I've come across a situation I have no experience with. We're currently trying to buy two LIHTC properties. They're in decent shape, located neighborhood we really like. Current owner is open to a sale.
The only problem is the seller wants to include a third property in the deal. We don't want the third one. The three properties are subject to the same LURA, put in place with the financing.
Seller believes the LURA is a barrier to selling except as a package. It seems that the properties can be split off, just that seller worries the process is too expensive/time consuming.
To be clear, we do not want to remove the LURA from any of the properties. We just want to buy 2 out of 3 subject to the LURA.
Anyone know what is involved to break off the properties we want? All properties are located in Richmond, VA.
I'm newer to the commercial side of RE. Could you explain LURA and LIHTC? I was guessing and thought LIHTC would stand for Light Industrial Hard To Comp, but that's me stretching on a guess! Thanks!
LURA is Land Use Restriction Agreement. In my case, a previous owner received a loan from a quasi-governmental agency to renovate the property for low income housing. In exchange for favorable financing and tax credits, previous owner signed an agreement that the properties would only be used for low income housing with certain other requirements. This agreement travels with the property, therefore binding all subsequent owners until it expires.
LIHTCs are Low Income Housing Tax Credits. Basically, an incentive program to encourage developers to build or renovate apartment complexes that will be used specifically for low income housing.
I am not an expert on either and the exact definitions may vary by jurisdiction or issuing program.
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