STATE AGENCIES' MANUAL
 

APPENDIX M
 
 

[INSTRUCTIONS TO STATE HOUSING AGENCIES FOR 

EXECUTION OF RELEASES FROM LURA REQUIREMENTS] 

Attached is a suggested form of Release from Land Use Restriction Agreement 

(the "Release") which is to be used in order to acknowledge the termination of the 

applicable LURA with respect to a particular (multifamily) property.1

 The most 

commonly used form of LURA provides, at Section 1. 1 (o), for the end of the 'Term" of 

the LURA upon the earliest of. 

1. Involuntary loss of the Property caused by seizure, condemnation, 

foreclosure or deed-in-lieu of foreclosure; 

2. Total involuntary loss as a result of fire or other casualty; 

3, Obsolescence of the Property, making it unusable for housing, with no 

financially feasible option of rehabilitation; 

4. The later of 40 years from the date of the LURA or 50 years from the date 

the Property was initially occupied as multifamily housing. 

Upon the request of a property owner, the Agency may determine which of the 

cited circumstances has occurred and execute the Release accordingly. The Release 

should set forth the particular circumstance giving rise to the end of the Term. 

Note that the LURA provides that, in the event of loss of the Property by 

foreclosure or deed-in-lieu, the low-income occupancy requirements are revived if a party 

which owned the Property at the time of, or immediately prior to, foreclosure acquires an 

ownership interest in it at any time thereafter. This provision, which may be of concern to 

lenders and successor owners as a cloud upon the title, is intended to prevent foreclosures 

which are carried out solely in order to enable the owner to escape the low- income 

occupancy requirements while retaining effective use of the Property. The provision 

should not be applied, and revival of the restriction should not be sought, merely in 

circumstances in which a party, following a bona fide foreclosure, subsequently 

reacquires an interest in a Property on a reasonable commercial basis. Your Agency 

should feel free to share this guidance and interpretation with concerned parties. 

1

 If a particular Agency finds the proposed form of Release unsuitable for use in its State, 

for whatever reason, that Agency should use whatever format it finds appropriate. Please 

advise RTC of any such incompatibility which you believe to exist. 
____________________________ 

RELEASE FROM LAND USE RESTRICTION AGREEMENT 

THIS RELEASE FROM LAND USE RESTRICTION AGREEMENT (this 

"Release") is executed this ___ day of ________________, ____, by ­

_____________________________ (the "Agency") with respect to the obligations of ­

_____________________________ (the "Owner") as the owner of a rental housing 

project commonly known as _________________________ (the "Property") under a 

Land Use Restriction Agreement (the "Agreement") dated as of __________,199_, by 

and between the Owner or a predecessor in title to the Property and the Resolution Trust 

Corporation ('RTC') (the "Agreement"). 

WHEREAS, the Agreement was entered into by the Owner or a predecessor in 

title and RTC in order to satisfy certain requirements of Section 21(A)(c) of the Federal 

Home Loan Bank (12 U.S.C. §1441A(c)), as it existed as of the date of execution of the 

Agreement, with respect to occupancy of the Property by Lower Income Families or Very 

Low Income Families (as such terms are defined in the Agreement) and the rents which 

may be charged to such families; and 

WHEREAS, the Agency is the successor to or assignee of RTC with respect to 

RTC's powers and responsibilities under the Agreement; and 

WHEREAS, the Agreement, at Section 1.1U, provides for its termination upon 

the occurrence of certain events therein set forth [, subject to revival in certain instances 

as therein provided); and 

WHEREAS, the Agency has determined that there has been [foreclosure] [total 

involuntary loss of the Property for residential housing purposes] [OR STATE OTHER 

JUSTIRCATION], such event leading to the end of the "Term" of the Agreement, as such 

term is defined in the Agreement. 

NOW, THEREFORE, in consideration of the premises and in pursuit of its 

responsibilities and authorities pursuant to Section [4.7] of the Agreement, the Agency 

hereby acknowledges the end of the Term of the Agreement and the release of the 

Property from the requirements of the Agreement in accordance with the terms thereof. 

IN WITNESS THEREOF, the undersigned has hereunto affixed its signature and 

seal as of the date hereof. 

[AGENCY] 

By: ________________________ 

Title: _____________________