§201H-47 - Real property; restrictions on transfer; waiver of restrictions.

§201H-47 Real property; restrictions on
transfer; waiver of restrictions. (a) The following restrictions shall
apply 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 the
purchaser wishes to transfer title to the real property, the corporation shall
have the first option to purchase the real property at a price that shall not exceed
the sum of:

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

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

(2) The corporation may purchase the real property
either:

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

(B) By conveyance subject to existing mortgages
and liens.

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

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

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

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

(iii) Any mortgage or lien created for any other
purpose; provided that the corporation has previously consented to it in
writing.

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

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

(4) After the end of the tenth year from the date of
initial purchase or execution of an agreement of sale, the purchaser may sell
the real property and sell or assign the property free from any price
restrictions; provided that the purchaser shall be required to pay to the
corporation 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 made
by the corporation in the acquisition, development, construction, and sale of
the real property, and any other amount expended by the corporation not counted
as costs under section 201H-45 but charged to the real property by good
accounting practice as determined by the corporation whose books shall be prima
facie evidence of the correctness of the costs;

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

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

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

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

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

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

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

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

(2) The sale or transfer of the real property would
be at a price and upon terms that preserve the intent of this section without
the necessity of the State repurchasing the real property; provided that, in
this case, the purchaser shall sell the real property and sell or assign the
real property to a person who is a "qualified resident" as defined in
section 201H-32; and provided further that the purchaser shall pay to the
corporation its share of appreciation in the real property as determined in
rules adopted pursuant to chapter 91, when applicable; or

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

(d) The corporation may release the
restrictions prescribed in subsection (a) or (b) if the real property is
financed under a federally subsidized mortgage program and the restrictions
would jeopardize the federal government's ability to recapture any interest
credit subsidies provided to the homeowner.

(e) The restrictions prescribed in this
section and sections 201H-49 to 201H-51 shall be automatically extinguished and
shall not attach in subsequent transfers of title when a mortgage holder or
other 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 a
foreclosure action is commenced; provided that the mortgage is the initial
purchase money mortgage, or that the corporation consented to and agreed to
subordinate the restrictions to the mortgage when originated, if the mortgage
is not the initial purchase money mortgage; or when a mortgage is assigned to a
federal housing agency. Any law to the contrary notwithstanding, a mortgagee
under a mortgage covering real property or leasehold interest encumbered by the
first option to purchase in favor of the corporation, prior to commencing
mortgage foreclosure proceedings, shall notify the corporation in writing of:

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

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

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

(f) The provisions of this section shall be
incorporated in any deed, lease, agreement of sale, or any other instrument of
conveyance issued by the corporation. In any sale by the corporation of real
property 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 or
deferred sales price, and the conditions of the subsidy or deferred sales price
shall be clearly stated at the beginning of the contract document issued by the
corporation. In any sale in which the corporation's share of appreciation in
real property is a restriction, the terms of the shared appreciation equity
program 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 to
market-priced units in an economically integrated housing project, except as
otherwise determined by the developer of the units; provided that preference
shall be given to qualified residents in the initial sale of market-priced
units.

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