CROWN Toolkit

In year 10 of the initial compliance period, the Owner or Property Manager should send a Future Opportunity to Purchase letter to each existing household indicating the date their home will become eligible for purchase by the household. Any household that moves into a home subsequent to year 10 should receive a Future Opportunity to Purchase letter. Financial and Homeownership classes should continue. The compliance staff will connect the property with the NIFA homeownership department staff to identify potential financing products.

At the end of year 15, each household should be sent a Notice of Opportunity to Purchase their unit. The household must acknowledge receipt of this notice in writing and indicate if they intend to purchase the home or continue to rent. Once a household is ready to purchase their home, the items in our CROWN Checklists must be submitted: 

1.    Payment of $500 Administration Fee per sale

a.    This fee CANNOT be taken out of the tenant’s escrow account

2.    Current Year Compliance Documentation for Unit

3.    Certificate of Good Standing for the Owner

a.    Dated within 6 months of the sale

4.    Owner certification of all outstanding debt at the time of the sale

5.    Third party payoff amount of debt as of the date of sale

a.    Also, documentation that the current lender will release the property after the sale

6.    Owner Certification that the sale price does not exceed the price calculated under the Qualified Contract provision under Section 42(h)(6)(F):

a.    The homes will be sold for a price, as determined by [Owner] that is no less than the minimum price determined under Section 42(i)(7) of the Internal Revenue Code of 1986 as amended and no greater than the Qualified Contract Price.

The minimum purchase price is an amount equal to the sum of:

(I)    The principal amount of outstanding indebtedness secured by each home (other than indebtedness incurred within the 5-year period ending on the date of the sale to the tenants),  

(II)    All Federal, State, and local taxes attributable to the sale.

The Qualified Contract price or maximum purchase price is calculated as follows:

(i) The sum of

(I) The outstanding indebtedness secured by, or with respect to, the building, plus

(II) The adjusted investor equity in the building, plus

(III) Other capital contributions not reflected in the amounts described in subclause (I) or (II), reduced by

(ii) Cash distributions from (or available for distribution from) the project.

b.    Documentation of how the Qualified Contract price was calculated

(I)    This will be done once with the first sale only

7.    Third party appraisal dated within one (1) year of closing to determine the fair market price

8.    Owner certification of the length of occupancy for the qualified tenant

9.    Owner certification of the amount of the tenant escrow and the use of the funds

a.    Since the tenant escrow is placed in an interest-bearing account, all applicable interest in the account will be given to the tenant.

10.    Title Commitment detailing the legal description for the applicable property

11.    Copy of the purchase agreement

12.    Draft of the Closing Disclosure

a.    A real estate commission is not allowed.

13.    Notice of Opportunity to Purchase

a.    Participation Agreement given to tenant(s) at move-in that explains the CROWN program.

b.    Letter given to tenant(s) at year 10 that explains they will have the option to purchase the home after year 15.

c.    Letter given to the tenant(s) after year 15 notifying the tenants of their option to purchase the home.

14.    Repair/replacement documentation

a.    Documentation for the items in Section 2, #6 of the CROWN Program Commitment Letter must be provided.

i.    A statement certifying the repairs that have been completed along with an explanation of the source of funds that paid for such repairs. (i.e. replacement reserves, operating reserves or short term financing)

ii.    If repairs were made previously in the last 5 years, please provide documentation and we will take this under advisement.

15.    If the project resides on Tribal Land, include the following:

a.    Written Approval to convey/sell project units from US Department of Interior, Bureau of Indian Affairs (BIA)

b.    Copy of the Land Lease and Building Deed

i.    Submitted with the first sale for this project

c.    Submit for each house:

i.    Fully executed land lease between tribe and homeowner

ii.    Copy of the certified Title Status Report (TSR) once recorded with the BIA/Land Titles and Records Office (LTRO)

16.    Any Additional documentation

NIFA will review the items detailed in the original CROWN Program Commitment Letter to ensure the commitments are adhered to.

Purchase Price: In order to set up the tenant for success, NIFA highly encourages the purchase price to result in a monthly mortgage payment (PITI) that does not exceed the amount of the tenant’s rent at the time of the sale, to the greatest extent possible, or 75% of the appraised value, whichever is lower. Should the mortgage payment from the purchase price be more than the household is currently paying in rent, please explain actions taken to evaluate or ensure that the tenant will be able to sustainably make ongoing mortgage payments.

Replacement Reserves: Funds held in the development’s replacement reserves are to be used to improve the unit. Identified replacements or repairs should be made prior to the sale to a qualified household. This ensures that the household is not burdened with major repairs or replacements in the initial years after purchasing the house. If there are funds left in replacement reserves for this unit after renovations have been completed, NIFA will require the owner to provide an explanation of what is planned for these funds (i.e. spread across other units, repairs to common areas).

Warranty Deeds: When a household purchases a CROWN home a Special Warranty Deed will be put on the property. If the household has resided in the unit for less than 10 years the Deed will have a clause that a portion of the equity will be paid to NIFA if the property is resold prior to 10 years of occupancy.

Homes not sold to tenants: Tenants who choose not to purchase the home or are not able to purchase the home shall have the right to continue to rent the home. The owner may not terminate tenancy or evict the household for other than good cause. The home will stay in the program through the affordability period or until the home is purchased by a qualified household.  A CROWN home may be sold to a tenant at any time after the initial 15-year compliance period.