Real Property Acquisition

Determine Whether Each Particular Acquisition Is Governed by Title III of the Uniform Act

Even if the property was acquired prior to award or receipt of CDBG funds, if it was acquired with the intent to use CDBG funds for any part of the project, such as construction or rehabilitation activities, the project is subject to the URA and Section 104(d).

The URA requirements apply to both permanent and temporary easements and to any acquisition of real property where there is federal financial assistance involved in any part of the project costs except in the following instances.

• Voluntary Transactions.  While a seller may voluntarily be offering property for sale, URA does not necessarily consider it to be a “voluntary transaction” unless it can be demonstrated that the transaction meets all of the following criteria.  (See Exhibits VI A & B).
  • Acquisition undertaken by an agency or person that does have authority to acquire property by eminent domain;
    • no specific site or property needs to be acquired;
    • property to be acquired is not part of an intended, planned, or designated project area;
    • agency determines and informs the owner in writing that it will not use its power of eminent domain to acquire the property in the event that negotiations fail;
    • grantee will inform owner in writing of what it believes to be the Fair Market Value.  An appraisal is not required, however, the estimate must be prepared by a person familiar with real estate values and the agency's files must include an explanation of the basis for the estimate.
• Acquisition undertaken by an agency or person that does not have authority to acquire property by eminent domain, provided that:
  • prior to making the offer, the owner is clearly advised in writing that if negotiations fail the agency will not acquire the property; and,
  • the agency informs owner in writing of what it believes to be the Fair Market Value.

Whenever feasible, the above information should be provided to the owner before making the purchase offer.  The seller must be provided the opportunity to withdraw from the agreement after this information is provided.

• Acquisition from a public agency, if the acquiring agency does not have the authority to acquire the property through condemnation.
• Acquisition of real property by a cooperative from a person who, as a condition of membership in the cooperative, has agreed to provide without charge any real property that is needed by the cooperative.
• Acquisition of permanent and temporary easements.  See Exhibit VIII-G under Labor & Construction.

The grantee is prohibited by Title III of the Uniform Act from taking any actions that might coerce the property owner into agreeing to the agency's final offer.

If the procedures under the Uniform Act are not applicable, the grantee prepares a "Notice of Determination of Exemption" (Exhibit VI-D) to be included in the project file.  The Notice includes only a description of the parcel to be acquired and the criteria by which the locality determined that the Uniform Act does not apply to the acquisition.  The Notice should be signed by the grantee's program coordinator and placed in the grantee's Real Property Acquisition File.

Note:  If there is any dislocation of tenants from the property it must be noted that the grantee is aware that the move must be accomplished according to relocation assistance provisions contained in the Uniform Act. Grantee is potentially responsible for payment at URA level of assistance to any tenant who moves from property as a result of negotiations to acquire property if they have not been properly informed even if negotiations fail and property is not acquired.  (Please refer to Relocation Requirements, Secton VII, for more information.)

Donations:  If a CDBG project includes donated land, the property owner must be made fully aware of their right to receive just compensation for the property in question.  If, after they are advised of their rights under URA, they still wish to donate the property, an appraisal of the property must be completed.  This appraisal is not necessary unless the owner wants an appraisal, if the owner in writing, releases the Grantee from this obligation, or the valuation problem is uncomplicated and the fair market value does not exceed $10,000.

If Subject to URA, Grantee Must:

(i.e., a non-voluntary transaction)

• Provide written notice to the property owner of interest in acquiring the property and basic protections of the Uniform Act including the Agency's obligation to secure appraisal.  (HUD has an information brochure available entitled "When a Public Agency Acquires Your Property", HUD-1041-CPD.  Contact Shawn Wright, or your Contract Manager in the Department of Local Affairs to obtain copies or go directly to the agency website www.hud.gov/offices/cpd/library/relocation/publications/1041.pdf.)  If the agency does not wish to trigger eligibility for relocation assistance at the time of this notice, it should ensure that this notice is not a "Notice of Intent to Acquire".  (Refer to Relocation Requirements - Written Notice Requirements in Chapter VII, page VII-2)
• Have the property appraised to determine fair market value.  If a structure exists on the property to be acquired, the owner or the owner's designated representative shall be given an opportunity to accompany the appraiser during the inspection of the property.  Grantees are encouraged to obtain at least two appraisals of high value properties and properties requiring a complicated valuation process.
• Have a written review appraisal performed by a qualified reviewing appraiser and determine just compensation for the property.  The review appraiser's certification of the recommended or approved value of the property should be included in a signed statement which identifies the appraisal reports reviewed and explains the basis for the approval.
• Make a written offer to the owner.
• Review any additional materials related to determination of the purchase price.
• Make payment (applicable in those cases where the grantee and the property owner arrive at a mutually agreed upon purchase price.)
• Make a final offer before initiating condemnation procedures
• Maintain acquisition file for each property

In situations where the owner and the agency have come to a voluntary agreement and the agency has fully informed the owner of his/her rights under the Uniform Act and the owner is willing to voluntarily sell their property, the agency must have a signed statement to that effect (Exhibits VI-B or VI-C).

Real Property Acquisition - Recordkeeping Requirements

The following information must be maintained for at least five years after each owner of the property and each person displaced from the property have received the final payment to which they are entitled.

• Identification of property and property owner(s)
• Evidence that owner was informed on a timely basis about acquisition and his or her rights.
• Copy of each appraisal report, including review appraiser's report and evidence that owner was invited to accompany each appraiser on appraiser's inspection of property.
• A record of any contacts with the property owner.
• Copy of written purchase offer and summary statement of the basis for the determination of just compensation; date of delivery to owner.
• Copy of purchase contract and documents conveying property.
• Copy of settlement statement identifying incidental expenses and evidence that owner received net proceeds due from sale.
• Copy of any appeal or complaint filed and response.