CHAPTER 3 

ACHIEVING COMPLIANCE 

3.1 OVERVIEW 

When purchased, AHP rental properties may be fully 

occupied or vacant, turnover may be high or low, and 

market demand may be hot or cold. However, regardless 

of market and occupancy conditions, all owners are 

required to bring their properties into compliance with AHP 

occupancy and rent requirements. 

Owners do have choices about how to meet the 

requirements. A sizable number of existing tenants may 

qualify under the program and help owners fulfill their 

obligations. Alternatively, new tenants who are income 

eligible may be selected to move into vacant units to 

reach the property's set-aside requirements. The 

procedures for designating QUs and reaching full 

compliance are discussed in this chapter. 

Regardless of how the requirements are met, owners 

must assure that: 

0	 No in-place tenants are forced to move out solely 

to obtain the required number of Low Income units; 

0	 Both the Total and Very Low Income Set-Aside 

requirements are met; and 

The designation as a Qualified Tenant in a QU is not 

removed from a tenant unless their income exceeds the 

published limits or they move from the property. 

3.2 BASIC REQUIREMENTS FOR ALL QUs 

For a unit to be designated as a QU, the following criteria 

must be met: 

0	 Owners must establish that a tenant is a Low or 

Very Low Income household by comparing the 

documented income on the TIC form with 

appropriate income limits to determine designation. 

AHP Owner’s Compliance Manual 3-1 9/97 
0	 Owners must verify the household income and 

have the tenant certify its accuracy on a TIC form. 

0	 The contract rent for designated units must be 

equal to, or less than, the FDIC published rent 

limits for Low Income and Very Low Income units. 

0	 Owners must execute the required lease 

provisions using a lease or lease addendum. 

0	 Owners must designate the units that count toward 

meeting the property's set-asides on the 

Compliance Reports for the property. 

For a unit to continue to be counted as a QU, the owner 

must re-examine the income of tenants in QUs annually 

and maintain the rents at or below FDIC published limits. 

3.3 KEY STAGES 

Owner compliance can be separated into two distinct 

stages. 

KEY STAGES OF COMPLIANCE 

Pre-Compliance Stage -- begins when an owner 

closes a purchase with FDIC, and lasts until the owner 

certifies full compliance with the occupancy and rent 

requirements specified in the LURA for the property. 

On-Going Compliance Stage -- begins once the 

monitoring agency acknowledges an owner's 

certification of compliance with the LURA, and lasts for 

the remaining life of the LURA. 

The following sections explain the procedures owners 

need to follow during the two stages and the actions 

necessary to restore compliance in the event an owner 

fails to properly maintain the correct number of QUs in the 

property. 

AHP Owner’s Compliance Manual 3-2 9/97 
3.4 PRE-COMPLIANCE STAGE 

Depending on a property's size, its occupancy, and 

turnover of units, the Pre-Compliance Stage may last a 

few weeks or many months. There are a number of 

activities that occur during this period. 

PRE-COMPLIANCE STAGE 

0	 Owners submit monthly compliance reports. 

0	 Units occupied by existing tenants may be 

designated as QUs if they are qualified. 

0	 Vacant units must be reserved and leased to 

eligible tenants until set-asides are met. 

0	 Owners must submit a certification of compliance 

once the property's set-asides are met. 

During this period, an owner strives to meet AHP 

occupancy requirements by designating existing 

tenants/units as QUs, or renting vacant units to eligible 

tenants. Monthly reports document progress toward 

reaching the required set-asides. Also, owners must 

follow strict rules for leasing vacant units until they obtain 

the required number of QUs. 

A. Monthly Compliance Reports 

During the Pre-Compliance Stage, owners are required to 

submit monthly compliance reports until the monitoring 

agency determines that the property contains the required 

number of VLI and LI QUs. Compliance reports identify 

the QUs that have been leased to eligible VLI or LI 

households at the appropriate rents. The compliance 

report is explained more fully in Chapter 6 and copies of 

the report forms are provided in Appendix F. 

When reviewing monthly compliance reports, state 

monitoring staff will check to see that the correct income 

and rent limits have been used, the Tenant Income 

Certification (TIC) Forms have been prepared properly, 

AHP Owner’s Compliance Manual 3-3 9/97 
and the owner has followed AHP rules for leasing vacant 

units. 

B. Designating Units with Existing Tenants 

Owners are expected to reach full compliance as soon as 

possible; FDIC policy establishes that this should be 

accomplished within two years. Owners should consider 

ways to get to full compliance as quickly as possible, 

since Pre-Compliance imposes additional reporting and 

record-keeping burdens, and increases the chances of 

lost revenue from vacancies while owners look for 

qualified tenants to occupy units held for the Set-Aside. 

Owners of occupied properties may find it advantageous 

to designate units already occupied as their QUs. 

Owners can identify and designate eligible households by 

surveying the income of in-place tenants. 

Inducing Tenants to Apply 

Some tenants may be reluctant to respond to surveys and 

requests for such income. Owners should assure tenants 

that the information is for purposes of qualification for SetAside units only, and that privacy will be protected. 

If the Set-Aside units offer a substantial rent discount to 

market rents, the rent savings should be a sufficient 

inducement to respond. 

However, if the rents for the Set-Aside units are not 

significantly lower than market rents, then additional 

inducements may be needed. Property owners in the 

Program have used a variety of incentives such as: 

0 raffles for items such as free cable TV or a microwave 

oven to those tenants who respond; or 

0 a one-time rent credit of $25 or $50 credited the month 

a tenant completes QU certification. 

Like new tenants, existing tenants who appear eligible 

based on the results of the survey must: 

0 submit detailed income information; 

AHP Owner’s Compliance Manual 3-4 9/97 
 

0 sign a Release and Consent Form authorizing the 

release of information about their income; 

0 have their income verified; 

0 sign a Tenant Income Certification (TIC); and 

0 execute an acceptable lease or lease addendum 

reflecting appropriate rents and AHP provisions 

before their unit can be designated. 

If owners choose to identify qualified tenants among the 

existing tenants, they must attempt to survey all in-place 

households and not just favored tenants or certain units in 

particular areas of the property. Access to the rent 

protections of the AHP Program must be available to all. 

In cases where the number of surveyed tenants who are 

eligible exceed the required number of units needed to 

fulfill the Set-Asides, the owner should establish a fair and 

equitable manner for designating QUs. For example, 

owners could use a system based on income, length of 

tenure, or a lottery. Once owners have decided which 

existing tenants/units will be the QUs, they should identify 

these units on the monthly Compliance Report Form and 

attach a Tenant Income Certification (TIC) to show that 

the tenant's income has been reviewed. 

Good Practice: Maintain Waiting Lists 

If the survey of existing tenants reveals that there are 

more eligible tenants than QUs needed, owners may 

want to start a waiting list for those eligible tenants not 

selected for QUs. This can help alleviate tenant 

concerns about not being selected and provide the 

owner with a ready pool of tenants to replace QU 

residents that move out. 

C. Renting Vacant Units 

Some owners may not find it desirable or practical to 

designate existing tenants in order to meet required setasides. This might occur when the units are largely 

vacant or occupied by over-income tenants, or the tenants 

generally refuse to provide the information necessary to 

determine eligibility. Owners of these properties must 

AHP Owner’s Compliance Manual 3-5 9/97 
 

hold and rent vacant units to Qualified Tenants until all 

set-asides are met. 

The procedures for renting vacant units during the PreCompliance period depend on whether the number of 

vacant units exceeds the number of additional QUs 

needed to meet the Total Set-Aside. 

¤ If vacancies are fewer than or equal to the 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. 

¤ If vacancies are greater than the 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 as unrestricted units to 

any tenant. 

For example, if a property with 2 vacant units has five 

QUs out of a Total Set-Aside of 10 units, the 

owner/manager must reserve the 2 vacant units for 

Qualified Tenants plus rent the next 3 vacancies to 

Qualified Tenants. But, if the same property's vacancies 

jumped to 7 next month, the number of vacancies now 

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

the owner would need to reserve only 5 of the vacant 

units for Qualified Tenants. 

When vacancies exceed the number of Set-Aside units 

still needed, the owner may select the units to reserve for 

the Set-Aside. Selection should be done also in 

consideration of the ongoing Proportionality requirement 

(see Section 2.1). 

D. Meeting the Total and VLI Set-Asides 

Owners must have both enough VLI units to meet the VLI 

Set-Aside and a combination of VLI and LI units to meet 

the Total Set-Aside. Full compliance is based on 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 equals or exceeds the number 

required under the VLI Set-Aside. When this VLI number 

AHP Owner’s Compliance Manual 3-6 9/97 
is reached, any remaining units to be filled in the Total 

Set-Aside can be LI units. 

Conversely, if a property has LI-QUs equal to the 

difference between the Total Set-Aside and the VLI SetAside, then no more Set-Aside units need to be rented to 

LI tenants, but instead they should be held for VLI 

tenants. 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. 

Under the LURA, owners always must give preference to 

VLI tenants when leasing QUs, so long as the VLI SetAside is not met. This condition applies to both vacant 

units rented as QUs 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 

the remaining QUs to any Qualified Tenant -- either LI or 

VLI. There is no required minimum number of LI-QUs 

within the Total Set-Aside, and additional VLI-QUs over 

and above the VLI Set-Aside are counted toward the Total 

Set-Aside. However, even if the VLI Set-Aside is met, 

owners who rent the remaining LI units to a VLI tenant 

may only charge that VLI tenant up to the VLI rent, not the 

LI rent. Owners are not required to rent LI units to VLI 

applicants, and may operate separate waiting lists for VLI 

and LI units. 

Exhibit 3.1 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 Owner’s Compliance Manual 3-7 9/97 
 

EXHIBIT 3-1
 

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 
E.	 Documenting the Achievement of Full 

Compliance 

When an owner believes a property has achieved full 

compliance with both its Total and VLI Set-Asides, the 

owner must prepare and submit an Owner Compliance 

Certification (see Appendix G) along with the latest 

monthly compliance report. 

NOTE: A vacant unit held available for occupancy by a 

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

can only be designated as a QU after it has been 

leased to a Qualified Tenant. 

In submitting this document, the owner is certifying that 

the property is now in full compliance with the provisions 

of the LURA. Monitoring agencies will review the Owner 

Compliance Certification along with current and past 

monthly compliance reports. In addition, the agency will 

conduct an on-site visit to confirm that the property has 

met its occupancy requirements. 

During the visit, agency staff will confirm that the property 

contains a sufficient number of VLI and LI QUs, check that 

the tenants of these units qualify under the applicable 

income limits, and review the rents for Qualifying Units. 

The reviewers also will look to see that units were properly 

leased during the Pre-Compliance period. 

If the reports and visit confirm that the property has 

achieved full compliance, it will be classified as a property 

in the On-Going Compliance stage. If the agency's 

review determines the owner certification was made in 

error, the property will continue to be considered in the 

Pre-Compliance stage. 

3.5	 MAINTAINING COMPLIANCE 

On-Going Compliance begins when a property has 

complied with the AHP requirements and continues for the 

term of the LURA. 

AHP Owner's Compliance Manual	 3-9 9/97 
ON-GOING COMPLIANCE STAGE 

0 Re-examine tenant eligibility annually 

0 Maintain the required number of QUs (VLI & LI) 

0 Avoid improperly shifting QU designations 

0 Submit annual compliance reports and Owner 

Compliance Certifications 

0 Cooperate with monitoring agency staff during 

on-site reviews 

0 Pay annual monitoring fee 

A. Re-Examining Tenant Eligibility 

To ensure that tenants continue to qualify as eligible 

households, owners must re-examine the income and 

household composition of tenants in QUs at least 

annually. The procedures for performing reexaminations can be found in Chapter 4. 

Changes in household income may or may not change a 

unit's QU status. During a re-examination, owners may 

encounter any of the following situations: 

0	 Household income changes, but remains within the 

applicable income limits -- no change to 

household status; 

0	 Household income exceeds 140 percent of the 

latest LI income limits -- change in household 

status to OI-QU; 

0	 VLI Household income rises above the latest VLI 

income limits, but below the LI 140% Limit --

change household status to LI; or 

0	 LI Household income falls below the latest VLI 

income limits -- change household status to VLI. 

AHP Owner's Compliance Manual	 3-10 9/97 
 

B. Replacing QUs As Tenant Status Changes 

Tenant status can change in three different ways: 

0 an LI tenant can change to VLI; 

0 a VLI or LI tenant can change to Over-Income; or 

0 a VLI tenant becomes LI. 

In the last two cases, income changes among tenants in 

QUs may leave owners with an insufficient number of VLIand LI-QUs to meet the required set-asides. 

When an LI-QU Changes to VLI 

When an LI Tenant becomes a VLI Tenant due to a drop 

in the Tenant's income, this does not cause a shortage of 

QUs. The QU is reclassified as VLI-QU, so the property 

still contains a sufficient number of QUs to meet both the 

Total and VLI Set-Asides. Remember, however, that the 

VLI rent limit now applies to the reclassified unit, so rent 

may need to be adjusted. 

In addition, this re-designation of the unit may cause the 

number of VLI-QUs to exceed the VLI Set-Aside 

requirement. If that is so, the owner may choose to 

“ rebalance” the Set-Asides when a VLI-QU becomes 

vacant by renting it to an LI tenant. 

When QUs Change to Over-Income Units 

When a QU (VLI or LI) becomes an OI-QU because the 

tenant's income exceeds the applicable income limit (see 

Section 2.2.H), the LURA allows the owner to continue to 

report the unit as a QU as long as the next available unit 

(NAU) requirement for over-income units is followed. 

NAU Requirement For OI-QUs 

When a Tenant of a QU is determined to be over-income 

(OI) upon re-examination, and the property has fallen 

below the Total Set-Aside, the Next Available Unit of 

Similar or Smaller Size must be held available or rented to 

a LI or VLI depending on the unit's previous designation. 

AHP Owner's Compliance Manual 3-11 9/97 
 

 

To meet this requirement, owners have two additional 

choices beyond holding the Next Available Unit of Similar 

or Smaller Size (sometimes noted as NAU-SSS) 

requirement to “ replenish” the Set-Aside: 

1.	 While available larger units may be rented as 

unrestricted, they may be used to meet the Set-Aside 

at the owner’s discretion. The owner should consider 

the status of Set-Aside proportionality (see Section 

2.1.A) when making this decision. 

2.	 An owner also may satisfy this requirement by 

designating a formerly unrestricted unit which is 

occupied by an income eligible resident as a new QU 

(either VLI or LI as needed). 

The rent for an OI-QU can be changed to the prevailing 

market, or unrestricted, rent as soon as the recertification 

is completed, subject to the provisions of the lease and 

any local laws.8 

When a VLI-QU Becomes LI-QU 

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

income of that tenant, the total number of VLI-QUs may 

no longer satisfy the VLI Set-Aside for the property. 

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

but the total number of QUs still satisfies the Total SetAside, the owner must use the following procedure when 

renting available units: 

NAQU Requirement For Properties With Insufficient 

VLI-QUs But Sufficient TSA-QUs 

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. 

For example, a 100-unit property has a Total Set-Aside of 

35 units and a VLI Set-Aside of 20 units, and is in full 

Some of the early LURAs require 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 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 Owner's Compliance Manual	 3-12 9/97 

8 
compliance. If one of the VLI-QUs is re-designated as a 

LI-QU, the property now contains 19 VLI-QUs and 16 LIQUs). The property still meets the Total Set-Aside 

because it still has 35 QUs, but it is one short of the VLI 

Set-Aside. Every time a QU becomes available, the 

owner would have to rent the QU to a VLI household until 

the number of VLI-QUs reaches 20 units. 

In this case, the NAU rule is not applied since it would 

cause the owner to exceed the Total Set-Aside if an 

unrestricted unit was converted into a VLI-QU. Since the 

Total Set-Aside is still met, and the VLI shortage was 

related to a tenant status change, owners are given the 

opportunity using NAQU to “ rebalance” the Set-Asides as 

LI units become available to be converted to VLI units. 

Exhibit 3.2 summarizes the steps owners will need to take 

when changes in tenant income lead to a change in the 

status of a QU. 

AHP Owner's Compliance Manual 3-13 9/97 
EXHIBIT 3.2
 

POSSIBLE CHANGES IN QU STATUS
 

DUE TO CHANGES IN TENANT INCOME
 

Condition Optional or Required Actions Comments 

Household Income Now Step 1: Reclassify the Owners may continue to count 

Exceeds 140 percent of Latest household as OI on the TIC. an over-income QU toward their 

LI Limit (The MF-Transition Total Set-Aside, as long as the 

Income Limit) Step 2: Change the unit's 

designation to Over-Income 

(OI) on the unit listing and 

compliance reports, but count 

as QU (until replaced). 

action in Step 3 is properly 

completed.

 AHP rent limits no longer 

apply to the over-income unit. 

Step 3: Rent the next available 

unit of comparable or smaller 

size to an eligible household, 

OR 

Designate an eligible household 

in an unrestricted unit as a QU 

LI Household’s Income Falls Step 1: Reclassify the If excess VLI-QUs, owner may 

Below the Latest VLI Income household as VLI on the TIC. “ rebalance” units by renting 

Limits 

Step 2: Re-designate the unit 

as VLI on the unit listing and 

future compliance reports. 

future vacant VLI unit as LI. 

VLI rent limits now apply. 

VLI Household’s Income Rises 

Above the Latest VLI Income 

Limits (but below the 140 % LI 

Limit) 

Step 1: Reclassify the 

household as LI on the TIC. 

Step 2: Re-designate the unit 

as LI on the unit listing for the 

property and future compliance 

reports. 

LI rent limits now apply to redesignated unit. 

Step 3: If VLI-QU shortage, 

follow NAQU rule. 

AHP Owner's Compliance Manual 3-14 9/97 
C.	 Vacated QUs 

AHP rules provide that a QU which becomes vacant may 

continue to be reported as a QU throughout the period it is 

vacant. Once it has been reoccupied, the unit may be 

reported as a QU only if the new tenant is certified as an 

eligible household. To remain in compliance owners 

need to replace vacated QUs using the following options. 

REPLACING A VACATED QU 

0	 Hold and rent the vacated QU to an eligible 

household of the same category (e.g., VLI or LI); 

0	 Designate an existing occupied unit as a QU of 

the same category if the tenant meets AHP 

eligibility standards and the rent does not 

exceed the maximum allowable; or 

0	 Hold a vacant, unrestricted unit available to 

replace the vacated QU. 

D.	 Avoid Improperly Shifting QU Designations 

Between Units 

As discussed in Chapter 2, owners have flexibility in which 

units are designated as QUs. However, once the unit 

occupied by a eligible tenant has been designated as a 

QU, the designation must remain with that unit until the 

tenant moves, or is no longer income eligible. If the 

tenant of a QU moves to another unit within the property 

and continues to be eligible, the owner must shift the QU 

designation to the newly occupied unit. 

This provision is designed to protect both owners and 

tenants. On the one hand, tenants know that they receive 

the benefit of restricted rent as long as they continue to 

provide detailed information about their family status and 

income. Owners, on the other hand, can require tenants 

to provide the information needed to certify to meeting 

AHP requirements, and consistent designation of 

qualifying tenants avoids potential law suits and 

AHP Owner's Compliance Manual	 3-15 9/97 
 

disagreements that could occur if rents were no longer 

restricted. 

E. Annual Reporting 

Once a property contains the required Set-Aside units and 

is in compliance with the LURA, the owner's obligations 

are reduced from monthly to annual reporting. Owners 

can use the same reporting form to complete their annual 

compliance report. Chapter 6 discusses compliance 

reports in greater detail. 

Reports are due at the end of the monitoring year 

established by the monitoring agency. The reports must 

include copies of the TIC forms (new certifications and 

recertifications) for each unit in the property. 

As with monthly reports, agencies review annual reports 

to check that the required occupancy is being maintained 

and that the contract rents are within published 

maximums. 

F. Periodic On-Site Reviews 

The owner and his or her management agent should 

anticipate periodic on-site reviews performed by the 

monitoring agency. The frequency of these reviews is at 

the discretion of the monitoring agency. Agencies must 

make on-site reviews at least once every three years, but 

may visit properties more frequently.9 

The purpose of the review is to assure that owners and 

their managers understand and comply with the terms of 

their LURAs. The visits are designed to help monitoring 

staff assure that program procedures are well understood 

and documented. For owners and managers, the visits 

afford an opportunity for owners to ask questions and 

receive technical assistance. 

In addition to answering questions and concerns of 

owners, state agency monitoring staff will: 

9

 Developments with less than 10 QUs are exempt from this on-site visit at the monitoring agency's 

discretion. If an on-site visit is not performed, the owner must cooperate with the monitoring agency by providing 

all the necessary supporting data for the agency’s review. 

AHP Owner's Compliance Manual 3-16 9/97 
0	 check compliance reports for accuracy by 

comparing them to the monthly unit listings (rent 

rolls) and tenant files; 

0	 confirm that tenant files include the necessary 

documents, income data and verifications; 

0	 assure that owners and managers have followed 

correct procedures for leasing units, including 

renting units under the Next Available Unit (NAU) 

and Next Available QU (NAQUs) rules, as 

appropriate; 

0	 review leases to confirm rents and inclusion of 

required provisions; and 

0	 visit a sample of units. 

G. Paying Annual Administrative Fee 

The LURA signed by all owners requires payment of an 

annual administrative fee. Like other affordable housing 

initiatives, such as tax credits and tax-exempt bond 

financing, the fee paid by owners helps offset a 

monitoring agency's costs of ensuring program 

compliance. 

Each year, monitoring agencies will send owners an 

invoice covering the fee for the upcoming year. The fee is 

due to the agency by the start of the next annual 

monitoring period. Failure to pay the fee constitutes a 

compliance violation and can lead to additional fees and 

further action by the agency or FDIC against the owner. 

3.6 PROPERTIES OUT OF COMPLIANCE 

Once a property reaches full compliance, there are two 

types of improper leasing practices which could move a 

property out of compliance: 

0	 making an incorrect determination of a tenant's 

eligibility; or 

0	 failing to properly replace QUs when they are 

vacated or re-designated. 

AHP Owner's Compliance Manual	 3-17 9/97 
If a review of the tenant file for a QU reveals an incorrect 

eligibility determination by the owner/manager 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, causing the property to 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 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 Total Set-Aside. 

When an owner fails to maintain the required number of 

QUs due to improper leasing practices, the property will 

be out of compliance with the LURA, and the owner must 

restore compliance by following the procedures for renting 

available units presented in Exhibit 3.3. 

EXHIBIT 3.3 

PROPERTIES OUT OF COMPLIANCE WITH OCCUPANCY REQUIREMENTS 

REQUIRED PROCEDURES FOR RENTING AVAILABLE UNITS 

Property Status Required Procedure 

Out of Compliance with Total 

Set-Aside (TSA) & VLI SetAside (VLI-SA): 

0 QUs (VLI+LI)< TSA 

0 VLI-QUs < VLI-SA 

Next available unit must be rented to LI or VLI 

households until the QUs meets both Set-Asides. 

Owners must hold enough of the units out of the 

Total Set-Aside to meet the VLI Set-Aside, and may 

not rent these VLI units to LIs. 

Out of Compliance with VLI 

Set-Aside: 

0 QUs (VLI+LI) = TSA 

0 VLI-QUs < VLI-SA 

Next Available QU must be rented to VLI household 

until number of VLI-QUs meets VLI Set-Aside. 

Out of Compliance with Total 

Set-Aside: 

0 QUs (VLI+LI)< TSA 

0 VLI-QUs = VLI-SA 

Next available unit must be rented to LI or VLI 

household until number of QUs meets Total SetAside. 

AHP Owner's Compliance Manual 3-18 9/97