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(a) Resale price and terms. Except for foreclosure proceedings, any MPDU constructed or offered for sale or rent under this Chapter must not be resold or refinanced during the control period for a price greater than the original selling price plus:
(1) a percentage of the MPDU’s original selling price equal to the increase in the cost of living since the MPDU was first sold, as determined by the Consumer Price Index or other index as identified in Executive regulation;
(2) an allowance for capital improvements made to the MPDU between the date of original sale and the date of resale;
(3) if approved by the Director, an allowance for closing costs which were not paid by the original seller, but which will be paid by the original buyer for the benefit of the later buyer; and
(4) a reasonable sales commission.
In determining the amount of the allowance for improvements under paragraph (2), the Director may disallow the value of costs attributable solely to the maintenance and upkeep of the MPDU, or for luxury items. The resale price of an MPDU may be reduced if the physical condition of the unit reflects abnormal wear and tear because of neglect, abuse, or insufficient maintenance. Any personal property transferred in connection with the resale of an MPDU must not be included in the resale price of the MPDU. The Executive must establish procedures for calculating the allowable resale price of an MPDU under this subsection by method (1) regulation.
(b) Resale requirements during the control period.
(1) Any MPDU offered for resale during the control period must first be offered exclusively for up to 60 days to the Department and the Commission, in that order. The Department or the Commission may buy an MPDU when funds are available. The Department may buy an MPDU, or may assign its right to buy an MPDU to a designated agency, when the Director finds that the Department’s or a designated agency’s buying and reselling the MPDU will increase opportunities for eligible households to buy the MPDU. If the Department or the Commission does not buy the MPDU, the Department must notify eligible households of the availability of a resale MPDU. The MPDU may be sold through either of the following methods:
(A) The Department may establish a priority order under which eligible households who express interest in buying the MPDU may buy it at the approved resale price.
(B) The Department may notify the MPDU owner that the owner may sell the MPDU directly to any eligible household under the resale provisions of this Chapter.
(2) The Commission may purchase resale MPDUs in a particular development only if it did not previously purchase its full allotment of units at the initial offering. In no case may the Commission own more than 33.3 percent of the MPDUs in a particular development.
(3) A resale MPDU may be offered for sale to non-eligible households only after:
(A) the priority marketing period expires; and
(B) all eligible households who express an interest in buying it have been given an opportunity to do so.
(4) The Executive by regulation may adopt requirements for reselling MPDUs. The regulations may require a seller to submit to the Department for approval:
(A) a copy of the proposed sales contract;
(B) a signed copy of the settlement sheet; and
(C) an affidavit signed by the seller and buyer attesting to the accuracy of all documents and conditions of the sale.
(5) A transfer of an MPDU does not comply with this Chapter until all required documents and affidavits have been submitted to and approved by the Department.
(c) Payments to HIF during the control period. During the control period, if the Department determines that the design of the MPDU offered for resale would no longer comply with requirements for construction of a new MPDU or that the allowable resale price and fees associated with a multi-family condominium offered for resale would result in a monthly payment that is estimated to be at least 20% more than would be affordable to the maximum size MPDU household, the Director may permit the owner of the MPDU to sell the MPDU at market price, and the procedures for resale, including termination of the MPDU controls and release of restrictive covenants will be the same as for resale of an MPDU after the control period, as described in subsection (d).
(d) First sale after control period ends.
(1) If an MPDU originally offered for sale or rent after March 21, 1989, is sold or resold after its control period ends, upon the first sale of the MPDU the seller must pay to the Housing Initiative Fund one-half of the excess of the total resale price over the sum of the following:
(A) the original selling price;
(B) a percentage of the MPDU’s original selling price equal to the increase in the cost of living since the MPDU was first sold, as determined by the Consumer Price Index or other index as identified in Executive Regulation;
(C) an allowance for capital improvements made to the MPDU between the date of original sale and the date of resale; and
(D) a reasonable sales commission.
The Director must adjust the amount paid into the fund in each case so that the seller retains at least $10,000 of the excess of the resale price over the sum of the items in (A)--(D).
(2) The Director must find that the price and terms of a sale covered by subsection (d)(1) are bona fide and accurately reflect the entire transaction between the parties so that the full amount required under subsection (d)(1) is paid to the fund. When the Director finds that the amount due the fund is accurate and the Department of Finance receives the amount due, the Department must terminate the MPDU controls and execute a release of the restrictive covenants.
(3) The Department and the Commission, in that order, may buy an MPDU at any time during the control period, and may resell the MPDU to an eligible household. A resale by the Department or Commission starts a new control period.
(e) Original and later rent controls. Unless previously sold under subsection (d)(1), MPDUs built or offered for rent under this Chapter must not be rented for 99 years after the original rental at a rent greater than that established by Executive regulations. Procedures for original rentals of MPDUs are described in Section 25A-8. After the original rental, any MPDU (other than those built, sold, or rented under any federal, state, or local program offered by the Commission) offered for rent during the control period must be offered exclusively for 60 days to one or more eligible households, as determined by the Department, for use as that household’s residence. After the original rental, the Commission may lease MPDUs in a particular development only if it did not previously lease its full allotment of MPDUs at the initial offering. In no case may the Commission lease more than 33.3 percent of the MPDUs in a particular development. The Commission may assign its right to rent such MPDUs to low or moderate income households who are eligible for assistance under any federal, state, or local program identified in Executive regulations.
(f) Foreclosure or other court-ordered sales. If an MPDU is sold through a foreclosure or other court-ordered sale, all MPDU covenants must be released, and a payment must be made to the Housing Initiative Fund as follows:
(1) If the sale occurs during the control period, any amount of the foreclosure sale price which exceeds the total of the approved resale price under subsection (a), reasonable foreclosure costs, and liens recorded against the MPDU among the land records, must be paid to the Housing Initiative Fund.
(2) If the sale occurs after the control period, and the MPDU was originally offered for sale or rent after March 20, 1989, the payment to the Fund must be calculated under subsection (d), less reasonable foreclosure costs and liens recorded against the MPDU among the land records.
(3) If the MPDU is a rental unit, the resale price under subsections (a) and (d) must be calculated as provided in regulation.
(g) Waivers. The Director may waive the restrictions on the resale and re-rental prices for MPDUs if the Director finds that the restrictions conflict with regulations of federal or state housing programs and thus prevent eligible households from buying or renting MPDUs.
(h) Bulk transfers. This section does not prohibit the bulk transfer or sale of all or some of the sale or rental MPDUs in a subdivision within 30 years after the original rental or offering for sale if the buyer is bound by all covenants and controls on the MPDUs.
(i) Compliance. The County Executive must adopt regulations to promote compliance with this section and prevent practices that evade controls on rents and sales of MPDUs. (1974 L.M.C., ch. 17, § 1; 1978 L.M.C., ch. 31, § 5; 1979 L.M.C., ch. 21, § 5; 1982 L.M.C., ch. 6, § 1; 1984 L.M.C., ch. 24, § 28; 1989 L.M.C., ch. 27, § 1; 1990 L.M.C., ch. 46, § 1; 1994 L.M.C., ch. 29; 2001 L.M.C., ch. 25, § 1; 2004 L.M.C., ch. 29, § 1; 2018 L.M.C., ch. 20 , § 1.)
Editor’s note—2018 L.M.C., ch. 20, § 2, states: Regulations. The County Executive must submit the regulations required by Sections 25A-5, 25A-7, 25A-8, and 25A-9, as amended by this Act, to the Council for approval not later than October 15, 2018.
2004 L.M.C., ch. 29, § 2, states in part: "The amendments to Chapter 25A made by Section 1 of this Act which extend the control period for sale and rental MPDUs do not apply to any MPDU for which a sale contract or rental agreement was signed before April 1, 2005."
Section 25A-9(e) is interpreted in May Department Stores v. Montgomery County, 118 Md.App. 441, 702 A.2d 988 (1977), affirmed, 352 Md. 183, 721 A.2d 249 (1998), wherein this section is declared to be preempted by State law due to a conflict; the State provides for the priority of liens and the County may not change that priority.
Section 25A-9, formerly § 25A-7, was renumbered, retitled and amended pursuant to 1989 L.M.C., ch. 27, § 1.