ARTICLE 5. Supervision of Housing Sponsors [51200. - 51207.]

Cal. Health and Safety Code - HSC 5.

in effect

Cal. Health and Safety Code - HSC § 51200. Section 51200.

With respect to housing developments financed by a mortgage loan from the agency, the agency shall: (a) Prescribe uniform systems of accounts and records for rental and cooperative housing developments and require the housing sponsors to make reports and give answers to specific questions on such forms and at such times as may be necessary for the purposes of this part. (b) Establish minimum reserves to be maintained by nonprofit and limited-dividend housing sponsors of rental and cooperative housing developments. (c) Fix and alter from time to time a schedule of rents such as may be necessary to provide residents of rental and cooperative housing developments who are lower and very low income households with affordable rents to the extent consistent with the maintenance of the financial integrity of the housing developments and to provide profits to housing sponsors subject to the limitations of Section 51202. Income from commercial facilities constituting a portion of a housing development or residential structure financed pursuant to this part shall, to the extent they receive the benefit of below-market-interest financing from the agency, assist in the support of appurtenant residential facilities. No housing sponsor shall increase the rent charged on any restricted rental or cooperative unit of a housing development without the prior permission of the agency, which shall be given only if the housing sponsor affirmatively demonstrates that the increase is required to defray necessary operating costs or avoid jeopardizing the fiscal integrity of the housing development or to provide the agreed rate of return with respect to additional equity money contributed by investors pursuant to Section 51202, and additional debt service and necessary operating costs with respect to increases in mortgage loans for improvements to the housing development deemed necessary by the agency. Applications to the agency for permission to adjust rents shall include a statement of the existing and proposed rent for each unit, a detailed statement of the necessity and authority for the increase under this subdivision, and the extent to which rent increases would be paid by residents of restricted units and not offset by increased subsidy payments. Prior notice of any rent increase shall be given in writing as required by Section 1946 of the Civil Code. Prior to the time any rent increase is effective the housing sponsor shall notify every affected resident, in writing, of informal meetings with the housing sponsor to review the proposed rent increase and that each resident, upon request, will be provided the information submitted to the agency under this subdivision. “Restricted,” as used in this subdivision, means required to be made available for occupancy by lower income households or very low income households pursuant to an agreement between the agency and the housing sponsor. (d) Determine standards for, and control selection by housing sponsors of, tenants and purchasers. (e) Regulate the terms of occupancy agreements to be used in housing financed under this chapter. (f) Provide bilingual services and publications, or require housing sponsors to provide bilingual services and publications, which are necessary to ensure informed access to housing financed pursuant to this part for persons and families of low or moderate income who have limited fluency in the English language.

Cal. Health and Safety Code - HSC § 51201. Section 51201.

The agency may do any of the following with respect to housing sponsors of rental and cooperative housing financed pursuant to this part. (a) Through its agents or employees, enter upon and inspect the lands, buildings, and equipment of a housing sponsor, including all parts thereof, and examine the books and records of a housing sponsor. However, there shall be no entry or inspection of occupied units without consent of the occupant. (b) Supervise the operation and maintenance of any housing financed pursuant to this part and order such repairs as may be necessary to protect the public interest or the health, safety, or welfare of occupants of the housing. (c) Require any housing sponsor to pay to the agency such fees as it may prescribe to defray its costs incurred in connection with the examination, inspection, supervision, auditing, or other regulation of the housing sponsor. (d) Regulate the retirement of any capital investments or the redemption of stock or the distribution of any equity interest in any housing sponsor. (e) Order any housing sponsor to do, or to refrain from doing, any act, as may be necessary to comply with the provisions of state, federal, or local laws, the rules and regulations of the agency, or the terms of any contract between the agency and the housing sponsor. (f) Withhold the transfer of construction payments to a housing sponsor pending adequate performance, as determined by the agency, of any acts required of such housing sponsor pursuant to the provisions of this division or pursuant to any agreement by and between the agency and such housing sponsor.

Cal. Health and Safety Code - HSC § 51202. Section 51202.

Every housing sponsor of a rental or cooperative housing development which receives a construction loan or mortgage loan or a grant pursuant to this part shall enter into an agreement with the agency providing for the regulation of the disposition of property. No housing sponsor of a rental housing development receiving a mortgage loan pursuant to this part shall receive an earnings distribution of more than 6 percent of the equity invested in the housing development, unless a higher limitation on earnings distribution is otherwise provided by rules and regulations of the agency. The agency may permit a distribution greater than 6 percent to investors contributing additional equity money to an existing housing development, or in the case of a housing development over which the agency has assumed managerial and financial control pursuant to Section 51203, or in any case where it would materially contribute to meeting the policies or goals of this division.

Cal. Health and Safety Code - HSC § 51203. Section 51203.

Upon making a determination that the financial status of a rental or cooperative housing development is such as to jeopardize any economic interest of the agency in such housing development, the agency may assume managerial and financial control of the housing sponsor and may supervise and prescribe the activities of the housing sponsor in such manner and under such terms and conditions as the agency may stipulate in any contract with the housing sponsor. Such control may be exercised through appointment by the agency to the governing body of such housing sponsor of a number of new members sufficient to constitute a voting majority of the governing body thereof, notwithstanding the provisions of the articles of incorporation or other documents of organization of the housing sponsor.

Cal. Health and Safety Code - HSC § 51204. Section 51204.

The agency may prescribe regulations specifying the categories of cost which shall be allowable in the construction or rehabilitation of a housing development. The agency may require any housing sponsor to certify the development costs upon completion of the housing development. Such certification of development costs shall be subject to audit and verification by the agency.

Cal. Health and Safety Code - HSC § 51205. Section 51205.

(a) The agency may institute any action or proceeding pursuant to applicable provisions of law against any housing sponsor receiving or assuming a loan under this part in any court of competent jurisdiction in order to enforce this part or the terms and provisions of any contract between the agency and the housing sponsor, to foreclose its mortgage, or to otherwise protect the public interest or the occupants of the housing development. Where necessary to protect the interests of the agency, it may, in connection with the action or proceeding, apply to the court for the appointment of a receiver to take over, manage, operate, and maintain the affairs of the housing sponsor of a rental or cooperative housing development. No receiver shall be appointed unless approved by the agency. (b) (1) In the event of the reorganization of any housing sponsor, to the extent permitted by law, that reorganization shall be subject to the supervision and control of the agency. No reorganization of a housing sponsor shall be effected without the prior written consent of the agency. (2) The agency may provide in its loan agreements that, in the event of a judgment against any housing sponsor in any action to which the agency is not a party, there shall be no sale of the housing development or any portion thereof, except upon 60 days’ written notice to the agency. Upon receipt of notice, the agency or Attorney General shall take steps that, in its judgment, are necessary to protect the rights of all parties. (c) Notwithstanding any other provisions of law, if, prior to foreclosing on any collateral provided by a housing sponsor, the agency institutes any judicial proceeding or takes any action against a housing sponsor to enforce compliance with the obligations set out in subdivision (d) or to collect or offset any sum owed the agency as a result of any violation of any obligation set out in subdivision (d), that remedy or action shall not constitute an action within the meaning of subdivision (a) of Section 726 of the Code of Civil Procedure, or in any way constitute a violation of the intent or purposes of Section 726 of the Code of Civil Procedure, or constitute a money judgment for a deficiency or a deficiency judgment within the meaning of Section 580a, 580b, or 580d of, or subdivision (b) of Section 726 of, the Code of Civil Procedure. However, the above-referenced provisions of the Code of Civil Procedure shall apply to any judicial proceeding instituted, or nonjudicial foreclosure action taken, by the agency to collect the principal and interest due on the mortgage loan with the housing sponsor. (d) Subdivision (c) shall apply to the obligations of the housing sponsor to do any or all of the following: (1) Establish a schedule of rents, tenant standards and tenant selection process, and terms of occupancy, and to provide bilingual services and publications for tenants, pursuant to Section 51200. (2) Permit the agency to inspect the premises, books, and records; supervise the day-to-day operation and maintenance of the housing financed by the agency, and to pay the fees to defray the cost thereof, pursuant to subdivisions (a) to (d), inclusive, of Section 51201. (3) Comply with the provisions of federal, state, or local laws and ordinances, with the rules and regulations of the agency, or with the terms of any contract with the agency, pursuant to subdivisions (e) and (f) of Section 51201. (4) Adhere to the limitation on earnings required by Section 51202 or by the agency’s regulatory agreement, or both. (5) Turn over managerial and financial control to the agency pursuant to Section 51203. (6) Properly certify development costs pursuant to Section 51204. (7) Remit earned surplus to the agency as required by Section 51206. (e) This section shall apply to housing sponsors, as defined in Section 50074 and as used in Chapter 6.7 (commencing with Section 51325). (f) Notwithstanding any other provision of law, the prevailing party in any action instituted pursuant to this section shall be awarded costs and reasonable attorney’s fees, in an amount to be determined in the court’s discretion. (g) As used in this section, “mortgage loan” shall be defined as in Section 50086.

Cal. Health and Safety Code - HSC § 51206. Section 51206.

Whenever a housing sponsor of a rental or cooperative housing development accumulates an earned surplus greater than such operating and replacement reserves as the agency may require, that surplus shall be used to reduce rents within the housing development to a level at which no person or family of low or moderate income occupying the housing development pays more than the affordable rent. Whenever a housing sponsor of a rental or cooperative housing development accumulates an earned surplus greater than such operating and replacement reserves as the agency may require and no person or family of low or moderate income occupying the housing development pays more than the affordable rent, then such surplus shall be transferred to the agency for use in lowering the rents for persons and families of low or moderate income in other housing developments to a level no greater than the affordable rents.

Cal. Health and Safety Code - HSC § 51207. Section 51207.

A person or family of low or moderate income shall not receive financial assistance under this part if such person or family has already received assistance under this part for purchase of other real property, unless such property is sold or transferred for good cause as determined by the agency.

Source: CA Legislative Counsel Bulk DataURL: https://downloads.leginfo.legislature.ca.gov/pubinfo_2025.zipFetched: 6/27/2026