CHAPTER 2 

AHP MULTIFAMILY PROPERTY REQUIREMENTS 

Upon acquiring an AHP property, purchasers agree to follow a set of 

requirements designed to ensure that the property provides affordable housing 

for Low Income households. The owner's obligation to meet these 

requirements is formally established when the LURA is signed at closing. 

The primary role of state monitoring agencies is to check a property's 

occupancy status periodically to assess whether the owner is complying with the 

program's requirements. If an owner fails to follow the required procedures, the 

agency must take enforcement actions to compel the owner to bring the 

property into compliance. 

To act as effective monitors, state agencies must understand the 

requirements that apply to AHP property owners. This chapter describes these 

requirements, which fall into eight basic areas: 

0 Occupancy Requirements 

0 Tenant Eligibility 

0 Maximum Rents 

0 Dwelling Lease Requirements 

0 Leasing Procedures for Properties with Insufficient Qualifying Units 

0 Record-Keeping and Reporting Requirements 

0 Monitoring Fees 

0 Resale Requirements 

The first five areas consist of requirements designed to make units available to 

Low Income households at affordable rents. The last three areas reflect 

requirements to help state agencies monitor owner compliance in providing 

affordable units to eligible families. 

2.1 OCCUPANCY REQUIREMENTS 

The LURA requires that an owner lease a specified portion of the units in 

the property to Low Income tenants. The owner must maintain the required 

number of units over the life of the LURA. 

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A. Low Income Unit Requirements 

An owner must meet two specific Low Income occupancy requirements: 

¤ a Total Set-Aside; and
 

¤ a Very Low Income (VLI) Set-Aside .
 

Units that qualify for the VLI Set-Aside also count toward the Total Set-Aside 

obligation. 

Total Set-Aside 

The Total Set-Aside specifies the portion of the total units in the property 

that must be designated for occupancy by Low Income tenants. To qualify as a 

Low Income tenant in most areas, a household's annual gross income must not 

exceed 80 percent of the median income for that area after adjusting for family 

size. Section 2.2 discusses income eligibility and how annual income for a 

household is defined in greater detail. 

Generally, the Total Set-Aside is set at 35 percent of the total units in the 

property. However, higher set-asides were negotiated as part of some AHP 

sales, and the number of units that must be kept available for Low Income 

families can range from 35 percent up to 100 percent of the units.1 The Total 

Set-Aside established for a given property can be found in Section 2.2 (a) of its 

LURA. 

Very Low Income (VLI) Set-Aside 

The VLI Set-Aside establishes the share of the total units in a property 

that the owner must designate for occupancy by Very Low Income tenants. In 

most areas, a Very Low Income household must have an annual income equal 

to or less than 50 percent of the area median income after adjusting for family 

size. 

The VLI Set-Aside established for most properties requires that owners 

rent 20 percent of the total units in the property to Very Low Income tenants. 2 

Using the example of an owner who purchased a 100-unit property, a 20 

percent VLI Set-Aside would require the owner to rent at least 20 units to Very 

1 For bulk purchases of AHP properties, the 35 percent minimum Total Set-Aside applies to the entire 

purchase. Individual properties within the purchase may have a Total Set-Aside less than 35 percent as long as the 

set-asides established for the other properties bring the purchase up to the 35 percent minimum. 

2 In general, the required number of VLI units represents roughly 60 percent of the Total Set-Aside because 

that was the proportion established by the final rule for the program. However, in some cases negotiated 

requirements resulted in VLI Set-Asides that make up a larger or smaller share of the total Low Income units. 

These cases occurred primarily in bulk purchases where the owners are aggregating units among certain properties 

within the purchase. While the VLI units for the entire purchase represent roughly three-fifths of the Low Income 

units, the share of VLI-QUs for a given property in the purchase may vary. 

AHP Compliance Monitoring Manual 2-2 09/28/00 
 

 

Low Income households. In cases where higher Total Set-Asides were 

negotiated, the VLI Set-Aside may have been raised as well. The VLI SetAside for a specific property can be found in the same paragraph of the LURA 

as the Total Set-Aside. 

For purposes of this manual, all examples provided will use the minimum 

Program standards of 35 percent Total Set-Aside and 20 percent VLI Set-Aside. 

B. Designating Qualifying Units (QUs) 

Owners must designate the units within their property that will fulfill the 

two set-asides. As shown in Exhibit 2-1, the units occupied by Very Low 

Income tenants that the owner counts toward meeting the VLI Set-Aside are 

called Very Low Income Qualifying Units (VLI-QUs). When these units are 

added to the units occupied by Low Income residents and designated as Low 

Income Qualifying Units (LI-QUs), the total number of QUs should equal the 

number of units required by the Total Set-Aside.3 

Using the example mentioned above, an owner who purchased a 100­

unit property with a standard Total Set-Aside of 35 percent and VLI Set-Aside of 

20 percent would need to designate 20 VLI-QUs and 15 LI-QUs for a total of 35 

QUs. 

There are two principal methods owners can use to designate QUs. 

They can: 

1.	 identify and certify existing tenants who are income eligible; and/or 

2.	 reserve and lease a sufficient number of vacant units to income 

eligible tenants. 

Chapter 3 of the AHP Owner's Compliance Manual describes each method in 

greater detail. 

C. Vacated QUs 

When a tenant moves out of a QU, the unit retains the same QU 

designation (VLI or LI) until the unit has been occupied by a new tenant for 31 

days. After this time, the unit may remain a QU only if the new occupant 

qualifies as a Low or Very Low Income tenant. For example, if the tenant who 

moves into a vacated LI-QU has a household income that exceeds 80 percent 

of the area median income, the unit may no longer be designated as a QU after 

31 days and cannot be counted toward the property's Total Set-Aside. 

 Low and Very Low Income families may occupy unrestricted units in the property. A unit with a Low Income 

tenant only becomes a Qualifying Unit if the owner takes the steps necessary to designate it as one. 

AHP Compliance Monitoring Manual	 2-3 09/28/00 

3
The type of QU designation may also change when a new tenant moves 

into a vacated QU. When the tenant of a VLI-QU is replaced by a Low Income 

resident who is not a VLI household, the unit's designation must be changed to 

a LI-QU if the owner continues to count the unit as a QU. (Owners should be 

cautioned to make certain they do not fall below the required VLI-QUs in such a 

situation.) Likewise, if a LI-QU is reoccupied by a Very Low Income resident 

and the unit remains a QU, the owner must change the unit's designation to a 

VLI-QU. 

D. Shifting the QU Designation 

The QU designation is not permanently tied to a given unit. However, 

when an owner designates a unit as a QU, that unit must remain a QU as long 

as the tenant who occupied the unit remains eligible and continues to reside 

there. Section 2.2.G discusses the requirements for determining a tenant's 

continuing eligibility. 

For example, if Unit 201 was designated as a LI-QU based on the 

income of Household X, the owner should not remove the QU designation from 

Unit 201 until Household X is determined to be over-income or moves out and 

the unit is replaced. 

An exception to this requirement is made when the tenant of a QU 

moves to another unit within the property. In this case, as long as the tenant is 

eligible at the time of the unit change, the QU designation must be shifted to the 

new unit occupied by the tenant. Using the example above, if Household X is 

income eligible and moves to Unit 101, the LI-QU designation shifts to Unit 101 

and the owner may rent Unit 201 to any tenant. 

E. Treatment of In-Place Tenants 

One of the most important provisions of AHP is the protection for inplace tenants . The procedures for reaching the occupancy requirements for a 

property are designed to allow owners to lease QUs as existing units become 

available. Under no circumstances should an owner terminate the 

occupancy of any tenant in-place at the time the LURA became effective 

solely for the purpose of achieving compliance with the property's 

occupancy requirements. In-place tenants enjoy this protection for as long as 

they reside in the property. 

2.2 TENANT ELIGIBILITY AND LEASE REQUIREMENTS 

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Before a unit can be designated as a QU, the owner must establish that 

the tenant is a Low or Very Low Income household. To determine a tenant's 

status (Low Income, Very Low Income, or other), the owner must calculate and 

compare the household's annual income to the AHP income eligibility limits for 

Low and Very Low Income households, which are published annually by HUD 

and FDIC. 

To help assure that a tenant's eligibility is established properly, owners 

must verify the household's income and have the tenant certify its accuracy. 

Because income and household composition may change over time, the owner 

must re-examine the eligibility of tenants in QUs at least once a year. 

A. Determine the AHP Income Limits 

FDIC establishes the income limits owners must use in determining 

whether a household qualifies as a "Low Income" (LI) or "Very Low Income" 

(VLI) tenant. AHP relies on HUD's definitions of "Low Income" and "Very Low 

Income" respectively as the basis for these limits. The two income limits are 

determined as follows: 

HUD Definitions of Income 

Low Income Limit:	 Generally 80 percent of the 

area median income 

Very Low Inc Limit: Generally 50 percent of area 

median income 

For most areas of the country, low-income and Very Low Income are 

calculated as 80 percent and 50 percent of area median income with an 

adjustment for family size. However, there are some areas of particularly high 

or low median income where HUD adjusts the calculations of low- and Very Low 

Income. AHP uses only HUD's published income limits. Census Bureau and 

other definitions of median income are not appropriate surrogates for HUD's 

published numbers. 

The actual income limits are calculated by HUD and differ according to 

household size. HUD publishes the income limits by household size for all 

areas of the country on an annual basis. The current limits can be obtained 

from the HUD area offices. The table below shows how the 1992 income limits 

for Hometown, USA vary by household size. 

AHP Compliance Monitoring Manual	 2-5 09/28/00 
SAMPLE INCOME LIMITS 

Hometown, USA - 1992 

Household Size VLI Limit LI Limit 

1 person $10,700 $17,150 

2 persons $12,250 $19,600 

3 persons $13,750 $22,050 

4 persons $15,300 $24,500 

5 persons $16,500 $26,450 

6 persons $17,750 $28,400 

7 persons $18,950 $30,350 

8 persons $20,020 $32,300 

When determining eligibility, owners must use the income limits in effect 

on the date the tenant signs the lease for that unit. 

Monitoring agencies should distribute copies of the new income limits to 

all owners upon receipt from FDIC, and verify as part of monitoring that owners 

are using the current limits. 

B. Determine Household Size 

Because income limits vary by size of household, owners must establish 

the number of people in a tenant's household to determine whether that tenant 

is income eligible. FDIC relies on the method used by HUD to establish family 

size under the Section 8 program as the basis for determining household size 

under AHP. Exhibit 2.2 shows who should be counted when determining 

household size. 

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EXHIBIT 2-2
 

ESTABLISHING HOUSEHOLD SIZE
 

Count These Persons 

Do Not Count 

These 

Persons 

0 

0 

0 

Year-round occupants 

Absent children in cases where the 

parent is pursuing legal custody of the 

child 

Members temporarily away, such as 

students at school, children placed in 

foster care, Armed Forces personnel 

on temporary assignment, etc. 

0 Live-in aides, 

attendants, or 

nurses 

0 Absent children 

under 18 

0 Unborn children 

Like many federal housing programs, AHP does not specify who may or 

may not be considered a household.4 This determination is left to owners. For 

example, an owner may consider any group of persons who choose to live 

together as a household. 

C. Determine Tenant Eligibility 

To determine whether a tenant is income eligible, an owner must 

compare the tenant's anticipated annual (gross) income for the next 12 months 

to the income limits for the appropriate household size. The program uses the 

definition of annual income as defined in Section 3 (b)(4) of the United States 

Housing Act of 1937, which is used by HUD to determine annual (gross) income 

of families and individuals receiving housing assistance through the Section 8 

program. 

Under this definition, the eligible income from all adult members (over 

18) of the household must be counted when determining the annual income for 

a household. Annual income includes not only income from employment and 

benefits, but also income from assets. There are very specific requirements 

regarding the sources of income that must be included and excluded when 

determining a tenant's annual income.5 The "Guide for Determining Annual 

4 The AHP allows full- and part-time students to be recognized as households and eligible tenants as long as 

their income, as determined under the guidelines in Appendix E, falls within the program's income limits. 

5

 As HUD publishes updates to these requirements, monitoring agencies should inform owners of the changes. 

AHP Compliance Monitoring Manual 2-7 09/28/00 
Income," which is included in Appendix E of this manual, outlines these 

requirements and explains how to calculate annual income based on a 

household's current income and assets. 

Any changes by HUD to the definition of annual income for the Section 8 

Program may be incorporated automatically into AHP by the State Monitoring 

Agency to maintain consistency across programs, with the exception of student 

household income revisions, which may be changed only through direct 

issuance by the FDIC. As HUD publishes updates to these requirements, 

monitoring agencies should inform owners of the changes. 

FDIC recommends that owners collect the information needed to 

calculate annual income at the time of application using a rental application form 

comparable to the sample application included in Appendix C of this manual. 

The Owner's Compliance Manual provides more detailed guidance on the steps 

owners need to follow when determining a tenant's annual income. 

D. Execute the Tenant Release and Consent Form 

The LURA specifies that owners require tenants to provide all 

documentation determined to be necessary to evaluate a household's eligibility 

as a tenant of a QU, or to verify information received from other sources. 

For each QU, owners must require the household head and other 

appropriate members of the household to execute an FDIC/Monitoring Agency 

approved Release and Consent Form authorizing third parties to furnish or 

release information necessary to evaluate the household's eligibility, including: 

a) depository institutions; 

b) private sources of income; and 

c) any federal, state, or local agency. 

An FDIC-approved Release and Consent Form is included in Appendix D. 

Having a tenant sign this form enables an owner to check that the 

income information provided by tenant is accurate. When seeking Qualified 

Tenants, owners should have all prospective tenants who appear to be eligible 

sign this form. 

Use or disclosure of information obtained from a household or from 

another source pursuant to the Release and Consent form must be limited to 

purposes directly connected with determining tenant eligibility to occupy a QU. 

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E. Verify Tenant Income 

If the anticipated annual income of a prospective or existing tenant 

appears to fall within the appropriate income limits, the next step is to verify that 

the income information provided by the tenant is accurate. 

The verification process is a very important step in establishing a 

tenant's eligibility. To assure that the steps for verifying tenant income provide 

reliable results, the verification procedures for AHP properties follow methods 

quite similar to those used in other affordable housing programs, such as tax 

credit, tax-exempt bond, and HUD-assisted housing programs. 

Methods of Verification 

There are three basic methods of verification: 

•	 Third-party written verifications are preferred. The owner/manager 

must attempt to use this method wherever feasible. Tenants who are 

self-employed are one example where this method is not feasible. 

•	 First-hand documentation should be used in cases where thirdparty verification is not feasible. Examples of acceptable forms of 

firsthand documentation include: pay check stubs, W-2 forms, 

certified tax returns, and bank statements. 

•	 Third-party oral verification is the least preferred method, but may 

be used when there is no response to the owners request for written 

verification. Oral verifications also may be used to update written 

verifications. 

The Owner's Compliance Manual describes the procedures owners must follow 

when using each of these methods. 

Documenting Income Verifications 

All verifications must be properly documented. Sample third party 

written income verification forms are included in Appendix F of this document. 

When a tenant provides firsthand documentation, staff receiving the 

materials must note the date they were provided and who supplied them. 

When obtaining an oral verification, owners or managers must record all 

the information provided, as well as the name, title and phone number of the 

contact. Staff conducting an oral verification should sign and date the form 

containing the information. A sample format for documenting a telephone 

verification is also included in Appendix F. 

Exhibit 2-3 shows the acceptable forms of documentation for verifying 

the principal sources of income. 

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Timing of Income Verifications 

Income verifications remain valid for 90 days from the date they are 

completed. An oral update may be used to extend the life of a verification for 

30 days up to a maximum of 120 days from the date of the original. After this 

time, a new verification must be processed. 

Owners must verify the income of each household that will occupy a QU 

and the verification must be valid at the time the Tenant Income Certification is 

completed. 

F. Execute Tenant Income Certifications 

Owners must have Qualifying Tenants sign a written certification that the 

information they provided regarding their income and household composition is 

complete and accurate. This certification must be completed before a unit can 

be designated as a QU. For new tenants, the certification should be 

completed at the time the tenant signs the lease. 

AHP Compliance Monitoring Manual 2-10 09/28/00 
EXHIBIT 2-3
 

ACCEPTABLE FORMS OF INCOME VERIFICATION
 

SOURCE OF 

INCOME 

THIRD-PARTY 

FIRST-HAND 

Written Oral DOCUMENTATION

Employment Verification Forms or letter 

from employer 

Telephone/in-person contact 

with employer, specifying 

amount to be paid, by pay 

period, including anticipated 

raises, bonuses, etc. 

W-2 forms or tax returns if 

other sources unavailable and 

employee has had same 

employer or pay can be 

forecasted accurately. 

Self-Employment, Tips, etc. N/A N/A Certified Form 1040/1040A 

showing amount earned and 

employment period 

Income Maintenance 

Payments, Benefits, Income 

Other than Earnings 

(Incl.Welfare,Social Security, 

SSI, Unemployment, etc.) 

Verification Forms or letter 

from source 

Telephone or in-person 

contact with source, specifying 

amount of payments, 

deductions, if any (Medicare 

premiums, etc.) 

Recent check with date, 

amount, and period involved, 

and deductions, if any 

(Medicare premiums, etc.) 

Alimony or child support N/A N/A A copy of a separation or 

settlement agreement or 

divorce decree stating the 

amount and type of payment 

schedule 

Recurring contributions and 

gifts 

Notarized statement/affidavit 

signed by donor, or a letter 

from administering bank, 

attorney, or trustee 

N/A N/A 

Scholarships, Grants, and 

Education Benefits 

Verification Form or letter from 

source 

Telephone or in-person 

contact with source 

Copies of latest benefit checks 

if amount is not expected to 

change over the next 12 

months 

Net Business Income N/A N/A Certified Form 1040, 

Schedules C, E, or F, or 

audited financial statements, 

or a loan application with 

preceding 12 months 

business income 

Dividends or Interest Income, 

including Savings Accounts 

Verification Form or letter from 

source 

Telephone or in-person 

contact with source (but banks 

are not likely to provide this 

orally) 

Copies of current statements 

or Form 1099 from the 

institution, if amount is not 

expected to change over the 

next 12 months 

Interest from Sale of Real 

Property 

Verification Form or letter from 

an account, real estate agent, 

or other source including 

amortization table 

Telephone or in-person 

contact with an accountant, 

real estate agent, or other 

source including amortization 

table 

Copy of the amortization 

schedule, with information to 

determine the amount of 

interest to be earned during 

the next 12 months 

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In preparing a certification, owners must use the Tenant Income 

Certification (TIC) form included in Appendix G to this manual or a comparable 

form approved by the monitoring agency. Part I of the form provides a place to 

record all necessary information about household composition and tenant 

income. The owner or manager should complete this portion of the form with 

verified income figures for the tenant. 

The tenant must sign Part II of the form certifying the accuracy of the 

information shown in Part I. The owner or manager completes and signs Part III 

indicating the appropriate designation (Low Income or Very Low Income) and 

establishing that the income shown in Part I does not exceed the applicable 

income limit for a household of that type and size. 

The TIC must be effective on the date the tenant signs the lease for a 

QU. 

G. Re-Examine Tenant Incomes 

At least annually, owners need to re-examine the eligibility of tenants 

living in QUs. During each re-examination, owners must gather and verify 

information on changes in household composition or the annual income of the 

tenant. 

Conducting Re-Examinations 

In conducting a re-examination, owners must have the tenant of each 

QU report any changes in the household size or annual income. If no changes 

have taken place, the tenant must still re-certify the household's income. 

In assessing the ongoing eligibility of tenants, the applicable VLI limit is 

used to determine eligibility of VLI tenants. However, the income limit used to 

determine eligibility as a LI tenant is set at 140 percent of the applicable LI limit.

 Chapter 4 of the AHP Owner's Compliance Manual describes how to calculate 

the recertification limit. 

When conducting a re-examination, owners must use the TIC form (see 

Appendix G) and mark the recertification box, or use a comparable form that 

contains the necessary information and has been approved by the monitoring 

agency. All income information entered onto the form must be verified in 

advance, even if no change occurred. The requirements for verifying initial 

certifications described above also apply when verifying tenant income for 

recertifications. 

The re-examination must be completed no later than the recertification 

date for the unit. The anniversary of the effective date of the tenant's lease 

may be used as the standard recertification date. An owner may use a 

different recertification date as long as it occurs within 12 months of the last 

recertification. 

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Changes in QU Status 

Once the re-examination is completed, owners must assess whether the 

status of the QU has changed. For example, if the recertified income of a 

tenant living in a VLI-QU now exceeds the VLI limit, the status of the QU has 

changed. When an owner re-examines tenant eligibility there are three ways 

the status of a QU may change: 

POSSIBLE CHANGES IN QU STATUS 

VLI/LI-Qualifying Unit � Over-Income Qualifying Unit
 

VLI-Qualifying Unit � LI-Qualifying Unit
 

LI-Qualifying Unit � VLI-Qualifying Unit
 

¤	 VLI/LI-QU Becomes Over-Income Unit. If the recertified income of a 

tenant in a QU (VLI or LI) exceeds 140 percent of the applicable LI limit, the 

owner must use the special over-income Qualifying Unit (OI-QU) 

designation until the unit is properly replaced with a VLI- or LI-QU (see 

Section 2.5-B). 

¤	 VLI-QU Becomes LI-QU. If the recertified income of a tenant in a 

VLI-QU exceeds the applicable VLI limit but remains within the LI limit 

for QU tenants (140 percent of LI limit), the owner must redesignate 

the unit as a LI-QU. 

¤	 LI-QU Becomes VLI-QU. If the recertified income of a tenant in a 

LI-QU falls within the VLI limit, the owner must redesignate the unit 

as a VLI-QU. 

If the re-examination reveals that a tenant's status has changed, the 

owner or manager must mark the designation (Very Low Income, Low Income, 

or over-income) that corresponds to this new status when completing Part III of 

the TIC form. 

2.3 MAXIMUM RENTS 

To assure that units made available to Low and Very Low Income 

tenants are affordable to these households, the LURA establishes the maximum 

rents that owners can charge for these units. The rent limits are set at levels 

affordable to Low and Very Low Income households based on the median 

income for the area in which the property is located. Owners may charge rents 

up to the limit that applies to a QU. 

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A. Rent Limits for QUs 

The rent limits for LI and VLI-QUs are determined as follows: 

RENT LIMITS FOR QUs 

LI Rent Limit. Rents for LI-QUs must not exceed 

30 percent of the adjusted income [based on the 

adjustments set forth in the LURA] of a family 

whose income equals 65 percent of the area 

median with adjustment for family size. 

VLI Rent Limit. Rents for VLI-QUs must not 

exceed 30 percent of the adjusted income [based 

on the adjustments set forth in the LURA] of a 

family whose income equals 50 percent of the area 

median with adjustment for family size. 

NOTE: The rent limits apply even if tenants are receiving Section 8 

Existing Housing payments or other forms of rental assistance. The 

share of the unit rent paid by tenants receiving rental assistance (Section 

8 or some other program) will vary depending on the level of subsidy 

provided to the tenant. 

The rents limits are set at 30 percent of the income of a family at the 

specified level (50 or 65 percent of area median) with an adjustment for family 

size. Rent limits vary by unit size. The table below shows how the 1992 rent 

limits for Hometown, USA differ by unit size. 

SAMPLE RENT LIMITS 

Hometown, USA - 1992 

Unit Size VLI Rent Limit LI Rent Limit 

Efficiency $248 $328 

1 - Bedroom $286 $378 

2 - Bedroom $322 $426 

3 - Bedroom $374 $499 

4 - Bedroom $435 $577 

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The method used by HUD and FDIC to establish the rent limits that apply 

to AHP properties is set forth in Exhibit B of the LURA and is the same for all 

properties. The method relies on the most recent HUD figures for household 

income at 65 percent and 50 percent of the area median income, and makes 

assumptions about the number of persons who will occupy a unit of a given 

size. All calculations necessary to determine rent limits have already been 

performed by HUD and FDIC. 

The monitoring agency does not need to do any further calculations. 

However, the agency must forward to owners the rent limits that apply to their 

property. 

Every year, monitoring agencies must distribute the updated rent limits. 

FDIC or its successor will assist agencies by providing them with the updated 

income data necessary to notify all property owners and managers of the new 

rent limits within 30 days of its release. 

B. Utility Costs 

Utilities are not taken into account when determining the rent that may 

be charged for a unit. The rent limits only place a cap on the amount paid by 

the tenant for shelter. Unlike HUD-assisted housing programs, tenant-paid 

utilities do not reduce the maximum rent an owner can charge under AHP. 

In accordance with local laws, owners may charge tenants of QUs for 

owner-paid utility costs. The types of utility costs that may be passed on to 

tenants will vary across localities. These costs may only be passed on to all 

tenants (not just the QUs) through assessments separate from the rent 

established for the unit, and these charges must be set forth in the dwelling 

lease. 

When owners charge a tenant for owner-paid utilities, they must use an 

allocation method that equitably distributes the actual costs among all units in 

the property or rely on a system, such as readings from an approved sub-meter, 

that provides a reasonable estimate of the utility expenses for individual units. If 

an owner elects to pass on owner-paid utilities, assessments must be levied 

against all tenants in the property, not just tenants of QUs. 

C. Changes in QU Status 

When the status of a QU changes due to a change in the eligibility of the 

tenant in that unit, the rent limits for that unit must be revised accordingly. 

If a VLI-QU is re-designated as a LI-QU due to a change in the income 

or household composition of the tenant, the rent for that unit is now restricted by 

the LI rent limit. For example, if a two-bedroom VLI-QU in a property located in 

AHP Compliance Monitoring Manual 2-15 09/28/00 
 

 

Hometown, USA becomes a LI-QU, the rent limit changes from $322 to $426 

(see Hometown rent chart above). 

Likewise, when a LI-QU is redesignated as a VLI-QU due to a decrease 

in the tenant's income, the rent for that unit is now restricted by the VLI rent 

limit. Using the example of a property in Hometown, USA, if a three-bedroom 

LI-QU is redesignated as a VLI-QU, the rent limit changes from $499 to $374 

(see Hometown chart above). 

If the tenant of a QU is determined to be over-income, the rent for that 

unit is no longer be subject to the rent limits for QUs, and may be adjusted to 

the unrestricted market rent. 6 Any changes in the rent must conform to lease 

agreements and/or state and local laws. 

If, upon recertification, a tenant's status changes from VLI to LI, owners 

may raise the actual rent for that unit up to the applicable LI rent limit. However, 

any increase in rent is subject to provisions of the lease, as well as state and 

local law. If a tenant's status upon recertification changes from LI to VLI, the 

owner must promptly adjust the rent for that unit to comply with the applicable 

VLI rent limit, unless prohibited by state or local law. 

Likewise, if the rent limit for a QU rises during the middle of the lease 

period due to the annual adjustment of the limits, the owner may raise the unit 

rent up to the revised applicable rent limit. Again, however, any increase in rent 

is subject to provisions of the lease, as well as state and local law. If the rent 

limits for a QU decrease during the middle of the lease period, the owner must 

promptly adjust the unit rent to comply with the updated limit, unless prohibited 

by state or local law. 

2.4 DWELLING LEASE REQUIREMENTS 

Owners must execute a lease agreement with the tenant of each QU. 

There is no prescribed format or term for the lease. However, owners must 

incorporate the required language establishing the tenant's obligations and 

avoid using certain prohibited provisions. FDIC also expects that owners will 

comply with local tenant-landlord laws when executing the lease. Finally, as 

discussed above, if a tenant of a QU is being charged for owner-paid utilities, 

these charges must be set forth in the lease. 

Some of the early LURAs (Version I) stipulate that the rent for an QI-QU to remain restricted at the previous 

LI or VLI level until the unit is replaced with another QU, while later LURAs (Version II) permit immediate 

adjustment of the rent to an unrestricted rent. In order to be consistent, FDIC will apply the more recent standard 

to all properties. 

AHP Compliance Monitoring Manual 2-16 09/28/00 

6 
A.	 Required Tenant Lease Provisions 

To assure that a tenant's eligibility can be readily determined and reexamined, the owner must incorporate specific provisions into the lease 

agreement for each QU that establish the tenant's obligation to provide accurate 

information regarding household income and composition. They are: 

(i)	 The lessee certifies the accuracy of the information provided in 

connection with the examination or re-examination of the Annual 

Income of the household of the lessee. 

(ii)	 The lessee agrees that the Annual Income and other eligibility 

requirements shall be deemed substantial and material 

obligations of his or her tenancy, that he or she will comply 

promptly with all requests for information with respect thereto 

from the lessor, FDIC, or FDIC's monitoring agency. The lessee's 

failure to provide accurate information regarding such 

requirements (regardless of whether such inaccuracy is 

intentional or unintentional) or refusal to comply with a request for 

information thereto shall be deemed a violation of substantial 

obligation of his or her tenancy and constitute cause for 

immediate termination thereof. 

These provisions must appear in the lease or a lease addendum for each QU 

using the exact wording shown above unless prohibited by local law. 

B.	 Prohibited Lease Provisions 

Lease provisions prohibited under other federally-related affordable 

housing programs are also prohibited under AHP. The following provisions 

may not appear in the dwelling lease for any QU: 

•	 Agreement to be sued. Agreement by the tenant to be sued, 

admit guilt, or to a judgment in favor of the owner in a lawsuit 

brought in connection with the lease. 

•	 Treatment of Property. Agreement by the tenant that the owner 

may take, hold or sell personal property of household members 

without notice to the tenant and a court decision on the rights of 

the parties. This prohibition, however, does not apply to an 

agreement by the tenant concerning disposition of personal 

property remaining in the unit after the tenant has moved out. 

The owner may dispose of this personal property in accordance 

with State law. 

•	 Excusing the owner from responsibility. Agreement by the 

tenant not to hold the owner or the owner's agents legally 

AHP Compliance Monitoring Manual	 2-17 09/28/00 
responsible for actions or failure to act, whether intentional or 

negligent. 

•	 Waiver of notice. Agreement by the tenant that the owner may 

institute a lawsuit without notice to the tenant. 

•	 Waiver of legal proceedings. Agreement by the tenant that the 

owner may evict the tenant or household members without 

instituting a civil court proceeding in which the tenant has the 

opportunity to present a defense or before a court decision on the 

rights of the parties. 

•	 Waiver of a jury trial. Agreement by the tenant to waive any 

right to a jury trial. 

•	 Waiver of right to appeal court decision. Agreement by the 

tenant to waive the tenant's right to appeal or otherwise 

challenge in court a decision in connection with the lease. 

•	 Tenant chargeable with cost of legal actions regardless of 

outcome. Agreement by the tenant to pay attorney fees or other 

legal costs even if the tenant wins the court proceeding by the 

owner against the tenant. The tenant, however, may be 

obligated to pay costs if the tenant loses. 

Owners are not prohibited from taking the legal actions in these prohibited 

clauses, but they may not require tenant consent or waiver of rights in advance. 

Owners are also expected to avoid using lease provisions prohibited by all 

applicable state and local laws. 

2.5	 LEASING PROCEDURES: PROPERTIES WITH INSUFFICIENT QUs 

For properties where the number of designated QUs is not sufficient to 

meet the occupancy requirements established in the LURA, the owner must rent 

the next available unit (NAU) to an income eligible tenant. Properties that 

contain an insufficient number of QUs fall into three groups: 

a) new purchases;
 

b) insufficient QUs due to income changes among QU tenants; or
 

c) insufficient QUs due to improper leasing of QUs.
 

For each type of property, the owner must follow specific requirements for 

renting available units until the required number of QUs is reached. 

A.	 New Purchases 

AHP Compliance Monitoring Manual	 2-18 09/28/00 
Newly purchased properties do not meet the occupancy requirements 

established in the LURA because the owner needs time to collect and verify 

income information on the tenant for each QU. The time between final closing 

and the date the owner reaches full compliance with the occupancy 

requirements for the property is called the Pre-Compliance period. During this 

period, an owner must follow specific rules for leasing available units in order to 

remain in compliance with the program requirements. 

TREATMENT OF EXISTING TENANTS 

The procedures for reaching the occupancy 

requirements for a property are designed to 

allow owners to lease QUs as existing units 

become available. As set forth in the LURA, 

under no circumstances should an owner 

terminate the occupancy of any tenant inplace at the time the LURA became effective 

solely for the purpose of achieving 

compliance with the property's occupancy 

requirements. 

Renting Vacant Units 

Until a property contains enough QUs to meet the Total Set-Aside, 

owners must rent vacant units to Qualified Tenants. The procedures for renting 

vacant units during the pre-compliance period depend on whether the number 

of vacant units exceeds the number of additional QUs needed to meet the Total 

Set-Aside. 

0	 Vacancies Less Than QUs Needed: Owners must hold all vacant units 

available for occupancy by Qualified Tenants and rent each new vacant unit 

to an income eligible tenant. 

0	 Vacancies Greater Than QUs Needed: Owners must hold enough vacant 

units for Qualified Tenants to meet the additional number of QUs needed to 

reach the Total Set-Aside. Vacant units in excess of this number may be 

rented to any tenant. 

For example, if a property has five QUs, two vacancies, and a Total Set-Aside 

of 10 units, the property's vacancies are less than the five additional QUs 

needed to meet the Total Set-Aside. The owner needs to reserve the two 

vacant units for Qualified Tenants and rent the next three vacancies to Qualified 

Tenants. 

AHP Compliance Monitoring Manual	 2-19 09/28/00 
If the same property's vacancies jumped to seven next month, the 

number of vacancies would exceed the number of QUs needed. In this case, 

the owner would need to reserve five vacant units for Qualified Tenants. 

NOTE: A vacant unit held available for occupancy by 

a Qualified Tenant may not be counted as a QU. A 

unit can be designated as a QU only after it has been 

leased to a Qualified Tenant. 

Designating Units with Existing Tenants 

Owners can also obtain QUs by designating units already occupied with 

Qualified Tenants. Owners can identify these eligible households by surveying 

the income of in-place tenants. Like new tenants, existing tenants who appear 

eligible based on the results of the survey must: a) have their income verified; 

b) sign a tenant certification; and c) execute an acceptable lease or lease 

amendment reflecting appropriate rents before their unit can be designated. 

If owners choose to designate units with existing tenants, they should 

attempt to survey all in-place households and not limit their efforts to certain 

tenants or units in particular areas of the property. 

Meeting the Total and VLI Set-Asides 

The type of QU an owner must obtain depends upon the number of LIand VLI-QUs in the property, and whether there is a sufficient number of each to 

meet both the Total and VLI Set-Asides. 

A property has a sufficient number of VLI-QUs if the number of these 

units meets the number required under the VLI Set-Aside. A property has a 

sufficient number of LI-QUs when the number currently designated equals the 

difference between the Total Set-Aside and the VLI Set-Aside. For example, if 

a property has a Total Set-Aside of 35 units and a VLI Set-Aside of 20 units, 

when the number of LI-QUs reaches 15 the property will have a sufficient 

number of these units. 

Because the VLI Set-Aside specifies a minimum number of QUs that 

must be occupied by VLI tenants, if a property contains a sufficient number of 

LI-QUs, but an insufficient number of VLI-QUs, an owner must lease QUs to VLI 

tenants until the VLI Set-Aside is met. Again, this applies to both the rental of 

vacant units and units with existing tenants that are designated as QUs. 

Finally, if a property has a sufficient number of VLI-QUs but an 

insufficient number of LI-QUs, the owner may lease QUs to any Qualified 

Tenant (LI or VLI) because there is no required number of LI-QUs and additional 

VLI-QUs can be counted toward the Total Set-Aside. However, owners are not 

required to designate VLI-QUs above the minimum required by the Set-Asides. 

AHP Compliance Monitoring Manual 2-20 09/28/00 
Exhibit 2-4 summarizes the procedures owners must follow when leasing 

available units. It details the steps for owners of properties with insufficient 

QUs, noting the differences for properties with abundant and limited vacancies. 

AHP Compliance Monitoring Manual 2-21 09/28/00 
EXHIBIT 2-4
 

PROCEDURES FOR LEASING AVAILABLE UNITS
 

PROPERTIES WITH INSUFFICIENT QUs PROPERTY 

IN 

FULL COMPLIANCE 

VLI & LI SHORTAGE VLI SHORTAGE LI SHORTAGE 

VLI Not Sufficient 

LI Not Sufficient 

VLI Not Sufficient 

LI Sufficient 

VLI Sufficient 

LI Not Sufficient 

VLI Sufficient 

LI Sufficient 

Vacancies Greater than 

Number of Units Needed to 

Meet Total Set-Aside 

• Keep enough vacancies 

available to meet Total 

Set-Aside 

• Lease reserved vacant 

units to QTs, giving 

preference to VLI tenants 

• Option: Reduce number 

of vacancies held 

available by designating 

units with existing tenants 

who are QTs*, giving 

preference to VLI tenants 

• Keep enough vacancies 

available to meet Total 

Set-Aside 

• Lease reserved vacant 

units to VLI tenants 

• Option: Reduce number 

of vacancies held 

available by designating 

units with existing tenants 

who are VLI tenants 

• Keep enough vacancies 

available to meet Total 

Set-Aside 

• Lease reserved vacant 

units to QTs (LI or VLI) 

• Option: Reduce number 

of vacancies held 

available by designating 

units with existing tenants 

who are QTs* (LI or VLI) 

• Available units may be 

rented to any tenant 

Vacancies Less than 

Number of Units Needed to 

Meet Total Set-Aside 

• Lease NAU** to QT, 

giving preference to VLI 

tenants 

• Option: Designate units 

with existing tenants who 

are QTs*, giving 

preference to VLI tenants 

• Lease NAU** to VLI 

tenants 

• Option: Designate units 

with existing tenants who 

are VLI tenants 

• Lease NAU** to QTs* (LI 

or VLI) 

• Option: Designate units 

with existing tenants who 

are QTs* (LI or VLI) 

* QT = Qualified Tenant 

** NAU = Next Available Unit 
B. Insufficient QUs Due to Income Changes Among QU Tenants 

Income changes among tenants in QUs may leave the owner with an 

insufficient number of VLI- and LI-QUs to meet the required set-asides. 

Owners must follow specific procedures for replacing these units to remain in 

compliance with the LURA. The two types of changes that can lead to an 

insufficient number of QUs are: 

• QUs (VLI or LI) change to over-income units; or 

• VLI-QUs become LI-QUs. 

When a LI-QU becomes a VLI-QU due to a drop in the tenant's income, 

the property still contains a sufficient number of QUs to meet both the Total and 

VLI Set-Asides. In this case, no action is required of the owner, although the 

owner may rent a future vacant VLI unit as LI to restore the required balance of 

VLI and LI units. 

QUs Change to Over-Income Units 

When a QU (VLI or LI) becomes an over-income Qualifying Unit (OI-QU) 

unit because the tenant's income exceeds the applicable income limit (the 140 

percent limit on recertification), the LURA allows the owner to continue to count 

the unit as a QU as long as the next available unit (NAU) requirement for overincome units is followed. 

NAU Requirement for Over-Income Qualifying Units: 

When a re-examination reveals that the tenant of a QU is 

now over-income, the NAU of comparable or smaller size 

must be held available or rented to a Low or Very Low 

Income tenant depending on the type of unit needed to meet 

the Set-Asides. 

An owner also may satisfy this requirement by designating an unrestricted unit 

occupied by an income-eligible resident as a QU. Once an OI-QU has been 

properly replaced, the unit becomes an unrestricted unit. 

As noted above, the rent for an OI-QU is unrestricted and may be 

adjusted to the applicable market rent, subject to any limitations in the lease and 

state and local law. 

AHP Compliance Monitoring Manual 2-23 09/28/00 
VLI-QU Becomes LI-QU 

When a VLI-QU becomes a LI-QU due to a change in the eligibility of the 

tenant in that unit, the total number of VLI-QUs may no longer satisfy the VLI 

Set-Aside for the property. 

Take as an example a 100-unit property where the Total Set-Aside is 35 

units and the VLI Set-Aside is 20 units. If the property had 20 VLI-QUs and 15 

LI-QUs but one of the VLI-QUs was redesignated as a LI-QU, the property no 

longer meets the VLI Set-Aside because the property now contains less than 20 

VLI-QUs (19 VLI-QUs and 16 LI-QUs). Note: The property still meets the Total 

Set-Aside because it still has 35 QUs. 

If the number of VLI-QUs is less than the VLI Set-Aside but the total 

number of QUs still satisfies the Total Set-Aside, the owner must use the 

following procedure when renting available LI units: 

NAQU Requirement for Properties with Insufficient VLIQUs: The owner must rent the next available Qualifying Unit 

(NAQU) to a VLI tenant until the number of VLI-QUs meets the 

VLI Set-Aside. 

In the example above, every time a QU becomes available, the owner must rent 

the QU to a VLI household until the number of VLI-QUs reaches 20 units. 

C.	 Insufficient QUs Due to Improper Leasing Practices 

The number of QUs also may fall below the number required the Total 

Set-Aside or VLI Set-Aside if an owner fails to properly lease QUs. If this 

occurs, the property may be out of compliance with the LURA. Improper 

leasing practices include: 

•	 making an incorrect determination of a tenant's eligibility; or 

•	 failing to properly replace QUs when they are vacated or must be 

redesignated. 

If a review of the tenant file for a QU reveals that the owner or manager 

made an incorrect eligibility determination and the tenant's income actually 

exceeds the applicable LI limit, the unit can no longer be considered a QU. In 

such a case, the number of QUs may no longer satisfy the Total Set-Aside and 

the property would be out of compliance. 

If an owner fails to properly replace QUs, the property may no longer 

comply with the Total Set-Aside or the VLI Set-Aside. For example, if an owner 

AHP Compliance Monitoring Manual	 2-24 09/28/00 
rents a vacated QU to an ineligible household without designating or holding 

available an unrestricted unit to replace the QU, the number of QUs will drop 

below the amount required by the Total Set-Aside. 

When an owner fails to maintain the required number of QUs due to 

improper leasing practices, the property will be considered to be out of 

compliance with the LURA. In such a case, the owner must restore compliance 

with the property's occupancy requirements by following the procedures for 

renting available units presented in Exhibit 2-5. 

EXHIBIT 2-5 

PROPERTIES OUT OF COMPLIANCE WITH OCCUPANCY REQUIREMENTS 

Required Procedures for Renting Available Units 

Property Status Required Procedure 

A. Out of Compliance with Total SetAside & VLI Set-Aside 

-­ Number of QUs (VLI+LI) < Total 

Set-Aside 

-­ Number of VLI-QUs < VLI SetAside 

B. Out of Compliance with VLI SetAside 

-­ Number of QUs (VLI+LI) meets 

Total 

Set-Aside 

-­ Number of VLI-QUs < VLI SetAside 

C. Out of Compliance with Total SetAside 

-­ Number of QUs (VLI+LI) < Total 

Set-Aside 

-­ Number of VLI-QUs meets VLI 

Set-Aside 

A. Next available unit must be rented to LI 

or VLI household until the number of 

QUs meets the Total Set-Aside. 

Owners must give preference to VLI 

households when renting QUs. If Total 

Set-Aside is met, but VLI Set-Aside is 

not met, follow Procedure B. 

B. Next Available QU must be rented to 

VLI household until the number of VLIQUs meets VLI Set-Aside. 

C. Next available unit must be rented to LI 

or VLI household until the number of 

QUs meets Total Set-Aside. 

2.6 RECORD-KEEPING AND REPORTING REQUIREMENTS 

There are several record-keeping and reporting requirements that 

owners must meet to assure compliance with the LURA. These requirements 

fall into four major groups: 

AHP Compliance Monitoring Manual 2-25 09/28/00 
•	 on-site record-keeping; 

• compliance reports;
 

• owner certifications; and
 

•	 cooperation during agency on-site reviews. 

A.	 On-Site Records 

As set forth in the LURA, all records concerning the property must be 

kept separate from the owner's other business unrelated to the property and in 

a reasonable condition to allow for proper audit. The records must be 

maintained as required by the monitoring agency and in accordance with the 

procedures in the Owner's Compliance Manual. Representatives of FDIC or 

the monitoring agency may examine or photocopy documents pertaining to the 

property during regular business hours. 

There are two principal types of on-site records owners must maintain: 

•	 tenant files; and 

•	 monthly unit listings. 

Tenant Files 

Owners must keep a tenant file for each QU. Each file must contain the 

following: 

•	 the tenant's rental application; 

•	 a Release and Consent Form signed by all adult members of the 

household; 

•	 proper income verification documents; 

•	 a current TIC (initial certification or recertification); and 

•	 a proper dwelling lease. 

All tenant files must be maintained for at least three years after the date the 

tenant moves out. 

Monthly Unit Listings 

Owners also must keep monthly unit listings that correctly reflect 

occupancy at the property on the beginning of each month or a date established 

by the monitoring agency. These listings will provide monitoring agencies with 

an up-to-date record of QUs. They also allow monitoring staff to track changes 

in the status of QUs and unrestricted units during past months to confirm that 

over-income and vacated QUs were properly replaced. 

A monthly listing must provide the following information for each unit: 

•	 unit number 

•	 number of bedrooms 

AHP Compliance Monitoring Manual	 2-26 09/28/00 
• tenant name 

• effective lease date 

• monthly rent 

• unit status (VLI-QU, LI-QU, OI-QU, or unrestricted unit) 

Owners may meet this requirement by simply adapting their monthly rent rolls to 

provide the necessary information. 

Monitoring agencies may request that owners provide a copy of the most 

recent unit listing at any time during the monitoring year. Owners must keep 

accurate copies of these listings for the past three years. 

B. Compliance Reports 

Owners also must submit regular reports documenting their compliance 

with program requirements. The compliance report summarizes the status of 

the property's QUs and includes a listing of each unit in the property. The types 

of information the owner must provide for each unit include: 

• building identification 

• unit number 

• number of bedrooms 

• tenant name 

• number of persons in household 

• date of lease agreement 

• unit designation (VLI-QU, LI-QU, OI-QU, unrestricted unit) 

• annual household income (QUs only) 

• monthly unit rent (QUs only) 

• date of last income certification/recertification (QUs only) 

All of the information needed to complete a report should be readily available 

from the property's monthly unit listing, tenant files, and the income and rent 

limits provided by the monitoring agency. 

Monitoring agencies must have owners use the Compliance Report Form 

provided in Appendix H or a comparable form approved by the agency that 

provides the same information. 

Monthly Reporting 

Owners must submit monthly compliance reports for properties that have 

not reached full compliance, and when a property has fallen out of compliance. 

Monitoring agencies may ask owners to report on a monthly basis at other 

times, if necessary, to assure continued compliance. 

With each monthly report, owners also must include copies of the TICs 

for each newly designated QU. For example, the April monthly compliance 

AHP Compliance Monitoring Manual 2-27 09/28/00 
 

 

report for a property should include TICs for all units designated as QUs since 

the March report. 

The monitoring agency will specify the starting and ending date of the 

report as well as the day the report is due to the agency. If an agency opts to 

have the reports correspond to calendar months, agency staff need only specify 

the day by which owners must submit reports to the agency. 

Annual Reporting 

Once a property reaches full compliance, the owner may submit 

compliance reports annually rather than monthly. Owners can continue to 

report annually as long as the property remains in full compliance with the 

occupancy requirements and other provisions of the LURA. 

The annual compliance report documents the occupancy status of the 

property as of the end of the monitoring year. With each report, owners must 

provide copies of the income certification or current recertification for each QU. 

Monitoring agencies may require owners to include with their annual 

report any additional materials necessary to evaluate the property's continued 

compliance with provisions of the LURA. 

C. Owner Certifications 

To confirm that a property is in compliance with the provisions of its 

LURA, owners must provide monitoring agencies with a written certification of 

the property's compliance. Owners must submit a certification when a property 

reaches initial compliance (the end of the Pre-Compliance period) and then with 

each annual report. 

D. Owner Obligations During Agency On-Site Reviews 

Representatives of the monitoring agency will conduct periodic on-site 

reviews of AHP properties and their records to evaluate owner compliance with 

the LURA. During a review, owners and their property management staff must 

provide monitoring staff with access to all documents necessary to complete an 

evaluation of the owner's continued compliance with the provisions of the LURA. 

Monitoring agencies must give owners reasonable advance notice prior 

to conducting an on-site visit. Advance notice of which QU files will be 

selected for review is not required. 

AHP Compliance Monitoring Manual 2-28 09/28/00 
 

 

 

The managing owner and key on-site staff should be present during the 

review whenever possible. Entrance and exit interviews with the owner are 

recommended. 

2.7 ADMINISTRATIVE FEES 

A. Annual Administrative Fee 

To offset the cost of monitoring owner compliance with the LURA, each 

owner must pay the monitoring agency (or FDIC) an annual administrative fee. 

The fee is based on the number of QUs the LURA requires the owner to hold 

available for occupancy by Qualified Tenants. The required number of QUs is 

multiplied by the base monitoring fee established in the LURA, but is never less 

than $250 per property. The base fee generally will be found in Section 4.6 (a) 

of the LURA for the property. 

ANNUAL ADMINISTRATIVE FEE 

Number of Required QUs x Base Fee = Annual Fee 

The annual administrative fee is due the day the LURA is signed and 

covers the following 12-month period.7 The next annual fee is due on the 

anniversary date of the LURA. 

The monitoring agency, with proper notification to the owner, may 

establish a 12-month fee period that begins on a day other than the anniversary 

date of the LURA. In such a case, the monitoring fee is due at the beginning of 

the new fee period. If the change in start of the fee period shortens the length 

of the current period, the agency should prorate the current year's fee and apply 

the excess funds collected to the fee due at the beginning of the next 

monitoring year. 

Example: If the LURA for a property was signed in April and the 

monitoring agency establishes a revised fee period that starts in January 

of the coming year, the agency should apply three months of the current 

years' fee toward the annual fee due in January for the coming year. 

The monitoring agency should send invoices for the coming year's 

monitoring fee at least 30 days prior to the start of the upcoming fee period. 

7

 In cases where an owner purchased a property prior to the time an agency signed a compliance monitoring 

MOU with RTC, the annual fee is due once the MOU becomes effective and covers the following twelve month 

period. 

AHP Compliance Monitoring Manual 2-29 09/28/00 
B. Adjustment of Annual Fee 

Each year the agency may adjust the annual fee for increased costs due 

to inflation. If adjusted, the agency should compute the adjustment by 

multiplying the base fee by the most recent increase in the Consumer Price 

Index for All Urban Consumers (CPI-U). 

ANNUAL ADMINISTRATIVE FEE ADJUSTMENT 

(Current CPI-U Index)

 New Base Fee = Old Base Fee x (Previous CPI-U Index) 

C. Administrative Fees For Non-Compliance 

If the monitoring agency determines that a property is out of compliance 

with the provisions of the LURA, it may require the owner to pay an additional 

fee up to an amount equal to the annual administrative fee or $50 as stated in 

the applicable LURA. 

This additional fee is distinct from and in addition to the annual fee. 

The monitoring agency is entitled to be compensated for additional 

monitoring and enforcement activities for a period of up to three years following 

the most recent finding of non-compliance with regard to the property. 

The owner also is required to reimburse the state monitoring agency for 

all costs and legal fees to which the agency may be entitled as a result of any 

judicial enforcement action. These fees are payable to the monitoring agency 

regardless of whether the agency undertakes or succeeds in judicial 

enforcement action. 

2.8 RESALE REQUIREMENTS 

The owner is required to notify the monitoring agency of any resale of 

the property at least 30 days prior to closing. This notification is necessary to 

give the monitoring agency sufficient time to prepare for the change in 

ownership and take actions necessary to assure continued compliance with the 

LURA. 

AHP Compliance Monitoring Manual 2-30 09/28/00 
2.9 CONFLICTS BETWEEN AHP REQUIREMENTS AND LOCAL LAWS 

AHP requirements and procedures are intended to work in harmony with 

local laws. Generally, local law will take precedence over the program's rules. 

If monitoring agencies find that elements of the program do conflict with local 

law and cannot resolve the conflict, agency staff should seek guidance from 

FDIC. 

AHP Compliance Monitoring Manual 2-31 09/28/00