CHAPTER 8 

COMPLIANCE PROCEDURES FOR 

CONDOMINIUM BULK PURCHASES 

8.1	 OVERVIEW 

This chapter applies only to owners who have 

purchased condominium units in a bulk sale. 

The chapter outlines the requirements governing the 

rental of such units, describes the provisions governing 

sales of these units to individual homebuyers, and reviews 

the administrative fees applicable to these purchases. 

8.2	 RENTAL OF BULK SALE CONDOMINIUM UNITS 

Condominium units sold in bulk may be rented as 

multifamily housing, either permanently or during an 

interim period until sold to Low Income buyers under the 

terms of the LURA. During such rental uses, owners 

essentially must treat the collection of condominium units 

in a bulk purchase as they would units in a multifamily 

rental property. When such units are rented or held for 

future sale, the units are subject to the occupancy, rent 

and lease provisions of the first six chapters of this 

manual. 

Note: Many condominium bulk sales LURAs only have LI 

Set-Asides and not separate VLI Set-Asides. In such 

cases, the properties are not be subject to VLI Set-Aside 

requirements when renting. 

8.3	 SALE OF CONDOMINIUMS TO INDIVIDUAL 

HOMEBUYERS 

FDIC anticipates that owners eventually will sell the 

condominium units in these purchases to individual 

homebuyers. The LURA for bulk condominium 

purchases establishes a specific number of units in the 

purchase that must be set-aside for Low Income 

households, and when units are sold, the same number 

must go to Low Income homebuyers. 

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All of the units in a bulk condominium sale are 

encumbered by the Bulk LURA and must be released by 

the monitoring agency from that LURA prior to sale. 

Even unrestricted units not needed to meet the Set-Aside 

must be approved for release by the monitoring agency, 

which must determine that there are sufficient units 

remaining after release to meet Set-Aside obligations. 

It is the owner’s responsibility to notify the monitoring 

agency of any pending sales and obtain approvals as 

explained below. Sales without legal releases from the 

monitoring agency are subject to legal challenge. 

When selling condominium units to individual 

homebuyers, a number of conditions apply. 

¤	 Low Income (LI) Sales Requirement -- Owners 

must reserve enough units for sale to LI (and VLI, as 

applicable) buyers to meet the Set-Aside in the 

LURA.1 Units not needed to meet the Total Set-Aside 

may be sold to buyers of any income, although owners 

are encouraged to sell units to LI buyers before selling 

the remaining units in the purchase. 

¤	 Homebuyer Income Certification -- For any 

purchasers of units reserved to meet the Set-Aside, 

owners must obtain a written income certification from 

LI buyers documenting that their annual (gross) 

income as defined in Chapter 4 is within the applicable 

AHP income limit. The buyer's income must be 

verified by the owner using the procedures in Section 

4.5. This verification is good for 90 days. Delays in 

completion of the sale may require updated HICs. 

Appendix I contains an FDIC-approved Homebuyer 

Income Certification (HIC) form and instructions. 

¤	 Recapture LURA for LI Sales -- For any units 

designated to meet the Set-Aside, owners must 

require LI (and VLI, if applicable) buyers to execute a 

LURA establishing the condition that the purchaser will 

retain ownership of the unit for a period of at least 12 

months after the date of sale. The LURA also 

includes a provision allowing FDIC to recapture the 

profits from any resale of the unit by the homebuyer 

1
 If the LURA for a bulk purchase also includes a VLI Set-Aside, unit sales also must include a 

sufficient number of VLI buyers or reserved units to meet this Set-Aside, and all conditions specified in this Chapter 

for LI sales also apply to the VLI sales. 

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before the end of this 12-month period. A copy of this 

Recapture LURA is included in Appendix H. 

¤	 Price Not Restricted for LI Sales There is no ceiling 

restricting the price an owner can charge a LI buyer for 

a unit, or establishing affordability standards. The 

unit need only be purchased by an income eligible 

buyer. It is recommended that owners take into 

account the amount which a LI buyer can realistically 

afford, and that the lender(s) will assess affordability in 

the course of underwriting. 

¤	 Notice to Agency of Unit Sales -- Owners must 

notify the monitoring agency of all pending unit sales, 

provide a copy of the sales contract for each unit to be 

sold (and other documentation as noted below), and 

submit a listing of the remaining units held by the 

owner to indicate those units that are QUs or held 

available for rental by LI (and VLI, if applicable) 

tenants. 

¤	 Release from Condominium Bulk Sale LURA -- For 

each restricted unit sold, the owner should request 

that the agency execute a release for that unit from 

the provisions of the Condominium Bulk Sale LURA. 

¤	 Pay Processing Fee to Agency -- Owners must pay 

the monitoring agency a fee specified by the agency 

to process requests for AHP Recapture LURAs and 

release unrestricted units from the Condominium Bulk 

Sale LURA. 

Resale of condominium units must comply with all 

applicable state and local statutes, in addition to the 

requirements described in this chapter. 

8.4	 REQUIRED SUBMISSIONS PRIOR TO THE SALE 

OF INDIVIDUAL UNITS 

Agencies will monitor owner compliance with the LI resale 

provisions of the Condominium Bulk Purchase LURA, as 

well as the affordability requirements governing the rental 

of these units. This assessment will occur at the time of 

each sale, as well as in the periodic monitoring described 

in Chapter 6. This section addresses the submission 

requirements at the time of sale of a unit and the seller is 

requesting a release from the Bulk LURA. 

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A. Sale of Low Income Units 

When an owner requests the monitoring agency to 

release a unit for an anticipated sale of a unit to a LI (or 

VLI) household, the owner must provide the agency with: 

�	 a completed Homebuyer Income Certification (HIC) 

establishing that the buyer is an income eligible 

household; 

�	 a copy of the signed sales contract with the purchaser; 

�	 a completed AHP Recapture LURA, signed by the 

owner and the buyer; 

�	 payment of any processing fee required by the 

agency; and 

�	 any other documentation required by the monitoring 

agency. 

These are necessary to establish that the unit will be sold 

to an income eligible buyer according to the Bulk LURA. 

GOOD PRACTICE: Owners should submit the four 

items above to their monitoring agency for review no 

later than 14 days prior to final closing. 

If the items has been properly submitted and the 

proposed buyer meets the applicable LI limit, the agency 

will secure execution of the document by the FDIC, and 

will forward the executed document to the closing agent 

for the sale. The upon completion of the sale, as noted in 

C. below, the Bulk Sales LURA will be amended to 

remove the approved unit and reduce the Set-Aside to 

reflect the QU sale. 

Properties sold to individual LI buyers will not be released 

from the requirements of the Condominium Bulk Sale 

LURA unless the AHP Recapture LURA has been 

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executed by the monitoring agency (or FDIC) and properly 

recorded at final closing. 

B. Sales of Unrestricted Units 

Before units can be sold to buyers who are not LI or VLI 

purchasers, owners must have a sufficient number of 

units to satisfy the occupancy requirements for the 

purchase. Owners can sell unrestricted units to buyers of 

any income as long as there are enough QUs and vacant 

rental units to meet the Total Set-Aside. 

When selling unrestricted units, owners must submit a list 

of the remaining units under their control at the time they 

propose a sale, and request a release from the 

Condominium Bulk Sale LURA for that unit. If the owner 

has the necessary units to meet the property's occupancy 

requirements and has paid the processing fee to the state 

agency, the agency will prepare a release from the 

Condominium Bulk Sales LURA for the units to be sold. 

Removal of the unit from the Bulk Sales LURA will not 

reduce the Set-Aside requirement. 

Precondition For Sale of Unrestricted Units

 Number + Number of ‡ Total 

of QUs Vacant Units SetAside 

If the owner is out of compliance with the occupancy 

requirements, the agency may not be compelled to 

execute a release until the owners restores the property to 

compliance. 

C. Changes in the Rental Set-Aside 

Units sold to qualified LI (and VLI) buyers reduce the 

number of units that must be held available for rental to 

Low Income households. When the agency receives a 

copy of the recorded Recapture LURA from the closing 

agent, the agency will amend the LURA to reduce the 

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required number of Low Income rental or sales units by 

the number of units sold to approved LI buyers. 

8.5 ADMINISTRATIVE FEES 

A. Monitoring Fees 

The annual monitoring fee is determined by the same 

method used for multifamily rental properties, and is 

based on the number of QUs required by the LURA. 

Likewise, the additional administrative fee for noncompliance is set in the same way. 

As the Set-Aside is reduced through the sale of units as 

noted above, the fee is also reduced for future years. 

B. Processing Fee for Release from LURA 

Agencies may also charge owners a reasonable fee for 

processing Recapture LURAs and requests to release 

unrestricted units from the provisions of the Condominium 

Bulk Sale LURA. Such a fee must be paid to the agency 

when the owner gives notice of a proposed sale and 

submits a Recapture LURA or request for a release. 

Agencies will advise owners of the applicable fee for 

processing release requests. 

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