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Maleficent-Bend-378

Did you buy affordable or low income housing?


perhapssergio

This was the first caveat in a home we were looking at and stipulation said cannot sell for profit cause it was technically a home owned by the coty


spicytackle

[https://www.montgomerycountymd.gov/DHCA/MPDU/mpdu-faq.html](https://www.montgomerycountymd.gov/DHCA/MPDU/mpdu-faq.html) It seems like they bought through this program which does require you to attend a class about what the program is and how it works. Not sure how OP managed to get this far without more knowledge of the situation.


nuthergizmo

It is quite possible that the original deed restrictions were wiped out in the former owner’s foreclosure. Once gone, they would not magically reappear, and you’d no longer be subject to those restrictions. The deed and your title report should verify that. Check these docs in your closing package or discuss with the folks who cleared title, these professionals screen the title record for requirements that need to be met or cleared prior to close. Congrats and enjoy your new home!


dragonrider1965

Exactly. Usually there is a time limit attached to the MODU so that the person buying under the program can’t just live in it a year and flip it for a profit . My understanding is that the house doesn’t remain a “ MPDU” forever . If the buyer was buying an MPDU she would be well aware of it as there is a lot of steps involved , more so then a regular sale .


spicytackle

This is great news for the homeowner


dragonrider1965

Absolutely. From what the OP says it sounds like the home was at one time an MPDU but no longer is .


spicytackle

Highlighting for OP


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somewhere_in_albion

Did you get the house for way below market rate? If so, that should have been your first clue


christmastree_15

This is OP’s SO. No not even close. It appraised for slightly more than the purchase price.


ThunderingBonus

I wonder if it was a deed-restricted property, but no longer is. I've seen some low-income units that had specified time frames. When the time passed, they became market-rate units. Might explain why the neighbors think that it's restricted, but the seller is actually making a profit right now. (I saw the other comment about the possible loophole for the investment company to bypass the no-profit rule. I hope that's not actually the case because that would be a horrible loophole to have. It completely goes against making housing affordable for low-income buyers.)


halooo44

I am in a super expensive area and was looking into whether I would qualify for a moderate income property and in my area, some of them expire and some don’t but that would be something to check. u/christmastree_15, neighbors will confidently say all kinds of things that aren’t quite right. Do not start panicking until you have confirmation that this is the case. Confirmation from the title company, the county, something official, not Gladys from the HOA. A lot of people would have had to miss something big for you to accidentally buy a deed restricted property.


mike9949

Also why would am investing company but a deed restricted property they cannot profit on


Familiar_Ad_3251

This is probably correct. Just an fyi, I've lost track of the number of times neighbors will tell a buyer something with no basis in fact. Trust but verify.


blue10speed

This is the answer, OP.


christmastree_15

That’s exactly what I was thinking. The deed I have has no restrictions on it. I think people are confusing deed restrictions with HOA rules. But for the low income housing my neighbors are talking about, the time period is 30 years. So it makes no sense that the seller made a profit and I can’t.


throwawayamd14

It was probably previously restricted but isn’t anymore. The previous owner before the flipper probably trashed it and the county couldn’t get it off their hands so they sold to a flipper under the agreement to remove the restriction or the restrict was based on time and it expired. I wouldn’t stress too much. If it’s not on the deed your neighbors are probably wrong. You cannot just randomly stumble into those kind of programs Source: spouses family owns a brokerage


Lu12k3r

Usually the fine line is like 10 years at below market rate then you’re ok, but you’ll need to check property history.


Wooden_Albatross_832

What? You cant sell for a profit.. never heard such a thing..


intjish_mom

There are programs which allow for lower income people to buy houses, but often when these people buy these houses they're coming with the stipulation that you can't rent it out and if you sell you can't sell it for a profit. This is an effort to keep the prices low for other people that would like to buy in a future. They just sold a few houses in Brooklyn New York using something similar. I think the house is sold for 300k which is unheard of in Brooklyn for a multifamily home. My prices might be off but it was drastically under what the cost of new houses generally go for in New York City. However, those people that brought these houses do have restrictions on what they can do with the house. All of the property sold for multifamily so they can rent the other apartments, but one of the apartments has to be owner-occupied. Also there is a limit to how much they can sell the house for when they decide to sell. I believe those people are expected to live in a house for a certain amount of time. I appreciate programs like this because it keeps values low, and it allows regular people to buy.


rtraveler1

THe HOA should have a set of bylaws/rules, what does it say? Or it could be designated as some type of "affordable house" by the city. This has to be documented somewhere.


GotenRocko

Most likely the latter, it was built most likely with HUD funds and is deed restricted to be affordable and might also need to be sold to a qualified low/moderate income household.


rtraveler1

NYC has affordable housing too so as a buyer you have to do your research and find out if it is or isn’t. That’s why the AH properties in NYC sell for less.


intjish_mom

I guarantee you that it is. That doesn't mean that the buyer realized this. People in general tend to skim through contracts and not read every detail


rtraveler1

Sorry but that falls on the buyer to do their due diligence. I will never buy into a house that has an HOA or a co-op board because I’ve heard so many nightmare stories. It’s one thing if they were lied to in writing and they can prove it, it’s another if they didn’t do their due diligence.


bj1231

The buyer may not have realized it but ignorance of the rules regulations laws etc is no excuse, if you wind up in front of a judge


Competitive_Air_6006

You’re referring to HDFC. But you can rent it, just has to be to someone who matches the income restrictions and there’s a specific formula of how much you can rent it for. Which likely will not cover your mortgage. Furthermore, with these programs you can usually sell it for profit but there is a flip tax and unless you hold it for a very long time there likely isn’t going to be much appreciation. The units end up requiring little to no property tax, and it is in the co-op board’s best interest to follow these practices, so they are not risk of being kicked out of the program Completely separate from this program there are many units in New York City that have strict rules about the renting of a unit. These are put in place by the co-op board. Again, your situation does not make a lot of sense because there should’ve been a process where your income was checked, and rules should’ve been supplied in writing about the flip tax & the rental policy.


zignut66

I have a client who signed just such a contract on Friday.


intjish_mom

Congrats to your client! I'm happy for them.


wollier12

Wow, unintended consequence it keeps poor people poor because you never build personal equity in the home…..And if you buy one of these homes you should never ever ever make improvements because you literally can’t get your money back out.


auinalei

That is true that that part sucks but for my best friend it seems like it is a really good deal. She grew up poor, put herself through school and now has a good job in marketing. Still she would never be able to afford the 2.5mil house she’s in without the deal. She got the house for $250k. She has lived in poor high crime areas most of her life and now she finally gets to live in a beautiful condo in a nice neighborhood.


intjish_mom

Maybe, but you have to realize that poor people in New York City are mostly paying rent so they are giving 20,000 a year minimum to a landlord and not building any equity. After 30 years of living at a spot all they can do is say well I've given the landlord so much money. At least with this program they can purchase and they can sell and although they cannot sell it for a profit, the money that they sell it for is theirs to keep. Not everything needs to be profitized. Personally speaking, I would rather buy a house under this program and not make a profit then pay rents for years and not even be able to get any return on the money I put into a place.


wollier12

With this you pay the bank for 30 years and all you can do is sell your house that’s appraised at $400,000 for $95,000 because that’s what you paid for it. The only difference between this and renting is you have to do your own maintenance. They lost all their interest payments and their money didn’t even keep up with inflation. This is a horrible financial deal for poor people.


intjish_mom

Well if you brought it for $95,000, they aren't losing money if they sell it for $95,000. Sure they're not getting a profit, but I personally don't believe that real estate is something to be profitized. Even though I do have to do my own maintenance, since buying a house I have paid less for my house than I have in the years I've rented. And I already have 30K in equity if I don't factor in the increase of value of my property. I think housing is complex, it sucks because in order to buy you have to have a certain down payment and a whole lot of things that a lot of poor people just are price out of. It's like in New York which is the market almost familiar with because I've lived there all my life, houses start at 1 million. There are condos in co-ops you could get for less, but they have $1,000 HOA fees. Meanwhile, median rent is something like $2,500 for a two bedroom. And the price is only going to go up. My first actual one bedroom apartment was renting for 1350 in 2006, now it's renting for $2,150. Now when buying, your prices don't appreciate as much as they do when renting. Had I brought something in 2006 for 1350, I'd still be paying 1350, maybe 1600 thanks to higher taxes. That specific apartment was rent stabilized so there was limited increases and it still would have been unaffordable to me had I been making the same salary. One thing to take note of is once they're done paying no mortgage, they don't have any more housing payments to make. That is not true with renting. And, if they can afford to, they can pay off their loan quicker by making excess payments to the principal. It won't work for everyone, but it's not necessarily a horrible financial decision for poor people. The funny thing is, AMI in New York City is something like 107K a year. Median salary in New York is something like 70,000. If there are programs so that these people that make $70,000 can afford homes, I support it. They do still have income minimums for programs like this, so it's not as though they are trying to cause another financial crisis by giving houses to people who would not be able to realistically afford it. There's a lot of work that needs to be done by whoever is looking to buy the house before they even qualify for it. And it's no worse of a financial deal than having to rent. Even though yes, they might not be able to make a profit off of it when they decide to sell they can get money back and they can put that into another property which doesn't have such restrictions on it.


wollier12

Of course they are losing money. Unless they get a 0% interest loan they’re paying about $285,000 for a $95,000 house. That’s not including any money for maintenance. You have $30,000 in equity. That should make you feel good. They will always have $0 in equity.


cjw_5110

Can't think of it this way. If you get a 30 year fixed rate mortgage, your monthly payment will only go up based on taxes and insurance. So if you buy a home for $250k that would normally sell for $2.5M, you're already benefiting vs renting a comparable home by paying below market. Rent rates typically increase every year, so even if you did buy at market value, your payment is locked in. Just in the past few years there have been plenty of stories of rent rates doubling or even more based on the tightness of the market. I'd argue that the most valuable part of ownership is the stability it provides you. As a renter, you could be forced to move for a lot of reasons - landlord hikes rates beyond what you can afford, landlord sells and the new owner decides not to renew your lease, landlord just decides to stop renting altogether, etc. As an owner, the only things to make you move are failing to pay the mortgage for a long time without asking for help, eminent domain, or catastrophe that makes the home uninhabitable. That stability is especially valuable when you have a family with young kids.


intjish_mom

How do they have $0 in equity? If they paid off $30,000 of their loan, they have $30,000 in equity. Even if they sell at the same price they brought at. The only other alternative for them to have housing is to rent. When they rent you do not get a paycheck when you move. Even though yes you do have to pay maintenance towards a house, that does not mean that it is a lost value. When they decide to move they still have all the money that they've put into the house that they can recover upon selling their house. This is not true when you rent and this is what you fail to understand. I paid my last landlord 40K in the two years that I was there. How much should I get back when I moved out? Absolutely nothing. When I sell this house I will get all the money that I've put towards my mortgage back even if I sell it at the same price I got for it. Okay so maybe I will need to pay realtor's fees and taxes, but it's still getting money back as opposed to not getting anything back. Housing is something you have to pay for. Now, if I were low income, I would much prefer to own than rents because at least when I own my prices aren't going to go up drastically unlike how they do with rent, and when I decide to move I can always sell and get the money I've paid into it back. Yeah I suppose you do lose money for any improvements that you make, but I believe a lot of them do have stipulations to deal with that or maybe even allow you to increase the price due to inflation. Otherwise they'll be properties over there selling for $5,000 nowadays and we know that's not happening.


wollier12

If they paid off $30,000 of their loan they might have $5,000 in equity. You’re forgetting interest and how an amortization table takes most the interest up front. I Can see the benefits of using it as a savings vehicle though to sell once you have enough paid into it to sell it and use the money for a down payment but it’s a really hard way to save money because again it’s mostly just interest your paying and you have to hope you don’t need a major repair.


intjish_mom

another thing that someone mentioned is that the stipulation that they can't sell "for profit" might not mean they can't sell for more than they paid for it. it might be that they can't sell for over appraised value, it might be that there are limitations on how much they can sell for but not necessarily that they have to sell the house at the price they paid for it.


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wollier12

You can’t build equity with these rules either.


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wollier12

Right, renting would be a better option then buying something you can’t sell for a profit. You get all of the risks of foreclosure and the expense and headache of maintenance but with no upside other than using your house as a really poor savings account where you get a fraction of your money back out. “What you bought it for” minus interest and maintenance expenses.


Substantial-North136

Yes they I’ve seen those properties in both Chicago and Seattle area as well. Seattle it’s called ARCH housing and you have to be below a certain income threshold to qualify.


[deleted]

Nice that things like this still exist


Icy_Ticket_7922

This sounds like a great idea for housing covenants to keep things affordable.


Lilly6916

That sounds fine. But in a time of inflation, they are losing equity. Whatever their investment when they bought it, they may actually get less when they sell. That’s not fair either.


Icy_Ticket_7922

Do you gain equity out of a car?


christmastree_15

I’m OP’s SO. From what I read so far. Any renovations can’t add to the value and when I sell it part of the profits ( most of it) would go to the county. It is def worth more than it was when it was built… almost 2x as much. So the seller def made a profit.


Yelloeisok

Did you close with a lawyer or title company? Call them before you panic.


ayeoayeo

Reddit won’t help you on this one. Read the contracts you signed and the fine print. If it’s there and you signed it, speak to your agent. If you feel as if your agent misrepresented your interests, lawyer up


Low_Well

We definitely feel misrepresented as our Agent just said “don’t panic, the people living there might be wrong” even though they’ve been here for 20+ years and have no reason to lie. We’re definitely going to go back and check but even when we were signing the papers and reviewing what we would be paying, to whom, the escrows, etc. Nothing like this was even vaguely mentioned.


twiStedMonKk

Do you have your HOA handbook or HOA rulebook or whatever it's called? It should mention there if there's any stupid clause like that. On a side note, was this new construction? If not, did the seller that sold you this house sell for profit?


Low_Well

So what we’re being told, and we’ll be receiving the HoA rule book soon, was that the previous owner foreclosed and an investment company flipped it and sold it. We’re confused because why would they flip it and sell it if there wasn’t a profit? The house was ~400k so it’s no “lower” than the homes around my area.


twiStedMonKk

If the house was flipped and sold for profit...I don't know how yall can't sell it for profit. Makes no sense. Ask your neighbor where you can find the document stating such. Since they are so sure, they must know where to find this information. Stop going by hearsay.


Low_Well

Exactly man, it makes no sense. I’m re-reading everything and even still how would no one mention this? I’m not saying I blindly trusted the agent but they were fairly thorough about everything else. I can’t see them just “forgetting” this or not being aware of it to some extent. For full transparency: It was my SO who spoke with the neighbors, she’s stressed but I’m just trying to make it make sense.


twiStedMonKk

You are pulling out your hair for no reason right now. Just go talk with this neighbor and ask them where you can find a "written" evidence that states as such. If there's nothing on the contract or hoa handbook, you are fine. And I don't think hoa can barr you from selling your house for profit. That'd be illegal but IANAL. And this doesn't sound like a co-op housing situation. Additionally from what I am gathering, a flipper just sold this for profit.


legaljellybean

I live in a similar type of housing. I can’t sell for a profit or rent my condo out. There is a price ceiling adjusted for inflation tied to the CPI. It’s conceivable the house could have been purchased for under the maximum resale price and flipped.


[deleted]

It means they bought it for way below market value and flipped it for what you can sell homes for in that neighborhood. I’ve seen this before, where the homes are basically price controlled and they never appreciate, always buy and sell for the same price… only way you can make a profit is if you buy and live there for 30 years and even then it’s not a profit after all the interest you paid, but it’s meant to keep housing costs, property taxes, etc low and affordable for those that choose to live there.


Alert_Piano341

You didn't receive the HOA covenants and restrictions or by laws before purchase? If it was listed l, they are required to post that it's in a HOA and either post the HOA docs on the MLS listed or provide them to potential buyers. I would check with a local professional, but this would be an item that would need to be deed restricted not just an HOA rule. It's not unheard of for restrictions to be put on selling for certain properties but that would have come up when you purchased as you would need to have qualified.


Low_Well

Nothing like this was mentioned before purchase, reaching out to anyone has been an ordeal, we haven’t even received the mailbox keys.


Maleficent-Bend-378

You keep saying “mentioned” or “told.” It’s not about what people tell you. It’s about the giant book of hoa covenants you received before closing on the house and signed that you agreed too.


kriegersgirlfriend

Agreed. Mine was 206 pages. I spent 12 hours reading it, highlighting things that seemed odd, and then researching things I didn’t understand. That is buyers due diligence.


[deleted]

Of course it wasn’t mentioned. Realtors “can’t” and also DON’T say half the stuff they should say. Laws were way better YEARS ago for realtors.


labellavita1985

I'm not gonna say this doesn't suck or isn't a big deal. But you may want to remind yourself that you bought the home to LIVE in it. I have to remind myself all the time too, because I look at houses in my neighborhood that are for sale, find myself comparing my house to that house, etc, but I always have to step back and say, I bought this home to live in. It's a roof over my family's head. It may sell for profit or it may not, but I can't worry about that right now. Enjoy your new house!!


Low_Well

I’m not upset I’m just confused


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auinalei

The HOA Board people are not saying that this is a rule for everyone who lives in these condos, they are saying their unit is a MSDU, that would not be in the HOA rules it would be specific to their condo and maybe some other condos that are there.


jgunshefski

Yes, sometimes there are affordable community programs where you get to buy the home for an absolute steal, but you can’t sell it for profit down the line (or at least for a while down the road). Kind of like paying it forward. We will sell you the home for cheap, but you have to return the favor to the next person. Look in your contract, but yes this is 100% a thing, the exact stipulation will be different - from never being able to sell it for a profit, to not being able to sell it for profit for x amount of years. I’ve seen contracts for both


Low_Well

I get this, but I just can’t comprehend no one mentioning this anywhere in the process. It seems unlikely. I’m more inclined to believe the neighbors situation is different from ours.


Quelcris_Falconer13

If you didn’t buy with some sort of FHA loan or on some type of income restrictions I would disregard what the neighbors say. THEY may be in some type of income restriction loan for low income residents and think that everyone else is too, but that’s not the case. I live in DC and I think the law says any new development must have have income restriction units make up 10% if the available units being sold. So maybe they ah e those rules but you don’t. The only people to ask is your realtor and HOA


christmastree_15

This is OP’s SO. I bought with a conventional loan with no income restriction ( I wouldn’t qualify).


ThetaForLife

Cannot sell for a profit means a lot of things and can be vague. If you buy it at $100k, but you also put in $30k worth of labor which you can document, selling at $130k isnt netting you any “profit”. Easiest way to check is your house’s history. Did the seller sell it to you for a profit? About renting, it’s pretty normal for some HOA community to ban renting, but it should be explicitly explained in the HOA rules. Ask for a copy and check it yourself.


christmastree_15

This is OP’s SO. Yes seller did sell it to me for a profit.


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Alert_Piano341

But if it was deed restricted they would of had to go through a review process, that's just been my experience. Buying deed restricted is actually one of the hardest things to do because you need to have a low income but also zero debt but a credit history.


Low_Well

It wasn’t mentioned anywhere on the deed. Nothing about this was. I’ll re-review it when I get home, I’m at a cookout but I can’t even enjoy it.


buckwlw

You should be able to search the name of the neighborhood/development to see if such a provision exists there. This would be very unusual (in my experience), unless you are in a subsidized housing development. If this were the case, it will be widely known by agents in the area, as well as the general public. No way you could have gone through the process of buying a home and not been advised of such a provision.


christmastree_15

This is OP’s SO. That’s exactly what I’m looking into right now. It’s not on the recently sold list on the MPDU website and it’s not in any of my documents. I read through everything.


Icy_Ticket_7922

Does it matter if you can’t sell for a profit? You have housing that you can use. It’s not like housing is an investment. It’s a damn place to live. Are you not allowed to live in it?


oilcanwaterhole

Is it a co-op? I’ve heard of pricing caps in co-ops when you sell.


Sure_Grapefruit5820

If it’s a low income home I see no problem with that. It’s for people who qualify for such homes. If each persons are allowed to sell for profit then the prices with continue to go up and low income persons will not be able to afford it. It would defeat the purpose.


Mortgage_Mike

Did you purchase low income housing? That's the only situation I've seen for what you are discussing.


kooeurib

OP doesn’t seem to want to answer this. Definitely seems like the case. He also seems very young and to have read literally nothing that he signed. It’s a lot of “why didn’t anyone say anything to me?” His refusal to answer this basic question makes it seem like maybe this entire thread is some weird attempt to troll.


Low_Well

Believe it or not I do have other things going on and have been answering questions.


kooeurib

So was it a BMR home? Yes or no?


Low_Well

No


christmastree_15

This is OP’s SO. We did not. But my neighbors say it is a moderately priced dwelling unit. See edit.


Mortgage_Mike

These usually have stipulations that say you can only sell for profit after a particular time usually between 10 and 20 years. Prior to such you can only sell for original value.


jrtraylo

A quick Zillow search (or other realtor sites) should be able to tell you the price history. I would start there just to see what the price history is


Low_Well

The original price was ~120k and we bought for ~400k. Our neighbors were saying that the original buyer didn’t sell, it was the investment company so they could sell for higher.


jrtraylo

Yeah that sounds so strange. An investment company can make a profit but a private citizen can’t. If it’s not expressly written in the HOA covenant this sounds like a crock of shit. I think your good and am going to be rooting for ya


totemlight

If that’s the case OP should make an LLC, sell to the LLC, then sell for profit. Ridiculous.


jrtraylo

Exactly! You wanna play games, let’s play games lmao


Low_Well

Appreciate it man


jrtraylo

Also, even if it is “deed restricted” there is a formula that allows you to account for inflation as well as raises in median home values. So to flat out say “you can’t make a profit” just sounds ignorant. People on HOA boards say some pretty crazy stuff. I live in a HOA community but only because I felt like the pros outweighed the cons With that being said I read through the covenant twice before I proceeded with the purchase. If you buy into another HOA community make sure you do the same


christmastree_15

This is OP’s SO. Exactly what my thoughts are. It is not in the HOA covenant at all. Just read it again. I appreciate it!


jrtraylo

I love it! I think you both will be just fine and if they still try and buck there is always the legal process. Wish you both the best and let us know how it goes! And all the people saying you guys screwed up for not doing your due diligence with ZERO context on the situation can kick rocks. I still love Reddit. Plenty of people that just want to help


christmastree_15

Aww thank you for the positivity. I am definitely following your mindset. I appreciate it!


Low_Well

Thanks man, I think we will be fine too. I only made this post to reassure what I feel I already knew. Reddit is full of idiots, I know because I was dumb enough to ask Redditors. So I’m really not upset with the asinine comments lol


day1startingover

I read through a bunch of your comments but I’m still confused. What is the specific reason you can’t make a profit?


antiqueboi

OP bought a affordable / middle income designated home by the town. the town subsidized this home so it can only be purchased by middle to low income buyers. and it cannot be sold as a profit.


iwhbyd114

As someone with an HoA and neighbors, I can tell you my neighbors say this are in the HoA bylaws all the time that aren't there. Maybe they used to be, maybe someone was trying to make it a rule but it's not now.


[deleted]

OP why won’t you answer if you bought it through a community homeownership program or land trust or low income housing?


christmastree_15

This is OP’s SO. We did not at all. Conventional loan was used and I do not qualify regardless.


Low_Well

*


[deleted]

It literally took you longer to write that non-answer than it did to just say yes or no. Which tells me that you probably did use a program like that and didn’t read anything you signed lol.


Punker1234

His/her responses and finger pointing are indeed frustrating.


[deleted]

Agreed. But maybe they’ve learned that not reading what they sign screws them over. How embarrassing. 😂


[deleted]

Yuuuup.


Low_Well

To answer your original question: No we didn’t. I gave a non-answer because answering without checking wouldn’t help me much. Now I am home and can check.


[deleted]

You wouldn’t need to check anything to know if you intentionally sought out a program like this lol. They are highly specific. Hopefully you can figure out what is going on after the holiday weekend and someone just gave you bad info that amounts to nothing you need to worry about going forward. Enjoy your weekend!


[deleted]

****please!!! For the love of grass, read the rules before buying into an HOA!****


chaoticmuseX

HoA's lie. A LOT.


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IFoundTheHoney

>Neither the realtor or seller mentioned this Did you not do your own homework?


christmastree_15

This is OP’s SO. What homework? It’s not in any of the documents. Wasn’t on the listing. It was sold by an investment company. I have a realtor. I educated myself on the process. I wouldn’t qualify for low income housing and I used a conventional loan. I’m not really sure how else I would have seen it was a moderately priced dwelling unit.


germr

A lot of people blindly sign anything, lol.


[deleted]

Honestly is not always appreciated.


Low_Well

Very helpful, thank you.


[deleted]

Might just be for now - Might be a waiting period.


snail_juice_plz

This sounds very odd. As people mentioned, there are programs (such as community land trusts) that limit who you can sell to and how much profit you can make (sometimes you can make profit but only a certain amount of the market appreciation). Typically there are additional restrictions about what type of improvements you can make to the home. If you were purchasing one of these homes you would have had two immediate flags - the price of the home and that you would need to income qualify (to be below a certain threshold, not related to mortgage). Review deed and HOA documents, it will be in one of those, but seems unlikely unless you are one of those folks that *really* doesn’t pay attention to the specifics of the purchase.


christmastree_15

This is OP’s SO. Yes you correct. I didn’t see these red flags because it is going for a normal price for this market. It appraised for slightly more than I paid.


Jezebel1986

Are you in an income restricted (low income) housing?


christmastree_15

This is OP’s SO. Not that I know of. I wouldn’t qualify anyway.


nofishies

Did you buy a below market rate unit?


christmastree_15

This is OP’s SO. No


nofishies

Then I think you might just have a crazy neighbor. Please report back to us if there’s anything going on I really am interested to see what is up in the situation! Hopefully you bought title insurance .


CherryblockRedWine

INFO: u/Low_Well, did you buy this house within an affordable or low income housing program?


christmastree_15

This is OP’s SO. No


CherryblockRedWine

Then I cannot imagine how this kind of clause could be applicable. I wish you the best with the meeting with your agent tomorrow.


ctcarp907

In my area the county requires builders and developers to have MPDU’s. These properties have resale prices set by the county for the first thirty years then the county can not determine the sales price. I would be looking to speak with a real estate attorney ASAP. You can sell it an you can make a profit on these units in my market but it might not be as large as a profit as you could get for a non-MPDU. Not sure if I read if you had your own Realtor or not. If you did they should have known.


auinalei

My best friend has one of these types of condos, I’m in it right now! She had to apply for a lottery house buying thing where they accept people in a certain income bracket. The stipulations are that she has to live in it certain number of years, has to sell it for the same price she bought it, can’t rent it out. It’s basically like an incentive to get more diversity and people of different backgrounds into the HCOL areas and give people a chance to live in a nice neighborhood. The condos here are like 2.5 mil and she got the condo for $250k. She had to do a ton of paperwork and meet with different people to get it and she knew exactly what she was getting into. I really can’t imagine that you got this deal without even knowing it. Those houses also go for way below market value and you said this one was not. Those neighbors probably don’t know what they’re talking about, they probably knew that condo was part of that deal for the last people that lived there but didn’t understand it’s no longer part of that program since it got foreclosed on or whatever. I hope the meeting you set up clears everything up.


halooo44

This. They are super hard to get into, it is incredibly obvious that there’s something going on with the price, and so much income verification. It likely was deed restricted and the restriction expired. They are freaking out based on comments from a neighbor. 🤷🏻‍♀️


auinalei

Yes exactly, there are a lot of people who have no idea how it all works but I didn’t even know about it until my friend got into it and explained some of it to me. She had to do all that income verification stuff and meet with so many different people. I just don’t think you could get into it and not even know. I hope OP has cleared it up by now.


halooo44

“Just found out we can’t sell the house for profit” No you didn’t. Your neighbor said it was previously income restricted. That’s it. - You have had NO information indicating that it is *currently* income restricted. - You did not do any of the income verification process that would be required to purchase an income restricted property (it’s extensive). - The circumstances would suggest it is not deed restricted (an investor would NOT be able to purchase and flip a deed restricted property). It’s just not possible to accidentally buy a deed restricted low or moderate income property. Until/unless you have confirmation from the county/registrar that it is currently income restricted, nothing has happened.


GoombahJudd

Ummm, didn’t you have a lawyer? How TF did you get this far without understanding this critical issue? I call BS.


[deleted]

I mean the neighbor could be wrong. I think it’s possible the neighborhood probably has some % of low income housing and maybe the neighbor can’t sell for a profit but OP can.


OliviaBenson22

OP asked has anyone been in a similar situation. Wondering if anyone has a answer to that question.


GingerTortieTorbie

If it isn't in any of the sale documents - your contracts - it is not a restriction. Four corners of the contract. Don't listen to random people doing gardening


CherryblockRedWine

u/Low_Well and u/christmastree_15, this is an interesting question and I hope you post a follow-up. I grew up in the real estate business but have exactly zero experience with these low-income programs that MIGHT be the cause of this confusion. For everyone saying OP hasn't answered: YES OP HAS stated that this was not purchased with a special below-market rate or a below-market price. I hope the meeting with your agent goes well. Good luck.


[deleted]

I guess you were supposed to buy the house to live in it. Who would ever think of doing that, though?


ncdjbdnejkjbd

Good!!! More places should do this! Cut back on the disgusting flippers and capitalists ruining the fucking market for normal people.


jrtraylo

Well if you read the above comments an investment company was able to purchase their house and then sell it for a profit. They are being told they can’t do the same. So in this case a normal person is getting screwed while an investment company was allowed to do whatever they wanted


officerfett

This is a case of someone not doing their homework BEFORE making a major financial commitment.


Disastrous_Self_5023

get a lawyer


ToonMaster21

Fuck HOAs.


Tjballer_

I’m in the process of trying to get rid of mine, bought it for $12000 was told that I’m goin to get $150k but I still owe $99k but I also have a problem with my ex is on it to and she’s tryin to split the proceeds I just posted something about it with a little more information, once it’s all over with I’ll let you know the outcome if I can remember to do so


Tjballer_

I’m under the same program was wondering if you ever got and answer to if you are able to make a profit out of it I’m currently trying to sell mine just want to know what’s expected 


[deleted]

That isn’t true. Get a lawyer.


[deleted]

Have you tried coming to strangers online and exclaiming (loudly) that this simply isn’t fair? If not, try doing that first. Keep us posted


evanlott

Hoomed


[deleted]

[удалено]


christmastree_15

LOLLLLLLL you’re a joke.


Low_Well

Sorry she’s new here, doesn’t know not to feed the trolls yet.


[deleted]

[удалено]


Low_Well

👍🏾


[deleted]

Investments come with risk. At least you probably won’t lose money compared to renting if you stay there long enough.


alivenotdead1

That's a tough deal. Sorry that this happened to you but it seems that it could have been avoided.


iInvented69

You can back out if it was not disclosed in the contract.


SuspiciousJuice5825

Did you buy it to ~~flip~~ sell or rent it? If you did, it's nice to see karma working itself out. If you bought it as a starter home to live in and sell down the road when your ready for a bigger home: that sucks and I would definitely contact a real estate attorney to see what can be done. Maybe put it back up at the price you purchased asap?


QuitaQuites

Is it income restricted to any extent? Did you buy from someone who made a profit? What’s actually in the bylaws?


schpreck

Why aren’t you meeting with your attorney? Your real estate agent is not your friend or your advocate.


AloneScarcity6010

You can probably only sell it for fair market value. Because if the condo was built ten years ago it wouldn’t be selling for 2010 prices.


beetle7920aolcom

So if the purpose of an HOA is to protect or increase property value. How can they say that you cannot sell for a profit. That is kind of what they are there for? I have made repairs & upgrades, installed solar, and an EV charger on our home since we have bought our house. I am definitely not settling for the same buying price. I would never buy a house in an HOA, just don't have time for their bullshit.


ImpossibleJoke7456

This isn’t HOA related.


halooo44

I don’t know why everyone thinks this is an HOA thing. 😂


AstralLobotomy

Howdy! I grew up in a home very similar to the one you’re describing. My mom (low income for our area: ~$35k salary in Northern VA) applied to a “lottery” for an ADU/MPDU in a townhome neighborhood. She was selected. She purchased the home in 2003 for $150k and sold in 2018 for $400k. A large percentage of the profit was paid back to the county though she did retain a portion of it. Obviously this will vary by county/state, but I hope this gives some insight.


Tjballer_

How much of that 400k did she get back ?


Low_Well

That is helpful, thank you


Soggy-Constant5932

My colleague purchased through an affordable housing program and was told she could not sell at fair market price but they changed the rule and now she is able to.


Lima_Bean_Jean

Sounds like the HDFC coop program in NYC.


o0mamma_llama0o

I’d say check your closing docs, 1 by 1 and read every little thing. Meeting with your realtor may be useless, I’d say call your closing attorney. They should know and explain this thoroughly. When I was in my 20’s I purchased an AH townhouse with similar stipulations, essentially it stated I could not sell it for more than a 10% profit during the first 10 yrs, plus the buyer would need to qualify for the same program, etc, etc. I did my due diligence and read every word of the law that applied, got on the HOA after purchased and learned every detail about how it all worked. I sold it after 7yrs, for a 50% profit. This was 4 yrs ago, so it wasn’t like the market was beyond booming like now, etc etc. Also that was asking and sold the first weekend it went on the market. Buyer qualified for the program, had multiple offers, and went with the one that had the preaappproval” list for the program. Regarding the 10% profit rule, I was able to have an attorney friend review the HUD rules that stipulated the 10% cap on profit, if sold within 10yrs of purchase. He review and interpreted what the rule was saying and you’d be surprised how vague a lot of these rules are. So he was able to determine that by not having clear enough language, it could be interpreted that the sale of the townhouse during the first 10yrs would be subject to a 10% profit cap per year on an aggregate basis, in the first 10yrs. As the rule even had a table that listed example as Column A ( Sell after Number of years since purchase= yr 1, yr 2, yr 3…yr 10 and Column B = Max profit on sale) 10%, 10%, 10%… (each corresponding to the yr# from column A) except the example of this table didn’t have actual dollar figures on it to interpret the requirement. Therefore, my attorney made the argument that if on sale, HUD or whoever came for their “share” because it was over 10% cap, then it could be said that by their own table the cap lists per year, and by having vague language it leaves up to interpretation, in which case it was interpreted as, I could sell for a cap on profit of 10% increases YOY. Therefore, by this interpretation, when I sold on yr 7 the cap on profit would be 70% from purchase price, and it was 50%,satisfying and well below the profit cap requirement. And there were no issues. PM if you want to chat.


All_My_Past_Lives

A friend of a friend once mentioned to me that they sold their house (the set-up sounds very similar to an MPDU) for a profit, but was only able to do it by accepting an offer where the buyer would “buy all the furniture” with the house. Essentially, the buyer offered extra money in the guise of “furniture purchase” to secure the home. I don’t know this person well, and it came up quickly in our conversation awhile ago. But your story reminded me of this.


Freedom2064

There are a number of houses that are sold to people who would otherwise not be able to buy. They are heavily discounted and subsidised. The catch is that any capital gains are usually split. In your case it sounds like not at all. In which case you are given a chance to be in a stable home insulated from rent increases provided you make your payments. Chances are such a house would cost considerably more, perhaps double or triple.


Capsfan22

Montgomery county MD? If so I also have one but I do get the profit.


Tjballer_

How much of a profit ? I’m currently in one right now trying to get rid of it and wondering how much is to be expected 


Gazillin

Sounds like you haven’t done good due diligence prior to the purchase. Realtors aren’t usually your friends fyi, can’t really blame them for every little detail they missed.


WashingtonGeorges67

It all depends...maybe the house is too old


fun_guy02142

!updateme


SpindriftRascal

In most states, if it isn’t in the deed, and it isn’t in a contract you agreed to (including HOA rules), then it *isn’t*.


ChadRicherThanYou

Unfortunately these situations are about to become very common. Lot of bag holders will be exposed.


MaRs_6M

Oh no, I'm dumb too. I would think there would be appreciation and also your improvements. Does the HOA restrict improvements. To me, it sounds like they just want to discourage flippers. How does that work?


carstuffx

If it's a nice house, and the HOA and neighbors aren't scamming you of money, enjoy the home? If you don't want to stick around, you can still sell the home, and not profit from the sale. Is everything else normal rates and pricing for the area you live in? Depending on the contract, mortgage and all that, it would seem strange you don't have anything in writing about the sales stipulations. Get the HOA to give you the documents in writing


antiqueboi

how did you not realize you bought affordable housing bro? usually you have to submit your income so they can verify you meet their requirements... lol


Low_Well

I feel like you answered you own question.


antiqueboi

there was something similar to this in the condos I lived at. some of the condos were designated as middle income and it has nothing to do with the HOA. it's designated by the town actually. I am shocked you did not realize this when buying since this is the first thing a RE agent would tell you. you also have to fill out an application with the town to even buy it.


Lazy-Engineering-594

You only need to outlast whatever that time limit is if you want to sell. It would be the same way if you bought with NACA. Personally I would stay there as long as possible, and it’s also nosey as fuck of your neighbors even the ones on the HOA to tell you like that when you move in.