N.J. Admin. Code § 5:80-5.8

Current through Register Vol. 56, No. 24, December 18, 2024

Section 5:80-5.8 - Return on equity

(a) The buyer shall assume the same rate of return on equity that the seller had. The buyer's equity in the housing project shall be determined in accordance with N.J.A.C. 5:80-3.3(a).

(b) The seller shall be limited to a cumulative, but not compounded, return on its equity, from project operations or sale, at the rate of return as determined by N.J.A.C. 5:80-3 and set forth in the mortgage and other contractual documents between the seller and Agency.

1. Upon sale or other disposition of the project or any interest therein, the seller shall be entitled to a return of its equity in the project and any accrued but undistributed return on its equity. Such return shall be conditioned upon the Agency's mortgage and any other supplemental project financing from the Agency or other governmental agency or department being assumed by the buyer, and further conditioned upon the making of any required project repairs or improvements, pursuant to N.J.A.C. 5:80-5.4(d), and the payment of all amounts due the Agency and the funding of reserves pursuant to N.J.A.C. 5:80-5.4(e). The seller shall not be entitled to or paid any return until such conditions have been met. The seller's equity in the project shall be determined in accordance with N.J.A.C. 5:80-3.3(a).

2. Upon sale or other disposition of the project or any interest therein, the seller is not entitled to and may not retain or be paid any more than its equity in the project plus any accrued but undistributed return on its equity. Any amounts realized in excess of the aforementioned amounts less the total of the amounts listed below shall be paid into the Multi-family Rental Investment Program:

i. Any amount of the purchase price that is paid or escrowed in an Agency controlled account for repairs or improvements pursuant to N.J.A.C. 5:80-5.4(d);

ii. Any amounts paid to fund reserves pursuant to N.J.A.C. 5:80-5.4(e); and

iii. Any mortgages or other supplemental financing from the Agency or other governmental agency or department that are paid or assumed upon transfer.

3. Funds paid into the Multi-family Rental Investment Program shall be used as provided therein or in the case of a housing sponsor organized under N.J.S.A. 55:16-1 et seq., such excess shall be distributed pursuant to said Act. The funds deposited into this program shall be used for the purpose of providing loans to rental projects meeting low and moderate income needs.

4. In cases where the sale or other disposition of the project includes a permitted prepayment of the Agency mortgage, return on equity shall be governed by the provisions of N.J.A.C. 5:80-5.10(b).

N.J. Admin. Code § 5:80-5.8

Amended by R.1990 d.504, effective 10/15/1990.
See: 22 New Jersey Register 1971(a), 22 New Jersey Register 3220(a).
References to rate of return on equity amended to conform to applicable statutes, in accordance with New Jersey Supreme Court holding in Lower Main Street Associates v. New Jersey Housing and Mortgage Financing Agency, 114 N.J. 226 (1989).
Amended by R.1995 d.247, effective 5/15/1995.
See: 27 New Jersey Register 265(a), 27 New Jersey Register 1977(b).
Amended by R.2005 d.219, effective 7/5/2005.
See: 37 New Jersey Register 970(a), 37 New Jersey Register 2476(a).