Conveying property to housing organization for low- and moderate-income homeownership

<p>It is not uncommon for charitable housing organizations, such as Habitat for Humanity, to request land from local governments with the intent of developing housing on the property and then selling it to low- and moderate-income homebuyers. Unfortunately, North Carolina local governments sometimes convey the property incorrectly, perhaps due to forgetting that the North Carolina Constitution does not permit a local government to “donate” real property to a charity, or perhaps by relying on the wrong statutes for the conveyance. Any taxpayer has standing to sue the local government for an improper conveyance. This creates risk for the charity and for the future homeowner because the remedy often used by the courts is simply voiding the conveyance.</p> <p>To help local governments avoid such a result, this post offers legal guidance and practical tips on conveying real property to an intermediary organization for development into housing for eventual sale (not rental) to low- and moderate-income (LMI) households. Low-income households earn no more than 60% of local area median income; moderate-income households earn no more than 80% of local area median income. The income eligibility of homebuyers is a crucial element in determining local government legal authority to convey property for housing. These distinctions around income, and other details related to real property conveyance for affordable housing, are described in more detail below.</p> Background on real property conveyance by North Carolina local governments <p>We start with the general rule that, unless an exception is authorized by statute, North Carolina local governments are required to dispose of real property [...]</p>