9443-ORCF Minor Movable Equipment Escrow Agreement

Minor Movable Equipment Escrow Agreement Section 232

U.S. Department of Housing and Urban Development Office of Residential Care Facilities

OMB Approval No. 2502-0605 (exp. 03/31/2018)

Public reporting burden for this collection of information is estimated to average 1 hour. This includes the time for collecting, reviewing, and reporting the data. The information is being collected to obtain the supportive documentation which must be submitted to HUD for approval, and is necessary to ensure that viable projects are developed and maintained. The Department will use this information to determine if properties meet HUD requirements with respect to development, operation and/or asset management, as well as ensuring the continued marketability of the properties. 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. 

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. 

This ESCROW AGREEMENT FOR MINOR MOVABLE EQUIPMENT (Agreement) made this _____ day of ____________________, 20____, by and between _______________________________________________, (Lender), whose principal address is _______________________________________________, and ____________________________________________________, (Borrower), whose principal address is _______________________________________________, [and if applicable, _______________________________________________ (Depository Institution), whose principal address is _______________________________________________ ], in connection with U.S. Department of Housing and Urban Development (HUD) FHA Project No. ____________________, located in the City/County of ____________________, State of ____________________, which Project [has been, is being, or will be] [constructed, rehabilitated, purchased or refinanced] from the proceeds of a Loan insured by HUD and made by Lender. (The definition of any capitalized term or word used herein can be found in this Escrow Agreement for Minor Movable Equipment, the Regulatory Agreement between Borrower and HUD, the Note, and/or the Security Instrument, except that the term Program Obligations means (1) all applicable statutes and any regulations issued by HUD 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)).

RECITALS:

A. HUD has issued a Firm Commitment to insure said Loan pursuant to § _____ of the National Housing Act, as amended, and Program Obligations, on which mortgage insurance Borrower is relying for financing of the Project.

B. The Firm Commitment is conditioned upon a minor movable equipment escrow being established and funded as indicated below.

AGREEMENTS:

In consideration of the mutual promises and undertakings contained herein, and for the purpose of inducing the Lender to make and HUD to insure said Loan, the parties acknowledge and agree as follows:

1. At or before initial endorsement of the Note by HUD for mortgage insurance, Borrower shall deposit, or cause to be deposited with Lender or subject to the control and order of Lender with a depository institution satisfactory to Lender in accordance with Program Obligations, the sum of $____________________ (Escrow).

2. It is agreed that the Lender at all times shall control the Escrow, and the funds in the Escrow may be released or allocated for the purposes indicated in this Agreement and for no other purpose without the prior written approval of HUD. The Escrow shall take the form of [specify as applicable]:

 cash, and/or

 one or more unconditional, irrevocable letter(s) of credit issued to Lender by a banking institution, attached hereto as Exhibit “A”. The rating of the issuing banking institution and the duration of such letter(s) of credit shall comply with Program Obligations. The letter(s) of credit is attached for informational purposes only. It is expressly agreed and understood that HUD assumes no responsibility for reviewing the letter(s) of credit for sufficiency or enforceability.

3. Disbursements from the Escrow may be authorized with prior written HUD approval during and after the course of construction (i) for the purchase of initial minor movable equipment needed in order to operate the Project and for which funds are not available under the Building Loan Agreement Form HUD-92441-ORCF, if and to the extent that income from the Project, at the time, is insufficient to make such purchase (ii) to pay all expenses relating to such purchases and (iii) to reimburse the Borrower for any such purchases and expenses.

4. With prior written HUD approval, any unused balance remaining in the Escrow will be released at Borrower’s request and returned to Borrower when it has been demonstrated to HUD’s satisfaction that all minor movable equipment needed in order to initially operate the Project have been purchased and all expenses relating thereto have been paid in full. HUD will look to the servicing lender to certify that this requirement has been met.

5. The Escrow, when in the form of cash, shall be held by Lender or a depository institution satisfactory to the Lender and in accordance with Program Obligations. Lender may, at any time, for any reason or no reason, draw upon any letter of credit included in the Escrow and convert the same to cash, which cash shall then be held and disbursed pursuant to the terms of this Agreement. Fees charged by Lender and any interest earned on the Escrow shall be governed by Program Obligations.

6. The Escrow may, at HUD’s direction, be subject to immediate application to the Indebtedness if an Event of Default by Borrower occurs at any time.

Each signatory below hereby certifies that each of their statements and representations contained in this Agreement and all their supporting documentation thereto are true, accurate, and complete. This Agreement 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.

IN WITNESS WHEREOF, the parties have duly executed this Escrow Agreement for Minor Movable Equipment as of the day and year first above written.

BORROWER: LENDER:

_________________________ ________________________

By_______________________ By______________________

_________________________ ________________________

Print Name and Title Print Name and Title

Attachment: Exhibit “A”

EXHIBIT “A”

Form of Letter of Credit

P revious versions obsolete Page 3 of 3 form HUD-9443-ORCF (03/2018)