Md. Code Regs. 05.06.07.04

Current through Register Vol. 51, No. 21, October 18, 2024

Section 05.06.07.04 - Purchase and Loan Transaction

A. Offer to Purchase.

(1) An eligible nonprofit organization approved for participation in the Program as described in Regulation .05 of this chapter may make an offer to purchase an eligible property, as defined in Regulation .03B of this chapter, that is located in the operational area of the nonprofit organization.

(2) The offering price shall be the sales price set by the Division for that property.

(3) The purchase contract shall be in the form required by the Division.

B. Financing. The Department shall provide financing to the nonprofit purchaser on the following terms:

(1) The term of the loan shall be for 1 year from the date of purchase by the nonprofit organization, at which time the principal amount of the loan shall be repaid in full whether or not the nonprofit organization has sold the property as provided in §B(4) of this regulation;

(2) The interest rate shall be zero percent per year;

(3) The loan shall be secured by a deed of trust constituting a first lien on the property in favor of the Department;

(4) On or before the end of the 1-year loan term, the property shall be sold to a person or persons who intend to occupy the property as their principal residence, except as provided in §B(6) of this regulation;

(5) Before the Department releases the deed of trust, the nonprofit organization shall provide a copy of the contract with its purchaser and a certification by the purchaser of the intention to occupy the property as the purchaser's principal residence;

(6) If the nonprofit organization demonstrates to the satisfaction of the Department that it is not feasible to sell the property to a purchaser as provided in §B(4) of this regulation, the property may be rented or retained by the nonprofit organization;

(7) Renovation, marketing, sales, and other matters are solely the responsibility of the nonprofit organization that purchases the property; and

(8) The nonprofit organization shall agree that if the nonprofit organization fails to repay the loan when due, the nonprofit organization shall offer the Department a deed-in-lieu in the form approved by the Department, and the Department shall have the option of whether to accept the deed-in-lieu.

C. Settlement and Payment Terms.

(1) The Department shall execute a deed in the form approved by the Department.

(2) The nonprofit organization shall execute loan documents, including a note and deed of trust, in the form approved by the Department.

(3) The Department will pay settlement costs as defined in Regulation .03B(9) of this chapter.

(4) The Department shall waive reimbursement by the nonprofit organization at settlement for the organization's pro rata share of property taxes paid in advance by the Department.

(5) Settlement shall occur within 45 days of the date of the purchase contract, at a date and time mutually acceptable to the Division and the purchaser.

D. Limit on Number of Homes. An eligible nonprofit organization may not own, at any one time, more than two properties purchased through the Program.

Md. Code Regs. 05.06.07.04