§201H-47  Real property; restrictions ontransfer; waiver of restrictions.  (a)  The following restrictions shallapply to the transfer of real property developed and sold under this chapter,whether in fee simple or leasehold:

(1)  For a period of ten years after the purchase,whether by lease, assignment of lease, deed, or agreement of sale, if thepurchaser wishes to transfer title to the real property, the corporation shallhave the first option to purchase the real property at a price that shall not exceedthe sum of:

(A)  The original cost to the purchaser, asdefined in rules adopted by the corporation;

(B)  The cost of any improvements added by thepurchaser, as defined in rules adopted by the corporation; and

(C)  Simple interest on the original cost andcapital improvements to the purchaser at the rate of one per cent a year;

(2)  The corporation may purchase the real propertyeither:

(A)  By conveyance free and clear of allmortgages and liens; or

(B)  By conveyance subject to existing mortgagesand liens.

If the real property is conveyed in themanner provided in subparagraph (A), it shall be conveyed to the corporationonly after all mortgages and liens are released.  If the real property isconveyed in the manner provided in subparagraph (B), the corporation shallacquire the property subject to any first mortgage created for the purpose ofsecuring the payment of a loan of funds expended solely for the purchase of thereal property by the seller; and any mortgage or lien created for any otherpurpose provided that the corporation has previously consented to it inwriting.

The corporation's interest created bythis section shall constitute a statutory lien on the real property and shallbe superior to any other mortgage or lien except for:

(i)  Any first mortgage created for the purposeof securing the payment of a loan of funds expended solely for the purchase ofthe real property by the seller;

(ii)  Any mortgage insured or held by a federalhousing agency; and

(iii)  Any mortgage or lien created for any otherpurpose; provided that the corporation has previously consented to it inwriting.

The amount paid by the corporation to theseller shall be the difference, if any, between the purchase price determinedby paragraph (1)(A) to (C), and the total of the outstanding principal balancesof the mortgages and liens assumed by the corporation;

(3)  A purchaser may refinance real property developedand sold under this chapter; provided that the purchaser shall not refinancethe real property within ten years from the date of purchase for an amount inexcess of the purchase price as determined by paragraph (1)(A) to (C); providedfurther that the purchaser shall obtain the corporation's written consent ifany restriction on the transfer of the real property remains applicable;

(4)  After the end of the tenth year from the date ofinitial purchase or execution of an agreement of sale, the purchaser may sellthe real property and sell or assign the property free from any pricerestrictions; provided that the purchaser shall be required to pay to thecorporation the sum of:

(A)  The balance of any mortgage note,agreement of sale, or other amount owing to the corporation;

(B)  Any subsidy or deferred sales price madeby the corporation in the acquisition, development, construction, and sale ofthe real property, and any other amount expended by the corporation not countedas costs under section 201H-45 but charged to the real property by goodaccounting practice as determined by the corporation whose books shall be primafacie evidence of the correctness of the costs;

(C)  Interest on the subsidy or deferred salesprice, if applicable, and any other amount expended at the rate of seven percent a year computed as to the subsidy or deferred sales price, if applicable,from the date of purchase or execution of the agreement of sale, and as to anyamount expended, from the date of expenditure; provided that the computedinterest shall not extend beyond thirty years from the date of purchase or executionof the agreement of sale of the real property.  If any proposed sale ortransfer will not generate an amount sufficient to pay the corporation the sumas computed under this paragraph, the corporation shall have the first optionto purchase the real property at a price that shall not exceed the sum ascomputed under paragraphs (1) and (2); and

(D)  The corporation's share of appreciation inthe real property as determined under rules adopted pursuant to chapter 91,when applicable;

(5)  Notwithstanding any provision in this section tothe contrary, pursuant to rules adopted by the corporation, the subsidy ordeferred sales price described in paragraph (4)(B) and any interest accruedpursuant to paragraph (4)(C) may be paid, in part or in full, at any time; and

(6)  Notwithstanding any provision in this section tothe contrary, the corporation's share of appreciation in the real propertydescribed in paragraph (4)(D):

(A)  Shall apply when the sales price of thereal property that is developed and sold under this chapter is less than thethen-current, unencumbered, fair market value of the real property asdetermined by a real property appraisal obtained prior to the closing of thesale;

(B)  Shall be a restriction that runs with theland until it is paid in full and released by the corporation, or extinguishedpursuant to subsection (e); and

(C)  May be paid, in part or in full, at anytime after recordation of the sale.

(b)  For a period of ten years after thepurchase, whether by lease, assignment of lease, deed, or agreement of sale, ifthe purchaser wishes to transfer title to the real property, and if thecorporation does not exercise the option to purchase the real property asprovided in subsection (a), then the corporation shall require the purchaser tosell the real property to a "qualified resident" as defined insection 201H‑32, and upon the terms that preserve the intent of thissection and sections 201H-49 and 201H-50, and in accordance with rules adoptedby the corporation.

(c)  The corporation may waive the restrictionsprescribed in subsection (a) or (b) if:

(1)  The purchaser wishes to transfer title to thereal property by devise or through the laws of descent to a family member whowould otherwise qualify under rules established by the corporation;

(2)  The sale or transfer of the real property wouldbe at a price and upon terms that preserve the intent of this section withoutthe necessity of the State repurchasing the real property; provided that, inthis case, the purchaser shall sell the real property and sell or assign thereal property to a person who is a "qualified resident" as defined insection 201H-32; and provided further that the purchaser shall pay to thecorporation its share of appreciation in the real property as determined inrules adopted pursuant to chapter 91, when applicable; or

(3)  The sale or transfer is of real property subjectto a sustainable affordable lease as defined in section 516-1.

(d)  The corporation may release therestrictions prescribed in subsection (a) or (b) if the real property isfinanced under a federally subsidized mortgage program and the restrictionswould jeopardize the federal government's ability to recapture any interestcredit subsidies provided to the homeowner.

(e)  The restrictions prescribed in thissection and sections 201H-49 to 201H-51 shall be automatically extinguished andshall not attach in subsequent transfers of title when a mortgage holder orother party becomes the owner of the real property pursuant to a mortgage foreclosure,foreclosure under power of sale, or a conveyance in lieu of foreclosure after aforeclosure action is commenced; provided that the mortgage is the initialpurchase money mortgage, or that the corporation consented to and agreed tosubordinate the restrictions to the mortgage when originated, if the mortgageis not the initial purchase money mortgage; or when a mortgage is assigned to afederal housing agency.  Any law to the contrary notwithstanding, a mortgageeunder a mortgage covering real property or leasehold interest encumbered by thefirst option to purchase in favor of the corporation, prior to commencingmortgage foreclosure proceedings, shall notify the corporation in writing of:

(1)  Any default of the mortgagor under the mortgagewithin ninety days after the occurrence of the default; and

(2)  Any intention of the mortgagee to foreclose themortgage under chapter 667 forty-five days prior to commencing mortgageforeclosure proceedings;

provided that the mortgagee's failure to provide writtennotice to the corporation shall not affect the mortgage holder's rights underthe mortgage.  The corporation shall be a party to any foreclosure action, andshall be entitled to its share of appreciation in the real property asdetermined under this chapter in lien priority when the payment is applicable,and if foreclosure occurs within the ten-year period after the purchase, thecorporation shall also be entitled to all proceeds remaining in excess of allcustomary and actual costs and expenses of transfer pursuant to default,including liens and encumbrances of record; provided that the person in defaultshall be entitled to an amount that shall not exceed the sum of amountsdetermined pursuant to subsection (a)(1)(B) and (C).

(f)  The provisions of this section shall beincorporated in any deed, lease, agreement of sale, or any other instrument ofconveyance issued by the corporation.  In any sale by the corporation of realproperty for which a subsidy or deferred sales price was made by the corporation,the amount of the subsidy or deferred sales price described in subsection(a)(4)(B), a description of the cost items that constitute the subsidy ordeferred sales price, and the conditions of the subsidy or deferred sales priceshall be clearly stated at the beginning of the contract document issued by thecorporation.  In any sale in which the corporation's share of appreciation inreal property is a restriction, the terms of the shared appreciation equityprogram shall be clearly stated and included as an exhibit in any deed, lease,agreement of sale, or any other instrument of conveyance.

(g)  This section need not apply tomarket-priced units in an economically integrated housing project, except asotherwise determined by the developer of the units; provided that preferenceshall be given to qualified residents in the initial sale of market-pricedunits.

(h)  The corporation is authorized to waive anyof the restrictions set forth in this section in order to comply with orconform to requirements set forth in federal law or regulations governingmortgage insurance or guarantee programs or requirements set forth by federallychartered secondary mortgage market participants. [L 2006, c 180, pt of §3; amL 2007, c 186, §1; am L 2009, c 38, §2]