An Act amending the act of December 3, 1959 (P.L.1688, No.621), known as the Housing Finance Agency Law, establishing the Pennsylvania Lease with Guaranteed Purchase Option Home Ownership Program and the Pennsylvania Lease with Guaranteed Purchase Option Home Ownership Program Fund.

PRINTER'S NO. 2086
THE GENERAL ASSEMBLY OF PENNSYLVANIA
HOUSE BILL
No. 1696
Session of
2025
INTRODUCED BY FREEMAN, SAMUELSON, HILL-EVANS, GIRAL, KENYATTA,
CEPEDA-FREYTIZ, PARKER, SANCHEZ, DALEY, BOYD, GREEN,
SHUSTERMAN AND BURGOS, JULY 2, 2025
REFERRED TO COMMITTEE ON HOUSING AND COMMUNITY DEVELOPMENT,
JULY 7, 2025
AN ACT
Amending the act of December 3, 1959 (P.L.1688, No.621),
entitled "An act to promote the health, safety and welfare of
the people of the Commonwealth by broadening the market for
housing for persons and families of low and moderate income
and alleviating shortages thereof, and by assisting in the
provision of housing for elderly persons through the creation
of the Pennsylvania Housing Finance Agency as a public
corporation and government instrumentality; providing for the
organization, membership and administration of the agency,
prescribing its general powers and duties and the manner in
which its funds are kept and audited, empowering the agency
to make housing loans to qualified mortgagors upon the
security of insured and uninsured mortgages, defining
qualified mortgagors and providing for priorities among
tenants in certain instances, prescribing interest rates and
other terms of housing loans, permitting the agency to
acquire real or personal property, permitting the agency to
make agreements with financial institutions and Federal
agencies, providing for the purchase by persons of low and
moderate income of housing units, and approving the sale of
housing units, permitting the agency to sell housing loans,
providing for the promulgation of regulations and forms by
the agency, prescribing penalties for furnishing false
information, empowering the agency to borrow money upon its
own credit by the issuance and sale of bonds and notes and by
giving security therefor, permitting the refunding,
redemption and purchase of such obligations by the agency,
prescribing remedies of holders of such bonds and notes,
exempting bonds and notes of the agency, the income
therefrom, and the income and revenues of the agency from
taxation, except transfer, death and gift taxes; making such
bonds and notes legal investments for certain purposes; and
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indicating how the act shall become effective," establishing
the Pennsylvania Lease with Guaranteed Purchase Option Home
Ownership Program and the Pennsylvania Lease with Guaranteed
Purchase Option Home Ownership Program Fund.
The General Assembly of the Commonwealth of Pennsylvania
hereby enacts as follows:
Section 1. The act of December 3, 1959 (P.L.1688, No.621),
known as the Housing Finance Agency Law, is amended by adding an
article to read:
ARTICLE IV-E
PENNSYLVANIA LEASE WITH GUARANTEED PURCHASE OPTION HOME
OWNERSHIP PROGRAM
Section 401-E. Definitions.
The following words and phrases when used in this article
shall have the meanings given to them in this section unless the
context clearly indicates otherwise:
"Advertisement." A written, visual or oral communication
made to a lessee or prospective lessee by means of personal
representation, newspaper, magazine, circular, billboard, direct
mailing, sign, radio, television, telephone or other means of
communication that aids, promotes or assists, directly or
indirectly, a lease with guaranteed purchase option agreement.
"Escrow account." A bank account or other financial account
administered by the agency or its designee in which all funds
paid by lessees toward the closing costs and down payment to
purchase the subject premises and any and all matching program
funds are deposited and maintained unless paid directly to the
title company at closing.
"Fund." The Pennsylvania Lease with Guaranteed Purchase
Option Home Ownership Program Fund established in section 406-E.
"Lease with g uaranteed purchase option agreement" or
"agreement." An agreement for the use of real property by an
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individual primarily for personal, family or household purposes
for an initial period of not less than one year that is
automatically renewable for successive one-year periods and that
provides for a guaranteed option for the lessee to purchase the
property. The term does not include an agreement for
agricultural, business or commercial purposes or an agreement in
which the individual that will use the property is an
organization.
"Lessee." An individual who leases real property in
accordance with a lease with guaranteed purchase option
agreement.
"Lessor." A person or entity that owns residential property:
(1) constructed or rehabilitated under the program; and
(2) to be leased with a guaranteed option to purchase to
an eligible lessee.
"Monthly payment." The total amount due under a lease with
guaranteed purchase option agreement that is attributable to
rent and an amount escrowed for the purchase of the property,
and which agreement provides that the escrowed amount is not
less than 20% of the monthly payment.
"Program." The Pennsylvania Lease with Guaranteed Purchase
Option Home Ownership Program established in section 402-E.
"Program funds." All money appropriated by the General
Assembly for the purpose of awarding grants or loans under the
program, including money from sources other than the
Commonwealth that are provided for the program.
"Purchase price." The purchase price of the subject
property, as stated in a lease with guaranteed purchase option
agreement, which is equal to the actual market value of the
property on the date of the agreement, as determined in a real
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estate appraisal report provided by a certified residential real
estate appraiser who is mutually agreed to by the lessor and
lessee. The lessor shall pay the cost of the appraisal. In the
event the lessor and lessee cannot agree upon an appraiser, each
shall select an appraiser to produce an appraisal report, with
each bearing their own costs for the report, and the purchase
price shall be equal to the average of the values determined in
the two appraisal reports.
Section 402-E. Establishment.
The Pennsylvania Lease with Guaranteed Purchase Option Home
Ownership Program is established and shall be administered by
the agency. The program shall be dependent on the availability
of program funds.
Section 403-E. Structure of program.
(a) Project types.--The program may provide funding for
sustainable home ownership rehabilitation located in distressed
and disinvested census tracts in order to provide decent, safe
and sanitary dwellings for lease with a guaranteed purchase
option to an individual whose household income is at or below
80% of the area median income for the metropolitan area
determined by the Department of Housing and Urban Development.
(b) Use of program funds.--Program funds for projects under
subsection (a) may be used for the following:
(1) Predevelopment activities, including title searches,
market studies, project planning, architectural services,
legal and engineering studies and related fees.
(2) Acquisition and disposition of real property.
(3) Site preparation, including demolition of existing
structures, improvements and infrastructure.
(4) Rehabilitation and construction.
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(5) Matching funds for the lessee's escrow account.
(c) Affordable housing matching funds.--Program funds may be
used as a set aside for matching funds for counties that have
established optional county affordable housing funds under 53
Pa.C.S. Ch. 60 (relating to optional affordable housing
funding). To receive matching funds under this subsection, a
county must annually report detailed information as required by
the agency on the use of the optional affordable housing funds
for county projects. The information shall be included in the
agency's report under section 405-E.
(d) Mandatory preferences.--To the extent possible, the
agency shall adopt written policies to give preference to
projects that utilize properties from inventories maintained by
public entities, including municipalities, land banks and
redevelopment agencies.
(e) Discretionary preferences.--The agency may adopt written
policies to give preference to projects, including, but not
limited to, projects that:
(1) Meet weatherization standards promulgated by the
agency.
(2) Meet energy efficiency standards promulgated by the
agency.
(3) Are accessible to people with physical disabilities.
(f) Considerations.--The agency shall take into
consideration geographical distribution of program funds to
ensure that all areas of this Commonwealth participate to the
greatest extent possible.
(g) Allocation.--The agency shall allocate at least 30% of
program funds for housing projects that benefit households with
household incomes that are less than 50% of the area median
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income for the metropolitan area as determined by the Department
of Housing and Urban Development. To better assist households
below 50% of the area median income, the agency shall prioritize
lessees in a Housing Choice Vouchers Homeownership Program under
Federal law.
(h) Monitoring and compliance.--The agency shall develop and
implement criteria for monitoring compliance with program
requirements.
Section 404-E. Plan.
(a) Duty to adopt.--Within 90 days of the effective date of
this subsection and by March 15 of each year thereafter, the
agency shall adopt a plan that specifies the method by which
program funds will be distributed and administered that year.
(b) Publication and posting.--
(1) The agency shall submit the proposed plan, including
a comment response document to be produced as part of the
public comment process, to the chair and minority chair of
the Urban Affairs and Housing Committee of the Senate and the
chair and minority chair of the Housing and Community
Development Committee of the House of Representatives, and to
the Legislative Reference Bureau for publication in the next
available issue of the Pennsylvania Bulletin, and shall post
the proposed plan on the agency's publicly accessible
Internet website for public comment no later than 45 days
prior to adoption of the proposed plan under subsection (a).
(2) All comments submitted to the agency in writing are
public records accessible for inspection and duplication in
accordance with the act of February 14, 2008 (P.L.6, No.3),
known as the Right-to-Know Law, and the agency shall
incorporate the comments into the comment response document.
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Section 405-E. Reporting.
(a) Duty of agency.--Within 90 days following the close of
the first calendar year after the effective date of this
subsection and by July 1 of every year thereafter, the agency
shall issue a report containing a financial statement, an
itemized list of projects funded, demographic data, including
gender, disability, number of children in the household and race
and ethnicity and income of the individuals and communities
served, and a description of other expenditures in the preceding
year. The agency shall submit the report to the Governor, the
Auditor General, the chair and minority chair of the Urban
Affairs and Housing Committee of the Senate and the chair and
minority chair of the Housing and Community Development
Committee of the House of Representatives and shall post the
report on the agency's publicly accessible Internet website.
(b) Public record.--The report shall be a public record
accessible for inspection and duplication in accordance with the
act of February 14, 2008 (P.L.6, No.3), known as the Right-to-
Know Law.
Section 406-E. Pennsylvania Lease with Guaranteed Purchase
Option Home Ownership Program Fund.
The Pennsylvania Lease with Guaranteed Purchase Option Home
Ownership Program Fund is established in the State Treasury.
Interest and earnings of the fund shall remain in the fund. All
program funds shall be deposited into the fund. The money in the
fund and interest accruing thereon is appropriated to the agency
on a continuing basis to carry out the provisions of this
article.
Section 407-E. Funding.
Implementation of this article shall be contingent upon
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sufficient program funds being deposited into the fund in
accordance with section 406-E to carry out the purposes of this
article. In a year in which there are insufficient program funds
in the fund for the purposes outlined in this article, the
program shall be suspended until program funds exist in
sufficient amount.
Section 408-E. Disclosures required in connection with lease
with guaranteed purchase option agreement.
(a) Duty of lessor.--A lessor shall comply with any and all
local occupancy or other requirements applicable to rental
dwellings and disclose to the lessee all of the following in a
clear and conspicuous manner:
(1) A brief description of the leased property,
sufficient to identify the property to the lessor and lessee.
(2) The total amount of all payments due under the
agreement, including:
(i) The total amount of the monthly payment due
under the agreement, to be applied toward rent.
(ii) The total amount of the monthly payment due
under the agreement, to be applied toward the escrow
account.
(iii) The total amount of each payment due under the
agreement for utilities that are provided by the lessor,
if not included in the lease payment.
(iv) Any security deposit to be collected by the
lessor and escrowed in accordance with sections 511.1 and
511.2 of the act of April 6, 1951 (P.L.69, No.20), known
as The Landlord and Tenant Act of 1951.
(v) Any other charges, individually itemized,
payable by the lessee to the lessor.
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(3) The timing of lease payments.
(4) The right of the lessee to reinstate as provided in
section 411-E.
(5) The name and contact information of any property
manager acting as agent for the lessor for the rental and
management of the property.
(6) The condition upon which the lessee or lessor may
terminate the lease.
(7) The guaranteed option of the lessee to purchase the
leased property.
(8) The purchase price of the real property that is the
subject of the agreement.
(9) A statement as to whether any contractor or third-
party warranties on appliances and installed equipment, roof
or other improvements to the leased property will be
transferred to the lessor or lessee in the event the lessee
purchases the property.
(10) A statement that the lessee is not required to
purchase insurance for the property, although the lessee is
advised to purchase renter's insurance.
(11) A notice in a prominent place in at least 12-point
type or in legible print with letters at least one-eighth
inch in size, in substantially the following form:
NOTICE: THIS LEASE with GUARANTEED PURCHASE OPTION
AGREEMENT IS REGULATED BY STATE LAW AND MAY BE
ENFORCED BY THE ATTORNEY GENERAL OR BY PRIVATE LEGAL
ACTION.
(b) Lease to be written.--A lease with guaranteed purchase
option agreement shall be in writing and the information
required by this section shall be disclosed by the lessor prior
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to execution of the agreement and shall be disclosed either in
the agreement or on a dated, executed document that identifies
the lease with guaranteed purchase option agreement and the
parties to it.
(c) Requirements for disclosures.--Except as provided in
subsection (a)(11), the information required to be disclosed by
this section shall be printed or typed in at least 12-point bold
face type and numerical amounts and percentages shall be stated
in figures. All information required by this section shall be
stated in plain language, using words and phrases of common
meaning. The information shall be appropriately divided and
captioned by its sections.
(d) Disclosure of additional information.--A lessor may
disclose information that is not required by this section if the
additional information is not stated, used or placed in a manner
that will contradict, obscure or distract attention from the
required information.
Section 409-E. Prohibited terms.
A lessor may not require any of the following from the
lessee:
(1) The purchase of insurance.
(2) Any payment in addition to the lease payments
specified in the agreement other than the payment described
in section 412-E that is required for the lessee to acquire
ownership of the leased property.
(3) Lease payments that in the aggregate exceed the
maximum amount specified in section 416-E.
(4) A penalty for early termination of the agreement.
(5) A fee for collection of a lease payment.
(6) Any requirement for mandatory arbitration to resolve
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disputes pertaining to the agreement.
Section 410-E. Protections against eviction.
(a) Reasons for termination or nonrenewal of agreement.--A
lessor may terminate or refuse to renew the agreement or may
evict a lessee and dwelling occupants only for one of the
following reasons:
(1) Nonpayment of rent, after notice of default and
failure to cure as provided under this article.
(2) A second or subsequent material violation of the
agreement occurring within a six-month period when the
violation has not been remedied within 30 days of receipt of
written notice of the violation.
(b) Eviction procedure.--A lessor may only commence an
action in eviction in accordance with the following procedure:
(1) Prior to the commencement of the eviction proceeding
or the termination of or failure to renew the agreement and
after the expiration of the grace period required by section
411-E(c), the lessor shall notify the lessee in writing of
the particular breach or violation of the lease by certified
or registered mail.
(2) In the case of nonpayment of rent, the notice shall
state that an eviction proceeding may be commenced if:
(i) the lessee does not pay the overdue rent within
20 days from the date of service if the notice is given
on or after April 1 and before September 1 and 30 days if
given on or after September 1 and before April 1; or
(ii) an additional nonpayment of rent occurs within
six months of the giving of the notice, in which case the
landlord may commence an immediate eviction proceeding.
(3) In the case of a breach of the agreement other than
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nonpayment of rent, the notice shall describe the particular
breach or violation and provide an opportunity to cure within
30 days.
(4) An eviction action may not be commenced and the
lessor may not terminate or refuse to renew the agreement
unless the lessee has been notified as required by this
section. Upon a second or subsequent material violation or
breach occurring within six months of an unremedied material
violation or breach, the lessor may commence eviction
proceedings at any time within 60 days of the last violation
or breach.
(c) Eviction diversion program.--Prior to the commencement
of an eviction proceeding, the lessor shall utilize at least one
eviction diversion program if any such program is available in
the jurisdiction. If the lessee initiates utilization of an
eviction diversion program, the lessor must participate.
(d) Compliance with other law.--Any lease termination,
refusal to renew a lease or eviction by a lessor shall comply
with all other applicable Federal, State and local laws.
Section 411-E. Reinstatement of agreement after default.
(a) Right of lessee.--A lessee whose agreement has been
terminated for failure to make timely payments has the right to
reinstate the original agreement, within six months of the lease
termination, without losing any right or option previously
acquired under the agreement if the leased premises is vacant
and habitable at the time of reinstatement.
(b) Payments, charges and fees permitted.--Before
reinstating an agreement, the lessor may require the lessee to
pay any unpaid lease payments.
(c) Grace period.--A lessor shall allow a lessee a grace
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period of not less than 15 days before the lessee is determined
to be in breach of the lease for nonpayment of rent or any other
violation of the lease. No lessee shall be entitled to more than
three grace periods per year.
Section 412-E. Acquiring ownership.
(a) Right of lessee.--The lessee may exercise the option to
purchase the leased property and use the escrow funds for the
purchase if:
(1) the lessee has obtained a loan preapproval or
commitment from a financial institution to purchase the home;
or
(2) the lessee has otherwise satisfied the terms of the
agreement for exercising the option to purchase.
(b) Agreement.--The agreement shall be based on the standard
agreement described in section 417-E(a).
(c) Construction.--Nothing in this section shall be
construed to preclude the lessee from exercising the option to
purchase the leased property prior to any dates specified in the
agreement within which the option may be exercised.
Section 413-E. Advertisements and mandatory information to be
supplied.
(a) Prohibited advertisements.--An advertisement for a lease
with guaranteed purchase option agreement may not state that:
(1) A lease of any specific property is available at
specific amounts or on specific terms unless the lessor will
lease the property at those amounts or on those terms.
(2) A payment or a lease payment is due upon origination
of a lease without disclosing all of the following:
(i) The payment due upon origination of the lease.
(ii) The lease payment.
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(iii) The total number of lease payments necessary
to obtain ownership of the property that is the subject
of the agreement.
(b) Amounts required.--All property offered under a lease
with guaranteed purchase option agreement shall include all of
the following:
(1) The purchase price of the property.
(2) The amount of the monthly payment.
(3) The amount of the monthly payment that will be
deposited into the lessee's escrow account for use in
purchasing the property.
(4) The total number of lease payments necessary to
acquire ownership of the property that is the subject of the
lease with guaranteed purchase option agreement.
Section 414-E. Liability of lessor for noncompliance.
(a) Extent of liability.--A lessor who fails to comply with
the requirements of this article with respect to a lease with
guaranteed purchase option agreement is subject to any remedy
available under contract law and, in addition, is liable to the
lessee in an amount equal to the sum of the following:
(1) The costs of the action and reasonable attorney fees
as determined by a court.
(2) The greater of the following:
(i) The actual damages sustained by the lessee
because of the failure of the lessor.
(ii) Twenty-five percent of the total amount
necessary to acquire ownership of the property that is
the subject of the lease with guaranteed purchase option
agreement.
(b) Single recovery.--If a particular lease with guaranteed
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purchase option agreement has more than one lessee, only one
recovery of damages is allowed under subsection (a)(2) for a
violation of this article. Multiple violations in connection
with an agreement shall entitle the lessee or multiple lessees
to only one recovery under this section.
(c) When offset prohibited.--
(1) A lessee may not take action to offset an amount for
which a lessor is potentially liable under subsection (a)(2)
against an amount owed by the lessee, unless the amount of
the liability of the lessor has been determined by a court of
competent jurisdiction in an action in which the lessor was a
party.
(2) Paragraph (1) shall not be construed to bar a lessee
in default on an obligation arising from the agreement from
asserting a violation of this article in an original action
or as a defense or counterclaim to an action brought by the
lessor to collect amounts owed by the lessee under the
agreement.
Section 415-E. Eligible lessees.
The program shall be limited to households that have incomes
equal to or less than 80% of the area median income for the
metropolitan area as determined by the Department of Housing and
Urban Development.
Section 416-E. Maximum allowable monthly payments.
The agency shall determine maximum allowable monthly payments
under a lease with guaranteed purchase agreement, which shall
not exceed 110% of the fair market rent for the county in which
the property is located, as published by the Department of
Housing and Urban Development in accordance with 42 U.S.C. §
1437a(b)(2) (relating to rental payments). Not less than 20% of
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the monthly payment shall be designated for escrow on the
lessee's behalf to be used for the purchase of the property. The
remainder of the monthly payment shall be transmitted to the
lessor as rent.
Section 417-E. Standard lease agreement.
(a) Duty of agency.--The agency shall develop a standard
lease agreement for all lessees and lessors participating in the
program, including the following components:
(1) The maximum number of years the lessee may lease the
property without exercising the lessee's option to purchase
under the terms of the agreement, which shall not be less
than 10 years. The agreement shall specify that the lessee
may, at the lessee's discretion, exercise the option to
purchase sooner than the maximum time period. Upon the
request of the lessee, the agency shall provide assistance to
the lessee in obtaining financing to purchase the property
through the agency's Statewide network of mortgage lenders
and brokers.
(2) The amount of each monthly rental payment to be
deposited into an interest-bearing escrow account and to be
used towards the purchase of the home.
(3) A provision that the lessor shall apply for any real
estate tax abatement available in the jurisdiction in which
the property is situated. The monthly payment shall be set as
if no abatement is in place. The portion of the monthly
payment attributed to the difference between the abated taxes
and the unabated taxes shall be deposited into the escrow
account for the benefit of the lessee and shall be counted
toward the match described in subsection (b).
(4) A requirement that all lessees participate in home
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ownership counseling through the agency's Housing Counseling
network at no cost to the lessee prior to exercising the
option to purchase.
(5) A provision that the lease constitutes a traditional
landlord and tenant agreement with the landlord remaining
responsible for all traditional maintenance and financial
costs associated with the property, except utilities or
specific obligations, such as snow removal, which the lease
clearly specifies are to be paid by the lessee.
(6) A provision stating that any other agreement or
contractual obligation between the parties must be in
writing.
(b) Matching funds.--The agency shall deposit into the
escrow account amounts from the fund to match the lessee's
deposits on a 1:1 basis. The matching funds shall be deposited
with the same frequency as the lessee's deposits to the escrow
account.
Section 418-E. Escrow accounts.
The agency shall specify the type of account in which escrow
deposits are to be maintained, including the following:
(1) The specific accounting of each lessee's escrowed
funds, if separate accounts are not maintained for each
lessee in the program.
(2) The process for handling of escrow accounts in
instances of eviction for nonpayment and damages to property.
(3) A provision stating that any remaining escrow amount
deposited by a lessee who defaults under, or chooses to
terminate, the agreement shall revert to the lessee.
Section 419-E. Exemption from realty transfer tax.
A transfer of real property to a lessee from a lessor under
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the program shall be exempt from both the State and local realty
transfer tax under Articles XI-C and XI-D of the act of March 4,
1971 (P.L.6, No.2), known as the Tax Reform Code of 1971, and
section 301.1 of the act of December 31, 1965 (P.L.1257,
No.511), known as The Local Tax Enabling Act.
Section 420-E. Guidelines.
Within 180 days of the effective date of this section, the
agency shall establish guidelines to carry out the provisions of
this article.
Section 2. This act shall take effect in 90 days.
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