24 C.F.R. § 891.130
§ 891.130 Prohibited relationships. (24 CFR Part 891)
Operative Text
This section shall apply to capital advances under the Section 202 Program and the Section 811 Program, as well as to loans financed under §§ 891.655 through 891.790. (a) Conflicts of interest. (1) Officers and Board members of either the Sponsor or the Owner (or Borrower, as applicable) may not have any financial interest in any contract with the Owner or in any firm which has a contract with the Owner. This restriction applies so long as the individual is serving on the Board and for a period of three years following resignation or final closing, whichever occurs later. (2) The following contracts between the Owner (or Borrower, as applicable) and the Sponsor or the Sponsor's nonprofit affiliate will not constitute a conflict of interest if no more than two persons salaried by the Sponsor or management affiliate serve as nonvoting directors on the Owner's board of directors: (i) Management contracts (including associated management fees); (ii) Supportive services contracts (including service fees) under the Supportive Housing for the Elderly Program; (iii) Developer (consultant) contracts; and (iv) Contracts for the sale of land. (b) Identity of interest. An identity of interest between the Sponsor or Owner (or Borrower, as applicable) and any development team member or between development team members is prohibited until two years after final closing.
Section 891.130 governs conflict-of-interest and identity-of-interest relationships for organizations participating in HUD's Section 202 and Section 811 capital advance programs, as well as certain loan-financed projects. It bars officers and board members from holding a financial stake in contracts involving their own organization, both during their tenure and for three years after they leave. Certain contracts between an owner and its sponsoring nonprofit are carved out from the conflict-of-interest prohibition, provided no more than two salaried individuals from the sponsor serve as nonvoting directors on the owner's board. Separately, financial entanglements between sponsors, owners, borrowers, and development team members are prohibited for two years following final closing.
Plain English — not legal advice.
Operators and sponsors subject to 24 CFR Part 891 § 891.130 generally maintain documented policies that track board member financial interests and flag any contracts in which those individuals hold a stake. Compliant organizations typically ensure that any salaried sponsor personnel placed on an owner's board serve in a nonvoting capacity and that no more than two such individuals hold those seats, in order to take advantage of the enumerated contract exceptions. Organizations also commonly establish internal timelines to monitor the three-year post-resignation restriction on former officers and board members, as well as the two-year post-closing prohibition on identity-of-interest arrangements with development team members.
General guidance for property managers — not legal advice for your specific situation. Consult an attorney for advice on your case.
Residents living in housing developed under the Section 202 or Section 811 programs have an interest in knowing that § 891.130 is designed to prevent self-dealing by the organizations that own and manage their housing. If a tenant has reason to believe that prohibited financial relationships exist between an owner's leadership and its contractors, that concern can generally be raised with HUD's Office of Multifamily Housing or the relevant HUD field office, which oversees compliance with these requirements. Tenant-rights organizations and HUD-approved housing counseling agencies can help residents understand how this provision applies to their housing and what reporting channels are available.
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 4, 2026 — auto-generated, not yet human-reviewed. See /transparency for methodology.
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