What Is A Lura Agreement

Dec 20th, 2020 | By | Category: Uncategorized

LURA walks with the country. This means that when the new owner is sold, he will have to comply with the terms of the LURA. Lenders must also declare themselves ready to be subordinated to the LURA. The initial 15-year compliance period is implemented by IRS rules. The extension of the useful life, which is often an additional 15 years, is applied by state rules. Details can vary and can be found in the various LURA agreements. Ground restrictions are maintained during periods of limitation and compliance. The termination of LURA is based on: (a) compliance and limitation deadlines naturally expire in accordance with the LURA agreement; b) silos of lenders; C) certain qualified termination procedures. Multi-family real estate with a LURA contract or other regulatory contract (HAP contract) that limits rents and/or income is underwritten and treated differently from traditional market real estate.

In addition, the terms, costs and interest rates of loans may differ from those of a market-rate property. Most multi-family lenders deal with real estate with a restrictive agreement under an affordable housing program, in which a special team of professionals specially trained in affordable housing depreciates, processes and enters into loans. What is a Land Use Agreement (LURA) A Land Use Restriction Agreement (LURA) subjects multi-family real estate to a land use restriction contract (LURA) in which the owner waives part of his land use rights in exchange for the commitment of future tax credits, restrictions on tenant income, rental restrictions for lower-income tenants and other accessibility restrictions. Restrictions on land use are recorded in the ARUA, which is registered in the public registration and works with the country (i.e. the restriction of actions). As the LURA works with the land, if an apartment building is sold during the term of the contract, the LURA restrictions are mandatory for the purchaser. The objective of a LURA is to provide affordable housing to low-income households by limiting the maximum rent that can be calculated for a unit and by requiring that certain units or units be made available only to households with incomes below one percentage (for example. B 40%, 60%, 80% of average median income. LIHTC Tax Credits In exchange for submission to land use restrictions, LIHTC`s multi-family real estate owner receives a number of tax credits that allow dollar reductions for every dollar on their federal income taxes.

LIHTC real estate receives tax credits each year for the first 10 years of the contract. Tax credits are paid to the owner only because of his property on eligible property. Tax credits cannot be separated individually from the property, i.e.: You cannot sell tax credits. Since the tax credits remain on the property, an interest in the property can be sold, which results in the buyer receiving the tax credits. In addition to the basic requirement for a property to meet the 40/60 test or the 20/50 test and keep rents at this level for at least 15 years, the LURA agreements also include an extended utility period, often 15 years, but sometimes longer or shorter depending on the country. It is important to recognize that when an owner sells a property and the LURA is still active, the new purchaser must always follow all its rules. LIHTC credits depend on a project that distributes 40% of housing units to tenants who represent no more than 60% of median income (the 40/60 test) or allocate 20% of units to tenants who do not earn more than 50% of the median surface income (test 20/50). However, LRAs often go further by limiting unit rents for more project units or requiring a certain amount of units to be used for tenants, who even account for less than 50% of the MAI (i.e.

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