Federal Interest Reporting/Recording FAQs

The following Frequently Asked Questions (FAQs) address the Federal requirements to report and record on the Federal interest in real property improved or purchased in whole or in part by Elementary and Secondary School Emergency Relief (ESSER) and/or Governor’s Emergency Education Relief (GEER) funds.

General Questions

1. Is this a new requirement?

   No. The federal reporting and recording requirements for investments in real property existed before the ESSER/GEER funding was made available. The recent federal notice regarding these funds was distributed to ensure these requirements are understood and that subgrantees remain in compliance, as funds overseen by the U.S. Department of Education (ED) do not typically allow for the improvement or purchase of property, and thus this requirement is likely not widely known.

2. Which funds does this requirement apply to?

   This requirement applies to funding used for the improvement or purchase of property from:
   

   • ESSER I, resource code 3210
   • ESSER II, resource code 3212
   • ESSER III, resource codes 3213, 3214
   • GEER I, resource code 3215
   • GEER II, resource code 3217

3. What must subgrantees report on property improved or purchased, in whole or in part, by Federal grant funds?

   All subgrantees that have property that was improved or purchased, in whole or in part, by federal grant funds from the programs described above must submit the cover page of the form Real Property Status Report (Cover Page) (Standard Form (SF)-429) along with the other applicable SF-429 Attachments (A or C). Real property is defined in 2 Code of Federal Regulations (CFR) § 200.1 as “land, including land improvements, structures and appurtenances thereto, but excludes moveable machinery and equipment.” Moveable equipment may include heating, ventilation, and air conditioning (HVAC) equipment, mobile classrooms, building furniture, and other similar items.
   
   Typically, a subgrantee will submit the Cover Page and Attachment A. Attachment C is only used when there is a change in the real property disposition. If there is a disposition, please contact the California Department of Education (CDE) (ESSER_Reporting@cde.ca.gov) with any questions. Both forms can be found the Federal Post-Award Reporting Forms website .

4. Where do I submit the forms?

   Subgrantees that have a renovation, major remodeling, construction, or real property project must submit the Real Property Status Report (SF-429) cover sheet and appropriate attachment annually to the CDE at ESSER_Reporting@cde.ca.gov.
   
   The deadline for submission to CDE is January 28, 2025.
   

5. Do subgrantees still need to report after the period of performance?

   Yes. A subgrantee must annually submit an SF-429 report for a renovation, major remodeling, construction, or real property project for at least the first 15 years after a project is funded and for which a federal Interest is retained.
   
   Changes to the property or its status could affect the project period. If for any reason the property acquired or improved by federal grant funds is sold, transferred, or otherwise changes use, the grantee or subgrantee must first contact the ED for appropriate disposition instructions of the federal interest. Subgrantees may be required to reimburse the ED for the federal interest in the property if the property will not be used in the way that was supported originally by federal grant funds.

6. What happens if subgrantees fail to submit timely reports?

   Failure to submit timely reports may result in delays or suspension of additional funding, potential penalties, or the requirement to return funds.

7. Are subgrantees subject to audits or compliance checks for ESSER fund use?

   Yes. Subgrantees are subject to audits by both state and federal authorities to ensure funds are used appropriately. Subgrantees must maintain detailed records of all expenditures, as well as documents associated with reporting and recording the federal interest in property and be prepared to submit them during audits or compliance reviews.

8. Are there penalties for noncompliance with federal interest reporting and recording requirements discovered during reporting or audits?

   Yes. Noncompliance may result in enforcement actions, including the subgrantee being required to repay the funds, loss of future funding, and potential legal action depending on the severity of the violation.

9. What documentation should subgrantees retain for reporting and audit purposes?

   Subgrantees should retain all records pertaining to the use of federal funds. As it specifically pertains to federal interest reporting and recording, subgrantees should retain copies of their SF-429 in its entirety, the appropriate attachment, and records of local recording of the federal interest in a property when applicable.

10. Where can I find additional information?

    For further guidance on federal interest in real property and compliance, please refer to the following resources: ESSER and GEER FAQs (PDF) can be found on the ED’s website. All required forms including the SF-429 and all Attachments can be found on the Federal Post-Award Reporting Forms website . For more information on federal Interest in real property, this Frequently Asked Questions document FAQ: Federal Interest in Real Property prepared by the U.S. Health and Human Services Bureau of Primary Health Care’s Health Resources & Services Administration may be helpful. .

Recording the Notice of Federal Interest (NFI)

11. Which subgrantees need to record a Notice of Federal interest (NFI)?

    Generally, subgrantees that have a renovation, major remodeling, construction, or real property project using $1 million or more in federal funds as calculated pursuant to the Code of Federal Regulations (CFR), Title 2, Section 200.1 (2 CFR § 200.1 ) must record the NFI in the official real property records for the jurisdiction in which the improved or purchased property is located. ESSER and/or GEER subgrantees that have a renovation, major remodeling, construction, or real property project using less than $1 million in federal funds from these specific programs are normally not subject to this requirement, though exceptions apply, as outlined below.

12. What other factors may require recording requirements when using less than $1 million in federal funds?

    The federal interest in a project may still be significant even when the project uses less than $1 million in federal funds. This may be the case if the federal funds represent the majority of the total value. For example, if $900,000 in federal funds were to be invested in a building with a total worth of $1,200,000. In other cases, the ED may determine that an local educational agency (LEA) is in high-risk status which requires recording as an added safeguard to further protect the federal interest from other liens that could prevent the building from being used for its educational purpose. If you have questions on the application of this guidance to a particular project, please contact the state program officer at ESSER_Reporting@cde.ca.gov.
    

13. How is the share of federal interest determined?

    The share of federal interest is determined based on the “Real Property Cost” field on the SF-429 form, Attachment A.
    
    The SF-429 Attachment A and instructions can be obtained on the Federal Post-Award Reporting Forms website .

14. If my project used less than $1 million in federal funding, does that mean there is no federal interest in the property?

    No. The federal interest exists in improved real property even if the federal interest is not recorded. Subgrantees must still maintain adequate documentation regarding protection of all federal interest. This includes timely filing of the cover page of the form SF-429 along with the other applicable SF-429 Attachments (A or C) referenced above in Section 2 and maintaining the associated records. Additionally, subgrantees must follow all federal real property disposition requirements.

15. By when does a subgrantee need to record an NFI?

    Any ESSER or GEER subgrantee that has an acquisition, renovation, major remodeling, construction, or real property project of $1 million dollars or more in Federal funds must record all NFIs by January 28, 2025.

16. How do I file an NFI?

    1. LEAs should check with the local jurisdiction in which the real property is located for instructions on how to record the NFI. Typically, there are six general requirements for an NFI:
       
       The NFI must reference the appropriate P/R Award Number, which can be found in the following list:
       
       
       • GEER I - S425C200012
       • GEER II - S425C210012
       • ESSER I - S425D200016
       • ESSER II - S425D210016
       • ESSER III - S425U210016
         
         
    2. The description of the project should clearly describe the approved construction project, renovation, or purchase supported in part or whole by grant funds.
    3. The legal description should be preferably the full legal description of the property in the deed. However, Township and Range, or Map, Block, and Lot number will be accepted. A physical address may be included, but it does not constitute a sufficient legal description by itself.
    4. The signatory of the NFI should be the owner of the property or authorized representative. This indicates the owner’s consent to have a lien filed on the property.
    5. The NFI must then be notarized and embossed with a notary seal.
    6. The NFI must then be recorded with the applicable local jurisdiction

    
    Additional information and federal guidelines are available in the ED’s Office of Elementary and Secondary Education (OESE) letter (PDF) regarding recording and reporting federal interest.
    

Completing the SF-429

17. Who is the subgrantee’s “Authorized Certifying Official”?

    The governing body of a subgrantee must authorize a specific individual to act as the “Authorized Certifying Official.” A copy of this authorization must be kept on file by the subgrantee. By signing, the Authorized Certifying Official is certifying that to the best of their knowledge and belief, the information contained in the report is true, correct and accurate. A false statement of fact in the report may constitute a violation of federal law and may be grounds for possible punishment as provided in 18 U.S.C. 1001 .

18. Who must complete the SF-429?

    The SF-429 and appropriate attachment (A or C) must be completed by all subgrantees that have property that was improved or purchased, in whole or in part, by Federal grant funds from the programs listed in question 1. Reports must be submitted annually for at least the first 15 years following the award. A separate copy of attachment A is required for each piece of real property. There is no minimum Federal interest at which the reporting requirement ceases to apply.

19. How long is my reporting period of federal Interest?

    Typically, this reporting period should be 15 years is from the start of the allowable grant period, the end of the grant period, or from when the funds were utilized in the project. The ED will define the applicable beginning date.

20. How do I report the real property cost?

    Enter the total cost of the property, using the current value as required pursuant to § 200.1 of the Code of Federal Regulations. Include the following data for ANY federal agencies contributing to the acquisition or improvement of the property.
    

    1. Amount provided by the federal government
    2. Share percentage provided by the federal government (based on the federal share of the total cost of the project)
    3. Amount provided by the subgrantee or other non-Federal parties
    4. Share percentage provided by the non-federal parties
    5. Total cost
    6. Total share percentage (sum must equal 100 percent)

21. Where Can I Find Additional Assistance in completing the SF-429?

    Detailed federal instructions for completing the SF-429, along with attachments A and C are available at the Federal Post-Award Reporting Forms web page. Please note that the CDE will review submitted documents for completeness only and will not verify the accuracy of the information. Therefore, acceptance of a submission by CDE does not secure the subgrantee from any discrepancies or errors identified in a federal audit.