VERIFY – YOU’VE GOT QUESTIONS, WE’LL FIND ANSWERS
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Imagine trying to sell your house, and the City of Denver says you can't sell it for just any price. You have to sell for the price it picks.
That's what you signed up for if you bought a house through the city’s affordable housing program.
Now imagine your next-door neighbor -- who lives in an income qualified house -- sells theirs for market value.
That’s the case for a Green Valley ranch resident named Lori Lucero who asked our Verify team how in the world that's fair?
WHAT WE FOUND
Lucero bought a new house from Oakwood Homes 13 years ago through Denver’s affordable housing program called the inclusionary zoning ordinance. It required home builders to pay a fine or dedicate 10 percent of their homes as affordable housing.
Those homes were sold below market value to people who met certain income guidelines.
But there was one important caveat.
Lucero and other families couldn’t sell their homes at market value. They promised to sell to another income qualified family for a price set by city officials.
Lucero knew that going in but thought the deed restriction on her house expired.
A handful of homes in her neighborhood recently sold for market value. The house next door even sold to an investment company called American Homes 4 Rent.
So, she called a friend who works as a realtor and asked for an evaluation.
“We could list our home for anywhere between $325,000 and $349,000,” Lucero said.
That was great news for Lucero and her husband. They’d like to downsize now that their son is heading off to college and prepare for retirement.
She planned to list her house until she discovered it was income restricted through 2024.
“We were under the impression that maybe for a couple years that it would be ... but never for twenty years,” Lucero said.
She talked to Oakwood Homes, and a representative told her the most she could sell her house for was $217,500.
It didn’t make sense.
Smaller homes in her neighborhood sold for thousands more -- including several bought by rental companies. Those businesses aren't families, and they obviously earn more than the income guidelines allow, Lucero said.
We asked Erik Soliván, who heads Denver’s housing projects and programs, to explain.
“There are two exceptions to the incomes restrictions. One is foreclosure under federal housing rules. The second is when that income restriction has expired,” Solivan said.
The homes Lucero saw sell for market value went into foreclosure at some point during the last 13 years.
“That is federal law, so we have to comply with federal law,” Solivan said. “All of our properties developed under the [Federal Housing Authority], which helps underwrite a lot of that construction. We have to abide by that.”
Lucero doesn’t think that’s fair.
“I can let my house go into foreclosure. I can walk away with a ruined credit record,” Lucero said. “But the bank can sell it for whatever they want to sell it for.”
She and her husband are thinking about delaying their retirement plans until the deed restriction lifts.
Solivan said her frustration raised an important point about understanding the deed restriction on these kinds of homes before you buy one. The 20-year rule should have been clearly explained before the couple closed.
“I encourage her to reach out and let us work with her,” Solivan said.
So, our Verify team connected them, and it turned out Oakwood gave Lucero an incorrect number.
The city used its formula to calculate her maximum sale price and got a ballpark figure of $300,000.
Denver looks at purchase price, length of residency and market conditions to determine a sale price for an owner with an income restricted property.
“I like that figure much better,” Lucero said. “If we can get $300,000, I would sell.”
Income restricted homes stay that way for 20 years unless someone loses it through foreclosure. And Denver is the only entity that can set a maximum sale price while the deed restriction is in place.
If Lucero had sold her house for the price Oakwood Homes gave her, she would have lost $80,000.
© 2017 KUSA-TV