Deed Restriction FAQs

What are affordable housing deed restrictions? 

Affordable housing deed restrictions are legally binding rules written into the deed of a property to ensure the home remains affordable to low or moderate-income buyers over time. The purpose of deed restrictions is to preserve the affordability of the unit. The following are examples of what is included in deed restrictions:

  • Resale Price Limits: the property can only be resold at a price determined by a set formula, tied to the area median income, not the market value. This keeps the home affordable for future buyers
  • Income Eligibility: future buyers must meet income limits, usually a percentage of the area median income, to qualify. 
  • Owner Occupancy Requirements: the home must be occupied as a primary residence. Renting a unit out is strictly prohibited. 
  • Time Period of Restriction: these restrictions expire every 30 years. It is up to the homeowner if they would like to extend their deed restrictions for another 30 years. 
    • If you choose to extend your deed restrictions, they will last for another 30 years, and you will continue to be taxed at the affordable housing rate. You will not need to re-qualify. 
    • If you do not choose to extend your deed restrictions, you can stay in your home. It will be taxed at the market value rate. If you decide to sell your unit, outside of the affordable housing system, you will retain 5% of the profit, while 95% will go to the Affordable Housing Trust Fund. 
  • 95/5 Rule: see below.

What is the difference between the affordable housing deed restrictions and the deed itself?

The affordable housing deed restrictions and the actual deed are related legal documents, but they serve different purposes:

  • Deed: legal document that transfers ownership of a property from one person or entity to another. This document proves that you own your property. It includes the names of the buyer and seller, along with a legal description of the property and the type of ownership. 
  • Affordable Housing Deed Restrictions: legal limitation placed on a property that restricts how it can be used or sold. It includes income restrictions, caps on resale price, restrictions on renting out the property, etc. It does not transfer ownership like a deed, rather says what can be done with the property. 

I can't rent my affordable housing unit under the deed restrictions. If the restriction expires, can I then rent my unit and keep all of the profits from the rental income? 

If the deed restriction expires, there is no provision under the current version of the Uniform Housing Affordability Controls (UHAC) that we are aware of that would prohibit the owner from renting the unit. That being said, the owner would need to confirm with the HOA that renting the unit is permitted by the applicable governing documents before renting the unit. 

Will my association fees go up if I do not extend my affordability control? Will they go up anyway?

These are questions to be answered by the HOA. It is our understanding that the deed-restricted affordable units are currently subject to lower HOA fees than the market rate units. The HOA will determine whether association fees change once the HOA is informed that the deed restriction has expired on an affordable unit. The HOA will also determine whether there may be future HOA fee increases for the affordable units and the market units. 

What happens when I pass away? What value will my estate get for my home?

Under the current version of the Uniform Housing Affordability Controls (UHAC), certain transfers of property ownership are exempt from the typical resale restrictions that apply in a sale. These exemptions generally apply to transfers that do not involve a third-party sale but are instead the result of personal or legal circumstances, such as divorce or inheritance. 

The following types of ownership transfers are considered "exempt" or "non-sales," meaning they are not subject to the usual resale restrictions:

1. Transfer of ownership between former spouses resulting from a judicial decree of divorce or separation (note: this does not include sales to third parties). 

2. Transfer of ownership between family members by will or intestate succession (inheritance). 

3. Transfer of ownership through an Executor's Deed to a Class A beneficiary (e.g., a beneficiary named in the decedent's will). 

4. Transfer of ownership by court order, as directed by legal proceedings. 

Important Considerations:

  • Resale Restrictions Remain in Effect: While these transfers may be exempt from the standard restrictions on ownership of sale, resale restrictions on the property will still apply. If the property was deed-restricted under UHAC at the time of transfer, those restrictions remain in place even after the transfer of ownership. Therefore, if the new owner later decides to sell the property, the sale must be made to a certified low or moderate-income buyer, in accordance with UHAC and local municipal guidelines. 
  • Owner's Responsibility: The new owner (or their representative) is responsible for providing the Administrative Agent with the necessary documentation to verify that the transaction qualifies for an exemption. This may include legal documents such as divorce decrees, wills, or court orders. 

Impact on Property Value: 

The value of the property at the time of your death will depend on factors such as:

  • Its market value
  • Outstanding liens
  • Other obligations

However, if the property is subject to UHAC resale restrictions, the sale price will be limited by these controls, which are designed to ensure long-term affordability for future buyers. The sale price is capped at a maximum resale price, which is determined annually based on the regional income limits set by the Council on Affordable Housing (COAH). 

How will the FMV be calculated if I were to sell the home after letting the affordability controls expire (i.e., what is the based number that the 95/5 split will be calculated from? 

Under the current version of the Uniform Housing Affordability Controls (UHAC), all new ownership units created after July 14, 1989, and falling under COAH's jurisdiction are subject to the 95/5 rule. This rule applies to the first non-exempt transfer of title following the expiration of the deed restricted period, as outlined in the Recapture Mortgage recorded against the affordable unit. 

The 95/5 Rule stipulates that 95% of the difference between the maximum deed-restricted sales price (as determined by the Administrative Agent under the UHAC guidelines) and the actual fair market value or contract price at the time of sale must be returned to the Administrative Agent. The Administrative Agent then forwards this amount to the municipality =, where it will be used for affordable housing purposes, as monitored by COAH. 

The seller is entitled to the maximum deed-restricted sales price and 5% of the difference between the deed-restricted sales price and the actual fair market value or contract price at the time of the sale. 

For instance, if the deed-restricted sales price of a unit is $110,000 and the appraised unrestricted market value is $200,000, the difference is $90,000. 

  • The municipality would receive 95% of $90,000, which is $85,500.
  • The seller would receive 5% of the $90,000, which is $4,500, in addition to the deed-restricted sales price of $110,000. 

Thus, in this scenario, the seller would receive a total of $114,500 ($110,000 + $4,500), while the municipality would receive $85,500 for use in further affordable housing development.