Real Property Guidance

The following ACF programs and their respective Assistance Listing (AL) numbers have real property authority to allow recipients, with prior written approval, to use Federal financial assistance awards to acquire and/or improve real property. Encumbrances are also allowed, with prior written approval, but only for the type of real property activity indicated. For instance, when a purchase of real property is not allowed to be charged to the award, this also means a mortgage for a purchased property cannot be charged to the award). See Depreciation guidance. 

Administration on Children, Youth & Families (ACYF) —AL varies

• Basic Center Program (renovation only) — 93.623
• Street Outreach Program (renovation only) — 93.557
• Transitional Living Program (renovation only) — 93.550
• Stephanie Tubbs Jones Child Welfare Services (Disaster Relief, Public Law (P.L.) 117-328)^* (construction and renovation only) — 93.645

Office of Child Care (OCC) — Construction and Renovation Only (Except, as noted otherwise) — AL varies

• Native Hawaiian and Non-Profit American Indian Organization Child Care Grant (YN) — 93.575 and 93.596
• CCDF Tribal Construction (CONST) — 93.575 and 93.596
• Child Care Disaster Relief* (Disaster Relief Act of 2019, P.L. 116-20; Consolidated Appropriations Act, 2023, P.L. 117-328)* (States, Territories, and Tribes) — 93.489

Office of Community Services (OCS) — AL varies

• Community Services Block Grant Discretionary Awards (i.e., Community Economic Development only) — 93.570
• Community Services Block Grant — 93.569 (only with an approved waiver, per 42 U.S.C. §9918(a)(1)-(2) and 45 CFR §96.15)
• Social Services Block Grant and the Social Services Block Grant/Consolidated Block Grant — 93.667 (only with an approved waiver, per 42 U.S.C. §1397d(a)(1) and (b), and 45 CFR §96.15)
• Social Services Emergency Disaster Relief — 93.667; 93.095 and 93.096

Office of Family Violence and Prevention Services (OFVPS) — Construction and Renovation Only — AL varies

• State Domestic Violence Coalitions (Disaster Relief, P.L. 117-328)^* — 93.591
• Family Violence Prevention and Services (Disaster Relief, P.L. 117-328)^* — 93.671

Office of Head Start (OHS) — 93.600 and 93.356 (Disaster Relief)

• Birth to Five 
• Early Head Start — Child Care Partnerships 
• Early Head Start Indian — Child Care Partnerships
• Early Head Start Migrant — Child Care Partnerships
• Head Start Indian Grants  
• Head Start Migrant Grants 
• Head Start Projects
• Head Start Disaster Assistance 
• Head Start Natural Disaster Recovery 
• Head Start Emergency Supplement — American Indian 
• Head Start Emergency Supplement 
• Head Start Emergency Supplement — Migrant 
• Head Start Facility 
• Head Start Facility — American Indian 
• Head Start Facility — Migrant 

PLEASE NOTE: Due to some Disaster Relief Acts, the following disclaimer also applies to the programs impacted. See asterisk^* for the identified programs and respective Public Laws (P.L.) located on Congress.gov . Funds made available under these awards shall not be available for costs that are reimbursed by the Federal Emergency Management Agency (FEMA), under a contract for insurance, or by self-insurance. Except for Head Start programs, the Federal interest will expire in 10 years from the date on which the funds were made for the intended purpose under the award. 

For more information and guidance, please see the Real Property Disposition, Real Property Reporting, and Real Property Notice of Federal Interest (NFI) under the Real Property Guidance page. Please direct any property questions to your assigned Office of Grants Management (OGM) Specialist.

The following sample ACF real property standard templates have been formally pre-approved for use by HHS Office of General Counsel (OGC). If these documents are used and amended, or other documents are provided in place of these, delays in prior approval and/or disposition requests may occur.

For accessibility issues, please contact your assigned Program Specialist. The templates and descriptions are as follows:

Office of Community Services (OCS) - Community Economic Development (CED) Notice of Federal Interest (NFI)

When OCS-CED Federal funds are used to support the purchase or renovation of a facility, the recipient must ensure that an NFI is filed and recorded with the local jurisdiction. The only exception is when the facility in question is on formally designated Bureau of Indian Affairs (BIA) Trust property; please see the Notice of Award remarks for additional information.

The NFI document identifies the property acquired or improved using Federal funding and applicable federal requirements. HHS/ACF’s interest applies to the entire Property, including, but not limited to, the facility and land. Federal law governs its use, encumbrance, and/or disposition. Before any attempt to purchase, sell, occupy, take a mortgage interest in or otherwise encumber, or foreclose upon the property, the NFI directs the Party to notify the responsible HHS official listed in the document.  For a sample fillable standard template of the form, please see OCS-CED NFI (DOCX) (DOCX).

Office of Community Services (OCS) - Generic Subordination Agreement

When an OCS recipient seeks to finance a property improved or purchased with Federal funds, the lending institution may require that the Federal Interest be subordinated to its own as a condition of the loan.  A subordination is an agreement by which one party takes a second or third position — a subordinate position. The ACF Chief Grants Management Officer (CGMO) is the authorizing official for subordination requests. 

This sample subordination agreement template is designed to protect the Federal Interests.  Please note: HHS/ACF has and will continue to have a Federal Interest in the property because the recipient (Borrower) used OCS Federal funds to purchase and/or renovate property, and may use additional Federal funds for this purpose, such as through principal or interest on the loan.  

When the CGMO approves the subordination request, subject to the terms and conditions of this Agreement, the Federal Interest in the property is and shall be subordinated to the lien of the Lender secured by the mortgage or deed of trust.  For a fillable standard template of the form, please see OCS Subordination Agreement (DOCX) (DOCX).

Office of Head Start (OHS) - Recipient Notice of Federal Interest (NFI)

When OHS Federal funds are used to support the purchase, construction, or major renovation of a facility, the recipient must ensure that an NFI is filed and recorded with the local jurisdiction. The only exception is when the facility in question is on formally designated Bureau of Indian Affairs (BIA) Trust property; please see the Notice of Award remarks for additional information.

The sample NFI document identifies the property acquired or improved using Federal funding and applicable federal requirements. HHS/ACF’s interest applies to the entire Property, including, but not limited to, the facility and land. Federal law governs its use, encumbrance, and/or disposition. Before any attempt to purchase, sell, occupy, take a mortgage interest in or otherwise encumber, or foreclose upon the property, the NFI directs the Party to notify the responsible HHS official listed in the document. For a fillable standard template of the form, please see OHS NFI (DOCX) (DOCX).

Office of Head Start (OHS) - Inter-Creditor Agreement

When an OHS recipient wishes to pursue a USDA loan, an Inter-Creditor Agreement must be included. The OHS Inter-Creditor Agreement is between the United States Department of Agriculture, Rural Housing Services (USDA-RD) and the United States Department of Health and Human Services, Administration for Children and Families (HHS/ACF). This agreement is strictly to facilitate inter-agency management and coordination of the respective laws, regulations and policy guidance governing USDA’s Rural Development Program and HHS/ACF’s Head Start Program.

Office of Head Start (OHS) - Lease Rider

When HHS/ACF approves a recipient's (Tenants) plan to use Head Start funds to construct a facility on leased property or complete a major renovation on leased property, HHS/ACF has and will continue to have a Federal Interest in the Leasehold. The Federal Interest includes any future HHS/ACF awards made for Improvements to the Leasehold. This Lease Rider evidences a Federal Interest in the Leasehold that secures the right of the federal awarding agency to recover the remaining value of the Improvements in the event that a lease is terminated prior to expiration of its full term. The Federal Interest in the Leasehold of a facility on which the Tenant has made major renovations with Federal Head Start funds continues for a period of at least 15 years and the Federal Interest in the Leasehold of land on which the Tenant has constructed a facility with Federal Head Start funds continues for a period of at least 30 years notwithstanding any termination of the lease prior to completion of its original term. The recipient has agreed to lease a portion of the leased property from the Lessor (owner of real property) for the purpose of operating a Head Start facility, pursuant to a lease, a copy of the Lease must be attached to the Lease Rider. For a sample fillable standard template of the form, please see OHS Lease Rider (DOCX) (DOCX).

Office of Head Start (OHS) - Generic Subordination Agreement

When an OHS recipient seeks to finance a property improved or purchased with Federal funds, the lending institution may require that the Federal Interest be subordinated to its own as a condition of the loan.  A subordination is an agreement by which one party takes a second or third position — a subordinate position. The ACF CGMO is the authorizing official for subordination requests.

This sample standard subordination agreement template is designed to protect the Federal Interests. Please note: HHS/ACF has and will continue to have a Federal Interest in the property because the recipient (Borrower) used OHS Federal funds to purchase and/or improve the property, and may use additional Federal funds for this purpose, such as through principal or interest on the loan. 

When the CGMO approves the subordination request, subject to the terms and conditions of this Agreement, the Federal Interest in the property is and shall be subordinated to the lien of the Lender secured by the mortgage or deed of trust.  For a fillable standard template of the form, please see OHS Subordination Agreement (DOCX) (DOCX).

When HHS/ACF Federal funds are used to purchase or improve real property, a Federal interest is established. Federal interest does not expire until formal disposition. This requires recipients (and subrecipients) to comply with multiple reporting and approval processes under the Federal award. 

• Prior approval for purchase and improvement: Before buying or improving facilities, recipients must obtain ACF approval to use Federal funds for these purposes. (45 CFR §§75.308(g) , 75.318 , 75.407 , 75.439 (effective on or after 10/1/2025: 2 CFR §§200.311 , 200.407 , 200.439 , 200.462 )); program regulations) Please note: An encumbrance (e.g., new financing, refinancing or extensions of existing mortgages) with or without a subordination requires prior approval and is only approved by the ACF Chief Grants Management Officer. 
• Annual Reporting: Recipients must report Federal interest property status yearly until disposition. (45 CFR §75.343 ; effective on or after 10/1/2025: 2 CFR §200.330 ) 
• Disposition Instructions: When a property is no longer needed, recipients must request disposition instructions to remove the Federal interest. (45 CFR §75.318(e) ; effective on or after 10/1/2025: 2 CFR §200.311(d) )  For additional information, see the Real Property Disposition.
• Real Property Reports and Request Forms: As of July 1, 2017, ACF implemented the OMB approved SF-429 real property report and request forms in the GrantSolutions Online Data Collection System (GS/OLDC). Line item form instructions and tips on how to complete the form are included on each line item within the GS/OLDC system.
• Electronic Submissions: Recipients must submit the SF-429 forms in GrantSolutions Online Data Collection System. Reports must be submitted electronically rather than paper copies. (45 CFR §75.363 ; effective on or after 10/1/2025: 2 CFR §200.336 ) To access and submit the SF-429 forms, please login to www.grantsolutions.gov   and navigate to the forms in OLDC.

Additional Resources:

SF-429 Real Property Reporting

SF-429 Reporting in OLDC Tip Sheet (PDF)

When real property is no longer needed for its original purpose, the recipient must request disposition instructions and submit the SF-429 Attachment C Disposition Form along with supporting documentation to their ACF Grants Management Officer (GMO). Recipients must submit the disposition request in the GrantSolutions/Online Data Collection System (GS/OLDC).

The official starting point for any disposition process, a prior approval, is an OLDC submitted SF-429C Disposition or Encumbrance Request form with supporting documentation.

The three standard disposition options available are (45 CFR §75.318(c ); effective on  or after 10/1/2025: 2 CFR §200.311(d) ):

1. Retain title after compensating ACF. The amount paid to ACF will be computed by applying the federal share percentage of participation in the cost of the original purchase (and costs of any improvements) to the fair market value of the property (i.e., meaning the appraised value identified by an independent certified appraiser in an appraisal). However, in those situations where the recipient is disposing of real property acquired or improved with a Federal award and acquiring replacement real property under the same Federal award, the net proceeds from the disposition may be used as an offset to the cost of the replacement property. Note: this action may require additional lead time by the recipient and further discussions with Office of General Counsel and ACF to determine whether it is an acceptable option that fits within the timeframe and scenario to qualify as a replacement property.
2. Sell the property and compensate ACF. The amount due to ACF will be calculated by applying the federal share percentage of participation in the cost of the original purchase (and costs of any improvements) to the proceeds of the sale after deduction of any actual and reasonable selling and fixing-up expenses. If the Federal award has not been closed out, the net proceeds from the sale may be offset against the original cost of the property. When the recipient is directed to sell the property, sales procedures must be followed and provide adequate competition to the extent practicable and result in the highest possible return.
3. Transfer title to a third party designated/approved by ACF. ACF does not have the authority to own property; therefore, if option 3 is chosen, ACF must designate and approve of the third party to which the property will be transferred. The transferor (former recipient title holder) is entitled to be paid an amount calculated by applying the non-federal share percentage of participation in the purchase of the real property (and costs of any improvements) to the current fair market value of the property.

Please note: ACF does not have authority to approve alternative disposition methods. The standard three disposition options must be followed. 

Additional Resources:

SF-429 Real Property Reporting

Prior written approval is required for acquisition, construction, major renovations, and disposition of or encumbering real property. (45 CFR §§75.308(g) , 75.318 , 75.407 , 75.439 (effective on or after 10/1/2025: 2 CFR §§200.311 , 200.407 , 200.439 , 200.462 )); (Please note: an encumbrance (with or without a subordination) requires ACF Chief Grants Management Officer decision.) 

Recipients (and on behalf of subrecipients) that proceed on the basis of unauthorized officials and/or incur costs before authorized officials approve requests do so at their own risk. ACF is not bound to unauthorized decisions, unallowable costs, and/or risky terms. There is no guarantee a request will be approved.

Request for Approval

Please refer to the  Real Property Prior Approval Guidance (PDF) document for specific items required for Purchases/Acquisition, Encumbrance, Construction and/or Major Renovation requests.

Approval and Next Steps

The only official notification approving the request will be in the form of the Notice of Award (NOA). Once a request is approved via the NOA, the recipient and pass-through entity must ensure that the NFI is filed and/or posted, accordingly, and submit in OLDC the SF-429 Attachment A's annually about the property. Exceptions include minor renovation, and when the facility in question is formally designated Bureau of Indian Affairs (BIA) Trust property.

When real property is purchased, constructed or renovated (Major Renovation) with Federal funds, a Federal interest is established. This interest does not expire, until formal approved disposition.

Encumbrance (Lien) Notice

An encumbrance is a right to, interest in, or legal liability on real property. These include liens, mortgages, easements, encroachments, licenses, or deed restrictions. Real property acquired, constructed, or renovated with federal funds may not be conveyed, transferred, assigned, mortgaged, leased, or in any other manner encumbered by the recipient, except as expressly authorized in writing by ACF. For more information, see 45 CFR §75.308(c)(1)(xi),  45 CFR §75.318(b)(1),  45 CFR §75.323 , HHS Grants Policy Statement (effective on or after 10/1/2025: 2 CFR §§200.311 , 200.407 , 200.439 )).

There is a common misconception that only new financing requires approval. Renewal or extension of an existing financing is also an encumbrance. Without formal prior approval all encumbrances (with or without a subordination) on a property with federal interest are unallowable. The use of federal funds to support an unapproved encumbrance (e.g., for mortgage payments, interest payments) is also unallowable and can result in a disallowance.

When requesting prior approval, please note the following:

• The official starting point for an encumbrance (with or without subordination) prior approval request is the submission of the SF-429 Attachment C, along with all relevant new (and old, if applicable) supporting documents (e.g., debt instrument, agreements, notes, amortization schedule), in the GrantSolutions On-Line Data Collection (OLDC) system.
• ACF will consider low risk, ideal, and reasonable terms and provisions, which minimizes federal financial interest risk. These include, but are not limited to: long term, low interest, fixed rate, and fully amortized loans. Any debt instrument or related document that are not low-risk and reasonable will be scrutinized heavily, which will delay ACFs decision.
• High risk and unreasonable terms and provisions should be avoided or waived to mitigate federal financial interest risk. These include, but are not limited to: short term, variable rate(s), floating rate(s), interest rate swap (e.g., alternative rate spread, hedge, London Inter-bank Offered Rae (LIBOR), Securities Industry and Financial Markets Association (SIFMA), variable-rate demand obligations (VRDO), futures, forwards), balloons (notes, loans, payments), uncapped, bundled loans, cross-collateralization, cross-default, pre-payment penalties, call notes (e.g., due on sale), interest after default, right to set-off, and security accounts. Risky and expensive loans typically reduce the funding available to support services, compromising optimal program effectiveness.
• Please allow adequate time (at least 90 calendar days) for ACF review and decision.
• Incomplete or unsupportable packages may be returned.
• Recipients must demonstrate that they performed their due diligence by exploring the market and choosing the best option available. A comparable process that is considered a standard for due diligence is the procurement market search which requires a minimum of three bids. If a lender cannot meet the low risk terms and provisions, recipients are encouraged to look elsewhere.
• There is no guarantee a request will be approved.

Recording a Federal Interest

When federal funds are approved and used to support the acquisition, construction, and/or major renovation of a property, the recipient and pass-through entity must ensure that the NFI is filed and recorded with the local jurisdiction. (Some jurisdictions do not allow NFI’s to be filed for modular units classified as real property; therefore, the NFI must be posted on the structure). Federal interest exists irrespective of the filing of the NFI. The recipient and pass-through entity must ensure that the subrecipient also follow the same requirements.

Records for properties that have Federal interest must be maintained and retained for up to 3 years after final disposition.

Federal Interest

The Federal interest in the property does not expire, until a formal disposition request has been submitted with supporting document and is officially approved by the ACF Office of Grants Management. So long as a Federal interest remains, the title holding entity must report on the property annually. Recipients and pass-through entities are responsible for submitting these reports on behalf of their subrecipients. 

Federal Interest in Leased Real Property

As statutory authority allows, when ACF approves a recipient’s request to use federal award funds to construct and/or make major renovation to a leased real property, ACF has and will continue to have a Federal Interest in the leasehold (not the underlying real property). The Federal Interest includes any future improvements to the leasehold.

The lease is an intangible property and must be disposed using the equipment disposition requirements and applicable program requirements. (45 CFR § §75.322(a) , 75.320(e) ; effective on or after 10/1/2025: 2 CFR §§200.315 , 200.313(e) ) However, when the lease arrangement involves real property, the Real Property Reporting requirements, including the use of the SF-429 forms, applies.

The term of the lease arrangement should be in accordance with the program regulations or, when silent, for a period of years that is at least equal to the estimated useful life of the real property. For instance, under OHS regulations at 45 CFR §1303.50(a) :

“If a [recipient] receives federal funds to purchase, construct, or renovate a facility on real property the [recipient] does not own or to purchase or renovate a modular unit on real property the [recipient] does not own, the [recipient] must have a lease or other occupancy agreement of at least 30 years for purchase or construction of a facility and at least 15 years for a major renovation or placement of a modular unit.”

In the event that a lease with federal interest is terminated prior to the expiration of its full term, ACF has the right to recover the remaining value of the improvements.

ACF does not have a direct legal relationship with the third-party and is not a party of the arrangement. However, to protect the federal interest, the lease or lease rider/amendment must contain at least the following:

• The legal description of the real property.
• Effective dates and detailed listing of all associated costs.
• The recipient’s full use of and access to the leased property during the term of the lease.
• The recipient’s agreement not to sublease, assign, encumber, use as collateral, sell, or otherwise transfer the leased property, or use the property for a non-award-related purpose without ACFs written approval. Please note: the landlord is not required to seek ACF approval to encumber (finance, refinance, or amend a financing arrangement) their own property.
• The lessor informing ACF of any default by the recipient under the lease.
• The lessor accepting payment of money or performance of any other obligation by ACFs designee, for the recipient, as if such payment of money or performance had been made by the recipient.
• ACF having 60 days from the date of receipt of the lessor’s notice of default to eliminate the default, and that the lessor will delay exercising until the end of the 60-day period.
• ACF intervening to ensure the default is eliminated by the recipient or another ACF designated recipient.
• In the event that the recipient defaults, the Federal award is terminated, or the recipient vacates the leasehold before the end of the lease term, allowing ACF the right to designate a substitute recipient (interim or replacement) for the remainder of the lease term.
• The recording of a Notice of Federal Interest on the leased property. For more information, see the Recording a Federal Interest subheading on this page.

For an example of a Lease Rider, please see the Real Property Standard ACF Templates.

Request to Release a Federal Interest

When a property is no longer needed, the recipient and pass-through entity (and on behalf of subrecipients) must request disposition instructions (i.e., submit the SF-429 Attachment C Disposition Request along with supporting documentation) within the GrantSolutions On-Line Data Collection (OLDC) system.

The recipient and pass-through entity are considered direct recipients of ACF Federal award(s). As ACF does not have a relationship with subrecipients, ACF is unable to release a federal interest until the recipient or pass-through entity submits the request with supporting documentation for approval. The title holding entity must conduct research and gather information pertaining to the whole funding source scenario to determine the amount and percentage of federal funds used to establish the Federal interest on the property.

Determining Federal Interest to Remit Payment

Federal interest is determined by utilizing the following documentation such as, but not limited to:

1. Initial and any subsequent funding requests related to the property.
2. Property records (including capital asset records, improvements, etc.).
3. Awards indicating the purpose and amount of Federal amounts used for the property. As applicable, the cost sharing / matching requirement included under the Federal award.
4. Filed (or posted) Notice of Federal Interest.
5. Encumbrance documents (e.g., loans, mortgages, amortization schedule, etc.). As applicable, the interest payments included under the Federal award.

For more information, please review   Federal Interest Examples (PDF) .