Affordable housing finance
Extended use agreement
The recorded IRC § 42(h)(6) covenant keeping LIHTC restrictions on the land at least 30 years — 55 years on California CTCAC deals — binding successors.
Definition
Since 1990, no building earns credits without an extended low-income housing commitment under IRC § 42(h)(6): a restrictive covenant recorded against the property, binding successors and enforceable in state court, running at least 15 years beyond the compliance period — 30 years total. California goes to 55 years under the CTCAC regulations' regulatory agreement, which also carries the deal-specific commitments (deeper targeting, unit mix, services) priced into the original award. Even after early-termination events, tenants keep a 3-year protection tail against rent increases and no-cause eviction.
Why it matters in an underwrite
The covenant, not the building, is what a buyer of a LIHTC asset acquires: in California, up to 55 years of restricted NOI, enforceable by the agency and by tenants. Model exit values off restricted rents for the full remaining term — the qualified-contract escape is waived on most CTCAC deals, so the realistic value events are resyndication and refinancing, not deregulation. Pull the recorded agreement in diligence; its limits, not the federal maxima, set your rent matrix.
Sources & related guides
See also
See the term in the law itself
Read the controlling text in the Code Library, or ask the AI how it applies to your project.
Last reviewed 2026-07-29. General information, not legal advice.