(

a) A borrower or grantee that receives funds from a loan or grant made pursuant to the program shall only use the funds as follows:

(1) To pay for property acquisition, rehabilitation, and repair costs and associated transaction costs for real property purchased through one of the following: (

A) A trustee’s sale pursuant to

Section 2924m of the Civil Code. (

B) A preforeclosure intervention sale. (

C) A foreclosure risk intervention sale.

(2) To pay for transaction costs, so long as no more than percent of a single loan or grant funded by the program is used toward transaction costs.

(3) To pay operating expenses from any capitalized operating subsidy reserve established pursuant to

Section 50720.6. (

b) A borrower or grantee that receives funds from a loan or grant made pursuant to this program shall ensure that all vacant units are restricted in one of the following ways:

(1) By those conditions of a contract described in paragraph (10) of subdivision (

a) of

Section 402.1 of the Revenue and Taxation Code.

(2) By those conditions of a contract described in paragraph (11) of subdivision (

a) of

Section 402.1 of the Revenue and Taxation Code. (3) (

A) To persons and families of extremely low, very low, low, or moderate income, with an affordable housing cost or an affordable rent, as defined in Sections 50052.5 and 50053, respectively, for a minimum of years, or a longer duration as the department may require. (

B) A property may be restricted pursuant to this paragraph by recording a lease agreement, ground lease agreement, or other recorded contractual agreement between a borrower or grantee and the residents of the property, or between a borrower or grantee and a resident-controlled corporation or association. (

C) Any agreement made between a borrower or grantee and a resident-controlled corporation or association pursuant to subparagraph (

B) shall ensure that the housing units are affordable to lower income households, as defined in

Section 50079.5 (

c) Occupied properties having a mix of incomes among tenants or owners may seek exemption from restrictions under subdivision (

b) for units with over-income occupants, only until the unit is vacated due to natural turnover and available to be rerented or resold.