What is a transfer of physical assets (TPA)?

A transfer of physical assets (TPA) is a type of property sale that requires the assumption of a loan sponsored by the United States Department of Housing and Urban Development (ATH), which oversees subsidized and public housing in the United States

TPAs only apply to residential loans insured by HUD and do not apply to commercial loans. Many properties financed by Sponsored by HUD the loans are multi-unit buildings, leased at low cost under government regulations. A HUD-sponsored loan is provided by the Federal Housing Administration (FHA).

Understanding a transfer of physical assets

A The TPA can take one of two forms: full or modified. A full TPA describes a transaction in which ownership completely changes hands. One owner sells the house to another. With a full APR, the buyer assumes the note and mortgage associated with the property.

The buyer can then either take over the existing regulatory agreement, the central contract with HUD, or enter into a new regulatory agreement with HUD. In a modified TPA, the ownership structure changes, but the beneficial ownership does not completely change hands.

The application phase

An APT review has two phases: application and preliminary approval. APTs must be requested through a HUD-driven process that involves a number of forms. Certain properties eligible for a TPA are also the subject of a Contract of Assignment or Support for Housing Assistance (HAP). These contracts are for properties that can be rented under the Housing Choice Voucher program, section 8.

The preliminary approval phase

In the preliminary approval phase, HUD reviews the application along with 22 separate documents, which are described therein and include the buyer’s financial statements, a buyer’s letter describing the transaction, organizational documents proposed by the borrower and all participation certificates. Both parties are legally bound to take the necessary steps to re-transfer ownership to the seller if the conditions for preliminary approval are not met within 45 days.

Special considerations

Some HUD properties come with user agreements that the buyer must always adhere to. These agreements can limit the rent that the landlord can charge on the units of the property. For this reason, HUD encourages all potential buyers to carefully read any pre-existing user agreements. Each is unique and will likely affect whether the buyer feels the purchase price is appropriate.