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Section 42 Qualified Contracts

Section 42 Qualified Contracts. New Hampshire Housing Multi-Family Conference May 8, 2014. QCP Overview. Initial 15 year compliance period 1989 Reconciliation Act added the 15 year extended use period with an “opt out”

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Section 42 Qualified Contracts

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  1. Section 42Qualified Contracts New Hampshire Housing Multi-Family Conference May 8, 2014

  2. QCP Overview • Initial 15 year compliance period • 1989 Reconciliation Act added the 15 year extended use period with an “opt out” • The intent to balance preservation with incentive for investors to have back end possibility • “Bona fide” qualified contract

  3. QCP Terms and Conditions • Owners request to NHH • Unless you waived this right- LURA or other governing docs • Verify all Right of First Refusal • Properties Requirements

  4. QCP Requirements • First Year commencement • Submitting the QCP • Description of property • Photographs • Financial operating statements • First year 8609’s

  5. QCP Requirements • Annual partnership tax returns • Loan documents including Partnership Agreement • Physical Needs Assessment • Appraisal • Market Study • Phase I environmental (if necessary)

  6. QCP Review process • 60 days review of submittal • 60 days to validate the QCP • Once QCP has been approved commencement of the 1 year begins

  7. QCP Owner Requirements • Owner to hire a broker • Post summary data on our website • Cooperation with NHH on QCP, including additional project data • Provide access to the property for viewing

  8. Presenting the QC Price • NHH’s only obligation is to present a QC price • No requirement in IRC 42 that prospective buyer actually purchase the property • “Bona Fide” offer declined by owner

  9. Three Year “Ease Out” Period • No “Bona Fide” is presented • Three (3) year tenant protection period • Commencing on the termination of compliance period • Owner may not evict tenant (except for cause) • Increase gross rent except as permitted by Section 42

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