For the Infill Housing Initiative
Resale prices will be controlled for 30 or more years by an unnamed County bureaucracy. The prices that owners will be allowed to resell at will, presumably, be set at amounts well below the prevailing fair market values.
Owners wishing to resell will be limited to an extremely small universe of potential "qualified" buyers (only those low and moderate income persons who have been certified and approved in writing by the unnamed County bureaucracy).
Potential buyers wishing to become a "qualified" must first apply to the unnamed County bureaucracy. There is no time deadline imposed upon the County for the approval or disapproval of such applications.
Owners wishing to re-sell must first apply to the County for permission. The application must include a sworn affidavit, the proposed sales contract, and information on the proposed purchaser. The County's approval or disapproval must be given in a "reasonable time" (30 days? 6 months?). This assumes, of course, that the Owner (or broker) can figure out from the language of the Restrictive Covenant who in the County to submit the application to (OCED? GSA? MDHA? MDHFA? the County Manager?).
The County's title restrictions are expressly stated to have priority over any mortgage. This will make it difficult or impossible for a prospective homeowner to get financing for the purchase.
There will be nothing in the chain of title to indicate whether a particular resale had been approved by the County or not (leading to title issues for future owners).
In summary, the affordability mechanism may not prove
to be workable in the long run. It has several serious drawbacks.
Primarily, it will impose a significant ongoing administrative
responsibility on the County. Owners, including second and third
owners, will constantly need to know the price at which they can sell
their property and the income limits of potential buyers. Hence, the
County must be constantly monitoring so that it can respond to such
inquiries. Maintaining a highly efficient, responsive, and user
friendly County bureaucracy will be absolutely critical if disaster
is to be avoided. There is also be a continuing educational
requirement as second and third owners will be largely unaware of the
purpose of the original affordability program. Additionally most real
estate agents will not handle transactions involving these houses due
to the restrictions on the sales price and the potential buyers.
Lenders will not want to participate for the same reasons and because
their mortgages will be subordinate to the restrictions. Finally, the
artificially low resale prices will have a depressing affect on
market rate resale prices for other houses in the targeted distressed
neighborhoods and accelerating the downward spiral of social and
There are alternate solution that are perhaps more desirable. Click here to read an article on the advantages and disadvantages of the various alternatives for preserving affordabilty.