N.Y. Comp. Codes R. & Regs. tit. 9 § 277.5

Current through Register Vol. 46, No. 50, December 11, 2024

Section 277.5 - Replacement housing payments

(a) Replacement housing payments for 180-day homeowner-occupants.

(1) Eligibility. A displaced person is eligible for the replacement housing payment for a 180-day homeowner-occupant if the person:

(i) has actually owned and occupied the displacement dwelling for not less than 180 days immediately prior to the initiation of negotiations; and

(ii) purchases and occupies a decent, safe and sanitary replacement dwelling within one year after the later of the following dates (except that the agency may extend such one year period for good cause):

(a) the date the person receives final payment for the displacement dwelling or the date the required amount is deposited; or

(b) the date the agency identifies for the displacee replacement housing actually available within the limits of the offer extended for replacement housing.

(2) Amount of payment The replacement housing payment for an eligible 180- day homeowner-occupant may not exceed $22,500. (See also section 277.5[d]). The payment under this section is limited to the amount necessary to relocate to a comparable replacement dwelling within one year from the date the displaced homeowner-occupant is paid for the displacement dwelling, or the date such person is initially offered a comparable replacement dwelling, whichever is later. The payment shall be the sum of:

(i) the amount by which the cost of a replacement dwelling exceeds the acquisition cost of the displacement dwelling as determined in accordance with paragraph (3) of this subdivision;

(ii) the increased interest costs and other debt service costs which are incurred in connection with the mortgage(s) on the replacement dwelling as determined in accordance with paragraph (4) of this subdivision; and

(iii) the reasonable expenses incidental to the purchase of the replacement dwelling as determined in accordance with paragraph (5) of this subdivision.

(3) Price differential.

(i) Basic computation. The price differential to be paid under subparagraph (2)(i) of this paragraph is the amount which must be added to the acquisition cost of the displacement dwelling to provide a total amount equal to the lesser of:

(a) the reasonable cost of a comparable replacement dwelling as determined in accordance with section 277.5(c)(1); or

(b) the purchase price of the decent, safe and sanitary replacement dwelling actually purchased and occupied by the displaced person.

(ii) Mixed-use and multi-family properties. If the displacement dwelling was part of a property that contained another dwelling unit and/or space used for nonresidential purposes, and/or is located on a lot larger than typical for residential purposes, only that portion of the acquisition payment which is actually attributable to the displacement dwelling shall be considered its acquisition cost when computing the price differential.

(iii) Insurance proceeds. To the extent necessary to avoid duplicate compensation, the amount of any insurance proceeds received by a person in connection with a loss to the displacement dwelling due to a catastrophic occurrence (fire, flood, etc.) shall be included in the acquisition cost of the displacement dwelling when computing the price differential.

(iv) Owner retention of displacement dwelling. If the owner retains ownership of the displacement dwelling, moves it from the displacement site and reoccupies it on a replacement site, the purchase price of the replacement dwelling shall be the sum of:

(a) the cost of moving and restoring the dwelling to a condition comparable to that prior to the move; and

(b) the cost of making the unit a decent, safe, and sanitary replacement dwelling; and

(c) the current fair market value for residential use of the replacement site, unless the claimant rented the displacement site and there is a reasonable opportunity for the claimant to rent a suitable replacement site; and

(d) the retention value of the dwelling, if such retention value is reflected in the "acquisition cost" used when computing the replacement housing payment.

(4) Increased mortgage interest costs. The payment shall be an amount which will reduce the mortgage balance on the replacement dwelling to an amount which would be amortized with the same monthly payment for principal and interest as that for the mortgage(s) on the displacement dwelling. In addition, payments shall include other debt service costs, if not paid as incidental costs, and shall be based only on bona fide mortgages that were valid liens on the displacement dwelling for at least 180 days prior to the initiation of negotiations. Subparagraphs (i)-(v) of this paragraph shall apply to the computation of the increased mortgage interest costs payment, which payment shall be contingent upon a mortgage being placed on the replacement dwelling.

(i) The payment shall be based on the unpaid mortgage balances on the displacement dwelling; however, in the event the person obtains a smaller mortgage than the mortgage balance(s) computed in the buydown determination, the amount computed as the buydown payment must be adjusted to reflect the change. This can be done through proration by dividing the amount of the actual replacement mortgage by the computed eligible replacement mortgage amount. This calculation provides a percentage factor which can be applied to the computed buydown amount resulting in an adjusted increased mortgage interest payment. In the case of a home equity loan the unpaid balance shall be that balance which existed 180 days prior to the initiation of negotiations or the balance on the date of acquisition, whichever is less.

(ii) The payment shall be based on the remaining term of the mortgage(s) on the displacement dwelling or the term of the new mortgage, whichever is shorter.

(iii) The interest rate on the new mortgage used in determining the amount of the payment shall not exceed the prevailing fixed interest rate for conventional mortgages currently charged by mortgage lending institutions in the area in which the replacement dwelling is located.

(iv) Purchaser's points and loan origination or assumption fees, but not seller's points, shall be paid to the extent:

(a) they are not paid as incidental expenses;

(b) they do not exceed rates normal to similar real estate transactions in the area;

(c) the agency determines them to be necessary; and

(d) the computation of such points and fees shall be based on the unpaid mortgage balance on the displacement dwelling, less the amount determined for the reduction of such mortgage balance under this paragraph.

(5) Incidental expenses. The incidental expenses to be paid under subparagraph (2)(iii) of this subdivision or section 277.5(b)(3)(i) are those necessary and reasonable costs actually incurred by the displaced person incident to the purchase of a replacement dwelling and customarily paid by the buyer, including:

(i) legal, closing and related costs, including those for title search, preparing conveyance instruments, notary fees, preparing surveys and plats and recording fees;

(ii) lender, FHA or VA application and appraisal fees;

(iii) loan origination or assumption fees that do not represent prepaid interest;

(iv) certification of structural soundness and termite inspection when required;

(v) credit report;

(vi) owner's and mortgagee's evidence of title, e.g., title insurance, not to exceed the costs for a comparable replacement dwelling;

(vii) escrow agent's fee;

(viii) State revenue or documentary stamps, sales or transfer taxes (not to exceed the costs for a comparable replacement dwelling);

(ix) such other costs as the agency determines to be incidental to the purchase.

(6) Rental assistance payment for 180-day homeowner. A 180-day homeowner-occupant, who could be eligible for a replacement housing payment under paragraph (1) of this subdivision but elects to rent a replacement dwelling, is eligible for a rental assistance payment not to exceed $5,250, computed and disbursed in accordance with subdivision (b) of this section.

(b) Replacement housing payment for 90-day occupants.

(1) Eligibility. A tenant or owner-occupant displaced from a dwelling is entitled to a payment not to exceed $5,250 for rental assistance, as computed in accordance with paragraph (2) of this subdivision, or downpayment assistance, as computed in accordance with paragraph (3) of this subdivision, if such displaced person:

(i) has actually and lawfully occupied the displacement dwelling for at least 90 days immediately prior to the initiation of negotiations; and

(ii) has rented, or purchased, and occupied a decent, safe and sanitary replacement dwelling within one year (unless the agency extends this period for good cause) after:

(a) for a tenant, the date the person moved from the displacement dwelling; or

(b) for an owner-occupant, the later of:

(1) the date the person receives final payment for the displacement dwelling; or

(2) the date the person moves from the displacement dwelling.

(2) Rental assistance payment.

(i) Amount of payment. An eligible displaced person who rents a replacement dwelling is entitled to a payment not to exceed $5,250 for rental assistance. (See also section 277.5[d].) Such payment shall be 42 times the amount obtained by subtracting the base monthly rental for the displacement dwelling from the lesser of:

(a) the monthly rent and estimated average monthly cost of utilities for a comparable replacement dwelling; or

(b) the monthly rent and estimated average monthly cost of utilities for the decent, safe and sanitary replacement dwelling actually occupied by the displaced person.

(ii) Base monthly rental for displacement dwelling. The base monthly rental for the displacement dwelling is the lesser of:

(a) the average monthly cost for rent and utilities at the displacement dwelling for a reasonable period prior to displacement, as determined by the agency. (For an owner- occupant, use the fair market rent for the displacement dwelling. For a tenant who paid little or no rent for the displacement dwelling, use the fair market rent, unless its use would result in a hardship because of the person's income or other circumstances);

(b) thirty (30) percent of the person's average gross household income. (If the person refuses to provide appropriate evidence of income or is a dependent, the base monthly rental shall be established solely on the criteria in clause (2)(ii)(a) of this subdivision. A full time student or resident of an institution may be assumed to be a dependent, unless the person demonstrates otherwise);

(c) the total of the amounts designated for shelter and utilities if receiving a welfare assistance payment from a program that designates the amounts for shelter and utilities.

(iii) Manner of disbursement. A rental assistance payment may, at the agency's discretion, be disbursed in either a lump sum or in installments. However, except as limited by paragraph (c)(6) of this section, the full amount vests immediately, whether or not there is any later change in the person's income or rent, or in the condition or location of the person's housing.

(3) Downpayment assistance payment.

(i) Amount of payment. An eligible displaced person who purchases a replacement dwelling is entitled to a downpayment assistance payment in the amount the person would receive under paragraph (2) of this section if the person rented a comparable replacement dwelling. However, the payment to a displaced homeowner shall not exceed the amount the owner would receive under section 277.5(a)(2) if the 180-day occupancy requirement was met. A displaced person eligible to receive a payment as a 180-day owner-occupant under section 277.5(a)(1) is not eligible for this payment.

(ii) Application of payment. The full amount of the replacement housing payment for downpayment assistance must be applied to the purchase price of the replacement dwelling and related incidental expenses.

(c) Additional rules governing replacement housing payments.

(1) Determining cost of comparable replacement dwellings. The upper limit of a replacement housing payment shall be based on the cost of a comparable replacement dwelling.

(i) If available, at least three comparable replacement dwellings shall be examined and the payment computed on the basis of the dwelling most nearly representative of, and equal to, or better than, the displacement dwelling. An adjustment shall be made to the asking price of any dwelling, to the extent justified by local market data. An obviously overpriced dwelling may be ignored.

(ii) If the site of the comparable replacement dwelling lacks a major exterior attribute of the displacement dwelling site, (e.g., the site is significantly smaller or does not contain a swimming pool), the value of such attribute shall be subtracted from the acquisition cost of the displacement dwelling for purposes of computing the payment.

(iii) If the acquisition of a portion of a typical residential property causes the displacement of the owner from the dwelling and the remainder is a buildable residential lot, the agency may offer to purchase the entire property. If the owner refuses said offer to sell the remainder, the fair market value of the remainder may be added to the acquisition cost of the displacement dwelling for purposes of computing the replacement housing payment.

(iv) To the extent feasible, comparable replacement dwellings shall be selected from the neighborhood in which the displacement dwelling was located or, if that is not possible, in nearby or similar neighborhoods where housing costs are generally the same or higher.

(2) Inspection of replacement dwelling. Before making a replacement housing payment or releasing a payment from escrow, the agency or its designated representative shall inspect the replacement dwelling and determine whether it is a decent, safe and sanitary dwelling.

(3) Purchase of replacement dwelling. A displaced person is considered to have met the requirement to purchase a replacement dwelling, if the person:

(i) purchases a dwelling; or

(ii) purchases and rehabilitates a substandard dwelling; or

(iii) relocates a dwelling which the person owns or purchases; or

(iv) constructs a dwelling on a site the person owns or purchases; or

(v) contracts for the purchase or construction of a dwelling on a site provided by a builder or on a site the person owns or purchases; or

(vi) currently owns a previously purchased dwelling and site, valuation of which shall be on the basis of current fair market value.

(4) Occupancy requirements for displacement or replacement dwelling. No person shall be denied eligibility for a replacement housing payment solely because the person is unable to meet the occupancy requirements set forth in these regulations for a reason beyond the person's control, including:

(i) a disaster, an emergency, or an imminent threat to the public health or welfare, as determined by the President, State or the agency; or

(ii) another reason, such as a delay in the construction of the replacement dwelling, military reserve duty, or hospital stay, as determined by the agency.

(5) Conversion of payment. A displaced person who initially rents a replacement dwelling and receives a rental assistance payment under section 277.5(b)(2) is eligible to receive a payment under section 277.5(a) or section 277.5(b)(3) if the person meets the eligibility criteria for such payments, including purchase and occupancy within the prescribed 1 year period. Any portion of the rental assistance payment that has been disbursed shall be deducted from the payment computed under section 277.5(a) or section 277.5(b)(3).

(6) Payment after death. A replacement housing payment is personal to the displaced person and on the person's death the undisbursed portion of any such payment shall not be paid to the heirs or assigns, except that:

(i) The amount attributable to the displaced person's period of actual occupancy of the replacement housing shall be paid.

(ii) The full payment shall be disbursed in any case in which a member of a displaced family dies and the other family members continue to occupy a decent, safe and sanitary replacement dwelling.

(iii) Any portion of a replacement housing payment necessary to satisfy the legal obligations of an estate in connection with the selection of a replacement dwelling by or on behalf of a deceased person shall be disbursed to the estate.

(d) Replacement housing of last resort.

(1) Determination to provide replacement housing of last resort. Whenever a program or project cannot proceed on a timely basis because comparable replacement dwellings are not available within the monetary limits for owners or tenants as specified in section 277.5(a) or section 277.5(b), as appropriate, the agency shall provide additional or alternate assistance under the provisions of this subdivision. Any decision to provide last resort housing assistance must be adequately justified either:

(i) On a case-by-case basis, for good cause, which means that appropriate consideration has been given to:

(a) the availability of comparable housing in the project or program area; and

(b) the resources available to provide comparable housing; and

(c) the individual circumstances of the displaced person; or

(ii) By a determination that:

(a) there is little, if any, comparable replacement housing available to displaced persons within an entire project or program area and, therefore, last resort housing assistance is necessary for the area as a whole; and

(b) a project or program cannot be advanced to completion in a timely manner without last resort housing assistance; and

(c) the method selected for providing last resort housing assistance is cost-effective, considering all elements which contribute to total project or program costs.

(2) Basic rights of persons to be displaced. Notwithstanding any provision of this subdivision, no person shall be required to move from a displacement dwelling unless comparable replacement housing is available to such person. No person may be deprived of any rights provided under this Part. The agency shall not require any displaced person to accept a dwelling provided by the agency under this Part (unless the agency and the displaced person have entered into a contract to do so) in lieu of any acquisition payment or any relocation payment for which the person may otherwise be eligible.

(3) Methods of providing comparable replacement housing. The agency shall have broad latitude in implementing this section, but implementation shall be for reasonable cost, on a case-by-case basis unless an exception to case-by-case analysis is justified for an entire project.

(i) The methods of providing housing of last resort include, but are not limited to:

(a) a replacement housing payment in excess of the limits set forth in section 277.5(a) or section 277.5(b). A rental assistance subsidy under this section may be provided in installments or in a lump sum at the agency's discretion;

(b) rehabilitation of and/or additions to an existing replacement dwelling;

(c) the construction of a new replacement dwelling;

(d) the relocation and, if necessary, rehabilitation of a dwelling;

(e) the purchase of land and/or a replacement dwelling by the agency and subsequent sale or lease to or exchange with a displaced person;

(f) the removal of barriers to the handicapped; and

(g) the change in status of the displaced person, with the person's concurrence, from tenant to homeowner when it is more cost-effective to do so, as in cases where a downpayment may be less expensive than a last resort rental assistance payment.

(ii) Under special circumstances, consistent with the definition of a comparable replacement dwelling, modified methods of providing housing of last resort permit consideration of replacement housing based on space and physical characteristics different from those in the displacement dwelling, including upgraded, but smaller replacement housing that is decent, safe and sanitary and adequate to accommodate individuals or families displaced from marginal or substandard housing with probable functional obsolescence. In no event, however, shall a displaced person be required to move into a dwelling that is not functionally equivalent to the displacement dwelling.

(iii) The agency shall provide assistance under this subdivision to a displaced person who is not eligible to receive a replacement housing payment under section 277.5(a) or section 277.5(b) because of failure to meet the length-of-occupancy requirement when comparable replacement rental housing is not available at rental rates within the person's financial means, which is 30 percent of the person's gross monthly household income. Such assistance shall cover a period of 42 months.

N.Y. Comp. Codes R. & Regs. Tit. 9 § 277.5