1. (a) Restrictions. As a condition for sale at a Reasonable Price at Priority 5, a Housing-Related Private Entity shall agree to Use and Resale Restrictions containing the terms, conditions, and restrictions imposed by the Department to ensure the property remains available to Persons and Families of Low or Moderate income. Such restrictions include, but are not limited to:

   1. (1) restricting the use of the property; and
   2. (2) restricting rental of the property; and
   3. (3) restricting transfers of the property; and
   4. (4) restricting refinancing of the property; and
   5. (5) specifying distribution of proceeds from a subsequent sale; and
   6. (6) monitoring and enforcement provisions.

2. (b) Restriction on Use. A Housing-Related Private Entity shall rehabilitate a property purchased at Priority 5 to be used as either:

   1. (1) If a Surplus Residential Property, as Decent, Safe, and Sanitary housing at Affordable Rents for Persons and Families of Low or Moderate Income.

      1. (A) Current Tenants shall have the first right of occupancy.
      2. (B) If the current Tenants are Persons and Families of Low or Moderate Income, then the purchasing entity shall provide them Affordable Rents.
      3. (C) If the current Tenants are not Persons and Families of Low or Moderate Income, then the purchasing entity may collect market rent. The restrictions described in (1) will begin immediately after the market rate Tenants vacate.
      4. (D) The restrictions described in this section shall be for no less than 55 years from the close of escrow described in § 1485(k).

   2. (2) If a Single-Family Residence, as Decent, Safe, and Sanitary owner-occupied housing for Persons and Families of Low or Moderate Income.

      1. (A) If Current Tenants are Persons and Families of Low or Moderate Income then they shall be offered first right of refusal.
      2. (B) The sales price shall be an Affordable Price calculated pursuant to § 1481.2(c). All subsequent sales within the period described in (C) shall also be at an Affordable Price calculated pursuant to § 1481.2(c).
      3. (C) The restrictions described in this section shall be for no less than 45 years from the close of escrow described in § 1485(k).

3. (c) Resale. An occupied property sold at Priority 5 shall not be resold for 120 calendar days following close of escrow. All properties sold at Priority 5 may be sold as follows:

   1. (1) To another approved Housing-Related Private Entity if the following conditions are met:

      1. (A) The Department has provided written approval of the sale; and
      2. (B) The sales price is the same price paid to the Department for the Priority 5 purchase, without any adjustment; and
      3. (C) The purchasing entity takes ownership subject to the same Use and Resale Restrictions imposed upon the selling entity.

   2. (2) At Fair Market value if the following conditions are met:

      1. (A) The applicable time described in (b)(1) or (b)(2) has expired; and
      2. (B) All profits from the sale by the Housing-Related Private Entity are dedicated to providing housing for Persons and Families of Low or Moderate Income within Pasadena, South Pasadena, Alhambra, La Canada Flintridge, or the 90032 postal ZIP Code.
   3. (3) At an Affordable Price pursuant to (b)(2).
4. (d) Removing Restrictions. The Use and Resale Restrictions described in this section will cease to encumber the property upon the expiration of the period for deed restriction specified in the applicable Use and Resale Restrictions, except the restriction on the use of profits from the subsequent sale described in (c)(2) will remain.

5. (e) Provisions Specific to Properties in the City of Pasadena or the City of South Pasadena. If the Surplus Residential Property offered at Priority 5 is within the City of Pasadena or the City of South Pasadena, then:

   1. (1) In addition to the restrictions described in (b), the Housing-Related Private Entity shall cause the Surplus Residential Property to be developed as a limited equity cooperative with first right of occupancy to present Occupants, unless the Housing-Related Private Entity determines such a cooperative is not feasible.

Note: Authority cited: Sections 54237, 54237.10, 54239.4, 54239.5 and 54239.6, Government Code. Reference: Sections 54236, 54237, 54238, 54239.1, 54239.4, 54239.5 and 54239.6, Government Code.

History

1. New section filed 12-13-2021 as an emergency; operative 12-13-2021 (Register 2021, No. 51). Pursuant to Government Code Section 54237.10, this is a statutorily deemed emergency and the emergency language remains in effect until 12-14-2023. A Certificate of Compliance must be transmitted to OAL by 12-13-2023 or emergency language will be repealed by operation of law on the following day.

2. Amendment of subsection (c)(2)(B) and Note filed 4-7-2022 as an emergency; operative 4-7-2022 (Register 2022, No. 14). Pursuant to Government Code section 54239.4(f), this is a statutorily deemed emergency and the emergency language remains in effect until 4-7-2024. A Certificate of Compliance must be transmitted to OAL by 4-7-2024 or emergency language will be repealed by operation of law on the following day.

3. Refiling of 4-7-2022 emergency amendments, including amendment of section and Note, on 7-3-2023 as an emergency; operative 7-3-2023 (Register 2023, No. 27). Pursuant to Government Code section 54239.5(e), this is a statutorily deemed emergency and the emergency language remains in effect until 9-30-2024. A Certificate of Compliance must be transmitted to OAL by 9-30-2024 or emergency language will be repealed by operation of law on the following day.

4. Pursuant to Government Code section 54237.10(c), as added by Assembly Bill 1038 (Stats. 2024, Ch. 347), a Certificate of Compliance must be transmitted to OAL by 1-31-2026 or the language in the emergency order of 7-3-2023 (Register 2023, No. 27) will be repealed by operation of law the following day (Register 2024, No. 41).

5. Certificate of Compliance as to 7-3-2023 order, including amendment of subsections (c)(1)(C) and (e) and Note, transmitted to OAL 6-25-2025 and filed 8-7-2025; operative 8-7-2025 pursuant to Government Code section 11343.4(b)(3) (Register 2025, No. 32).