• Resale of an MPDU During the Control Period
• Resale After the Applicable Control Period Has Expired For MPDUs that were first purchased BEFORE March 20, 1989
• Resale After the Applicable Control Period Has Expired For MPDUs that were first purchased AFTER March 20, 1989

Before reading the information below, be sure you know the length of the control period on your MPDU.  This information can be found in the information you signed when you executed the contract and closed on your MPDU.  The control period for most MPDUs purchased before April 1, 2005 is 10 years from the settlement date (MPDUs sold after this date have a 30 year control period).  However, some MPDUs sold before April 1, 2005 have a 15 year control period.

A.  Resale of an MPDU During the Control Period:

The owner of an MPDU who wishes to sell the MPDU during the applicable control period must resell the unit to another MPDU certificate holder through the MPDU program at a resale price determined by the County.  The resale pricing policy for each MPDU being offered for sale during the applicable control period is described below; this policy applies regardless of when the unit was initially offered for sale by the builder.

The resale price is determined by the initial acquisition price, plus an allowance for the increase in inflation from the date of the initial settlement on the unit through the date of the resale price determination.  The owner also receives credit for allowable improvements.  No credit will be given for permanent financing costs (loan discount points), buy downs, or improvements not included in the list of compensable improvements dated March 20, 1989.  The increase permitted for inflation is based upon the Consumer Price Index for the Washington Metropolitan area (CPI-U).

The County will allow the payment of a real estate sales commission only if the owner can demonstrate that they were unsuccessful in selling their MPDU for a period of 60 days through the MPDU office.  The MPDU must have been listed in the resale book maintained by DHCA, and advertised on the Department’s MPDU telephone resale number and website.  The owner must obtain written permission from DHCA prior to signing a listing agreement with a real estate agent, in order to include this expense in the resale pricing.

The following is an example of the resale price calculation for a unit sold within the ten-year MPDU price and occupancy control period.  This example assumes the unit was initially sold in 1998:

Initial Acquisition Price in 1998:                                                            $100,000

Increase in the CPI (15% increase since 1998)                                     $  15,000

Documented Capital Improvements:                                                      $    3,000

Real Estate Commission:*                                                                     $           0

Base Resale Price:                                                                            $118,000

Closing Cost Allowance: (3.5% of Base):                                              $    4,130

Maximum Resale Price:                                                                    $122,130

*NOTE:  To qualify for an add-on of the real estate broker’s commission to the sales price, an owner must demonstrate that he has been unsuccessful after a conscientious effort to sell the unit himself by listing the unit for sale in the MPH office for not less than sixty days.

B.        Resale After the Applicable Control Period Has Expired For MPDUs that were first purchased BEFORE March 20, 1989:

If an MPDU was initially offered by the builder through the MPDU Program before March 20, 1989, the owner may sell the unit on the open market after the applicable control period has expired, without restriction on the resale price and with the entire profit going to the seller.  

C.        Resale After the Applicable Control Period Has Expired For MPDUs that were first purchased AFTER March 20, 1989:

For MPDUs that were initially offered by the builder through the MPDU program after March 20, 1989, the owner may sell the unit on the open market for a fair market price once the applicable control period has expired.  However, the owner must pay one-half of the excess profit into Montgomery County’s Housing Initiative Fund (HIF) in order to provide affordable housing units in the future.  The County also has the right-of-first-refusal to match the proposed fair market sales price.

The following example shows how the County’s portion of the excess profit is calculated.  The example assumes an initial purchase price of $80,000 in 1995, and a current market sales price of $250,000:

Initial Acquisition Price in 1995:                                                            $  80,000

Increase in CPI (25% increase between 1995 and 2005):                      $  20,000

Documented Capital Improvements:                                                      $    5,000

Real Estate Commission (6% of sales price):                                         $  15,000

½ of Transfer Tax & Recording Fee (1.1% of market sales price):         $    2,750

Adjusted Base:                                                                                   $122,750

Fair Market Sales Price (as shown on sales contract):                       $250,000

Less:  Adjusted Base (from above):                                                       $122,750

Excess Profit (the Difference Between Adjusted Base and                   $127,250

the Fair Market Sales Price):

Share of Excess Profit to Owner (50%):                                                $  63,625

Share of Excess Profit to County (50%):                                               $  63,625

Total Proceeds to Seller:                                                                   $186,375

Total Shared Profit to County:                                                          $  63,625

In order to calculate the shared profit that will be due to the County upon sale of the MPDU, the owner must provide the County with a signed copy of the sales contract as soon as possible after it is signed.  In order to receive credit for eligible improvements, the owner must also submit a list of improvements, showing the cost of each item, as well as documentation of the cost (such as receipts or cancelled checks).  Finally, the owner must provide the name, contact information, phone and fax number for the settlement attorney.