92466-CA Capital Advance Program Regulatory Agreement Housing for

Capital Advance Program
Regulatory Agreement
Housing for the Elderly or Handicapped (Nonprofit)
Section 202 of the Housing Act of 1959 or Section 811
of the National Affordable Housing Act.

U.S. Department of Housing
and Urban Development
Office of Housing
Federal Housing Commissioner

This agreement entered into__________________ day of ________________ l9______ , between ___________________________
_____________________________________________ whose address is _______________________________________________
hereinafter called Mortgagor, and the undersigned Secretary of Housing and Urban development hereinafter called HUD.
In consideration of the making of the capital advance by HUD
and the disbursement of any part thereof, and in order to comply
with the requirements of the Housing Act of l959 or National
Affordable Housing Act of l990 and the Regulations adopted by
the Secretary pursuant thereto, the Mortgagor agrees for itself,
its successors and assigns, and any owner of the mortgaged
property, that in connection with the mortgaged property and the
project operated thereon and so long as the capital advance is
outstanding:
l. The Note and Mortgage bear no interest and repayment is
not required so long as the housing remains available for
very low-income elderly persons or very low-income persons with disabilities (whichever is applicable).
2. Mortgagor will establish and maintain a special fund to be
known as the revenue fund account in a bank which is a
member of the Federal Deposit Insurance Corporation, Savings Association Insurance Fund, or the National Credit
Union Share Insurance Fund, into which will be deposited
all rentals, charges, income and revenue arising from the
operation or ownership of the project. The bank in which
this account is established shall provide collateral acceptable to HUD to equal the maximum amount in the account
at any one time when such amount exceeds $l00,000. If the
bank will not provide appropriate collateral in such instances, the Mortgagor will be required to establish accounts
in two or more banks so that the total amount on deposit at
any time does not exceed $l00,000 in any one bank. Expenditures shall be made from the revenue fund account only in
accordance with the operating budget submitted to and
approved by HUD.
3. Not later than 30 days prior to the beginning of each fiscal
year, the Mortgagor shall submit an operating budget for
that fiscal year to HUD. The budget shall include all
necessary operating expenses, current maintenance charges,
expenses of reasonable upkeep and repairs, taxes and special
assessment levies, prorated amounts required for insurance
and all other expenses incident to the operation of the
project; and shall show the expected revenue to pay such
expenses, including reserve fund deposits. The expenses
incurred and disbursements shall not exceed the reasonable
and necessary amount thereof, and the Mortgagor will not
expend any amount or incur any obligations in excess of the
amounts approved in the annual operating budget except
upon written certification by the Mortgagor to HUD that
such expenses were unanticipated and are necessary and
provided further, that nothing in this section shall limit the
amount which the Mortgagor may expend from funds obPage 1 of 5

tained from some other source than project revenues or other
funds required of the Mortgagor pursuant to this Agreement
or the Capital Advance Agreement.
4. As security for the Capital Advance for the required payments under this Agreement into the reserve fund for replacements, and for all other obligations of the Mortgagor
under this Agreement, the Mortgagor hereby assigns,
pledges and mortgages to HUD all its rights to the income
and charges of whatever sort which it may receive or be
entitled to receive from the operation of the mortgaged
property, subject, however, to any assignment of rents or
project income in the Mortgage referred to herein. Until a
default occurs under this Agreement, however, permission
is granted to Mortgagor to collect and retain under the
provisions of this Agreement such rents, income, operating
surplus and charges, but upon default this permission is
terminated, as to all rents, income, operating surplus and
charges due or collected thereafter.
5. (a) Mortgagor will establish and maintain a reserve fund for
replacements in a separate account in a bank which is
insured by the Federal Deposit Insurance Corporation,
Savings Association Insurance Fund, or the National
Credit Union Share Insurance Fund. Concurrently with
the effective commencement of rental assistance payments under the Project Rental Assistance Contract, the
Mortgagor will deposit an amount equal to $
per month unless a different date or amount is approved
in writing by HUD.
Such fund, whether in the form of a cash deposit or
invested in obligations of, or fully guaranteed as to
principal by, the United States of America shall at all
times be subject to the control of HUD. Disbursements
from such fund, whether for the purpose of effecting
replacement of structural elements and mechanical
equipment of the project for any other purpose, may be
made only after the consent in writing of HUD. In the
event of a default in the terms of the mortgage, HUD
may demand the full or partial application of the balance in such fund to be amount due on the mortgage
debt.
(b) Mortgagor will deposit the minimum capital investment
with an escrow agent acceptable to HUD purusant to
Regulations.
(c) Within 60 days after the end of each fiscal year, any
residual receipts realized from the operation of the
mortgaged property shall be deposited in a separate
form HUD-92466-CA (4/92)
ref. Handbook 4571.4 & 4571.5

residual receipts account. Residual receipts shall be
under the control of HUD and shall be disbursed only at
the discretion of HUD for such purpose as it may
determine to be necessary or appropriate.
6. The real property covered by the Mortgage and this Agreement is described in Schedule A attached hereto.
7. Mortgagor shall not without the written approval of the
Secretary;
(a) Transfer, dispose of or encumber any of the mortgaged
property. Any such transfer shall be only to a person or
persons or corporation satisfactory to and approved by
HUD, who shall, by legal and valid instrument in
writing, to be recorded or filed in the same recording
office in which conveyances of the property covered by
the Mortgage are required to be filed or recorded, duly
assume all obligations under this Agreement and under
the Note and Mortgage;
(b) Assign, transfer, dispose of, or encumber any personal
property, including rents or charges, and shall not disburse or pay out any funds except as provided herein and
in the Capital Advance Agreement.
(c) Remodel, reconstruct, add to, or demolish any part of
the mortgaged property or subtract from any real or
personal property of the project;
(d) Pay any compensation or make any distribution of
income or other assets to any of its officers, directors or
stockholders;
(e) Enter into any contract or contracts for supervisory or
managerial services;
(f) Require as a condition of occupancy or leasing of any
unit or residential space in the project, any consideration or deposit other than a security deposit in an
amount equal to one month’s total tenant payment or
$50, whichever is greater. The family is expected to pay
the security deposit from its own resources and other
available public or private resources. The Mortgagor
may collect the security deposit on an installment basis.
The security deposits must be placed in a segregated
interest-bearing account. A record shall be maintained
of the amount in this account that is attributable to each
family in residence in the project. Annually for all
families, and when computing the amount available for
disbursement, the Mortgagor shall allocate to the
family’s balance, the interest accrued on the balance
during the year. Unless prohibited by State or local law,
theMortgagor may deduct for the family, from the
accrued interest for the year, the administrative cost of
computing the allocation to the family’s balance. The
amount of the administrative cost adjustment shall not
exceed the accrued interest allocated to the family’s
balance for the year. The amount of the segregated,
interest-bearing account maintained by the Mortgagor
must at all times equal the total amount collected from
the families then in occupancy plus any accrued interest
and less allowable administrative cost adjustments.
Page 2 of 5

The Mortgagor must comply with any applicable State
and local laws concerning interest payments on security
deposits.
The Mortgagor, subject to State and local law, may use
the family’s security deposit balance as reimbursement
for any unpaid family contribution or other amount
which the family owes under the lease in accordance
with the Regulations.
(g) Permit the use of the dwelling accommodations of the
project for any purpose except the use which was originally intended, or permit commercial use greater than
that originally approved by HUD.
(h) Amend its articles of incorporation or by-laws other
than as permited under the terms of the articles of
incorporation approved by HUD.
8. Mortgagor shall maintain the mortgaged premises, accommodations and the grounds and equipment appurtenant
thereto, in good and substantial repair and condition; provided that, in the event all or any of the buildings covered
by the Mortgage shall be destroyed or damaged by fire or
other casualty, the money derived from any insurance on the
property shall be applied in accordance with the terms of the
Mortgage.
9. Mortgagor shall not file any petition in bankruptcy or
insolvency, or for a receiver, or for reorganization or composition, or make any assignment for the benefit of creditors
or to a trustee for creditors; or permit an adjudication in
bankruptcy, or insolvency, the taking possession of the
mortgaged property or any part thereof by a receiver, or the
seizure and sale of the mortgaged property or any part
thereof under judicial process or purusant to any power of sale
and fail to have such adverse actions set aside within 45 days.
10. Mortgagor shall from funds other than project income immediately satisfy or release any mechanic’s lien, or any
other lien which attaches to the mortgaged property or any
personal prop-erty used in the operation of the project, and
shall dismiss or have dismissed or vacated any receivership,
or petition in bank-ruptcy or assignment for benefit of
creditors, creditors bill or insolvency proceeding involving
the project or the mortgaged property.
11. (a) If the Mortgagor has or comes to have any nonproject
funds, all income and other funds of the mortgaged
project shall be segregated from any such funds of the
Mortgagor and segregated from any funds of any other
corporations or persons. Income and other funds
pledged to the mortgaged project shall be expended
only for the purposes of the project.
(b) Mortgagor shall provide for the management of the
project satisfactory to HUD. Any management contract
entered into by the Mortgagor involving the project
shall contain a provision that it shall be subject to
termination, without penalty and with or without cause,
upon written request by HUD addressed to the Mortgagor and the management agent. Upon receipt of such
request the Mortgagor shall immediately move to terminate
form HUD-92466-CA (4/92)
ref. Handbook 4571.4 & 4571.5

the contract within a period of not more than 60 days and
shall make arrangements satisfactory to HUD for continuing proper management of the project.
(c) Neither Mortgagor nor its agents shall make any payments for services, supplies or materials unless such
services are actually rendered for the project or such
supplies or materials are delivered to the project and are
reasonably necessary for its operation. Payments for
such services or materials shall not exceed the amount
ordinarily paid for such services, supplies or materials
in the area where the services are rendered or the
supplies or materials furnished.
(d) The mortgaged property, equipment, buildings, plans,
offices, devices, books, apparatus, contracts, records,
documents, and all other papers relating thereto shall at
all times be maintained in reasonable condition for
proper audit and subject to examination and inspection
at any reasonable time by HUD and its duly authorized
agents. Mortgagor and its successors, assigns or its
agents shall retain copies of all written contracts or
other instruments which affect the mortgaged property,
all or any of which may be subject to inspection and
examination by HUD or its duly authorized agents.
(e) The books and accounts of the operations of the mortgaged property and of the project shall be kept in
accordance with the requirements of HUD.
(f) Within 60 days following the end of each fiscal year
HUD shall be furnished with a complete annual financial report based upon an examination of the books and
records of Mortgagor prepared in accordance with the
requirements of HUD, certified to be an officer of the
Mortgagor and, when required by HUD, prepared and
certified by a Certified Public Accountant, or other
person accepted to HUD.
(g) At the request of HUD, its agents, employees, or attorneys, the Mortgagor shall give specific answers to
questions upon which information is desired from time
to time relative to the income, assets, liabilities, contracts, operation, and condition of the property and the
status of the Mortgage and any other information with
respect to the Mortgagor or the mortgaged property and
of the project which may be requested.
(h) All receipts of the project shall be deposited in the name
of the project in a bank, whose deposits are insured by
the FDIC, Savings Association Insurance Fund, or the
National Credit Union Share Insurance Fund. Such
funds shall be withdrawn only in accordance with the
provisions of this Agreement for expenses of the
project. Any person receiving funds of the project shall
immediately deposit such funds in the project bank
account and failing so to do in violation of this Agreement shall hold such funds in trust. Any person receiving property of the project in violation of this Agreement shall immediately deliver such property to the
project and failing so to do shall hold such property in
trust.
Page 3 of 5

(i) Mortgagor shall at all times, if required by the laws of
the jurisdiction, maintain in full force and effect a
license to operate the project from the State and/or other
licening authority. Mortgagor shall lease any portion of
the project only on terms approved by HUD.
(j) Mortgagor shall not collect from tenants or occupants or
prospective tenants or occupants of the project any
admission fee, founder’s fee, life-care fee, or similar
payment pursuant to any agreement, oral or written,
whereby the Mortgagor agrees to furnish accommodations or services in the project to persons making such
payments.
(k) No officer, director, trustee, member, stockholder nor
authorized representative of the Mortgagor except for
management by sponsor or non-profit affiliate, shall
have any financial interest in any contractural arrangement entered into by the Mortgagor in connection with
rendition of services, the provision of goods or supplies,
management of the project, procurement of the site or
other matters whatsoever.
12. (a) If project is funded under Section 202 of the Housing
Act of l959, as amended, Mortgagor will limit public
occupancy of the project to elderly families and individuals as defined in Section 202 of the Housing Act of
l959, and applicable HUD Regulations. If project is
funded under Section 8ll of the National Affordable
Housing Act of l990, Mortgagor will limit public
occupancy of the project to persons with disabilities as
defined in Section 8ll of the National Affordable Housing Act of l990, and applicable HUD Regulations. The
criteria governing eligibility of tenants for admission to
Section 202 or Section 8ll units and the conditions of
continued occupancy shall be in accordance with the
Project Rental Assistance Contract.
(b) Except as provided in (d) below Mortgagor will make its
dwelling accommodations and services available to
eligible occupants at charges established in accordance
with a schedule to be approved in writing by HUD. Such
accommodations shall not be rented for a period less
than 30 days. Commercial facilities, if any, shall be
rented only in accordance with a schedule of charges
fixed by the Mortgagor and approved in writing by
HUD. Subleasing of dwelling accommodations or commercial facilities shall be permitted only upon the terms
and conditions approved by HUD in writing.
(c) Upon prior written approval by the Secretary, Mortgagor may charge to and receive from any tenant such
amounts as from time to time may be mutually agreed
upon between the tenant and the Mortgagor for any
facilities and/or services which may be furnished by the
Mortgagor or others to such tenant upon request, in
addition to the facilities and services included in the
approved Project Rental Assistance Contract.
(d) Nothing contained in this Agreement shall be construed
to relieve the Mortgagor of any obligations under the
Project Rental Assistance Contract.
form HUD-92466-CA (4/92)
ref. Handbook 4571.4 & 4571.5

13. Mortgagor will comply with the provisions of any Federal,
State or local law prohibiting discrimination in housing on
the grounds of race, color, creed, age, sex, handicap, familial status or national origin, including Title VI of the Civil
Rights Act of l964 (42U.S.C.2000d-1), the Fair Housing Act
(42U.S.C.360l), Section 504 of the Rehabilitation Act of
l973(29U.S.C.794), Age Discrimination Act of
l975(42U.S.C.6l0l) Executive Orders ll063 and ll246, Section 3 of the Housing and Urban Development Act of l968,
and the affirmative fair housing marketing requirements at
24CFR part 200, subpart M.
14. No litigation seeking the recovery of a sum in excess of
$5,000 nor any action for specific performance or other
equitable relief shall be instituted nor shall any claim for a
sum in excess of $5,000 be settled or compromised by the
Mortgagor unless prior written consent thereto has been
obtained from HUD. Such consent may be subject to such
terms and conditions as HUD may prescribe.
15. Upon a violation of any of the above provisions of this
Agreement by Mortgagor, HUD may give written notice,
thereof, to Mortgagor, by registered or certified mail, addressed to the address stated in this Agreement, or such other
address as may subsequently, upon appropriate written notice thereof to HUD, be designated by the Mortgagor as its
legal business address. If such violation is not corrected to
the satisfaction of HUD within 30 days after the date such
notice is mailed or within such further time as HUD determines is necessary to correct the violation, without further
notice HUD may declare a Default under this Agreement
effective on the date of such declaration of default and such
default HUD may:
(a) Take possession of the project, bring any action necessary to enforce any rights of the Mortgagor growing out
of the project operation, and operate the project in
accordance with the terms of this Agreement until such
time as HUD in its discretion determines that the Mortgagor is again in a position to operate the project in
accordance with the terms of this Agreement and incompliance with the requirements of the Note and
Mortgage, or require Power of Attorney from Mortgagor to effectuate transfer of the project to a HUD
approved nonprofit corporation.
(b) Collect all rents and charges in connection with the
operation of the project and use such collections to pay
the Mortgagor’s obligations under this Agreement and
under the Note and Mortgage, and the necessary expenses of preserving the property and operating the
project.

other relief as may be appropriate, since the injury to
HUD arising from a default under any of the terms of
this Agreement would be irreparable and the amount of
damage would be difficult to ascertain.
(e) Require the Mortgagor to transfer all of its right title and
interest in the project and to all project assets to a
private nonprofit corporation designated by HUD and,
for this prupose the Mortgagor hereby constitutes and
appoints HUD its true and lawful attorney-in-fact, with
full power of substitution in the premises, to transfer the
project and all project assets to the private nonprofit
corporation designated by HUD, if the Mortgagor fails
or refuses to make such a transfer as required by HUD.
16. (a) Mortgagor has executed the Project Rental Assistance
Contract. The terms of the Project Rental Assistance
Contract, when executed, shall be incorporated by reference into this Regulatory Agreement.
(b) A violation of the Project Rental Assistance Contract
may be construed to constitute a default hereunder in the
sole discretion of HUD.
(c) In the event said Project Rental Assistance Contract
expires or terminates before the expiration or termination of this Agreement, the provisions of this paragraph
and any other reference to said Contract, and to assisted
units contained herein shall be self-cancelling and shall
no longer be effective as of the date of the expiration or
termination of the Project Rental Assistance Contract.
17. As used in this Agreement the term:
(a) “Default” means a default declared by HUD when a
violation of this Agreement is not corrected to its
satisfaction within the time allowed by this Agreement
or such further time as may be allowed by HUD after
written notice;
(b) “Distribution” means any withdrawal or taking of cash
or other assets of the project other than for payment of
reasonable expenses incident to its construction, operation and maintenance;
(c) “Mortgage” includes “Deed of Trust”, “Chattel Mortgage“ Declaration of Covenants” and any other security
for the Note identified herein;
(d) “Mortgaged Property” includes property, real, personal, or mixed, covered by the mortgage or mortgages
securing the note held by HUD;
(e) “Mortgagee” refers to the holder of the mortgage identified herein, its successors and assigns;

(c) Declare the whole of said indebtedness immediately
due and payable and then proceed with the foreclosure
of the mortgage.

(f) “Project” includes the mortgaged property and all its
other assets or whatsoever situate, used in or owned by
the business conducted on said mortgaged property;

(d) Apply to any court, State or Federal, for specific performance of this Agreement, for an injunction against
any violation of this Agreement, for the appointment of
a receiver to take over and operate the property in
accordance with the terms of this Agreement, or for such

(g) “Residual Receipts” means any cash remaining after;

Page 4 of 5

(l) The Payment of;
(i) All amounts required to be deposited in the
reserve fund for replacements;
form HUD-92466-CA (4/92)
ref. Handbook 4571.4 & 4571.5

20. The invalidity of any clause, part or provision of this
Agreement shall not affect the validity of the remaining
portions thereof.

(ii) All obligations of the project other than the
mortgage held by HUD unless funds for payment are set aside or deferment of payment has
been approved by HUD; and

21. Mortgagor warrants that it has not, and will not, execute any
other agreement with provisions contradictory of, or in
opposition to, the provisions hereto, and that, in any event,
the requirements of this Agreement are paramount and
controlling as to the rights and obligations set forth and
supersede any other requirements in conflict therewith.

(2) The segregation of;
(i) An amount equal to the aggregate of all special
funds required to be maintained by the project;
(ii) All tenant security deposits held.

22. Mortgagor does not assume personal liability for payments
due under the Note and mortgage or for payments to the
reserve for replacement fund. However, defaults or other
failures to follow program requirements may result in limited denial of participation or debarment from HUD or other
Federal programs.

(h) “Assisted Units” refer to units assisted pursuant to
Project Rental Assistance Contract.
(i) “Assistance Contract” refers to a Project Rental
Assistance Contract between the Mortgagor
and HUD under Section 202 of the Housing Act
of l959 or between the Mortgagor and HUD
under Section 8ll(d)(2) of the National Affordable Housing Act of l990.

23. Mortgagor shall have available necessary equipment or
devices and make reasonable accommodations to meet the
needs of persons with visual and/or hearing impairments in
compliance with Section 504 of the Rehabilitation Act of
1973 (29 U.S.C. 794) and 24 CFR Part 8.

18. HUD shall not be liable for any of its actions hereunder
except for arbitrary and capricious conduct.
19. This instrument shall bind, and the benefits shall inure to,
the respective parties hereto, their legal representatives,
executors, administrators, successors in office or interest,
and assigns, and all owners of the mortgaged property, so
long as the Mortgage is outstanding.

United States of America
Secretary of Housing and Urban Development (Signature)

Owner(Signature)

By (Name)

By (Name)

Official Title

Date

Official Title

Page 5 of 5

Date

form HUD-92466-CA (4/92)
ref. Handbook 4571.4 & 4571.5