92466m Regulatory Agreement For Multifamily Projects

1
OMB Approval No.2502-0598
(Exp. 04/30/2014)

Public Reporting Burden for this collection of information is estimated to average .75 hours per response, including the time for
reviewing instructions, searching existing data sources, gathering and maintaining the data needed, and completing and reviewing
the collection of information. Response to this request for information is required in order to receive the benefits to be derived.
This agency may not collect this information, and you are not required to complete this form unless it displays a currently valid OMB
control number. While no assurance of confidentiality is pledged to respondents, HUD generally discloses this data only in
response to a Freedom of Information Act request.

Recording Requested by:
_____________________
_____________________
_____________________
_____________________
After Recording return to:
_____________________
_____________________
_____________________
_____________________

U.S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
REGULATORY AGREEMENT FOR MULTIFAMILY PROJECTS
UNDER SECTIONS 207, 220, 221(d)(3), 221(d)(4), 223(a)(7), 223(f) and 231 OF THE
NATIONAL HOUSING ACT, AS AMENDED
Replaces HUD- 92465, 92466, FHA-1730, and 1733
Project Name:
HUD Project No.:

Elderly ____

Non-Elderly ____

HAP Contract No.:
Project Location:
Lender:

Processed under:

[ ]MAP

[ ]TAP

Original Principal Amount of Multifamily Note:

Originally endorsed for insurance under Section ______________. Date of Note:

Borrower: Profit-Motivated _____ Limited Dividend _____ Public Body _____ Non-Profit _____
(Borrower shall check the space which matches the box checked on HUD-92264 and is attached to
the Firm Commitment for insurance. Failure to check the appropriate space shall not affect the
enforceability or application of this Agreement.)
Previous editions are obsolete;
Replaces form HUD-92466 (11/02)

Regulatory Agreement

HUD-92466M (Rev. 04/11)

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This Agreement is entered into this
day of
, 20 , between
________________________________, a
organized
and existing under the laws of
, whose
address is
, its successors, heirs, and assigns (jointly and severally)
(Borrower) and the United States Department of Housing and Urban Development,
acting by and through the Secretary, his or her successors, assigns or designates
(HUD).
In consideration of, and in exchange for an action by HUD, HUD and Borrower
agree to the terms of this Agreement. The HUD action may be one of the following:
HUD’s endorsement for insurance of the Note, HUD’s consent to the transfer of the
Mortgaged Property, HUD’s sale and conveyance of the Mortgaged Property, or HUD’s
consent to other actions related to Borrower or to the Mortgaged Property.
Further, Borrower and HUD execute this Agreement in order to comply with the
requirements of the National Housing Act, as amended, and the regulations adopted by
HUD pursuant thereto. This Agreement shall continue during such period of time as
HUD shall be the owner, holder, or insurer of the Note. Upon satisfaction of such Note,
this Agreement shall automatically terminate. However, Borrower shall be responsible
for any Violations of this Agreement which occurred prior to termination.
Violation of this Agreement may subject Borrower and other signatories hereto to
adverse actions. Refer to Article VII below.
AGREEMENTS: Borrower and HUD covenant and agree as follows:
I. DEFINITIONS
1. DEFINITIONS. Any capitalized term or word used herein but not defined shall have
the meaning given to such term in the Security Instrument between Borrower and
Lender or the Note. The following terms, when used in this Agreement (including when
used in the above recitals), shall have the following meanings, whether capitalized or
not and whether singular or plural, unless, in the context, an incongruity results:
a. “Affiliate” is defined in 24 C.F.R. 200.215, or any successor regulation.
b. “Borrower” means all entities identified as “Borrower” in the first paragraph of the
Security Instrument, together with any successors, heirs, and assigns (jointly and
severally). “Borrower” shall include any entity taking title to the Mortgaged Property
whether or not such entity assumes the Note. Whenever the term “Borrower” is used
herein, the same shall be deemed to include the obligor of the debt secured by the
Security Instrument and shall also be deemed to be the mortgagor as defined by
Program Obligations.
c. “Business Day” is defined in Section 46.
Previous editions are obsolete;
Replaces form HUD-92466 (11/02)

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d. “Declaration of Default” is defined in Section 38.
e. “Displaced Persons or Families” means a person, family or families, displaced
from (i) an urban renewal area, (ii) as a result of government action, or (iii) as a result of
a major disaster determined by the President pursuant to the Robert T. Stafford
Disaster Relief and Emergency Assistance Act.
f. “Distribution” means any disbursal, conveyance or transfer of any portion of the
Mortgaged Property, including the segregation of cash or assets for subsequent
withdrawal as Surplus Cash, other than in payment of Reasonable Operating
Expenses, or any other disbursement, conveyance, or transfer provided for in this
Agreement.
g. “Elderly Person” means any person, married or single, who is 62 years of age or
older.
h. “Fixtures” means all property or goods that become so related or attached to the
Land or the Improvements that an interest arises in them under real property law,
whether acquired now or in the future, excluding all tenant owned goods and property,
and including but not limited to: machinery, equipment , engines, boilers, incinerators,
installed building materials; systems and equipment for the purpose of supplying or
distributing heating, cooling, electricity, gas, water, air, or light; antennas, cable, wiring
and conduits used in connection with radio, television, computers, security, fire
prevention, or fire detection or otherwise used to carry electronic signals; telephone
systems and equipment; elevators and related machinery and equipment; fire detection,
prevention and extinguishing systems and apparatus; security and access control
systems and apparatus; plumbing systems; water heaters, ranges, stoves, microwave
ovens, refrigerators, dishwashers, garbage disposals, washers, dryers and other
appliances; light fixtures, awnings, storm windows and storm doors; pictures, screens,
blinds, shades, curtains and curtain rods; mirrors; cabinets, paneling, rugs and floor and
wall coverings; fences, trees and plants; swimming pools; playground and exercise
equipment and classroom furnishings and equipment.
i.

“Goods and Services” is defined in Section 24.

j. “HUD” means the United States Department of Housing and Urban Development
acting by and through the Secretary in his capacity as insurer or holder of the Loan
under the authority of the National Housing Act, as amended, the Department of
Housing and Urban Development Act, as amended, or any other federal law or
regulation pertaining to the Loan or the Mortgaged Property.
Previous editions are obsolete;
Replaces form HUD-92466 (11/02)

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k. “Impositions” and “Imposition Deposits” are defined in the Security Instrument.
l. “Improvements” means the buildings, structures, and alterations now constructed
or at any time in the future constructed or placed upon the Land, including any future
replacements and additions.
m. “Indebtedness” means the principal, interest on, and all other amounts due at any
time under the Note or the Security Instrument, including prepayment premiums, late
charges, default interest, and advances to protect the security as provided in the
Security Instrument.
n. “Land” means the estate in realty described in Exhibit A.
o. “Leases” means all present and future leases, subleases, licenses, concessions or
grants or other possessory interests now or hereafter in force, whether oral or written,
covering or affecting the Mortgaged Property, or any portion of the Mortgaged Property
(including but not limited to proprietary leases, non-residential leases or occupancy
agreements if Borrower is a cooperative housing corporation), and all modifications,
extensions or renewals. (Ground leases that create a leasehold interest in the Land and
where the Borrower’s leasehold is security for the Loan are not included in this
definition.)
p. “Lender” means the entity identified as "Lender" in the first paragraph of the
Security Instrument, or any subsequent holder of the Note, and whenever the term
“Lender” is used herein, the same shall be deemed to include the Obligee, or the
Trustee(s) and the Beneficiary of the Security Instrument and shall also be deemed to
be the Mortgagee as defined by Program Obligations.
q. “Limited Dividend Borrower” means a limited dividend/distribution corporation or
other limited dividend/distribution entity that is restricted as to rate of return and other
aspects of its operation.
r. “Mortgaged Property” means all of Borrower's present and future right, title and
interest in and to all of the following:
(1) the Land;
(2) the Improvements;
(3) the Fixtures;
(4) the Personalty;
Previous editions are obsolete;
Replaces form HUD-92466 (11/02)

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(5) all current and future rights, including air rights, development rights, zoning rights
and other similar rights or interests, easements, tenements, rights-of-way, strips and
gores of land, streets, alleys, roads, sewer rights, waters, watercourses, and
appurtenances related to or benefiting the Land or the Improvements, or both, and all
rights-of-way, streets, alleys and roads that may have been or may in the future be
vacated;
(6) all insurance policies covering the Mortgaged Property, and all proceeds paid or to
be paid by any insurer of the Land, the Improvements, the Fixtures, the Personalty or
any other part of the Mortgaged Property, whether or not Borrower obtained such
insurance policies pursuant to Lender’s requirement;
(7) all awards, payments and other compensation made or to be made by any
Governmental Authority with respect to the Land, the Improvements, the Fixtures, the
Personalty or any other part of the Mortgaged Property, including any awards or
settlements resulting from condemnation proceedings or the total or partial taking of the
Land, the Improvements, the Fixtures, the Personalty or any other part of the
Mortgaged Property under the power of eminent domain or otherwise and including any
conveyance in lieu thereof;
(8) all contracts, options and other agreements for the sale of the Land, the
Improvements, the Fixtures, the Personalty or any other part of the Mortgaged Property
entered into by Borrower now or in the future, including cash or securities deposited to
secure performance by parties of their obligations;
(9) all proceeds (cash or non-cash), liquidated claims or other consideration from the
conversion, voluntary or involuntary, of any of the Mortgaged Property and the right to
collect such proceeds, liquidated claims or other consideration;
(10)

all Rents and Leases;

(11) all earnings, royalties, instruments, accounts, accounts receivable, supporting
obligations, issues and profits from the Land, the Improvements or any other part of the
Mortgaged Property, and all undisbursed proceeds of the Loan and, if Borrower is a
cooperative housing corporation, maintenance charges or assessments payable by
shareholders or residents;
(12)

all Imposition Deposits;

Previous editions are obsolete;
Replaces form HUD-92466 (11/02)

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(13) all refunds or rebates of Impositions by any Governmental Authority or insurance
company (other than refunds applicable to periods before the real property tax year in
which the Security Instrument is dated);
(14)

all forfeited tenant security deposits under any Lease;

(15) all names under or by which any of the above Mortgaged Property may be
operated or known, and all trademarks, trade names, and goodwill relating to any of the
Mortgaged Property;
(16) all deposits and/or escrows held by or on behalf of Lender under Collateral
Agreements; and
(17) all awards, payments, settlements or other compensation resulting from litigation
involving the Project.
s. “Non-Profit Borrower” means a Borrower that is treated under the Firm
Commitment issued by HUD to Lender as a corporation or association organized for
purposes other than profit or gain for itself or persons identified therewith, pursuant to
501(c)(3) or other applicable provisions of the Internal Revenue Code. The entity may
not make Distributions to any individual member or shareholder. The definition of “NonProfit Borrower” does not include a non-profit borrower who is treated under the Firm
Commitment as a for profit borrower.
t. “Note” means the Note executed by Borrower described in the Security Instrument,
including all schedules, riders, allonges and addenda, as such Note may be amended
from time to time.
u. “Notice” is defined in Section 46.
v. “Personalty” means all equipment, inventory, and general intangibles. The
definition of “Personalty” includes furniture, furnishings, machinery, building materials,
appliances, goods, supplies, tools, books, records (whether in written or electronic
form), computer equipment (hardware and software) and other tangible or electronically
stored personal property (other than Fixtures) that are owned, leased or used by
Borrower now or in the future in connection with the ownership, management or
operation of the Land or the Improvements or are located on the Land or in the
Improvements, and any operating agreements relating to the Land or the
Improvements, and any surveys, plans and specifications and contracts for
architectural, engineering and construction services relating to the Land or the
Improvements, choses in action and all other intangible property and rights relating to
the operation of, or used in connection with, the Land or the Improvements, including all
Previous editions are obsolete;
Replaces form HUD-92466 (11/02)

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certifications, approvals and governmental permits relating to any activities on the Land.
Generally, intangibles shall also include all cash and cash escrow funds related to the
Project, such as but not limited to: Reserve for Replacement accounts, bank accounts,
Residual Receipt accounts, and investments.
w. “Principal” is defined in 24 C.F.R. 200.215, or any successor regulation.
x. “Project” and “Project Assets” mean the Mortgaged Property.
y. “Program Obligations” means (1) all applicable statutes and any regulations
issued by the Secretary pursuant thereto that apply to the Project, including all
amendments to such statutes and regulations, as they become effective, except that
changes subject to notice and comment rulemaking shall become effective only upon
completion of the rulemaking process, and (2) all current requirements in HUD
handbooks and guides, notices, and mortgagee letters that apply to the Project, and all
future updates, changes and amendments thereto, as they become effective, except
that changes subject to notice and comment rulemaking shall become effective only
upon completion of the rulemaking process, and provided that such future updates,
changes and amendments shall be applicable to the Project only to the extent that they
interpret, clarify and implement terms in this Agreement rather than add or delete
provisions from such document. Handbooks, guides, notices, and mortgagee letters
are available on HUD's official website:
(http://www.hud.gov/offices/adm/hudclips/index.cfm or a successor location to that site).
z. “Property Jurisdiction” is (are) the jurisdiction(s) in which the Land is located.
aa. “Public Body Borrower” means a federal instrumentality, a state or political
subdivision thereof, or an instrumentality of a state or a political subdivision thereof, that
certifies that it is not receiving financial assistance from the United States exclusively
pursuant to the United States Housing Act of 1937 (with the exception of projects
assisted or to be assisted pursuant to Section 8 of such Act) and that is acceptable to
HUD.
bb. “Reasonable Operating Expenses” means expenses that arise from the
operation, maintenance and routine repair of the Project and that primarily benefit the
Project (as opposed to Borrower) or as otherwise permitted by Program Obligations.
cc. “Rents” means all rents (whether from residential or non-residential space),
revenues, issues, profits (including carrying charges, maintenance fees, and other
cooperative revenues, and fees received from leasing space on the Mortgaged
Property), other income of the Land or the Improvements, gross receipts, receivables,
parking fees, laundry and vending machine income and fees and charges for food and
Previous editions are obsolete;
Replaces form HUD-92466 (11/02)

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other services provided at the Mortgaged Property, whether now due, past due, or to
become due, Residual Receipts, and escrow accounts, however and whenever funded
and wherever held.
dd. “Reserve for Replacement” is defined in Section 10.
ee. “Residual Receipts” is a term that applies to certain funds held by Non-Profit,
Public Body and Limited Dividend Borrowers whose Notes are insured or held by HUD
pursuant to Section 220, Section 221(d)(3) and 231 of the National Housing Act, as
amended. Residual Receipts are calculated by determining an amount of Surplus Cash
(defined below).
After the calculation of Surplus Cash, as described below, Borrower may make any
Distributions permitted by this Agreement. “Residual Receipts” shall be the restrictive
cash held by Section 220, Section 221(d)(3) and 231 Non-Profit, Public Body, and
Limited Dividend Borrowers remaining after any allowable Distributions. The use of
these Residual Receipts is restricted under this Agreement.
ff. “Security Instrument” means the Multifamily (Mortgage, Deed of Trust, or other
designation as appropriate by Property Jurisdiction), Assignment of Leases and Rents
and Security Agreement (HUD-94000M), and any other security for the Indebtedness
between Borrower and Lender, and shall be deemed to be the “mortgage” as defined
by Program Obligations.
gg. “Surplus Cash” means any cash plus amounts receivable under Section 8 projectbased subsidy payments (earned in the applicable fiscal period) remaining after:
(1) The payment of: (i) all sums immediately due or currently required to be paid under
the terms of the Note, the Security Instrument and this Agreement on the first day of the
month following the end of the fiscal period; including without limitation, all amounts
required to be deposited in the Reserve for Replacement or other reserves as may be
required by HUD; and (ii) all other obligations of the Project (accounts payable and
accrued, unescrowed expenses) unless funds for payment are set aside or deferment
of payment has been approved by HUD, and
(2) The segregation and recording of: (i) an amount equal to the aggregate of all
special funds required to be maintained by Borrower; (ii) the greater of Borrower’s total
liability or the amount held by Borrower for tenant security deposits; and (iii) all
accounts and accrued items payable within thirty (30) days after the end of the fiscal
period.

Previous editions are obsolete;
Replaces form HUD-92466 (11/02)

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hh. “State” includes the several states comprising the United States of America, and
Puerto Rico, the District of Columbia, Guam, the Commonwealth of the Northern
Marianas, American Samoa, and the U.S. Virgin Islands.
ii. “Taxes” means all taxes, assessments, vault rentals and other charges, if any,
general, special or otherwise, including all assessments for schools, public
betterments and general or local improvements, that are levied, assessed or
imposed by any public authority or quasi-public authority, and that, if not paid, could
become a lien on the Land or the Improvements.

jj. “Undocumented Expense” is defined in Section 16.
kk. “Violation” is defined in Section 37.
ll. “Waste” means a failure to keep the Mortgaged Property in decent, safe and
sanitary condition and in good repair. During any period in which HUD insures the Loan
or holds a security interest on the Mortgaged Property, Waste is committed when,
without Lender’s and HUD’s express written consent, Borrower:
(1)

physically changes the Mortgaged Property, whether negligently or
intentionally, in a manner that reduces its value;

(2)

fails to maintain and repair the Mortgaged Property in accordance
with Program Obligations;

(3)

fails to pay before delinquency any Taxes secured by a lien having
priority over the Security Instrument;

(4)

materially fails to comply with covenants in the Note, the Security
Instrument or this Regulatory Agreement respecting physical care,
maintenance, construction, abandonment, demolition, or insurance
against casualty of the Mortgaged Property; or

(5)

retains possession of Rents to which Lender or its assigns have the
right of possession under the terms of the Loan Documents;

II. CONSTRUCTION; REFINANCING
2. CONSTRUCTION FUNDS. Borrower shall keep funds of the Mortgaged Property to
be used for repairs or for construction or substantial rehabilitation separate and apart
Previous editions are obsolete;
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from operating funds of the Mortgaged Property. Funds for construction or substantial
rehabilitation are identified in the Building Loan Agreement and/or Construction
Contract.
3. UNPAID OR OUTSTANDING OBLIGATIONS. Borrower certifies, upon final or
initial/final endorsement of the Note by HUD, Borrower shall have no unpaid obligations
in connection with the purchase of the Mortgaged Property, the construction or repair of
the Mortgaged Property, or with respect to the Security Instrument, except such unpaid
obligations as have the written approval of HUD as to terms, form and amount; and,
except for those obligations approved by HUD in writing, the Land shall be paid for in
full and is free from any liens or purchase money obligations, or if the Land is subject to
a leasehold interest, it must be subject to a HUD approved lease, and it shall be free
from any lien. As of the date hereof, Borrower has no knowledge of any liens or
encumbrances against the Mortgaged Property that are not reflected as exceptions to
coverage in the lender’s title policy insuring the Security Instrument accepted by HUD or
that are not shown on the UCC search. All contractual obligations of Borrower or on
behalf of Borrower with any party shall be fully disclosed to HUD.
4. LENDER’S CERTIFICATE. Borrower shall be bound by the terms of the Lender’s
Certificate or the Request for Endorsement of Credit Instrument & Certificate of Lender,
Borrower & General Contractor, as applicable (a copy of which has been provided to
Borrower), insofar as the applicable document establishes or reflects obligations of
Borrower. Borrower agrees that the fees and expenses enumerated in the applicable
document have been fully paid or payment has been provided for as set forth in the
applicable document and that all funds deposited with Lender shall be used for the
purposes set forth in the applicable document insofar as Borrower has rights and
obligations in respect thereto.
5. CONSTRUCTION COMMENCEMENT/REPAIRS. Borrower certifies that it has not
commenced construction or substantial rehabilitation of the Mortgaged Property prior to
HUD’s initial endorsement of the Note, except that this Section 5 is not applicable if
HUD has given prior written approval to an early start of construction, or if this Project is
an Insurance Upon Completion or involves a loan refinancing or if such work has been
disclosed to and approved in writing by HUD. In cases of purchase and/or refinance
involving an existing building, Borrower shall not commence any critical repairs without
the prior written approval of HUD.
6. DRAWINGS AND SPECIFICATIONS. The Mortgaged Property shall be constructed
in accordance with the terms of the Construction Contract as approved by HUD, if any,
and with the Drawings and Specifications that have been approved by HUD and
deemed attached to the Construction Contract.
Previous editions are obsolete;
Replaces form HUD-92466 (11/02)

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7. REQUIRED PERMITS. Unless otherwise required in the Construction Contract and
Building Loan Agreement, the Borrower has obtained all necessary certificates, permits,
licenses, qualifications, authorizations, consents and approvals from all necessary
Governmental Authorities to own and operate the Project and to carry out all of the
transactions required by the Loan Documents and to comply with all applicable federal
statutes and regulations of HUD in effect on the date of the Firm Commitment, except
for those, if any, which customarily would be obtained at a later date, at an appropriate
stage of construction or completion thereof, and which the undersigned shall obtain in
the future. The licenses and permits that are in effect as of the date hereof are
sufficient to allow any construction of the improvements to proceed to completion in the
ordinary course. As the construction of the Project progresses, unless otherwise
required by the Construction Contract, the Borrower will procure and submit all
necessary building and other permits required by Governmental Authorities. The
Mortgaged Property shall not be available for occupancy by any tenant without the prior
written approval of HUD and of all other legal authorities having jurisdiction of the
Mortgaged Property.
8. ACCOUNTING REQUIREMENTS. Borrower shall submit an accounting to HUD, as
required by Program Obligations, for all receipts and disbursements during the period
set forth therein. The excess of project income over property disbursements, as
determined by HUD, shall be treated as a recovery of construction cost, except as
otherwise allowed in Program Obligations.
III. FINANCIAL MANAGEMENT
9. PAYMENTS. Borrower shall make promptly all payments due under the Note,
Security Instrument, and this Agreement.
10. RESERVE FOR REPLACEMENT. Borrower shall establish and maintain a Reserve
for Replacement account for defraying certain costs of replacing major structural
elements and mechanical equipment of the Project or for any other purpose.
a. The Reserve for Replacement shall be deposited with Lender or in a safe and
responsible depository designated by Lender in accordance with Program Obligations.
Such funds shall at all times remain under the control of Lender or Lender’s designee
and shall be held in accounts insured or guaranteed by a federal agency and in
accordance with Program Obligations.
b. Borrower shall deposit at initial or initial/final endorsement of the Note an initial
amount of $ ___, if applicable, and if not applicable, the amount deposited will be $0;
and Borrower shall deposit a monthly amount of $______, concurrently with the
beginning of payments towards amortization of the Note unless a different date or
Previous editions are obsolete;
Replaces form HUD-92466 (11/02)

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amount is established by HUD. At least every ten years, starting from the date of initial
or initial/final endorsement of the Note, and more frequently at HUD’s sole discretion,
Borrower shall submit to HUD a written analysis of its use of the Reserve for
Replacement during the prior ten years and the projected use of the Reserve for
Replacement in accordance with Program Obligations. The amount of the monthly
deposit may be increased or decreased from time to time at the written direction of
HUD without a recorded amendment to this Agreement.
c. Borrower shall carry the balance in this account on the financial records as a
restricted asset. The Reserve for Replacement shall be invested in accordance with
Program Obligations, and any interest earned on the investment shall be deposited in
the Reserve for Replacement for use by the Project in accordance with this Section 10.
d. Disbursements from the Reserve for Replacement shall only be made after consent,
in writing, of HUD. In the event of a Declaration of Default under the terms of the
Security Instrument, pursuant to which the Indebtedness has been accelerated, a
written notification by HUD to Borrower of a violation of this Agreement or at such other
times as determined solely by HUD, HUD may direct the application of the balance in
such account to the amount due on the Indebtedness as accelerated or for such other
purposes as may be determined solely by HUD.
e. In the case of a transfer of the Mortgaged Property where the Project is already
subject to a Security Instrument insured or held by HUD as of the date hereof, and this
Agreement is now being executed by Borrower as of the date hereof, the Reserve for
Replacement now to be established shall be equal to the amount due to be in such
account under this Agreement, and payments hereunder shall begin with the first
payment due on the Security Instrument after acquisition, unless some other method of
establishing and maintaining the account is approved in writing by HUD.
f. Upon Borrower’s full satisfaction of all HUD obligations, Borrower shall receive any
monies remaining in the Reserve for Replacement.
11. RESIDUAL RECEIPTS. Section 221(d)(3) and 231 Non-Profit, Public Body, and
Limited Dividend Borrowers shall establish and maintain, in addition to the Reserve for
Replacement, a Residual Receipts account by depositing with Lender the Residual
Receipts within ninety (90) days after the end of the annual fiscal period within which
such receipts are realized. Such account shall be held by Lender or by a safe and
responsible depository designated by Lender in accordance with Program Obligations,
in an interest-bearing account which shall be insured or guaranteed by a federal agency
and in accordance with Program Obligations. The Residual Receipts shall be under the
control of HUD, and shall be disbursed only on the direction of HUD, which shall have
Previous editions are obsolete;
Replaces form HUD-92466 (11/02)

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the power and authority to direct that the Residual Receipts, or any part thereof, be
used for such purpose as it may determine.
12. PROPERTY AND OPERATION; ENCUMBRANCES.
a. Borrower shall deposit all Rents and other receipts of the Project in connection with
the financing of the Project, including equity or capital contributions required under the
Firm Commitment or otherwise advanced for the purpose and as part of the Mortgaged
Property, in the name of the Project in a federally insured depository or depositories
and in accordance with Program Obligations. (Equity or capital contributions shall not
include certain syndication proceeds, such as proceeds from Low Income Housing Tax
Credit transactions used to repay bridge loans from members/partners of Borrower, all
as more fully set forth in Program Obligations.) Such funds shall be withdrawn only in
accordance with the provisions of this Agreement for Reasonable Operating Expenses
of the Project or for Distribution of Surplus Cash or as reimbursement of advances as
permitted by Sections 14 and 15 below; or for permitted deposits authorized by this
Agreement or for any other reason authorized under this Agreement. Any person or
entity receiving Mortgaged Property other than for payment of Reasonable Operating
Expenses, authorized Distributions of Surplus Cash, or for any reason authorized under
Section 36 of this Agreement, shall immediately deliver such Mortgaged Property to the
Project and failing so to do shall hold such Mortgaged Property in trust.
b. Borrower shall not engage in any business or activity, including the operation of any
other project, or incur any liability or obligation not in connection with the Project, nor
acquire an Affiliate or contract to enter into any affiliation with any party except as
otherwise approved by HUD.
c. Borrower shall satisfy or obtain a release of any mechanic’s lien, attachment,
judgment lien, or any other lien that attaches to the Mortgaged Property or any part
thereof.
d. Penalties, including but not limited to delinquent tax penalties, shall not be paid from
the Project.
e. Borrower shall promptly notify HUD of the appointment of any receiver for the
Project, the filing of a petition in bankruptcy or insolvency or for reorganization.
f. Borrower shall keep the Mortgaged Property insured at all times in accordance with
the Security Instrument and Program Obligations, and Borrower shall notify HUD of all
payments received from an insurer.
g. Borrower shall notify HUD of any action or proceeding relating to any condemnation
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or other taking, or conveyance in lieu thereof, of all or any part of the Mortgaged
Property, whether direct or indirect condemnation.
h. Borrower shall notify HUD of any litigation proceeding filed against Borrower or the
Project, or any litigation proceeding filed by Borrower.
13. SECURITY DEPOSITS. Any funds collected as security deposits shall be kept (a)
separate and apart from all other funds of the Project; (b) in interest bearing trust
accounts, to the extent required by State or local law; and (c) in an amount which shall
at all times equal or exceed the aggregate of all outstanding obligations under said
account. Security deposit account interest shall be paid on a pro rata basis to tenants
or applied to sums due under their leases upon the termination of their tenancy in the
Project. The use of tenant security deposits for Project operations is prohibited unless
the tenant has forfeited the deposit.
14. DISTRIBUTIONS. Borrower shall not make or take, or receive and retain, nor allow
any Affiliate or Principal to receive or retain any Distribution of assets or any income of
any kind of the Project, except from Surplus Cash or in accordance with Program
Obligations. Distributions are governed by the following conditions:
a. No Distribution shall be made or taken from borrowed funds. Distributions shall not
be taken prior to the completion of the Project. Distributions shall not be taken after
HUD has given Notice to Borrower of a Violation under this Agreement or an Event of
Default occurs under the Note or Security Instrument. Distributions shall not be taken
when a Project is under a forbearance agreement.
b. No Distribution shall be made or taken when either (i) necessary services (utilities,
trash removal, security, lawn service or any other services that Borrower is required to
provide) are not being provided on a regular basis, which failure Borrower should have
known about in the exercise of due care; (ii) notices of physical repairs or deficiencies
(including, but not limited to, building code violations) by Governmental Authorities
and/or by HUD have been issued and remain unresolved to the satisfaction of the
issuing public body or (iii) Borrower has been notified by HUD, Lender or a
Governmental Authority that physical repairs and/or deficiencies exist and Borrower has
not corrected or cured the identified items to HUD’s satisfaction. Upon completion of
the repairs, HUD may permit a Distribution to be placed in an escrow account until a
subsequent inspection has been completed by HUD. If the Project passes a
subsequent inspection, HUD may then authorize release of the funds in the escrow
account to Borrower. HUD may also permit Distributions when there are minor or
contested local code violations on a case-by-case basis.
c. Any Distribution of any funds of the Project not permitted by this Agreement or
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Program Obligations shall be returned to the appropriate Project account as specified
by HUD immediately.
d. All allowable Distributions shall be made or taken only after the end of a semiannual
or annual fiscal period, and only as permitted by the law of the applicable jurisdiction.
All such Distributions to Limited Dividend Borrowers in any one fiscal year shall be
limited to __ percent of initial equity, or to such other amounts as may be specified in
Program Obligations, and the right to such Distributions shall be cumulative. No
Distributions may be taken in the case of Public Body or Nonprofit Borrowers unless
permitted by Program Obligations. For all other Borrowers, Distributions, if taken, must
be taken out of the appropriate Project account as specified by HUD within the
accounting period immediately following the computation of Surplus Cash and, if not
taken within the identified period, these funds remain as Mortgaged Property and may
only be used as permitted by this Agreement. The computation of Surplus Cash must
be prepared at the end of the semiannual or annual fiscal period.
e. Equity or capital contributions shall not be reimbursed from Project accounts without
the prior written approval of HUD. Borrower advances for Reasonable Operating
Expenses shall not be deemed to fall under this subsection but rather shall be treated
under Section 15 below.
15. REIMBURSEMENT OF ADVANCES. Any advances made by any Principal or by
any entity on behalf of Borrower, or for Borrower with respect to the Project must be
deposited into the Project’s operating account as required by Program Obligations. Any
Principal or any entity that advances funds on behalf of Borrower or for Borrower for
Reasonable Operating Expenses may be reimbursed from Surplus Cash at the end of
the annual or semiannual period or such other time as may be approved in writing by
HUD. Interest may be permitted on such advances with the prior written approval of
HUD. Such repayment is not considered a Distribution if otherwise approved by HUD.
16. FINANCIAL ACCOUNTING. Borrower shall keep the books and accounts of the
operation of the Mortgaged Property in accordance with Program Obligations. The
books and accounts must be complete, accurate and current at all times. Posting must
be made at least monthly to the ledger accounts, and year-end adjusting entries must
be posted promptly in accordance with sound accounting principles. Any
Undocumented Expense or Distribution shall be an ineligible Project expense, unless
otherwise determined in writing by HUD. An “Undocumented Expense” is an
expense without sufficient documentation that provides reasonable identification of the
basis of the expense. Books, accounts and records shall be open and available for
inspection by HUD, after reasonable prior notice, during normal office hours, at the
Project or another mutually agreeable location.
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17. BOOKS MAINTAINED BY MANAGEMENT AGENTS. The books and records of the
Project maintained by management agents and Affiliates shall be maintained in
accordance with Program Obligations and shall be open and available to inspection by
HUD, after reasonable prior notice, during normal office hours, at the Project or another
mutually agreeable location. Every contract executed on behalf of the Project with any
management agent or Affiliate shall include the provision that the books and records of
the Project shall be properly maintained and open to inspection during normal business
hours by HUD at the Project or another mutually agreeable location. Upon the
termination of a contract with management agent and/or Affiliates, the books and records
of the Project maintained by the management agent and/or Affiliates shall remain with
Borrower.
18. ANNUAL FINANCIAL STATEMENT. Within ninety (90) days, or such period
established in writing by HUD, following the end of each fiscal year, Borrower shall
furnish HUD and Lender with a complete annual financial report based upon an
examination of the books and records of Borrower prepared in accordance with GAAP,
audited in accordance with Generally Accepted Auditing Standards (“GAAS”) and
Government Auditing Standards (“GAS”) and any additional requirements of HUD
unless the report is waived in writing by HUD. If Borrower fails to submit the annual
financial report within ninety (90) days of said due date, HUD may thereafter hire a
certified public accountant to prepare the report at the expense of Borrower. The report
shall include a certification in content and form prescribed by HUD and certified by
Borrower. The report shall be prepared and certified by a certified public accountant
who is licensed or certified by a regulatory authority of a state or other political
subdivision of the United States, which authority makes the certified public accountant
subject to regulations, disciplinary measures, or codes of ethics prescribed by law. The
certified public accountant must have no business relationship with Borrower except for
the performance of the audit and tax preparation unless HUD expressly authorizes
other relationships. Auditing costs and tax preparation costs may be charged as an
authorized expense to the Mortgaged Property only to the extent they are required of
Borrower itself by state law, the Internal Revenue Service (“IRS”), the Securities and
Exchange Commission, or HUD. Neither IRS audit costs nor costs of tax preparation
for Borrower’s partners, members, shareholders, or other persons receiving
Distributions from Borrower may be charged to the Mortgaged Property as a Project
expense. Non-profit Borrowers are to follow audit requirements specified in OMB
Circular A-133, as revised.
IV. PROJECT MANAGEMENT
19. PRESERVATION, MANAGEMENT AND MAINTENANCE OF THE MORTGAGED
PROPERTY. Borrower (a) shall not commit Waste, (b) shall not abandon the
Mortgaged Property, (c) shall restore or repair promptly, in a good and workmanlike
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manner, any damaged part of the Mortgaged Property to the equivalent of its original
condition, or such other condition as HUD may approve in writing, whether or not
litigation or insurance proceeds or condemnation awards are available to cover any
costs of such restoration or repair, and (d) shall keep the Mortgaged Property in decent,
safe, sanitary condition and good repair, including the replacement of Personalty and
Fixtures with items of equal or better function and quality, all in accordance with
Program Obligations. Obligations (a) through (d) of this Section 19 are absolute and
unconditional and are not limited by any conditions precedent and are not contingent on
the availability of financial assistance of any kind from HUD or on HUD’s performance of
any administrative or contractual obligations. The Mortgaged Property must also be
maintained in reasonable condition for proper audit and subject to examination by HUD at
the Project or another mutually agreeable location. In the event all or any of the
Improvements shall be destroyed or damaged by fire, by failure of warranty, or other
casualty, the money derived from any settlement, judgment, or insurance on the
Mortgaged Property shall be applied in accordance with the terms of the Security
Instrument. In the event all or any of the Improvements shall be taken by an exercise of
the power of eminent domain, all awards of compensation in connection with
condemnation for public use of or a taking of any of the Improvements shall be paid in
accordance with the Security Instrument.
20. FLOOD HAZARDS. Borrower shall maintain flood insurance if required by the
Security Instrument.
21. MANAGEMENT AGREEMENT. Borrower shall execute a management agreement
or other document outlining procedures for managing or operating the Mortgaged
Property. Such agreement or document must be consistent with Program Obligations.
Borrower and the management agent shall submit and maintain a current management
certification meeting standards consistent with Program Obligations. A management
agreement must contain a provision that it cannot be assigned without the prior written
approval of HUD.
22. ACCEPTABILITY OF MANAGEMENT OF THE MORTGAGED PROPERTY.
Borrower shall provide management of the Mortgaged Property in a manner deemed to
be acceptable by HUD. At HUD's discretion, HUD may require replacement of the
management.
23. TERMINATION OF CONTRACTS. Any management contract entered into by
Borrower pertaining to the Mortgaged Property shall contain a provision that the
contract shall be subject to termination without penalty and without cause upon written
request by HUD and shall contain a provision that gives no more than a thirty day notice
of termination. Upon such request, Borrower shall immediately arrange to terminate the
contract, and Borrower shall also make arrangements satisfactory to HUD for
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continuing acceptable management of the Mortgaged Property effective as of the
termination date of the contract.
24. CONTRACTS FOR GOODS AND SERVICES. Consistent with Program
Obligations, Borrower shall obtain contracts for goods, materials, supplies, and services
(Goods and Services) at costs, amounts, and terms that do not exceed reasonable
and necessary levels and those customarily paid in the vicinity of the Land for Goods
and Services received. The purchase price of Goods and Services shall be based on
quality, durability and scope of work and shall be made upon the most advantageous
terms for the Project operation. Reasonable Operating Expenses do not include
amounts paid for betterments as defined in the Property Jurisdiction or Improvements
unless determined by HUD to be prudent and appropriate. Borrower shall keep copies
of all written contracts or other instruments that affect the Mortgaged Property, all or
any of which may be subject to inspection and examination by HUD at the Project or
another mutually agreeable location.
25. RESPONSIVENESS TO INQUIRIES. At the request of HUD, Borrower shall
promptly furnish operating budgets and occupancy, accounting and other reports
(including credit reports) and give specific answers to questions relative to income,
assets, liabilities, contracts, operation, and conditions of the Mortgaged Property and
the status of the Security Instrument.
26. TENANT ORGANIZATIONS. If the Project is subject to 24 CFR 245 Subpart B or
any successor regulation covering the rights of tenants to organize, Borrower shall
comply with this Section 26. Borrower shall not (a) impede the reasonable efforts of
resident tenant organizations to represent their members or the reasonable efforts of
tenants to organize, or (b) unreasonably withhold the use of any community room or
other available space appropriate for meetings that is part of the Mortgaged Property
when requested by: (i) a resident tenant organization in connection with the
representational purposes of the organization; or (ii) tenants seeking to organize or to
consider collectively any matter pertaining to their living environment, which includes
the terms and conditions of their tenancy as well as activities related to housing and
community development. Borrower may charge for the use of the Mortgaged Property
any fees or costs approved by HUD as may normally be imposed for the use of such
facilities or may waive any such fees or costs.
V. ADMISSIONS AND OCCUPANCY
27. RESIDENTIAL UNITS AND SERVICES. If the Project is subject to regulation of rent
by HUD, Borrower shall make residential units and services of the Project available to
eligible tenants at charges not exceeding those established in accordance with a rental
schedule approved in writing by HUD.
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28. LEASE TERMS FOR RESIDENTIAL UNITS. Residential units shall not be rented
for a period of less than thirty (30) days or for more than 3 years and shall not be used
for transient or hotel purposes. Rental for transient or hotel purposes shall mean: (a)
rental for a period of less than thirty (30) days or (b) any rental, if the occupants of the
residential units are provided customary hotel services such as room service for food
and beverages, maid service, furnishings or laundering of linens, and bellhop service.
Residential units in projects with Security Instruments initially endorsed for insurance
pursuant to Section 231 of the National Housing Act, as amended, may be rented for a
period of more than 3 years.
29. COMMERCIAL (NON-RESIDENTIAL) LEASES. No portion of the Mortgaged
Property shall be leased for any commercial purpose or use without receiving HUD’s
prior written approval as to terms, form and amount, except that for lease renewals or
extensions or amendments involving no change in terms or use, rent increases are
permitted without HUD approval. Borrower must deliver an executed copy of the
commercial Lease to HUD.
30. SUBLEASES. All Leases of residential units by Borrower to tenants must also
prohibit assignment of the leasehold interest by the tenant without the prior written
approval of Borrower. All Leases of residential units by Borrower to tenants must
prohibit tenants from entering into any subleases that do not run for at least thirty (30)
days and must require that all subleases be approved in advance in writing by
Borrower. Leases of residential units must prohibit the tenant from granting the right to
occupy the premises for a period of less than thirty (30) days or from furnishing hotel
services, as defined in Section 28. Assignment and subleasing of units by other than
the tenant thereof without the prior written approval of Borrower shall be prohibited in
the Lease. Upon discovery of any unapproved assignment, sublease or occupancy,
Borrower shall, to the extent permitted by law, immediately demand cancellation and/or
vacation of the premises, as appropriate, and notify HUD thereof.
31. TENANT SELECTION/OCCUPANCY.
a. If the Security Instrument is originally a HUD-held purchase money mortgage, or is
originally endorsed for insurance under any Section of the National Housing Act, as
amended, other than Section 231 units specially designed for use and occupancy of
Elderly Persons exclusively, Borrower shall not, in selecting tenants, discriminate
against any person or persons by reason of the fact that there are children in the family,
unless in accordance with the Fair Housing Act and otherwise approved in writing by
HUD.
b. If the Security Instrument is originally endorsed for insurance under Section 221,
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Borrower shall, in selecting tenants, give to displaced persons or families an absolute
preference or priority of occupancy that shall be accomplished as follows: (1) For a
period of sixty (60) days from the date of original offering, unless a shorter period of
time is approved in writing by HUD, all units shall be held for such preferred applicants,
after which time any remaining unrented units may be rented to non-preferred
applicants; (2) thereafter, and on a continuing basis, such preferred applicants shall be
given preference over non-preferred applicants in their placement on a waiting list to be
maintained by Borrower; and (3) through such further provisions agreed to in writing by
the parties to this Agreement.
c. At least 75% of the units in a Project insured under Section 231 shall be designed
for the use and occupancy of Elderly Persons unless prior written approval is given by
HUD for a lesser number of units.
d. All advertising or efforts to rent a project insured under Section 231 shall reflect a
bona fide effort of Borrower to obtain occupancy by Elderly Persons.
32. RENTS. If the Project is subject to regulation of rent by HUD, HUD will at any time
entertain a written request for a rent increase that is properly supported by
substantiating evidence and HUD will, within a reasonable time: (a) approve a rental
schedule that is necessary to compensate for any net increase, occurring since the last
approved rental schedule, in taxes (other than income taxes) and operating and
maintenance costs over which Borrower has no effective control; or (b) deny the
increase and state the reasons for its decision.
33. CHARGES FOR SERVICES AND FACILITIES. If the Project is subject to
regulation of rent by HUD, Borrower shall only charge to and receive from any tenant
such amounts as have the prior written approval of HUD and are mutually agreed upon
between Borrower and the tenant for any facilities and/or services not included in the
HUD approved rent schedule that may be furnished by, or on behalf of, Borrower to
such tenant upon request.
34. PROHIBITION OF CERTAIN FEES. Borrower shall not charge any Project tenant
or prospective Project tenant any fees prohibited under Program Obligations; such
prohibited fees may include an admission fee, a key fee, or similar payment pursuant to
any agreement to furnish residential units or services to persons making such
payments.
35. SECURITY DEPOSITS AND OTHER FEES. Borrower shall not require as a
condition of occupancy or leasing of any unit in the Project, any consideration or
deposit other than the prepayment of the first month’s rent plus a security deposit in an
amount not in excess of one month’s rent to guarantee the performance of the lease
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terms. Borrower may charge certain application processing fees such as credit check
or criminal background fees or pet deposits.

VI. ACTIONS REQUIRING THE PRIOR WRITTEN APPROVAL OF HUD
36. ACTIONS REQUIRING THE PRIOR WRITTEN APPROVAL OF HUD. Borrower
shall not without the prior written approval of HUD:
a. Convey, assign, transfer, pledge, hypothecate, encumber, or otherwise dispose of
the Mortgaged Property or any interest therein, or permit the conveyance, assignment,
or transfer of any interest in Borrower (if the effect of such conveyance, assignment or
transfer is the creation or elimination of a Principal) unless permitted by Program
Obligations. Borrower need not obtain the prior written approval of HUD: (i) for a
conveyance of the Mortgaged Property at a judicial or non-judicial foreclosure sale
under the Security Instrument; (ii) for inclusion of the Mortgaged Property in a
bankruptcy estate by operation of law under the United States Bankruptcy Code; (iii) for
acquisition of an interest by inheritance or by Court decree; or (iv) for actions permitted
under subsection 36(g).
b. Enter into any contract, agreement or arrangement to borrow funds or finance any
purchase or incur any liability, direct or contingent other than for Reasonable Operating
Expenses.
c. Pay out any funds of the Mortgaged Property: (i) except from permissible
withdrawals of Surplus Cash, and (ii) except for Reasonable Operating Expenses and
necessary repairs.
d. Except from permissible withdrawals of Surplus Cash, pay any compensation,
including wages or salaries, or incur any obligation to do so, to any officer, director,
stockholder, trustee, beneficiary, partner, member, manager (in the case of a Borrower
formed as a Limited Liability Company or Limited Liability Corporation), or Principal of
Borrower, or to any nominee thereof.
e. Enter into or change any contract, agreement or arrangement for supervisory or
managerial services or Leases for operation of the Project in whole or in part except as
permitted under Program Obligations.
f. Convey, assign or transfer any right to receive the Rents of the Mortgaged Property,
except as provided in the Security Instrument.
g. Remodel, add to, subtract from, construct, reconstruct or demolish any part of the
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Mortgaged Property, except as required by HUD under Section 19(c) and except that
Borrower may, without the prior written approval of HUD, dispose of obsolete or
deteriorated Fixtures or Personalty if the same are replaced with like items of the same
or greater quality or value and make minor alterations that do not impair the security.
h. Permit the use of the Mortgaged Property for any other purpose except the use for
which it was originally intended, or permit commercial use greater than that originally
approved by HUD.
i. Amend the organizational documents of Borrower in a way that materially modifies
the terms of the organization, including, but not limited to: any amendment that
activates the requirement that a HUD previous participation certification be obtained
from any additional partner or member; any amendment that would authorize any
officer, partner or member other than the officer(s), general partner(s) or the managing
member(s) of the corporation, partnership or company or pre-approved successor
officer(s), general partner(s) or managing member(s) to bind the corporation,
partnership or company for any matters concerning the Project which requires HUD’s
consent or approval; a change in the officer(s), general partner(s) or managing
member(s) or pre-approved successor officer(s), general partner(s) or managing
member(s) of the corporation, partnership or company and any proposed changes to
the HUD-required provisions included in the organizational documents. Copies of all
fully executed amendments to the organizational documents must be provided to HUD
within ten (10) days of the effective date of the amendment. If the amendments to the
organizational documents are recorded or filed, copies of the recorded or filed
documents must be provided to HUD within ten (10) days of receipt by Borrower.
j. Reimburse any party from Mortgaged Property for payment of expenses or costs of
the Project or for any purpose except for Reasonable Operating Expenses and in a
manner consistent with Section 15.
k. Receive any fee or payment of any kind from any managing agent, employee of the
Project or of the managing agent, or other provider of Goods or Services of the Project,
except for warranty claims from providers of Goods and Services.
l. Initiate or acquiesce in a change in the zoning classification of the Mortgaged Property
that results in any change in permitted use that was in effect at the time of initial/final
endorsement.
m. Establish any condominium or cooperative regime with respect to the Mortgaged
Property.

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n. Materially change any unit configurations or change the number of units in the
Mortgaged Property.

VII. ENFORCEMENT
37. VIOLATION OF AGREEMENT. The occurrence of any one or more of the following
shall constitute a “Violation” under this Agreement:
a. Any failure by Borrower to comply with any of the provisions of this Agreement;
b. Any fraud or material misrepresentation or material omission by Borrower, any of its
officers, directors, trustees, general partners, members, managers or managing agent
in connection with (1) any financial statement, rent roll or other report or information
provided to HUD during the term of this Agreement or (2) any request for HUD’s
consent to any proposed action, including a request for disbursement of funds from any
restricted account for which HUD’s prior written approval is required; and/or
c. The commencement of a forfeiture action or proceeding, whether civil or criminal,
which, in HUD’s reasonable judgment, could result in a forfeiture of the Mortgaged
Property or otherwise materially impair HUD’s interest in the Mortgaged Property.
38. DECLARATION OF DEFAULT.
a. At any time during the existence of a Violation, HUD may give written Notice of the
Violation to Borrower, by registered or certified mail, addressed to the addresses stated
in this Agreement, or such other addresses as may subsequently, upon appropriate
written Notice to HUD, be designated by Borrower as its legal business address. If,
after receiving written Notice of a Violation, that Violation is not corrected to the
satisfaction of HUD either within thirty (30) days after the date Notice is mailed, or within
such shorter or longer time set forth in said Notice, HUD may declare a default under
this Agreement without further Notice. Alternatively, in order to protect the health and
safety of the tenants, HUD may declare a default at any time during the existence of a
Violation without providing prior written Notice of the Violation.
b. Upon any Declaration of Default HUD may:
i. If HUD holds the Note, declare the whole of said Indebtedness immediately due and
payable and then proceed with the foreclosure of the Security Instrument;
ii. If said Note is not held by HUD, notify the holder of the Note of such default and
request the holder to declare a default under the Note and Security Instrument, and the
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holder, after receiving such Notice and demand, may declare the whole Indebtedness
due and payable and thereupon proceed with foreclosure of the Security Instrument or
assignment of the Note and Security Instrument to HUD as provided in Program
Obligations. Upon assignment of the Note and Security Instrument to HUD, HUD may
then proceed with the foreclosure of the Security Instrument;
iii. Collect all Rents and charges in connection with the operation of the Project and
use such collections to pay Borrower’s obligations under this Agreement and under the
Note and Security Instrument and the necessary expenses of preserving and operating
the Mortgaged Property;
iv. Take possession of the Mortgaged Property, bring any action necessary to enforce
any rights of Borrower growing out of the Mortgaged Property’s operation, and maintain
the Mortgaged Property in decent, safe, and sanitary condition and good repair;
v. Apply to any court, state or federal, for specific performance of this Agreement, for
an injunction against any Violations of this Agreement, for the appointment of a receiver
to take over and operate the Project in accordance with this terms of the Agreement, or
for such other relief as may be appropriate, as 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; and,
vi. Collect reasonable attorney fees related to enforcing Borrower’s compliance with
this Agreement.
c. Any forbearance by HUD in exercising any right or remedy under this Agreement or
otherwise afforded by applicable law shall not be a waiver of or preclude the exercise of
any right or remedy.
39. MEASURE OF DAMAGES. The damage to HUD as a result of Borrower’s breach
of duties and obligations under this Agreement shall be, in the case of failure to
maintain the Mortgaged Property as required by this Agreement, the cost of the repairs
required to return the Project to decent, safe and sanitary condition and good repair.
This contractual provision shall not abrogate or limit any other remedy or measure of
damages available to HUD under any civil, criminal or common law.

VIII. MISCELLANEOUS
40. COMPLIANCE WITH LAWS.

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a. Borrower shall comply with all applicable: laws; ordinances; regulations;
requirements of any Governmental Authority; lawful covenants and agreements
(including the Security Instrument) recorded against the Mortgaged Property; and
Program Obligations including lead-based paint maintenance requirements of 24 CFR
Part 35, subpart G, and any successor regulations; including but not limited to those of
the foregoing pertaining to: health and safety; construction of improvements on the
Mortgaged Property; fair housing; civil rights; zoning and land use; Leases; and
maintenance and disposition of tenant security deposits; and, with respect to all of the
foregoing, all subsequent amendments, revisions, promulgations or enactments.
Borrower shall at all times maintain records sufficient to demonstrate compliance with
the provisions of this Section 40. Borrower shall take appropriate measures to prevent,
and shall not engage in or knowingly permit, any illegal activities at the Mortgaged
Property, including those that could endanger tenants or visitors, result in damage to
the Mortgaged Property, result in forfeiture of the Mortgaged Property, or otherwise
impair the lien created by the Security Instrument or Lender's interest in the Mortgaged
Property. Borrower represents and warrants to HUD that no portion of the Mortgaged
Property has been or shall be purchased with the proceeds of any illegal activity.
b. HUD shall be entitled to invoke any remedies available by law to redress any breach
or to compel compliance by Borrower with these requirements, including any remedies
available hereunder.

41. BINDING EFFECT. This Agreement shall bind, and the benefits shall inure to,
Borrower, its heirs, legal representative, executors, administrators, successors in office
or interest, and assigns, and to HUD and HUD’s successors, so long as the Contract of
Insurance continues in effect, and during such further time as HUD shall be the Lender,
holder, coinsurer, or reinsurer of the Security Instrument, or obligated to reinsure the
Security Instrument.
42. PARAMOUNT RIGHTS AND OBLIGATIONS. Borrower warrants that it has not,
and shall not, execute any other agreement with provisions contradictory of, or in
opposition to, the provisions hereof, 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.
43. SEVERABILITY. The invalidity of any clause, part, or provision of this Agreement
shall not affect the validity of the remaining portions hereof.
44. RULES OF CONSTRUCTION. The captions and headings of the Sections of this
Regulatory Agreement are for convenience only and shall be disregarded in construing
this Regulatory Agreement. Any reference in this Regulatory Agreement to an
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Replaces form HUD-92466 (11/02)

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26
“Exhibit” or a “Section” shall, unless otherwise explicitly provided, be construed as
referring, respectively, to an Exhibit attached to this Regulatory Agreement or to a
Section of this Regulatory Agreement. All Exhibits attached to or referred to in this
Regulatory Agreement are incorporated by reference into this Regulatory Agreement.
Use of the singular in this Regulatory Agreement includes the plural and use of the
plural includes the singular. As used in this Regulatory Agreement, the term, “including”
means “including, but not limited to.”
45. PRESENT ASSIGNMENT. Borrower irrevocably and unconditionally assigns,
pledges, mortgages and transfers to HUD its rights to the Rents, charges, fees, carrying
charges, Project accounts, security deposits, and other revenues and receipts of
whatsoever sort that it may receive or be entitled to receive from the operation of the
Mortgaged Property, subject to the assignment of Rents in the Security Instrument.
Until a default is declared under this Agreement, a revocable license is granted to
Borrower to collect and retain such Rents, charges, fees, carrying charges, Project
accounts, security deposits, and other revenues and receipts, but upon a Declaration of
Default under this Agreement or under the Security Instrument, this revocable license is
automatically terminated.
46. NOTICE.
a. All notices, demands and other communications (“Notice”) under or concerning this
Regulatory Agreement shall be in writing. Each Notice shall be addressed to Borrower,
with a copy to Lender, at their respective addresses set forth below (and notices to
HUD shall be addressed to the appropriate HUD field office responsible for servicing
the Mortgaged Property), and shall be deemed given on the earliest to occur of (i) the
date when the Notice is received by the addressee; (ii) the first Business Day after the
Notice is delivered to a recognized overnight courier service, with arrangements made
for payment of charges for next Business Day delivery, or (iii) the third Business Day
after the Notice is deposited in the United State mail with postage prepaid, certified
mail, return receipt requested. The Term “Business Day” means any day other than a
Saturday, a Sunday or any other day on which Lender or HUD is not open for business.
b. Any party to this Agreement may change the address to which Notices intended for it
are to be directed by means of Notice given to the other party in accordance with this
Section 46. Each party agrees that it shall not refuse or reject delivery of any Notice
given in accordance with this Section 46, that it shall acknowledge, in writing, the
receipt of any Notice upon request by the other party and that any Notice rejected or
refused by it shall be deemed for purposes of this Section 46 to have been received by
the rejecting party on the date so refused or rejected, as conclusively established by the
records of the U.S. Postal Service or the courier service.
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BORROWER:

LENDER:

47. [INTENTIONALLY OMITTED]
48. CONFLICTS PROVISION. Borrower shall comply with the requirements set forth
in this Agreement as well as any other agreement Borrower enters into with HUD.
However, if a conflict exists between this Agreement and any other HUD agreement
executed by Borrower, the agreement which imposes the more restrictive requirements
on Borrower shall control.
49. THIRD PARTY BENEFICIARY. Borrower agrees that it is not a third-party
beneficiary to the Contract of Insurance between HUD and Lender, as more fully set
forth in 24 C.F.R. Part 207, Subpart B.

SECTION IX. NON RECOURSE
50. NONRECOURSE DEBT. The following individuals/entities as identified in the
“Firm Commitment” (which means the commitment for insurance of advances or
commitment for insurance upon completion issued to Lender by HUD under which the
debt evidenced by the Note is to be insured pursuant to a Section of the Act, dated
______):

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28
do not assume personal liability for payments due under the Note and Security
Instrument, or for the payments to the Reserve for Replacements, or for matters not
under their control, provided that said individuals/entities shall remain personally liable
under this Agreement only with respect to the matters hereinafter stated; namely: (a) for
funds or property of the Project coming into its hands which, by the provisions hereof, it
is not entitled to retain; (b) for authorizing the conveyance, assignment, transfer,
pledge, encumbrance, or other disposition of the Mortgaged Property or any interest
therein in violation of Section 36(a) of this Agreement without the prior written approval
of HUD; and (c) for its own acts and deeds, or acts and deeds of others, which it has
authorized in violation of the provisions of this Section 50. The obligations of the
individuals/entities referenced above shall survive any foreclosure proceeding, any
foreclosure sale, any delivery of any deed in lieu of foreclosure, any termination of this
Agreement, or any release of record of the Security Instrument.
___________________
Individual/Entity
Title
____________________
Individual/Entity
Title

ATTACHED EXHIBITS. The following Exhibits are attached to this Regulatory
Agreement:
[X]

Exhibit A

Previous editions are obsolete;
Replaces form HUD-92466 (11/02)

Description of the Land (required).

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29
IN WITNESS WHEREOF, the parties hereto have set their hands and seals on the date
first herein above written.
Borrower hereby certifies that the statements and representations contained in this
instrument and all supporting documentation thereto are true, accurate, and complete
and that each signatory has read and understands the terms of this Agreement. This
instrument has been made, presented, and delivered for the purpose of influencing an
official action of HUD in insuring the Loan, and may be relied upon by HUD as a true
statement of the facts contained therein.

BORROWER

U.S. DEPARTMENT OF HOUSING AND
URBAN DEVELOPMENT

(insert name)

BY:_________________
Authorized Agent
Title

BY:______________________________
Authorized Agent

[ADD ADDITIONAL LINES IF MORE THAN TWO SIGNATORIES]

Warning
Any person who knowingly presents a false, fictitious, or
fraudulent statement or claim in a matter within the jurisdiction of the
U.S. Department of Housing and Urban Development is subject to
criminal penalties, civil liability, and administrative sanctions.
NOTICE: THIS DOCUMENT MUST HAVE A LEGAL DESCRIPTION ATTACHED
AND BE EXECUTED WITH ALL FORMALITIES REQUIRED FOR RECORDING A
DEED TO REAL ESTATE (i.e., NOTARY/ACKNOWLEDGEMENT, SEAL, WITNESS
OR OTHER APPROPRIATE FORMALITIES).
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EXHIBIT A
[DESCRIPTION OF THE LAND]

A-1
Previous editions are obsolete;
Replaces form HUD-92466 (11/02)

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