source:
  type: guide
  id: usda-hb-3555-13.4
  authority: USDA SFH Guaranteed Loan Program Technical Handbook HB-1-3555 ¶13.4 —
    Restrictions On Resale Price
  description: USDA SFH Guaranteed Loan Program Technical Handbook HB-1-3555 ¶13.4
    — Restrictions On Resale Price.
  coverage_tier: operative
obligations:
- id: usda-hb-3555-13.4-full
  canonical_id: usda-hb-3555-13.4-full
  section: USDA SFH Guaranteed Loan Program Technical Handbook HB-1-3555 ¶13.4 — Restrictions
    On Resale Price
  type: do
  tags:
  - regulator-direct
  - usda
  - usda-handbook
  - corpus-expansion
  - tier-operative
  primary_source:
    tier: 1
    authority: USDA SFH Guaranteed Loan Program Technical Handbook HB-1-3555 ¶13.4
      — Restrictions On Resale Price
    source_class: usda-handbook
    source_url: https://www.rd.usda.gov/sites/default/files/hb-1-3555_consolidated.pdf
    snapshot_id: 0466acd1ea2d17a4
    fetched_at: '2026-05-25T14:10:13Z'
    content_hash: sha256:22ac6f998ff72578e318fca138ebe80fb18ae2fc701eb5936172f1842679a13a
    paragraph_quote: '13.4 RESTRICTIONS ON RESALE PRICE Restrictions on the resale
      price of the property or recapture of equity are permitted. A maximum sales
      price may be imposed or the sales proceeds due to the borrower may be limited,
      with any excess funds payable to a governmental body or nonprofit organization
      for reuse in a community land trust or to preserve long term affordability.
      When such restrictions apply, the requirements listed below must be met. x The
      borrower must be permitted to recover at least the original purchase price,
      sales commission, and cost of capital improvements when the borrower sells the
      property. x If the program permits the borrower to sell the property at market
      value but recaptures part of the equity, the Agency considers a reasonable share
      of appreciation to be at least 50 percent. The Agency does not object to situations
      whereby the borrower’s share of appreciation is on a sliding scale beginning
      at zero, provided that within two years the homeowner would be permitted to
      retain 50 percent of the appreciation. HB-1-3555 (03-09-16) SPECIAL PN 13-4
      Revised (05-05-25) PN 640 Guidance documents lack the force and effect of law,
      unless expressly authorized by statute or incorporated into a contract. USDA
      may not cite, use, or rely on any guidance that is not available through their
      guidance portal, except to establish historical facts. x The borrower must be
      permitted to recover a reasonable amount of appreciation, as determined by the
      lender. Appreciation is measured by the difference between the original purchase
      price and the actual price at which the property is resold. x If the program
      sets a maximum sales price restriction, the borrower must be permitted to retain
      100 percent of the appreciation. A. Right of First Refusal One method to ensure
      that housing remains part of an affordable housing program is to hold a “right
      of first refusal” or an “option right” that can be exercised when the borrower
      proposes to sell the home to a purchaser not eligible for the program benefits.
      Such a provision is permitted if all the requirements listed below are met.
      x The rights must be held only by a governmental body or eligible nonprofit
      organization and exercised by them, or someone they have identified as an eligible
      purchaser. x Any right must be exercised within 45 days after the holder of
      these rights may exercise them (for example, the rights are often triggered
      by a notice of sale from the borrower). x Any option price must allow the borrowers
      to recover their investment plus reasonable shares of appreciation. 13.5 LOANS
      ON LEASEHOLD ESTATES [7 CFR 3555.203(B)] Loans to finance the purchase of dwellings
      located on a leasehold estate may be guaranteed if the conditions described
      in this paragraph are met, and the applicants and the property otherwise meet
      the requirements outlined in this Handbook. A. Definition A leasehold estate
      is the right to use and occupy real estate for a stated term and under certain
      conditions that have been conveyed by a lease. In most cases, improvements to
      real estate are purchased in fee simple, subject to ground rent. Rent is paid
      for the right to use and occupy the land. The lender’s mortgage file must have
      documentation indicating the appropriate legal documents that have been reviewed
      for compliance with Agency regulations. HB-1-3555 (03-09-16) SPECIAL PN 13-5
      Revised (05-05-25) PN 640 Guidance documents lack the force and effect of law,
      unless expressly authorized by statute or incorporated into a contract. USDA
      may not cite, use, or rely on any guidance that is not available through their
      guidance portal, except to establish historical facts. B. Lease Requirements
      Mortgages subject to leasehold estates must meet the following conditions: x
      The mortgage must cover both property improvements and the leasehold interest
      in the land. x The leasehold estate must constitute real property, be subject
      to the mortgage lien, and be insured by a title policy. x The estate’s term
      runs fifteen or more years beyond the maturity date of the loan closing, except
      in the case of properties located on Native American restricted land. See Section
      13.6 for guidance regarding loans on Native American restricted land. x The
      leasehold estate must be assignable or transferable. x The lease cannot be terminated
      except for nonpayment of lease rents. The lease must: x Provide for lender notification
      of any default by the borrower and the option to cure the default. x Provide
      that the borrower will pay taxes, insurance, and association dues (as applicable)
      on the land and retain voting rights in the association. x Provide that the
      leasehold can be transferred, mortgaged, and sublet without restriction. x State
      rental increases in exact dollar amounts. x Be recorded and constitute an interest
      in real estate. x Permit mortgaging of the leasehold. x Provide for written
      notice of default. x Provide renewal options for the leasehold mortgagee. HB-1-3555
      (03-09-16) SPECIAL PN 13-6 Revised (10-12-23) PN 594 Guidance documents lack
      the force and effect of law, unless expressly authorized by statute or incorporated
      into a contract. USDA may not cite, use, or rely on any guidance that is not
      available through their guidance portal, except to establish historical facts.'
  judgment: false
