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Purchasing an MPDU

Current MPDU home owners can request a resale or refinance MPDU control price by completing this form and submitting to CPDS:

Current Resale Value

What should I know about MPDUs if I am thinking about buying one?
MPDUs are more affordable than market-rate units because they are regulated by Rockville City Code. Therefore, the units have restrictions that owners must abide by, including:

  • The unit must be owner-occupied as a primary residence for the length of the 30-year control period. The unit cannot be rented to others.  An MPDU owner cannot own another home or condo.
  • The control period for each new owner is 30 years. If the unit is sold during this time, the owner must contact the city for the control price and follow the City's procedures for selling, the unit.
  • For the first sale after the 30-year control period, the seller must split any excess profit with the City  upon selling the unit at market-rate.

What financial requirements does an applicant need to meet to purchase an MPDU?
In order for a person to purchase an MPDU, they must be able to qualify for financing from a bank and have savings for a down payment, settlement and other costs associated with buying a home. In addition, they must have a good credit rating. A bank or mortgage company determines if an individual is qualified for financing. The bank will provide a mortgage pre-approval letter stating the mortgage amount a buyer qualifies for.

How can I get on the City's MPDU homebuyer waiting list to purchase an MPDU?
Once a person is income qualified he or she must take two additional steps to be eligible to purchase an MPDU and be added to the City's waiting list of qualified prospective buyers. The person must: (1) Attend a first-time homebuyer class or information session and provide a copy of the completion certificate to the City and (2) Provide a mortgage pre-approval letter to the City. The waiting list is given to builders who are selling newly constructed units and to current owners who are selling their unit. The builders and sellers are instructed to contact people in the order in which they appear on the list and offer them an opportunity to buy an MPDU. You must notify City staff that you would like to be placed on a waiting list in order to purchase an MPDU.

Where can I take a First-Time Homebuyer's class? MPDU certificate holders who wish to be placed on the homeownership waiting list must complete a first-time homebuyer class that provides an introduction to the home purchase process. Certificate holders can attend Montgomery County's 3 hour First-Time Homebuyer Class conducted by Housing and Community Initiatives or attend a class through any HUD-approved counseling agency. A certificate of completion must be provided to City staff. Certificate holders can sign up for the class online at: http://hcii.org/HomebuyersEducationSchedule.html.

What if I don’t want to buy the unit that is offered to me by a builder or seller?
If a certificate holder is not interested in the unit available from the builder or seller who contacted them, they can decline to purchase the unit. Their name remains on the list of certificate holders, which is given to future builders or sellers of MPDUs. If a certificate holder chooses not to purchase a unit, when offered, there is no guarantee that another unit will become available. A name is only removed from the list when a certificate holder purchases a unit or requests that his or her name be removed.

What is the control period for MPDUs? What does this mean in terms of reselling a unit?
The control period for both rental and for sale units is 30 years. This means that units remain MPDUs for a period of 30 years and cannot be sold for more than the City-determined MPDU price. 

Units offered for sale may be resold during the 30-year control period. However, the resale price is controlled through the MPDU program. When an owner wants to sell their unit, they request a resale price determination from the program. This generally includes the cost of any capital improvements made to the unit and an allowance for the increase in value of the unit during the period between the date of original settlement and the date of resale. The increase in value is based on the Department of Labor’s Consumer Price Index (CPI). For the first sale after the 30-year control period ends, the seller must split excess profits with the City, as calculated according to a formula in the Moderately Priced Housing law.  However, a minimum of $10,000 is guaranteed to the seller after the control period, assuming that the price of the unit has increased since it was first sold.

How are the initial MPDU sale prices of new units determined?
The price of homes built under the MPDU Program is determined by provisions in the MPDU Regulations. Generally the prices range from about $120,000  to $240,000 depending on the size and location of the unit.

What options can be added to the allowable sales price of a unit?
The options listed below may be added to the sales price of a new MPDU sold by a builder. It is important to know that appliances are depreciating items. This means that over time they will not retain their full value. At the time of resale, appliances will not be valued at the original full purchase price. Modest additional options whose cost does not exceed $250 may also be offered; options other than those listed below may be offered, but must be paid for in cash by the purchaser. It is up to the purchaser and the seller to determine when payment is due for any options selected.

  • Washer and dryer
  • Dishwasher
  • Upgraded refrigerator and range
  • Upgraded kitchen cabinets and bathroom vanities
  • Upgraded carpet and padding
  • Upgraded resilient flooring
  • Gas HVAC and range
  • Finished optional bathrooms
  • Finished optional bedrooms
  • Finished basement/recreation room

Any other items not included on this list must be pre-approved by the City.

What closing costs are to be paid by the seller of an MPDU?
One-half percent for a permanent loan origination fee;

  • County tax certificate, transfer charges, revenue stamps and recordation charges;
  • Title examination, settlement, and attorney fees;
  • Notary fees and fees for preparation of a deed or conveyance, a deed of trust or mortgage, and the deed of trust or mortgage note;
  • House location survey plat; and
  • Appraisal fees and credit report charges.

In order to buy a house under the program, someone must be a “first time homebuyer.” What does this mean?
A first time homebuyer is someone who has not owned a home in the past five years. Even if the home you owned was in another state or country, you are not eligible for the MPDU program. If your spouse owned a home within the last five years, you are not eligible to participate in the sales program because both spouses must be listed on the deed as co-owners.

What if a Certificate holder gets a pay raise between the time a certificate is issued and he/she purchases a unit?
The household income of the Certificate holder must be within the MPDU income limits at the time a Sales Agreement Contract is signed for the purchase of an MPDU unit. The period of time between the signing of the Sales Agreement Contract and the date of settlement on the home can last several months. Therefore, MPDU Certificate holders may accept pay raises that may result in their income exceeding the eligibility limits. Since a contract for the purchase of a home has been entered into, it is not the intent of the MPDU Program that these situations result in breech of contract or denial of a pay increase. However, in such a situation the Certificate holder is not permitted to select a different MPDU and may only complete the transaction that has commenced; in other words, they may complete purchase on the unit for which the Sales Agreement Contract has been signed and cannot break that contract in order to purchase a larger MPDU that they may now be able to afford, in the event another MPDU is available.

Can a buyer have a cosigner for a mortgage loan?
There may be a cosigner on a loan as long as the cosigner does not appear on the deed as a co-owner. This provision is at the discretion of the individual lender.

If I buy an MPDU and have to move suddenly, can I rent out my unit?
Buyers of MPDUs must not lease MPDUs to other parties. There is a provision in the law under which temporary rentals MAY be allowed if the City Manager finds sufficient cause to make such an allowance. Selling the unit is always an option.

How do I resell my MPDU?
An owner of an MPDU must notify the Department of Community Planning and Development Services (CPDS) in writing of their intent to sell and request a resale price determination by completing the Current Resale Value form. The owner must provide CPDS with an itemized list of all capital improvements for which credit is requested as part of the resale price. All improvements must be documented with receipts. The owner must permit the CPDS to inspect the MPDU as part of the resale price determination process.

Once a resale price is determined, the owner is notified and the MPDU will then be offered exclusively to Rockville Housing Enterprises (RHE), which is the designated housing agency for the City's MPDU Program. RHE has a 45-day period in which to decide whether or not they will purchase the MPDU.

If RHE does not wish to purchase the unit, it will be offered to Certificate Holders on the MPDU Eligibility waiting list through CPDS for 60 days. A resale request grants permission to the CPDS to inform Certificate holders on the MPDU Eligibility waiting list of the availability to purchase the MPDU.

If the owner does not agree with the resale price determination, they have 14 calendar days to request reconsideration. Any such request must cite the basis for the request and include supporting documentation.