Finding Text
U.S Department of Housing and Urban Development 2025-002 Special Tests and Provisions – Real Property Acquisitions and Relocation Assistance (URA) Fiscal year finding initially occurred: 2025 Home Investment Partnerships Program - American Rescue Plan Act (14.239) CRITERIA: The federal regulations for Title 24 Housing and Urban Development state that HUD- assisted programs and projects are subject to the Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970, 42 U.S.C 4601 and its implementing regulations at 49 CFR part 24. In accordance with 49 CFR part 24.102 (c)(1) any real property to be acquired shall be appraised prior to the initiation of negotiations and purchase of said property. CONDITION: The five disbursement transactions charged to the grant were tested. The test found that one disbursement was for the purchase of real property and an appraisal was not obtained prior to the negotiations and/or purchase. An appraisal was obtained subsequent to the purchase date. CAUSE: The Organization did not have policies and procedures in place to adhere to federal regulations as it relates to the acquisition of real property. EFFECT: Failure to obtain an appraisal prior to purchase represents a deviation from the prescribed procedures intended to ensure that federal funds are expended at or below fair market value. However, a post purchase retrospective appraisal was obtained and substantiated that the acquisition price did not exceed the fair market value as of the purchase date. No evidence was noted of overpayment. Our sample was a non-statistical sample. RECOMMENDATION: The Organization should obtain appraisals prior to the negotiations and/or purchase of real property when utilizing funds from local, state, or federal sources. MANAGEMENT’S CORRECTIVE ACTION PLAN: Management was not aware of the appraisal requirement at the time the property was purchased. Upon becoming aware of the requirement, management promptly engaged a certified appraiser and obtained an appraisal of the acquired property, which substantiated that the fair market value exceeded the purchase price. To prevent recurrence, management will review and update its policies and procedures governing the acquisition of real property with public funds. Revised procedures will require that a certified appraisal be obtained prior to negotiations and purchase to ensure that the acquisition price does not exceed fair market value.