Homestead Act of 1985

Homestead Act of 1985 - Amends the United States Housing Act of 1937 to establish procedures under which families residing in public housing projects shall be provided with an opportunity to purchase their dwelling units.

Requires the formation of a homeownership association composed of families who: (1) are capable of assuming the responsibilities of homeownership; (2) have resided in public housing projects for not less than 24 consecutive months; and (3) have resided in their current dwelling units for at least 12 consecutive months.

Requires the Secretary of Housing and Urban Development to provide comprehensive improvement assistance to such projects to ensure that the physical condition, management, and operation of such projects are sufficient to encourage homeownership by resident families.

Directs the Secretary and the responsible public housing agency to provide the training and technical and educational assistance necessary to prepare the families and the homeownership association for homeownership. Directs the Secretary to pay to the agency an amount equal to any reduction in the operating expenses of a project realized as a result of providing such assistance. Directs the agency to use such amount to reduce the purchase prices of dwelling units.

Authorizes a homeownership association to purchase a public housing project after the Secretary determines that: (1) the association is prepared to manage and maintain the project with continued Federal assistance; and (2) project operating costs have been reduced sufficiently to make home ownership affordable to resident families. Allows an eligible family to purchase a dwelling directly from the public housing agency if the Secretary determines that such purchase will not interfere with the rights of other resident families or harm the efficient operation of the project. Requires the Secretary to continue to pay annual contributions to such project after such a purchase. Limits the purchase price for a project or unit to 25 percent of its fair market value. Lists alternative purchasing arrangements. Directs the agency to assist a purchase by making a loan to a family or association at an interest rate not exceeding 70 percent of the market interest rate.

Requires any unit or project purchaser who sells such property before the expiration of five years to pay the public housing agency a specified percentage of the sale price.

Establishes procedures under which families residing in public housing projects shall be provided with an opportunity to undertake the management, maintenance, educational, and cultural functions of such project. Requires such families to form a resident management association. Directs the Secretary and the responsible public housing agency to provide such association with the necessary training and technical and educational assistance. Allows such association to undertake such functions after the Secretary determines it is capable.

Prohibits the eviction of any resident family because of the sale of a project to a homeownership association. Authorizes the Secretary to: (1) help relocate any family which decides not to purchase its dwellings in a project where other units are purchased; or (2) provide such family with a housing voucher to permit such family to obtain comparable alternative housing.

Directs the Secretary to furnish financial assistance to: (1) public housing agencies to enable such agencies to carry out this Act; and (2) purchasing families or associations for operating and maintenance expenses.