System Transfer

When the VA value estimate considers the system installation costs to be paid in full by the builder, then additional controls are needed to protect against possible future excessive rates or assessment charges which may result if the system is transferred to a public utility company. 

The trust deed must provide that transfers

·   may be made only to a governmental authority or public utility company controlled by a State utility commission or similar body, and

·   any funds gained from such transfer shall be distributed among property owners served by the system. 

This protection will be obtained by insertion of an alternate paragraph 1 in the trust deed. 

Reference:  See HUD Handbook 4075.12, Appendix A, page 11, or Appendix B, page 11, as applicable.

Lower Valuation

Any lack of assurance of satisfactory service, at reasonable rates, without the possibility of a future charge to pay for the utility systems would be reflected in a lower reasonable value.

Field Station Review for Problems or Changes

If trust deed amendments are proposed or the above conditions are not satisfied, the situation must be reviewed by the VA field station legal staff prior to acceptance.  In this situation, the field station may also need to coordinate with the local HUD office.