What Is A Lura Agreement

What is a Land Use Limitation Agreement (LURA) A Land Use Restriction Agreement (LURA) subjects multi-family ownership to a Land Use Limitation Agreement (LURA), in which the owner gives up some of his land use rights in exchange for the promise of future tax credits, restrictions on tenants` income, unit quotas to be rented to low-income tenants and other affordability restrictions. Land use restrictions are documented in the LURA, which is recorded in the public record and runs with the land (i.e., restricted document). Since LURA works with the property, in the event that an apartment building is sold during the term of the contract, LURA`s restrictions are binding on the buyer. The purpose of an LURA is to provide affordable housing to low-income households by limiting the maximum rent that can be charged for a unit and by requiring that some or all units be provided only to households with an income of less than one percentage (e.g., 40%, 60%, 80% of the average median income). Impact on multifamily financing Properties with a LURA contract or other regulatory agreement (HAP contract) that limit rents and/or income are underwritten and treated differently from traditional market properties. In addition, credit conditions, costs and interest rates may differ from those of a market property. Most multifamily lenders treat real estate with a restrictive agreement as part of an affordable housing program, where a dedicated team of professionals specially trained in affordable housing sign, process, and complete the loan. LURA runs with the country. This means that when the property is sold, the new owner must comply with the terms of the LURA. Lenders must also agree to be subordinated to LURA. The initial compliance period of 15 years is enforced by IRS regulations.

The extended useful life, which is often an additional 15 years, is enforced by government regulations…