15 AAC 151.125. Purchase price requirements

(a) The acquisition cost of each residence may not exceed the "specified percent" of the average area purchase price of the statistical area in which the residence being financed is located as determined by the executive director in accordance with the Code. The executive director shall determine the average area purchase price separately with respect to (i) residences which have not been previously occupied, (ii) residences which have been previously occupied, (iii) one-family residences, and (iv) two-family residences. The executive director may adopt the average area purchase price limitations published by the United States Department of Treasury for the statistical area in which a residence is located which are referred to in the Code as the "Safe Harbor Limitations." For purposes of this subsection, "acquisition cost" means the cost of acquiring a residence from the seller as a completed residential unit. The determination whether a particular residence meets the purchase-price requirements shall be made as of the date on which the commitment to provide the financing is made, or if earlier, the date of purchase of the residence. The term "acquisition cost" includes the following:

(1) all amounts paid, either in cash or in kind, by the purchaser (or related party or for the benefit of the purchaser) to the seller (or related party or for the benefit of the seller) as consideration for the residence;

(2) if a residence is incomplete, the reasonable cost of completing the residence whether or not the cost of completing construction is to be financed with bond proceeds; for example, where a mortgagor purchases a building which is so incomplete that occupancy of the building is not permitted under local law, the acquisition cost includes the cost of completing the building so that occupancy of the building is permitted; and

(3) if a residence is purchased subject to a ground rent, the capitalized value of the ground rent, which shall be calculated using a discount rate equal to the yield on the issue of bonds as defined in the Code.

(b) In this section, the following terms have the following meanings:

(1) "acquisition cost" has the meaning provided in 15 AAC 151.125(a) but does not include the following:

(A) the usual and reasonable settlement or financing costs;

(B) the value of services performed by the mortgagor or members of the mortgagor's family in completing the residence; for example, if the mortgagor builds a home alone or with the help of family members, the acquisition cost includes the cost of materials provided and work performed by subcontractors (whether or not related to the mortgagor) but does not include the imputed cost of any labor actually performed by the mortgagor or a member of the mortgagor's family in constructing the residence, and if the mortgagor purchases an incomplete residence, the acquisition cost includes the cost of material and labor paid by the mortgagor to complete the residence but does not include the imputed value of the mortgagor's labor or the labor of the mortgagor's family in completing the residence; and

(C) the cost of land which has been owned by the mortgagor for at least two years prior to the date on which construction of the residence begins;

(2) "family" means, with respect to an individual, that individual's brothers and sisters (whether by the whole or half blood), spouse, ancestors, and lineal descendants;

(3) "financing costs" includes credit reference fees, legal fees, appraisal expenses, "points" which are paid by the buyer (but not the seller, even though borne by the mortgagor or through a higher purchase price) or other costs of financing the residence; however, such amounts will be excluded in determining acquisition cost only to the extent that the amounts do not exceed the usual and reasonable costs which would be paid by the buyer where financing is not provided through a qualified mortgage bond issue; for example, if the purchaser agrees to pay to the seller more than a pro rata share of property taxes, such excess shall be treated as part of the acquisition cost of a residence;

(4) "settlement costs" includes titling and transfer costs, title insurance, survey fees, or other similar costs; and

(5) "specified percent" means the percentage fixed by the Internal Revenue Code of 1986, as amended, and applied to the average area purchase price calculations as a requirement for the use of proceeds of qualified mortgage bonds.

History: Eff. 5/7/93, Register 130

Authority: AS 18.56.088

AS 18.56.098

The Alaska Administrative Code was automatically converted to HTML from a plain text format. Every effort has been made to ensure its accuracy, but neither Touch N' Go Systems nor the Law Offices of James B. Gottstein can be held responsible for any possible errors. This version of the Alaska Administrative Code is current through June, 2006.

If it is critical that the precise terms of the Alaska Administrative Code be known, it is recommended that more formal sources be consulted. Recent editions of the Alaska Administrative Journal may be obtained from the Alaska Lieutenant Governor's Office on the world wide web. If any errors are found, please e-mail Touch N' Go systems at E-mail. We hope you find this information useful. Copyright 2006. Touch N' Go Systems, Inc. All Rights Reserved.