Q: Are back taxes, fees or charges an eligible project soft cost for a project being acquired or rehabilitated with HOME funds?

A: HOME funds may not be used to pay for delinquent taxes levied on a property that will receive HOME assistance.

Delinquent property taxes, construction liens and similar encumbrances are obligations incurred by the property owner prior to the purchase or rehabilitation of the property with HOME funds, rather than costs associated with the acquisition or rehabilitation of the property.

In an acquisition, the seller may use the proceeds of a HOME assisted purchase to satisfy these liens and deliver clear title to the purchaser.

However, the purchase price may not be artificially inflated (i.e., above fair market value) so that proceeds will be available to pay these costs.