24 C.F.R. § 881.502
§ 881.502 Term of contract. (24 CFR Part 881)
Operative Text
(a) Term (except for Manufactured Home Parks). The term of the Contract will be as follows: (1) Where the estimated cost of the rehabilitation is less than 25 percent of the estimated value of the project after completion of the rehabilitation, the contract will be for a term of 20 years for any dwelling unit. (2) Where the estimated cost of rehabilitation is 25 percent or more of the estimated value of the project after completion of rehabilitation, the contract may be for a term which: (i) Will cover the longest term, but not less than 20 years, of a single credit instrument covering: (A) The cost of rehabilitation, or (B) The existing indebtedness, or (C) The cost of rehabilitation and the refinancing of the existing indebtedness, or (D) The cost of rehabilitation and the acquisition of the property; and (ii) For assisted units in a project financed with the aid of a loan insured or co-insured by the Federal government or a loan made, guaranteed or intended for purchase by the Federal government, will be 20 years for any dwelling unit; or (iii) For units in a project financed other than as described in paragraph (a)(2)(ii) of this section will not exceed 30 years for any dwelling unit except that this limit will be 40 years if (A) the project is owned or financed by a loan or loan guarantee from a state or local agency, (B) the project is intended for occupancy by non-elderly families and (C) the project is located in an area designated by HUD as one requiring special financing assistance. (b) Term for manufactured home parks. For manufactured home units or spaces in substantially rehabilitated manufactured home parks, the term of the Contract will be 20 years. (c) Staged projects. If the project is completed in stages, the term of the Contract must relate separately to the units in each stage. The total Contract term for the units in all stages, beginning with the effective date of the Contract for the first stage, may not exceed the overall maximum term allowable for any one unit under this section, plus two years.
Section 881.502 establishes how long a Housing Assistance Payments (HAP) contract under the Section 8 substantial rehabilitation program can remain in effect. The duration depends on factors such as the ratio of rehabilitation costs to the project's post-rehabilitation value, the type of financing used, and whether the project involves a manufactured home park or is built out in stages. Contract terms generally range from 20 to 40 years, with the longer end reserved for projects meeting specific ownership, financing, and occupancy criteria set by HUD.
Plain English — not legal advice.
Operators working with HAP contracts governed by 24 CFR Part 881 § 881.502 generally determine the applicable contract term at the outset by calculating rehabilitation costs as a share of post-rehabilitation project value and identifying the financing structure in use. When rehabilitation costs reach 25 percent or more of post-rehabilitation value, compliant operators align the contract term with the longest single credit instrument covering those costs, subject to the 20-, 30-, or 40-year ceilings that apply based on loan type and project characteristics. For staged projects, operators track contract terms separately for each stage while ensuring the combined term across all stages does not exceed the maximum allowable term for any single unit plus the two-year allowance provided under § 881.502(c).
General guidance for property managers — not legal advice for your specific situation. Consult an attorney for advice on your case.
Residents living in properties subject to a HAP contract under 24 CFR Part 881 § 881.502 have an interest in understanding how long that contract—and the affordability protections tied to it—is set to last. The contract term directly affects the duration of rental assistance, so tenants may want to ask their property manager or local HUD field office about the specific term applicable to their building. Tenant-rights organizations and HUD's Office of Multifamily Housing can be resources for understanding what happens as a contract approaches expiration and what options may be available under § 881.502.
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.
Effective Timeline
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