Wis. Admin. Code Department of Administration Adm 92.70

Current through October 28, 2024

Section Adm 92.70 - 180-day owner who purchases

An agency shall pay an owner-occupant of a dwelling who purchases a replacement, a payment for the differential cost to purchase a comparable dwelling, for the loss of favorable financing on an existing mortgage or land contract in financing a replacement dwelling, and for expense incidental to the purchase. A payment shall be determined as follows:

(1) ELIGIBILITY REQUIREMENTS. A displaced person shall be eligible for a payment when the person:

(a) Owns and occupies the property for not less than 180 days immediately before the date of initiation of negotiations for the acquisition of the property, or the date of vacation when given a notice of intent to acquire, whichever is earlier;

(b) Purchases and occupies a decent, safe and sanitary replacement dwelling within one year from the date the owner received final payment for the acquired property or the date the owner vacates the acquired property, or an extended date established by the agency for good cause, whichever is later. For the purpose of this section a replacement dwelling is purchased when a person:

1. Acquires an existing dwelling;

2. Relocates or rehabilitates a dwelling owned or acquired;

3. Purchases a life estate in a retirement facility;

Note: The cost shall be the entrance fee plus the present worth of a monetary commitment in a retirement facility to the facility, but may not include a periodic service charge;

4. Contracts to build or builds a new decent, safe and sanitary dwelling on a site owned or acquired.

Note: Construction cost, including the value of labor furnished by a displaced person, shall be limited to that cost necessary to purchase a comparable dwelling.

(2) DIFFERENTIAL AMOUNT PAYABLE. A differential amount payable is an amount, if any, when added to the acquisition payment for an acquired dwelling, equals an amount a person pays for a replacement, or an amount determined by an agency as necessary to purchase a comparable replacement, whichever is less. A replacement payment shall include the cost to modify a property to meet comparable standards or code requirements.

(3) SELECTION AND COST OF COMPARABLE AND ACTUAL REPLACEMENTS. An agency shall determine the cost of a comparable replacement by analyzing 3 or more comparable replacement dwellings, and selecting the one that is the most comparable. Fewer may be analyzed if 3 are not available.

(a) An agency may adjust the asking price of the selected comparable if considered justified on the basis of local market conditions. The agency's relocation plan shall specify if adjustments will be made for the project, the basis for this determination and the method of adjustment to be used.

(b) The cost of physical changes or improvements necessary to meet comparable standards in the selected comparable or the actual replacement shall be included in the maximum replacement payment.

(c) An agency shall select comparable dwellings from the neighborhood of a displaced person provided the area is not designated for governmental acquisition and displacement, or subject to adverse environmental conditions.

(d) An agency shall select comparable dwellings from adjacent or nearby neighborhoods in ascending order of cost when there are no comparable dwellings in the neighborhood of a displaced person.

(e) An agency, to promote racially integrated housing, may select comparable dwellings from an adjacent or nearby neighborhood having less concentrated racial composition, when desired by a displaced minority person.

(f) The selected comparable shall be equal to or better than the acquired property and a payment shall be based on new construction when there is no comparable dwelling available.

(4) REVISION TO SELECTED COMPARABLE AMOUNT. An agency, upon request of a displaced person, shall offer a comparable dwelling within the maximum differential amount determined. Another comparable study shall be made to determine a new replacement payment when there is no comparable dwelling available except the new replacement payment may not be less than the original payment.

(5) INCREASED INTEREST PAYMENT.

(a)General. An agency shall pay a displaced person for the increased interest expense and other debt service costs incurred in financing the purchase of a comparable replacement dwelling, if:

1. The acquired dwelling was encumbered by a bona fide mortgage or land contract;

2. The mortgage or land contract was executed in good faith not less than 180 days before initiation of negotiations to purchase the property;

3. All bona fide mortgages or land contracts that were valid liens on the displacement dwelling for at least 180 days before initiation of negotiations on the acquired dwelling shall be used to compute the increased interest payment.

(b)Payment computation. The increased interest payment shall be computed as follows:

1. The interest payment shall be an amount which will reduce the mortgage balance on the replacement dwelling to an amount which could be amortized with the same monthly payment for principal and interest as that for the mortgage or mortgages on the displacement dwelling, except that the payment for a person obtaining a mortgage that is less than the mortgage balance computed in the buydown determination, shall be prorated and reduced accordingly. In the case of a home equity loan, the unpaid balance shall be that balance which existed 180 days before the initiation of negotiations or the balance on the date of acquisition, whichever is less.

2. The amount paid by a person as points, loan origination or assumption fees, but not seller's points, shall be based on the amount refinanced, not exceeding the amount which would have been paid had the original mortgage been refinanced, and shall be added to the amount as specified under subd. 1. The origination or assumption fee shall be limited to the fee normal for real estate transactions in the area.

(c)Interest rate on replacement dwelling mortgage. The interest rate on the mortgage for a replacement dwelling used in the computation may not exceed the rate typically charged by mortgage lenders in the area.

(d)Mortgage term. The payment shall be based on the remaining term of the mortgage or mortgages on the displacement dwelling regardless of the term on the new mortgage.

(e)Adjustment to interest payment amount.

1. Larger than typical size lot. The interest payment shall be reduced to the percentage ratio that the value of the typical residential portion is to the value of the entire property before acquisition, when a dwelling is located on a lot larger than typical for the area.

2. Multi-use property. The interest payment on multi-use property shall be reduced to the percentage ratio that the residential value of the multi-use property is to the value of the entire property before acquisition.

3. Dwelling on land with higher and better use. An agency shall compute an interest payment as specified under par. (b) when a dwelling is located on land where the fair market value is established on a higher and better than residential use, and when the mortgage is based on residential value. The interest payment shall be reduced to the percentage ratio that the estimated residential value of the land is to the value of the entire property before acquisition, when the mortgage is based on the higher use.

(f)Prompt payment. An agency shall advise a displaced person of the approximate amount of a refinancing payment as soon as the facts relative to a person's current mortgages are known. If requested by the displaced person, the refinancing payment shall be made available at or near the time of closing on the replacement to permit reduction of the new mortgage amount.

(6) INCIDENTAL EXPENSE PAYMENT. An agency shall pay a person for actual and reasonable expense incurred incidental to the purchase of a replacement dwelling. The payment shall include the following:

(a) Legal, closing and related cost including title search, preparing conveyance contracts, notary fees, surveys, preparing drawings or plats and recording fees;

(b) Lender, appraisal or application fees, and loan origination or assumption fees that do not represent prepaid interest;

(c) Certification of structural soundness;

(d) Credit reports;

(e) Owner or mortgagee title insurance policy or abstract of title;

(f) Escrow agent fee;

(g) Other expense approved by an agency.

Note: The payment may not include a prepaid expense (e.g. taxes, water, fuel) or fee, cost, charge or expense which is part of a debt service or finance charge under 15 USC 1631- 1641 and Regulation Z issued pursuant thereto by the board of governors of the federal reserve system.

(7) OWNER-OCCUPANT RETAINS DWELLING. An owner-occupant may purchase the property back from an agency and move it to another location following receipt of payment for the acquired property, and when not inconsistent with project development. The replacement payment shall be determined as follows:

(a)Amount payable. The payment shall be the amount, if any, between the acquisition price and the cost to relocate the dwelling. The cost to relocate shall include the purchase-back price, the cost to acquire and develop a new site, or when moved to retained land, the market value of the residential lot, installing utility service, constructing a foundation, moving the dwelling, restoring it to comparable standards and other moving costs.

(b)Limitation. The differential payment under this subsection may not exceed the amount necessary to purchase a comparable replacement dwelling as specified under sub. (3), plus any increased interest or incidental expense payment due under subs. (5) and (6).

(8) REPLACEMENT PAYMENT CONVERSION. An agency shall pay a person as specified under this section. A replacement payment for a prior move to a rental unit shall be deducted from the amount payable under this section. The combined payment may not exceed $25,000, unless a person is eligible for a payment in excess of $25,000 under s. Adm 92.68(9).

Wis. Admin. Code Department of Administration Adm 92.70

Cr. Register, March, 1986, No. 363, eff. 4-1-86; am. (1) (b) (intro.), (5) (a) and (b) and (6) (b), r. and recr. (5) (d), cr. (5) (f), Register, November, 1989, No. 407, eff. 12-1-89; correction in (8) made under s. 13.93(2m) (b) 7, Stats., Register, April, 1996, No. 484; correction in (8) made under s. 13.92(4) (b) 7, Stats., Register December 2011 No. 672.