Finding Text
2024-010 ALN 14.850 – Public Housing Operating Fund – Special Tests and Provisions – Declaration of Trust
Condition and Criteria:
HUD regulations require that PHAs execute and record a Declaration of Trust (HUD Form
52190) against all real property acquired, developed, or modernized with Public Housing
funds. The Declaration of Trust must remain in effect for the duration of the affordability/use
restriction period. The requirement ensures that HUD’s legal interest in the property is
protected.
During our testing of special tests and provisions related to real property restrictions under the
Public Housing program, we noted that the Authority could not provide evidence of an
executed and recorded Declaration of Trust using HUD Form 52190 for its public housing
properties. The Declaration of Trust is a required instrument used to secure HUD’s interest in
properties funded under the Annual Contributions Contract (ACC).
Amount of Questioned Costs:
None.
Context: The Declaration of Trust (HUD Form 52190) that was in place during the audit period was
unable to be provided.
Cause:
The deficiency appears to stem from a lack of oversight in maintaining and verifying that
Declaration of Trusts was properly executed and recorded for all applicable properties. This
was the result of prior management's record keeping and current management being unable to
locate documentation that was maintained by the prior management.
Effect:
Failure to execute and maintain a valid Declaration of Trust places the Authority at risk of
noncompliance with HUD regulations and weakens the enforceability of HUD’s interest in the
public housing property. This could affect the Authority’s eligibility for future funding or
subject it to other administrative action.
Auditor’s Recommendation:
We recommend that the Authority establish controls to ensure a Declaration of Trust is
properly executed and recorded for all covered properties and that records are maintained in a
centralized, accessible location. Management should also periodically review property
compliance records to ensure all required legal instruments remain current and valid.
Grantee Response:
Management acknowledges the finding and will follow the auditor’s recommendation.