Low Income Unit

My partner and I are planing to bid on a condo in Northern California at the trustee sale. After the research, we find out this unit is a “low income” property. My question is:

  1. Does it still remain a “low income” unit after the trustee sale?
  2. what does it mean to the investors? We are not “low income” so can we buy it at the auction?
  3. If we want to sell it or rent it out, does the next buyer or renter have to be low income?


Without seeing the research, it is difficult to say. I am not sure when this started, but I pay close attention to this for MFRs built from 2000 and whenever I see SFRs with 2nd dwelling units scattered within a prodominatly SFR sub-division. These restrictions are created as conditions to the developer of the sub-division. They can be a conditional use permit. They are hard to find. They are usually recorded against the property before it is sub-divided, therefor, a search of the APN may not result in finding the use permit. And, I think, the city does not always record them, but they are none the less enforce.

How do you know the property is low income?

We find out from their HOA document. It has listed out all “Low Income” units in the complex and this property is one of them. The current owner bought the property at a below market price in 2006, and as I understand, they have to sell this unit to “Low Income” buyer.

I wouldn’t be worried about if you are allowed to buy it or not. You should be concerned with who you can sell it to. You may be limited to buyers with incomes between 80%-50% of county median income.

“Low income” is an income category within affordable housing language. There are usually three categories:

“Moderate income” = Typically, 120%-80% of county median income.
“Low income” = Typically, 80%-50% of county median income.
“Very low income” = Typically, under 50% of county median income.

You should check what your county’s income limits are for affordable housing. Search google for “affordable housing income limits (INSERT YOUR COUNTY HERE)”. You may find that the price you set for the condo will attract buyers in the “Low income” category if it was an affordable unit or not.

Why is their a deed restriction in the first place? Most cities and counties feel they don’t have enough supply of housing to attract lower income individuals. Think Marin County etc. So, they offer incentives to developers to include affordable units in their projects. Most cities and counties in northern California won’t approve a project unless there is an affordable component included.

The cities and counties (and state and feds) will assist developers in applying for special project financing if they include affordable units. Think bond financing. They will also do things like allow developers to build more units, forego various fees, and/or let them build less parking than is required.

All of the above is a back and forth negotiation between developer and the city/county. Sometimes a very aggressive negotiation as the developer may not want to build affordable units in the first place. Because of the negotiation process, the income limit deed restrictions may only last a couple years. Most of the time, the deed restrictions will last 25 years or more, but not always. Sometimes there are zero deed restrictions put in place.

(I have written all of this with the assumption that this isn’t simply a Section 8 rental.)

A variation on the low income housing requirement are occupancy restrictions. There are several MFRs in Santa Rosa that conditional use permits tha require a Fee owner live in one of the units.

Thank you so much Adm and Mauleace! Based on the information you provided, we have decided to steer away from this unit. Really appreciate all your help on this!!