24 C.F.R. § 880.501
§ 880.501 The contract. (24 CFR Part 880)
Operative Text
(a) Contract. The Housing Assistance Payments Contract sets forth rights and duties of the owner and the contract administrator with respect to the project and the housing assistance payments. The owner and contract administrator execute the Contract in the form prescribed by HUD upon satisfactory completion of the project. (b) [Reserved] (c) Housing Assistance Payments to Owners under the Contract. The housing assistance payments made under the Contract are: (1) Payments to the owner to assist eligible families leasing assisted units, and (2) Payments to the owner for vacant assisted units (“vacancy payments”) if the conditions specified in § 880.610 are satisfied. (d) Amount of Housing Assistance Payments to Owner. (1) The amount of the housing assistance payment made to the owner of a unit being leased by an eligible family is the difference between the contract rent for the unit and the tenant rent payable by the family. (2) A housing assistance payment will be made to the owner for a vacant assisted unit in an amount equal to 80 percent of the contract rent for the first 60 days of vacancy, subject to the conditions in § 880.611. If the owner collects any tenant rent or other amount for this period which, when added to this vacancy payment, exceeds the contract rent, the excess must be repaid as HUD directs. (3) For a vacancy that exceeds 60 days, a housing assistance payment for the vacant unit will be made, subject to the conditions in § 880.611, in an amount equal to the principal and interest payments required to amortize that portion of the debt attributable to the vacant unit for up to 12 additional months. (e) Payment of utility reimbursement. Where applicable, the owner will pay a utility reimbursement in accordance with § 5.632 of this title. HUD will provide funds for the utility reimbursement to the owner in trust solely for the purpose of paying the utility reimbursement.
Under 24 CFR Part 880 § 880.501, the Housing Assistance Payments (HAP) Contract is the governing agreement between a project owner and the contract administrator, executed in HUD-prescribed form once a project is satisfactorily completed. The contract establishes two categories of payments to owners: assistance payments tied to eligible families occupying units, and vacancy payments for unoccupied assisted units under specific conditions. The assistance payment for an occupied unit equals the gap between the contract rent and what the tenant actually pays, while vacancy payments are capped at 80 percent of contract rent for the first 60 days and shift to a debt-service-based formula for longer vacancies. Where utility reimbursements apply, funds flow through the owner in trust and must be passed on to tenants as directed by § 5.632.
Plain English — not legal advice.
Owners operating under 24 CFR Part 880 § 880.501 generally execute the HAP Contract in the form HUD prescribes and maintain compliance with its terms as the foundation of their payment relationship with the contract administrator. Compliant operators track vacancy durations carefully, since vacancy payments are limited to 80 percent of contract rent for the first 60 days and transition to a principal-and-interest formula for vacancies extending beyond that window under § 880.611. Owners are also mindful that collecting tenant rent or other amounts during a vacancy period that, combined with the vacancy payment, exceeds the contract rent triggers a repayment obligation to HUD, and that any utility reimbursement funds received must be held in trust and disbursed solely for that purpose per § 5.632.
General guidance for property managers — not legal advice for your specific situation. Consult an attorney for advice on your case.
Under 24 CFR Part 880 § 880.501, eligible families in assisted units have a right to benefit from housing assistance payments that cover the difference between the contract rent and the tenant rent they owe, meaning tenants are not responsible for the full market rent on their unit. Where utility reimbursements apply under § 5.632, those funds are required to reach tenants rather than be retained by the owner. Tenants who believe payments are not being applied correctly may find it useful to review their lease and HAP Contract terms, contact HUD's local field office or a tenant-rights organization, or explore whether a violation of § 880.501 can be raised in relevant administrative or legal proceedings.
General guidance for tenants — not legal advice for your specific situation. Consult a tenant-rights organization or attorney for advice on your case.
Generated September 6, 2026 — auto-generated, not yet human-reviewed. See /transparency for methodology.
Effective Timeline
References Out
No outbound references recorded yet for this provision.
References In
No inbound references recorded yet for this provision.