collection of delinquent rent and assessment of late fees must be in the written plan and in 

the tenant lease.

• Termination of leases and eviction. The plan must identify key lease provisions 

pertaining to termination of leases and eviction, and how the property manager will 

monitor compliance and take action to enforce these provisions. The provisions and the 

enforcement process must be fully consistent with Agency policies as well as with local, 

State, and Federal law.

• Tenant Protection and Grievance Procedures. The borrower or 

management agent must provide tenants with a copy of the tenant protection

and grievance procedures at the time of lease execution and must provide civil 

rights information to rejected applicants. Tenant grievance procedures must be 

posted in a conspicuous public location at the property such as the entry or common areas

[7 CFR 3565.351(c)].

• Security. Adequate security must be provided to the property and the tenants. A written 

security plan to address issues such as tenant protection measures, vandalism, and drugs is 

recommended. Any special security concerns for the site should be identified and 

remedial measures fully described. 
HB-1-3565

(02-23-12) PN 455

Attachment 8-A

Page 3 of 4

2. Tenant Services

The borrower and property manager are encouraged to offer tenant services appropriate

to the needs of residents. Such services might include an after-school program for families or 

social programs for elderly residents. The cost of such services must be included in the 

operating budget if they are to be paid from project funds. Property managers must also provide 

a link to other resources in the community for services to the tenants whenever possible. The 

borrower and property manager must describe which community-based services will be 

supported at the property. Information packets must be available to new residents which include 

lists of resources and area employers.

3. Maintenance

• Plans for carrying out an effective maintenance, repair, and replacement program. 

Routine and non-routine maintenance procedures must be explained in the plan, including 

how tenants access the maintenance system and how work requests from tenants will be 

handled in a timely manner.

• Environmental review compliance. The plan must describe how the property manager 

will manage compliance with applicable Federal and State environmental laws and any 

conditions set forth in the Agency’s environmental review.

• Energy conservation measures and practices. The plan must describe any practices to 

be used to reduce energy and water consumption in common areas and by tenants. 

Education programs on conserving energy in their units must be included as part of such 

practices.

4. Personnel Management

• Personnel policies and staffing arrangements. The property manager must detail the 

management and maintenance staffing plan for both on-site and off-site staff, provide job 

descriptions and delegations of authority, and list emergency contacts in the management 

plan. The number, type, and compensation of the staff must be appropriate for the 

property.

• Training. Information about staff training on program requirements and on management 

procedures and techniques must be included in the plan.
HB-1-3565

Attachment 8-A

Page 4 of 4

5. Financial Management and Reporting

The plan must describe how the required reports to the lender will be prepared and 

submitted in a timely manner, including:

• Access to Books and Records. The borrower and property manager must agree to 

provide access to the project books and records for review by the Rural Development 

staff and the Office of Inspector General, the General Accounting Office, and the 

Department of Justice (or their representatives) upon appropriate notification [7 CFR 

3565.351(a)(7)].

• Accounting and Record keeping. The plan must include information on accounting and 

record keeping, including data systems and software used to address:

◊ Rent rolls, lease-up, and vacancy information;

◊ Scheduled maintenance;

◊ Reserve withdrawals;

◊ Accounts payable and receivable;

◊ Tenant income reporting;

◊ Monthly bank statements and reconciliations; and

◊ Procedures to maintain books in accordance with Generally Accepted Government 

Auditing Standards (GAGAS).

• Insurance and Fidelity Coverage. Insurance coverage must be provided in accordance 

with Agency standards. The type and level of property and fidelity insurance coverage 

must be specified in the plan. The plan must specifically highlight any unique insurance 

coverage appropriate for the property area.

______________________________________________________________________________
HB-1-3565

(02-23-12) PN 455

Attachment 8-B

Page 1 of 5

ATTACHMENT 8-B

THE HEARING PROCESS FOR TENANT GRIEVANCES AND APPEALS

FOR THE GUARANTEED RURAL RENTAL HOUSING PROGRAM

THE HEARING PROCESS

A. Request for a Hearing

If an informal meeting between the tenant or prospective tenant does not resolve 

a tenant grievance, a grievance hearing may be requested. The tenant or prospective 

tenant shall present their request within 10 days after the receipt of the summary of 

the informal meeting. The request must contain the following information:

• The reason for the grievance or contest of the borrower or management agent’s proposed 

action;

• The action or relief sought; and

• Any additional information pertinent to the report.

If the tenant or prospective tenant’s request for a hearing is not received within the 

prescribed time, the right to a hearing will be withdrawn and the borrower or management 

agent’s decision will become final. If the tenant or prospective tenant does not request a hearing 

within the required time frame, the borrower’s or management agent’s decision will become

final.

B. Selection of the Hearing Panel or Hearing Officer

The two parties shall elect a hearing officer. If a hearing officer cannot be agreed 

upon, the two parties shall choose members to serve on a hearing panel. The hearing panel 

will consist of three members. The tenant and the borrower or management agent must each 

elect one person to the panel. It is then the responsibility of the two chosen members to elect a 

third member to the panel. If within 30 days of the date a hearing is requested a hearing panel 

has not been formed, the borrower or management agent must inform the Agency. Within 10 

days of reviewing the facts, the Agency will appoint a sole hearing officer who cannot be a 

person considered by the tenant or borrower/management agent. In lieu of a hearing officer, the 

borrower or management agent may ask the Agency to approve a hearing panel. Once a hearing 

officer or panel is selected, the Agency will inform them in writing of their responsibilities for 

governing the hearing.

Revised (04-24-23) PN 581
HB-1-3565

Attachment 8-B

Page 2 of 5

Helpful information for selecting a hearing panel or hearing officer includes:

• The hearing officer cannot be a person selected solely by the tenant or 

management agent.

• The hearing panel members should be impartial.

To minimize time and the level of effort, a borrower or management agent may elect to have 

a standing panel to hear tenant grievances for each project managed. If a standing panel is 

chosen, the following process should be substituted for the process discussed above.

• A hearing panel consisting of three members including at least one tenant panelist and 

one panelist selected by the borrower or management agent.

• Tenants will nominate and vote for both a panel member and an alternate. Residents 

must be notified of the time, date, and location of the election.

• The borrower or management agent will select two members to serve on the standing 

panel. One will serve as the alternate.

• The third member of the panel must be selected jointly by the tenants and borrower or 

management agent.

• The chairperson shall be elected by the other two interested parties. Each party will only

have the opportunity to give one vote, even if two people were elected to serve on the 

panel.

• Each member should be asked to serve on the panel for a specified term. All members of 

the standing panel shall be willing to render their services without compensation.

C. Hearing Schedule

The hearing shall be scheduled 15 calendar days after the receipt of the tenant’s request 

for a hearing if there is a standing hearing panel. If a hearing officer or panel must be selected, a 

hearing will be scheduled within 15 calendar days after the selection or appointment of a hearing 

officer or hearing panel. It is the responsibility of the two parties to agree upon a place and 

time that is mutually convenient to hold the hearing. If the two parties cannot agree on a place 

and time, the hearing officer or hearing panel will select a time and place.
HB-1-3565

(02-23-12) PN 455

Attachment 8-B

Page 3 of 5

D. Examination of Records

At a reasonable time before the hearing, the borrower or management agent must allow the 

tenant the opportunity to examine all files that are going to be used during the hearing. 

Documents can be examined and copied at the tenant’s expense if:

• The document, record, or policy is one 

that will be used during the hearing

process; and

• The document, record, or policy is not 

subject to any laws or confidentiality 

agreements that prohibit reproductions.

E. Escrow Deposits

Tenants may establish escrow accounts whenever a grievance involves a rent increase not

authorized by the Agency or a failure to maintain the property in a decent and sanitary manner

provided the tenant’s rental payments are otherwise current. The tenant must make timely rent

payments to the account, but the borrower or management agent will not receive the payment 

until the grievance has been settled. When an escrow account is employed, tenants must adhere 

to the following list of rules:

• All rent payments must be made to the escrow account on time and continue until the 

grievance is resolved. Failure to do so will terminate the entire process, and all sums will 

be due immediately.

• The escrow account must be established in a Federally-insured institution or with a 

bonded independent agent.

• All receipts of deposit must be made available for examination by the borrower/agent.

REQUIREMENTS GOVERNING THE HEARING

The hearing is an informal proceeding at which evidence is presented to a hearing officer or 

hearing panel. The hearing must be designed to ensure that the rights of all parties involved are 

protected and must permit:

• Both parties to be represented by counsel or another person(s) chosen as their 

representative;

• The right of the tenant or prospective tenant to request a private hearing;

Documents That May Not Be Copied

1. Credit reports

2. Project budgets

3. Supervisory findings

Revised (04-24-23) PN 581
HB-1-3565

Attachment 8-B

Page 4 of 5

• The right of the tenant or prospective tenant to present oral and written evidence and 

arguments in support of their grievance or appeal and to refute the evidence of all 

witnesses on whose testimony or information the borrower or management agent 

relies; and

• The right of the borrower or management agent to present oral and written evidence 

and arguments in support of the decision, to refute evidence relied upon by the tenant 

or prospective tenant, and to question and cross-examine all witnesses in whose 

testimony or information the tenant or prospective tenant relies.

During the hearing, each party may present evidence to support their position. Evidence may 

be presented without regard to whether that evidence could be used in judicial proceedings. All 

participants of the hearing are to conduct themselves in an orderly manner. Participants that can 

not conduct themselves in an orderly manner will be excluded from the proceedings and may, as 

a result, receive an unfavorable decision.

If the tenant or prospective tenant fails to appear at a scheduled hearing, the 

hearing officer or hearing panel may choose to postpone the hearing for no more than 

five days or determine that the party has waived his or her right to a hearing. If the 

determination is made that the absent party has waived their rights, the hearing officer or hearing 

panel will make a decision on the grievance. All parties involved in the hearing shall be 

informed in writing of the hearing panel’s decision.

THE HEARING DECISION

The hearing officer or hearing panel has the authority to uphold or reverse a borrower or 

management agent’s decision. Hearing decisions must be issued in accordance with the 

following decisions.

• The hearing officer or hearing panel must prepare a written decision within 10 

calendar days after the hearing. 

• The written notice must include the reasons for the decision and can only be based 

upon the facts presented at the hearing.

• The hearing officer or hearing panel must send a copy of the decision to the tenant or 

prospective tenant, borrower, and the Agency. 

• The notice must state that the decision is not effective for 10 calendar days to allow 

time for the Agency’s review.

_____________________________________________________________________________
HB-1-3565

(02-23-12) PN 455

Attachment 8-B

Page 5 of 5

• The decision of the hearing officer or hearing panel will be binding upon the parties 

to the hearing unless the parties to the hearing are notified within 10 calendar days by 

the Agency that the decision is not in compliance with Agency regulations.

• Upon receipt of written notification from the hearing officer or hearing panel, the 

borrower or management agent and tenant must take the necessary action, or refrain 

from any actions, specified in the decision. 

Revised (04-24-23) PN 581