24 C.F.R. § 891.170
§ 891.170 Repayment of capital advance. (24 CFR Part 891)
Operative Text
(a) Interest prohibition and repayment. A capital advance provided under this part shall bear no interest and its repayment shall not be required so long as the housing project remains available for very low-income elderly families or persons with disabilities, as applicable, in accordance with this part. The capital advance may not be repaid to extinguish the requirements of this part. To ensure its interest in the capital advance, HUD shall require a note and mortgage, use agreement, capital advance agreement and regulatory agreement from the Owner in a form to be prescribed by HUD. (b) Transfer of assets. The transfer of physical and financial assets of any project under this part is prohibited, unless HUD gives prior written approval. Approval for transfer will not be granted unless HUD determines that the transfer to a private nonprofit corporation, consumer cooperative (under the Section 202 Program), a private nonprofit organization (under the Section 811 Program), or an organization meeting the definition of “mixed-finance owner” in § 891.805, is part of a transaction that will ensure the continued operation of the capital advance units for not less than 40 years (from the date of original closing) in a manner that will provide rental housing for very low-income elderly persons or persons with disabilities, as applicable, on terms at least as advantageous to existing and future tenants as the terms required by the original capital advance.
Under 24 CFR Part 891 § 891.170, a capital advance provided by HUD for supportive housing carries no interest and does not need to be repaid as long as the property continues to serve very low-income elderly families or persons with disabilities as required by the program. Repaying the advance early cannot be used as a way to escape the program's ongoing obligations. Additionally, the physical or financial assets of such a project cannot be transferred to another party without HUD's prior written approval, and that approval is only granted when the transfer ensures the units will remain affordable and available to eligible residents for at least 40 years from the original closing date.
Plain English — not legal advice.
Owners operating under 24 CFR Part 891 § 891.170 generally maintain compliance by keeping the housing project continuously available to the designated very low-income population, since that ongoing use is what suspends the repayment obligation on the capital advance. Compliant operators also execute and honor the suite of agreements HUD requires — including the note and mortgage, use agreement, capital advance agreement, and regulatory agreement — as the mechanism through which HUD secures its interest. When ownership or asset transfers are contemplated, operators typically seek HUD's prior written approval well in advance and structure any proposed transaction to demonstrate that affordability and eligibility requirements will be preserved for the full required period under § 891.170(b).
General guidance for property managers — not legal advice for your specific situation. Consult an attorney for advice on your case.
Under 24 CFR Part 891 § 891.170, residents of HUD capital advance projects have a regulatory basis to expect that their housing will remain dedicated to very low-income elderly persons or persons with disabilities for the long term, and that any ownership transfer must preserve terms at least as favorable as those in the original capital advance. If a tenant believes a project is being transferred or repositioned in a way that undermines these protections, they may raise the requirements of § 891.170 as a concern in communications with HUD or a local HUD field office. Tenant-rights organizations and legal aid providers familiar with Section 202 or Section 811 programs can help residents understand what these protections mean in practice and what avenues exist for raising concerns.
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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