Resale Restrictions
2011
Resale Restrictions are a right in perpetuity or for a certain number of years, stated in the form of a restriction, easement, covenant, or condition in any deed, mortgage, ground lease, agreement, or other instrument executed by or on behalf of the owner of the land.
Resale Restrictions may limit the use of all or part of the land to occupancy by persons or families of low- or moderate-income or on the basis of age. (Senior communities must comply with applicable laws.)
Resale Restrictions may also restrict the resale price of the property to ensure it is available to future low- and moderate-income borrowers. The restricted resale price provides a subsidy to the homeowner, in an amount equal to the difference between the sales price and the market value of the property without resale restrictions.
Resale Restrictions are binding on current and subsequent property owners, and remain in effect until they are formally removed or modified, or terminate in accordance with their terms, such as at a foreclosure sale or upon acceptance of a deed-in-lieu of foreclosure.
This topic does not pertain to Community Land Trust ground leases. However, if a Community Land Trust uses a restriction, easement, covenant, or condition in any deed, mortgage, agreement, or other instrument executed by or on behalf of the owner of the land instead of a ground lease to create the resale restriction, this section will apply.
When Resale Restrictions are documented by a second mortgage or deed of trust, the lender must ensure that the second mortgage or deed of trust complies with Fannie Mae’s Community Seconds® guidelines. If the Resale Restrictions are included in a separate covenant or agreement instead of a second mortgage or deed of trust, they must comply, if applicable, with Fannie Mae’s requirements related to shared appreciation in property value.
Resale Restrictions Resources
Loans with Resale Restrictions guidance can be found in the Fannie Mae
Selling Guide
(Section B5-5.2).
For more information on loans with Resale Restrictions, contact your Fannie Mae www.efanniemae.com
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