24 C.F.R. § 883.607
§ 883.607 Default by owner and/or agency. (24 CFR Part 883)
Operative Text
(a) Rights of Owner if Agency defaults under Agreement or Contract. The ACC, the Agreement and the Contract will provide that, in the event of failure of the Agency to comply with the Agreement or Contract with the owner, the owner will have the right, if he/she is not in default, to demand that HUD investigate. HUD will first give the Agency a reasonable opportunity to take corrective action. If HUD determines that a substantial default exists, HUD will assume the Agency's rights and obligations under the Agreement or Contract and meet the obligations of the Agency under the Agreement or Contract including the obligation to enter into the Contract. (b) Rights of HUD if Agency defaults under ACC. The ACC will provide that, if the Agency fails to comply with any of its obligations, HUD may determine that there is a substantial default and require the Agency 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 an Agency is in substantial default, HUD will give the Agency a reasonable opportunity to take corrective action. (c) Rights of Agency and HUD if Owner defaults under Contract. (1) The Contract will provide that if the Agency determines that the owner is in default under the Contract, the Agency will notify the owner, and lender, if applicable, 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 Agency including specific performance under the Contract, abatement of housing assistance payments and recovery of overpayments, where appropriate; and (iii) That, if he/she fails to cure the default, the Agency has the right to terminate the Contract or to take other corrective action, in its discretion. (2) If the Agency provided the permanent financing, 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 (c) of this section.
Section 883.607 establishes a framework of mutual accountability among three parties—HUD, a state or local housing agency, and a property owner—participating in a Section 8 housing assistance program. When an agency fails to meet its obligations under the Agreement or Contract, the rule gives HUD authority to step in, assume the agency's role, and keep the program running after first allowing the agency a chance to correct the problem. Conversely, when an owner fails to meet contract obligations, the agency must formally notify the owner of required corrective steps and available remedies, which can include withholding housing assistance payments, demanding specific performance, or ultimately terminating the contract.
Plain English — not legal advice.
Under § 883.607, a compliant owner in a Section 8 program governed by 24 CFR Part 883 generally maintains awareness of the agency's obligations under the Agreement and Contract, since the owner retains the right to demand a HUD investigation if the agency defaults—provided the owner is not itself in default at the time. Operators also keep their own performance in good standing, because an owner default triggers a formal notification process in which the agency identifies required cure actions and may pursue remedies such as abatement of housing assistance payments or contract termination. Owners who receive a default notice under this provision are generally expected to respond to the cure requirements outlined in that notice within the timeframe provided.
General guidance for property managers — not legal advice for your specific situation. Consult an attorney for advice on your case.
Although § 883.607 primarily governs the relationships among HUD, housing agencies, and property owners, the provision's default and enforcement mechanisms are part of the broader framework that keeps Section 8 housing assistance payments flowing to properties where tenants reside. If program disruptions arise—such as a halt in housing assistance payments—tenants may find it useful to contact their local housing agency to understand whether a default situation under this provision is affecting their building. Tenant-rights organizations and HUD's regional offices can be resources for understanding how the protections built into § 883.607 relate to housing stability in a particular program.
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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