Land Use Restriction Agreement: A Basic Guide
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Quick Facts — Land Use Restriction Agreement Lawyers
- Avg cost to draft a Land Use Restriction Agreement: $830.00
- Lawyers available: 12 real estate lawyers
- Clients helped: 28 recent land use restriction agreement projects
- Avg lawyer rating: 5.0 (2 reviews)
What is a Land Use Restriction Agreement?
A Land Use Restrictive Agreement (LURA) is a legal document in which the property owner gives up some of their rights of the land use in exchange for the promise of future tax credits, tenant income restrictions, unit set asides to be rented to lower income tenants and other affordability restrictions. LURA documents the land use restrictions in a public record and runs with the land, which simply mean that the rights in the real estate deed remain with the land despite change in ownership.
Here is more on land use restriction agreements .
How Land Use Restriction Agreements Work
The purpose of a LURA is to provide affordable housing to low-income households by limiting the maximum rent that can be charged for a unit. The LURA documents the restrictions placed upon the property and guarantees that the project receives a specific number of low income housing tax credits over a specific time period. Low Income Housing Tax Credits, or LIHTC, are federal tax credits designed to encourage private businesses to invest in affordable housing.
Low Income Housing Tax Credits depend on a project providing 40% of the apartment units to tenants making no more than 60% of the area median income or allotting 20% of the units to tenants making no more than 50% of the area median income. Since LURA set the restrictions on a property, even if a developer sells the property which has a Land Use Restrictive Agreement in effect, it will transfer to the new buyer.
If the new buyer wants to develop a mixed-use project, the LIHTCs might be overly restrictive. However, there are ways to overcome this problem while maintaining the LIHTCs. One can create a master lease where a developer signs a lease to take over the commercial space. The developer thus becomes a tenant and pays a specific set rent under the income restriction back to the owner of the project. The developer can rent out the commercial space to businesses or individuals to make a profit.
The buyer can also break the mixed-use project into different pieces like a condominium's units–each owned by separate people. The developer is the sole owner of the commercial part of the project but it remains separate from the residential part of the project where the LIHTC applies.
You can read more on working with a property that has a land use restriction agreement in place, here .
Common Terms in a LURA
The LURA has some common sections such as definitions and property details. There are some common sections and topics that are present in all LURAs.
- Multifamily Financing Implications : Properties with a LURA restrict rents are underwritten and processed differently than traditional market rate properties. For instance, Loan terms, costs and interest rates may differ from those of a market rate property. Properties with a restrictive agreement in place are processed under an Affordable Housing program often. A dedicated team of professionals trained in affordable housing will underwrite, process and close the loan.
- The Restriction Period : The restrictions period is also known as the compliance period and is set forth in the LURA. For instance, the compliance period is set at 15 years with an additional 15 years for the extended use period.
- LIHTC Tax Credits : For submitting to the land use restrictions the owner of the multifamily property receives a series of tax credits that provide dollar-for-dollar reductions in its federal income taxes. LIHTC properties receive the tax credits annually during the first 10 years of the agreement.
- Termination of the LURA under LIHTC : While the restriction period of the LIHTC program is in place the land use restrictions also stay in place. This can limit the operations of the multifamily housing property. The specific length of time that the restrictions stay in place is specified in the LURA as the compliance period. The LURA's restrictions can terminate through the qualified termination process, through lender foreclosure proceedings or through the natural expiration of time which can be 30 years or more.
You can read more on components of a LURA here .
Land Use Restriction Agreement Compliance Period
The compliance period is the period between the effective date of the agreement and the expiration of the agreement. Generally, the compliance period is set at 15 years with an additional 15 years for the extended use period. The IRS regulations, HUD or other housing authority set the initial 15-year compliance period. Additional extended use period is enforced by the actions of the individual states housing authority where the property is located.
Here is a sample LURA .
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Meet some of our Land Use Restriction Agreement Lawyers
Faryal A.
Ms. Ayub is an attorney licensed to practice in Texas. Before moving to the US, she has a number of years of experience in contract review, analysis and drafting. Ms. Ayub is available to help you with your legal problems, as well as filling LLC and other business entity formation documents. To know more about her practice, please visit https://ayublawfirmpllc.com/.
"Faryal does excellent work. My document was prepared and delivered to me in a timely and professional manner. Care was taken in drafting the document and all necessary details were included. I highly recommend Faryal and will use her services again."
Ryenne S.
My name is Ryenne Shaw and I help business owners build businesses that operate as assets instead of liabilities, increase in value over time and build wealth. My areas of expertise include corporate formation and business structure, contract law, employment/labor law, business risk and compliance and intellectual property. I also serve as outside general counsel to several businesses across various industries nationally. I spent most of my early legal career assisting C.E.O.s, General Counsel, and in-house legal counsel of both large and smaller corporations in minimizing liability, protecting business assets and maximizing profits. While working with many of these entities, I realized that smaller entities are often underserved. I saw that smaller business owners weren’t receiving the same level of legal support larger corporations relied upon to grow and sustain. I knew this was a major contributor to the ceiling that most small businesses hit before they’ve even scratched the surface of their potential. And I knew at that moment that all of this lack of knowledge and support was creating a huge wealth gap. After over ten years of legal experience, I started my law firm to provide the legal support small to mid-sized business owners and entrepreneurs need to grow and protect their brands, businesses, and assets. I have a passion for helping small to mid-sized businesses and startups grow into wealth-building assets by leveraging the same legal strategies large corporations have used for years to create real wealth. I enjoy connecting with my clients, learning about their visions and identifying ways to protect and maximize the reach, value and impact of their businesses. I am a strong legal writer with extensive litigation experience, including both federal and state (and administratively), which brings another element to every contract I prepare and the overall counsel and value I provide. Some of my recent projects include: - Negotiating & Drafting Commercial Lease Agreements - Drafting Trademark Licensing Agreements - Drafting Ambassador and Influencer Agreements - Drafting Collaboration Agreements - Drafting Service Agreements for service-providers, coaches and consultants - Drafting Master Service Agreements and SOWs - Drafting Terms of Service and Privacy Policies - Preparing policies and procedures for businesses in highly regulated industries - Drafting Employee Handbooks, Standard Operations and Procedures (SOPs) manuals, employment agreements - Creating Employer-employee infrastructure to ensure business compliance with employment and labor laws - Drafting Independent Contractor Agreements and Non-Disclosure/Non-Competition/Non-Solicitation Agreements - Conducting Federal Trademark Searches and filing trademark applications - Preparing Trademark Opinion Letters after conducting appropriate legal research - Drafting Letters of Opinion for Small Business Loans - Drafting and Responding to Cease and Desist Letters I service clients throughout the United States across a broad range of industries.
"I was looking for solid expertise and a quick turnaround. Ryenne, you delivered perfectly. THANKS."
Sara S.
With over eleven years of intellectual property experience, I’m happy to work on your contract problem. I am very diligent and enjoy meeting tight deadlines. Drafting memoranda, business transactional documents, termination notices, demand letters, licenses and letter agreements are all in my wheelhouse! Working in a variety of fields, from construction to pharmaceutical, I enjoy resolving any disputes that come across my desk. I will prioritize your project, big or small. Please be ready and prepared with all relevant documentation so we can get started as soon as you click HIRE! Hourly rate projects will be billed hourly in accordance with the timesheet. Flat rate projects will be billed in segments. Choosing an hourly or flat rate is up to you. Absolutely no refunds.
"Sara was professional, responsive, and very thorough. She provided a clear written review, identified important filing-readiness issues, and gave direct feedback that helped me understand what needed to be fixed before moving forward. I appreciated her honesty, attention to detail, and written communication. I would be happy to work with her again."
June 11, 2024
Christopher S.
I've been a solo practitioner since becoming barred, though I've had part-time arrangements with firms and lots of as-needed of-counsel arrangements. I have extensive experience in family law, civil litigation, unlawful detainers, administrative law, with ample experience in probate court, criminal defense and other areas.
June 11, 2024
Merrill B.
I am an experienced commercial and technology transactions attorney who works with cross functional teams on large scale domestic and international commercial and technology B2B agreements for SaaS, software, and various commercial services, supporting sales, sourcing and business owners. This entails counseling, drafting and negotiation of IP, security, privacy, and liability issues, along with SLAs, SOWs, and Orders, giving business oriented advice, along with writing that is clear and concise. I enjoy giving practical business minded advice in a straight forward manner to clients, regardless of whether the issue is legal, business or financial.
Jack D.
Attorney licensed in Texas & Illinois
June 12, 2024
Daniel L.
I have 8 years of experience in commercial litigation. Clients have been in industries including chemical, trucking, heavy equipment and materials, industrial supplies, hospitality, and commercial real estate. I am barred in TN, and my NY bar admission is pending.
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"Ryenne was attentive and put together the liability waiver quickly."
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"Faryal does excellent work. My document was prepared and delivered to me in a timely and professional manner. Care was taken in drafting the document and all necessary details were included. I highly recommend Faryal and will use her services again."
Quick, user friendly and one of the better ways I've come across to get ahold of lawyers willing to take new clients.
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ContractsCounsel User
To review a 2 page MOU between my religious community and a neighbor regarding our neighbor him using our property to create a community garden.
Location: District of Columbia
Turnaround: Over a week
Service: Contract Review
Doc Type: Land Use Restriction Agreement
Page Count: 3
Number of Bids: 3
Bid Range: $350 - $500
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