Cal. Civ. Code § 0770-03-02-.11

(1) Limitation on Leasing to Ineligible Families.

(a) Owners may not lease any of the assisted units under Contract to ineligible families. Failure on
the part of Owner to comply with prohibition is a violation of the Contract and grounds for all
available legal remedies, including suspension or debarment from Agency HUD programs and
reduction of the number of units under the Contract, as set forth in Rule 0770-3-2-.11(2). Once
the Agency has determined that a violation exists, the Agency will notify HUD of its
determination and the suggested remedy(ies).

(2) Reduction for Failure to Lease to Eligible Families.

(a) If, at any time beginning six months after the effective date of the Contract, the Owner fails for a
continuous period of six months to have at least 90 percent of the assisted units leased or
available for leasing by Eligible Families, because families occupying units who were initially
eligible have become ineligible, the Agency may, on at least 30 days’ notice, reduce the number
of units covered by the Contract. The Agency may reduce the number of units to the number of
units actually leased or available for leasing plus 10 percent (rounded up). If the Owner has only
one unit under Contract and if one year has elapsed since the date of the last housing assistance
payment, the Contract may be terminated with the consent of the Owner.

(3) Restoration.

(a) Tennessee Housing Development Agency will agree to an amendment of the Contract, to
provide for subsequent restoration of any reduction made pursuant to Rule 0770-3-2-.11(2):

1. The Agency determines that the restoration is justified by demand.

2. The Owner otherwise has a record of compliance with obligations under the Contract, and

3. Contract authority is available.

Authority: T.C.A. §13-23-11.5 (18). Administrative History: Original rule filed July 13, 1982; effective August
12, 1982.