HAP Contracts

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ID Status Date Public/Private Industry AHACPA Contact
#6807 Closed public Multifamily Les Sparks
Customer Reply

We have run into a unique situation. We have a client that receives project based HAP. In October of 2012, One of the partners of the owner of the project purchased the other partner’s interest in the partnership and transferred the project to a single member LLC. The HUD project manager is stating this is in violation of the HUD HAP contract, which I can see since the parties to the HAP contract is HUD and the former partnership.

I have read the HAP contract and I don’t see anything related to changes in ownership. Is this a violation of HUD regulations?
Kathy Christensen

From Les Sparks:

The issue is not that they substituted the partner’s interest. It is due to the move to a single member LLC. That required some HUD approval.
In cases where we substitute partners, they only need to get HUD approval if the partner has not already been approved by HUD. In this case, it was a change in partnership who had already been approved.

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