24 C.F.R. § 880.507
§ 880.507 Default by PHA and/or owner (private-owner/PHA projects). (24 CFR Part 880)
Operative Text
(a) Rights of Owner if PHA defaults under Agreement or Contract. The ACC, the Agreement and the Contract will provide that, in the event of failure of the PHA to comply with the Agreement or Contract with the owner, the owner will have the right, if he is not in default, to demand that HUD investigate. HUD will first give the PHA a reasonable opportunity to take corrective action. If HUD determines that a substantial default exists, HUD will assume the PHA's rights and obligations under the Agreement or Contract and meet the obligations of the PHA under the Agreement or Contract including the obligations to enter into the Contract. (b) Rights of HUD if PHA defaults under ACC. The ACC will provide that, if the PHA fails to comply with any of its obligations, HUD may determine that there is a substantial default and require the PHA to assign to HUD all of its rights and interests under the Contract; however, HUD will continue to pay annual contributions in accordance with the terms of the ACC and the Contract. Before determining that a PHA is in substantial default, HUD will give the PHA a reasonable opportunity to take corrective action. (c) Rights of PHA and HUD if Owner defaults under Contract. (1) The Contract will provide that if the PHA determines that the owner is in default under the Contract, the PHA will notify the owner and lender, with a copy to HUD, (i) of the actions required to be taken to cure the default, (ii) of the remedies to be applied by the PHA including specific performance under the Contract, abatement of housing assistance payments and recovery of overpayments, where appropriate, and (iii) that if he fails to cure the default, the PHA has the right to terminate the Contract or to take other corrective action, in its discretion or as directed by HUD. (2) If the PHA is the lender, the Contract will also provide that HUD has an independent right to determine whether the owner is in default and to take corrective action and apply appropriate remedies, except that HUD will not have the right to terminate the Contract without proceeding in accordance with paragraph (b) of this section.
Section 880.507 establishes a framework of mutual accountability among HUD, a Public Housing Authority (PHA), and a private owner in federally assisted housing projects. When a PHA fails to meet its obligations under an Agreement or Contract, a non-defaulting owner may demand that HUD investigate, and HUD may ultimately step in to assume the PHA's role. Conversely, when an owner defaults, the PHA—and in some cases HUD independently—holds the authority to demand corrective action, withhold housing assistance payments, recover overpayments, or terminate the Contract.
Plain English — not legal advice.
Private owners participating in projects governed by 24 CFR Part 880 § 880.507 generally maintain documentation demonstrating their own compliance so they can credibly invoke their right to demand a HUD investigation if the PHA fails to perform. A compliant operator stays current on all Contract obligations, since § 880.507 makes clear that only a non-defaulting owner may trigger HUD's intervention against a PHA. Owners also familiarize themselves with the cure-and-notice process outlined in subsection (c), understanding that a PHA finding of owner default triggers formal notification requirements and a defined set of remedies before any Contract termination can occur.
General guidance for property managers — not legal advice for your specific situation. Consult an attorney for advice on your case.
Tenants living in private-owner/PHA projects covered by 24 CFR Part 880 § 880.507 benefit from a regulatory structure that keeps housing assistance payments flowing even when a PHA or owner falls out of compliance, because HUD retains authority to step in and assume obligations. If tenants observe conditions that suggest an owner may be in default—such as unaddressed maintenance failures or irregular assistance payments—§ 880.507(c) outlines a formal process through which the PHA can demand corrective action and apply remedies including abatement of payments. Tenants who believe this process is not being followed may consider contacting their local PHA, filing a complaint with HUD's regional office, or reaching out to a tenant-rights organization for guidance on available options.
General guidance for tenants — not legal advice for your specific situation. Consult a tenant-rights organization or attorney for advice on your case.
Generated September 4, 2026 — auto-generated, not yet human-reviewed. See /transparency for methodology.
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