TAB 7 - CLOSING BASICS: HANDLING A CLOSING WITH … · CLOSING BASICS: HANDLING A CLOSING WITH SKILL AND EFFICIENCY 1. “Closing Checklists: Important Survival Tools in Real Estate

CLOSING BASICS: HANDLING A CLOSING WITH SKILL AND EFFICIENCY

1. “Closing Checklists: Important Survival Tools in Real Estate Deals,” by Brad Dashoff and John Antonacci, Law Trends & News Practice Area Newsletter | ABA General Practice, Solo & Small Firm Division, Fall 2010, Vol. 7, No. 1. 2. Sample Checklist – Due diligence checklist for buying an existing, operating property 3. Sample Checklist – Closing checklist for buying vacant land 4. Sample Checklist – FHA closing checklist for a 223f loan 5. Sample Checklist – HUD submission checklist for RAD PBRA transaction 6. Sample Checklist – HUD submission checklist for RAD PBV transaction 7. Sample Checklist – HUD evidentiary submission checklist for mixed-finance transaction 8. Sample Checklist – Due diligence checklist for LIHTC investor’s tax credit opinion 9. 2016 ALTA survey requirements 10. HUD guidance on title survey requirements for FHA closings.

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Law Trends & News Practice Area Newsletter | ABA General Practice, Solo & Small Firm Division

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REAL ESTATE

Negotiating the Best Deal: Commercial Leases 101 »By Jacqueline M. Lage

Found Money Or Lost Opportunity? Still Too Few TakeAdvantage of the Federal Historic Tax Credist Program(Part Two) »By Stephen J. Day

Closing Checklists: Important Survival Tools in RealEstate Deals »By Brad Dashoff and John Antonacci

A service of the ABA General Practice, Solo & Small Firm Division

Law Trends & NewsPRACTICE AREA NEWSLETTER

Closing Checklists: Important Survival Tools in RealEstate Deals

By Brad Dashoff and John Antonacci

When you are asked to work on a purchase and sale or financing transaction,

one of the first steps you should take is to create a closing checking. The

closing checklist will serve as your roadmap through the transaction and is a

very useful tool for staying on top of all of the various components in a

transaction.

The elements of a closing checklist will vary depending on the typeand terms of the transaction and which party to the transaction iscreating the checklist. The closing checking for a loan will includedifferent documents than the closing checklist for a purchase andsale. If you are representing the buyer in a purchase and saletransaction and the buyer is also taking out a loan to finance thepurchase, your checklist will include all of the documents andinformation needed for both the purchase and the loan, whereas iflender’s counsel prepared the checklist, it will most likely onlyinclude the information and documents necessary for the loan.Quite often, the lender will prepare a checklist for the loantransaction so that the borrower will know exactly what the lenderis requiring. The borrower can then incorporate those items into thepurchase and sale checklist to create one master checklist.

Each side may use its own checklist tailored to what it needs for thetransaction, however, in large multi-party transactions, you mighthave one central checklist for the transaction and each party mightthen create its own checklist for the items it cares about.

For certain transactions, such as a retail or office lease, where the

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lease may be the only document, a formal checklist may not beneeded.

In preparing your closing checklist, you should leave space next toeach item to provide additional information about the item. If adocument has been agreed upon or signed, it is helpful to indicatebecause it shows the parties that progress is being made andeveryone can refocus on the documents and issues not yet agreedupon. If due diligence information has been requested but notprovided, you should indicate so and list who is responsible forproviding the information. If there are open questions or issuesbetween the parties, these can also be included next to the relevantdocument or due diligence item.

The closing checklist should be updated from time to time over thecourse of the transaction. On larger transactions, the client maywant to see weekly or daily updates but most often, updating theclosing checklist concurrent with revised drafts of the transactiondocuments being distributed will suffice. Updating the closingchecklist too frequently is not recommended because things mightnot have changed enough to warrant an updated draft and you mayconvey to your client the impression that you are generatingunnecessary work for yourself (at their expense). When you arerevising and updating your closing checklist, consider whether youshould show your revisions in tracking (if your word-processingprogram has such a feature). This is a very easy way for everyone tosee the progress made, or the issues that have arisen since the lastdraft.

There is no magic formula to creating a closing checklist and theycome in many different forms. The trick is to come up with a formthat works for you and your clients and that is easily manageable.The more complicated a closing checklist becomes, the less likely itis that it will be useful.

Do you want to learn more on this? Do you need sample

real estate forms and/or a sample closing checklist? If

so, click here to purchase the author’s book. GP/Solo

Division members automatically receive a discounted

price.

Brad Dashoff is a senior associate in the real estate group of Pillsbury

Winthrop Shaw Pittman, LLP (McLean, Virginia office). His practice includes

a variety of real estate matters, such as acquisitions and dispositions of

commercial properties, commercial lending, mixed use development, and the

creation of private equity funds to invest in real estate. John Antonacci is also

a senior associate in the real estate group of Pillsbury Winthrop Shaw

Pittman, LLP (McLean, Virginia office). He advises clients on a wide variety

of real estate matters, including the following primary areas: purchase and

sale transactions, commercial leasing (with a specialty in retail leasing

matters), investments in real estate private equity funds, and investments in

affordable housing.

This article is an excerpt from the book The Commercial Real Estate Lawyer’s

Job, A Survival Guide, by Brad Dashoff and John Antonacci, pp. 145–146,

published by the ABA GP/Solo Division and available to members of the

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GP/Solo Division for a discounted price through the link provided at the end

of this article. Copyright 2009 © by the American Bar Association. Reprinted

with permission. This information or any or portion thereof may not be copied

or disseminated in any form or by any means or stored in an electronic

database or retrieval system without the express written consent of the

American Bar Association.

© Copyright 2010, American Bar Association.

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DUE DILIGENCE CHECKLIST FOR ACQUISITION OF (1) EXISTING PROPERTIES OR (2) PARTNERSHIP INTERESTS Property Name: ___________________________ Date: _____________

OBTAIN FROM THE SELLER OR CONFIRM DURING THE DUE DILIGENCE PERIOD

REVIEW RESPONSIBILITY L = Legal M = Property Management C=CLC D = Development A = Accounting

Item Reviewed by Comments/Status A. Accounts Payable and Receivable M

1. Obtain certified list of all open accounts affecting the property

B. Appraisal D

1. Obtain from seller a copy of last appraisal

2. Obtain from seller market studies for the last 3 years, names of competitors and comparable properties

3. Obtain from seller marketing brochures

4. Perform rent comparability study

5. If “qualified contract” transaction, obtain appraisal to meet IRC requirements

C. Architectural Drawings and Plans D

1. Obtain original and as built architectural drawings

2. Obtain plans and specifications

3. Obtain engineer reports

4. Obtain floor plans

D. Certificates of Occupancy M/L

1. Obtain copy for each building M

2. Confirm whether new Certificate of Occupancy is required on sale of the property L

E. Commercial Leases M/L

1. Obtain copies of each form in use, with any amendments (all original leases to be

delivered at closing or left on site)

2. Obtain copy of any leasing of any leasing or brokerage agreements

3. Determine whether tenants will deliver estoppels at closing

F. Environmental Reports M/D

1. Obtain from Seller all existing environmental reports, audits, testing results or related items

2. Order Phase I, including lead based paint (if building built in 1978 or earlier) and asbestos and mold (cause/effect)

3. Review of environmental concerns

4. Determine how environmental concerns are to be resolved

G. Equipment and Personal Property M

1. Obtain list of all personal property and major equipment to be transferred to buyer (refrigerators, stoves, maintenance equipment and supplies, truck, lawn mower, computers, office furniture, clubhouse/community room furniture, etc.)

2. Inspect maintenance equipment and storage areas

3. Locate safety equipment

H. Financial Information

L/M/D/A (Part. Int.); M/A (Exist.

Bldg)

1. Review audited financial statements and tax returns for last 3 years to confirm financing, reserve deposits, compliance issues and note and noncompliance issues

2. Review general ledger and trial balance by individual month for the past year

3. Review bank statements for the past year specifically operating cash accounts, security deposit, escrow deposits, replacement reserve

4. Review bank reconciliations for all operating, reserve, escrow and security deposit accounts for past year

5. Review status of any withdrawal requests from replacement reserve and or reserves

6. Review schedule of property taxes payments and due dates

7. Review schedules that explain and support all A/R, Prepaid, A/P, and Accrued expenses (including when amounts are expected to be realized): a. Miscellaneous Prepaid Expenses

b. Intangible Assets c. Miscellaneous Other Assets d. All liabilities accounts

8. Review all mortgage documents, amounts, payment due dates, amortization schedules, escrow requirements, lender contact info

9. Check Register by vendor and by account for the past year

10. List of all monthly/quarterly/annual reporting requirements including contact information

11. All accounts payable files for past year

12. Confirm that there are no unsecured loans to partners/members of the Owners

13. Review current internal balance sheet

14. Review current Security Deposit bank statement and reconciliation

15. Review current bank statement for operating account(s) with reconciliations to the general ledger

I. Financing Documents L/M/D (Part.

Int.); L (Exist. Bldg)

1. Review existing mortgage, note, regulatory agreement, HAP contract to: a. Confirm note is prepayable without penalty b. Identify regulatory agreement restrictions that survive prepayment (distribution

limitations, tenant rent and income limitations, escrow funding, etc.) c. Determine what happens to escrow accounts (insurance, tax, mip, replacement

reserve, residual receipt) upon prepayment d. Determine whether any rental subsidy contract survives mortgage prepayment

2. Determine whether lender, bond issuer, mortgage insurer, etc. must approve ownership transfer and mortgage and what the process is

3. Obtain mortgage servicer information and contacts

4. If FHA insured, determine if full or modified “TPA” will be required

5. Confirm that debt is nonrecourse

6. Note any affordability restrictions imposed by the financing

7. Determine whether there is secondary financing, who holds it, and the holder’s long term interest vis-à-vis the property

8. Obtain a copy of any tax credit applications

9. Obtain a copy of applicable HUD forms and procedures

10. Confirm Max and Min rent limits

11. Confirm Section 8 acceptance

J. Governmental Notices L/M/D

1. Obtain any governmental notices received by owner or manager, including zoning, safety, building, fire, occupancy, environmental, wetlands, asbestos, health code, housing quality standards, subsidy, or other violations

2. Obtain list of violations owner has actual knowledge of but has not received a governmental notice

3. Confirm acceptable resolution of these items prior to closing L

K. Insurance documents M

1. Obtain list of names of property and liability insurance carriers for last 3 years

2. Obtain loss runs for the last 3 years

3. If any existing claims, litigation, etc. make sure purchase contract states that Purchaser is not assuming liability for these items L

L. Litigation L/M

1. Obtain list of all litigation against the owner or the property, condemnation or eminent domain proceedings, grievances and arbitration proceedings, unfair labor practice or discrimination charges or complaints, threatened or pending

2. If any existing claims, litigation, etc. make sure purchase contract states that Purchaser is not assuming liability for these items

M. Management and Maintenance Documents M

1. Confirm that management agreement can be terminated by Seller at closing L

2. Obtain personnel files of employees that will be retained by Purchaser, including employee resume, job description, pay rate (including bonus arrangements), date employed, salary history, medical and other benefits

3. Obtain payroll records

4. Verify EEO compliance

5. Talk to Human Resources about existing employees and employees to be hired

6. Maintenance records for last two years

7. REAC and other inspection reports for the last 3 years

8. Breakdown of repair and maintenance costs for last 2 years

9. List of improvements capitalized over the last 4 years

10. Review apartment registrations if the property is rent regulated

11. Review safety procedures and compliance with OSHA

12. Review leasing/marketing forms

13. Review lease addendums

14. Review rental applications

15. Review existing Mkt/Adv schedule

16. Obtain and review property management contract

17. Obtain list of and walk current vacancies

18. Review resident rules and regulations

19. Obtain list of current approved vendors

20. Obtain vender recap sheet

N. Organizational Documents of Owner Entity or Seller L

1. (Part. Int. ONLY) - Review Partnership Agreement to determine: a. Amount of limited partner consent needed to transfer partnership interests b. Any other documentation needed to effectuate transfer c. Identify all partners to make sure the correct parties are providing consent d. Review Certificate of Partnership to confirm identity of general partner

transferring the interest

2. Order Good Standing Certificate

3. Obtain seller entity documents e.g. partnership agreement and amendments, operating agreement, etc.

4. (Exist. Bldg ONLY) – Confirm authority of seller or partner/member to transfer interest or sell

5. Review for any option or right of first refusals

6. Determine if there are any shareholder agreements or buy-sell agreement restricting transfer

7. Determine if there are any outstanding loans or other financial obligations to or from any of the partners or their affiliates, including any deferred developer fees

O. Organizational Documents of Selling General Partner (Part. Int. ONLY) L

1. Get Resolution authorizing transfer

2. Order Good Standing Certificate

3. Review Partnership Agreement to determine: a. Amount of limited partner consent needed to transfer partnership interest b. Any other documentation needed to effectuate transfer c. Identify all partners to make sure the correct parties are providing consent d. Review Certificate of Partnership to confirm identity of general partner

transferring the interest

P. Project Conditions M/D

1. Perform “windshield” survey/site visit

2. Obtain from seller a copy of any comprehensive need assessment (HUD)

3. Perform scope of Rehab study

4. Obtain flood plain information

5. Determine seismic zone

6. Determine if property is in a historic district

7. Perform zoning analysis (determine if the property has any additional development potential)

8. If HUD assisted, obtain the REAC scores

9. Building safety review

Q. Service Contracts M

1. Review service and supply contracts, utility contracts, constructions contracts, employment and labor agreements (including laundry, cable TV, TV antenna, extermination, landscaping, snow removal)

2. If management wants to terminate, review notice and termination requirements

3. If management wants to retain, review for appropriate provisions (i.e. indemnification, warranties, insurance, no caps on liability)

4. Any other matters that are of concern to management staff

R. Subsidy Contracts/Tax Exemptions/Public Involvement L/M/D

1. Review Section 8 Housing Assistance Payment Contract, Rental Assistance Payments Agreement, IRP Agreement, flexible subsidy, LIHPRHA, and any other federal, state or local subsidy agreements

2. Determine expiration dates of any contracts, including whether they expire upon

mortgage prepayment or ownership transfer

3. Confirm whether any governmental entity must approve ownership transfer and what the approval process is

4. Determine what percent of units are covered by contracts

5. Confirm Security Deposit requirements (state/lender)

6. Determine who are the public officials in whose jurisdiction the property is located

7. Determine if owner had any options to terminate any subsidy contracts and whether any such options will still be available after closing

8. Determine if property is eligible for a government sponsored preservation strategy and what its components are

9. If assuming HUD subsidies, complete HUD 2530 process

10. Determine if any public notices will be required in connection with transfer and the time frames for such notices (e.g. Wellstone or 250-a)

11. Determine whether the property benefits from a real estate tax exemption and whether it will it continue after transaction is closed

12. Determine what exemptions are available after transfer and provisions and time frames for obtaining same

13. Determine if seller is a government sponsored/regulated entity, ( e.g. a redevelopment company or limited dividend housing company) and, if so, what consents or process required to complete the transaction

14. Obtain any notices of violations of subsidy contracts

15. Determine if there any regulatory restrictions on distributions or profits and, if so, whether they can be released or have any impact on developer fees

16. If LIHTC, obtain 8609

17. Review Section 8 Housing Assistance Payment Contract, Rental Assistance Payments Agreement, IRP Agreement, flexible subsidy, LIHPRHA, and any other federal, state or local subsidy agreements

18. Determine expiration dates of any contracts, including whether they expire upon mortgage prepayment or ownership transfer

S. Tax Bills and/or Exemption M (Part. Int.);

M/L (Exist. Bldg)

1. Obtain copies of real estate tax bills or receipts for the current and last two years, or

PILOT or tax abatement agreement

2. Obtain any notices of assessment or intent to assess taxes

3. Obtain prior years tax return (Exist. Bldg ONLY)

4. History of assessment over last five years, owner’s plans to reduce assessment in future, if any

5. Determine if PILOT expires upon ownership transfer or prepayment

6. Determine if funds need to be paid to municipality if PILOT expires at closing (Exist. Bldg. ONLY)

T. Tenant Information M

1. Determine whether to spot check or review all tenant files

2. Request from seller a tenant profile (income, age, special needs, length of residency, etc.)

3. Confirm tenant eligibility for LIHTC and other applicable programs

4. Confirm rent levels

5. Confirm appropriate lease forms

6. Confirm the amount of security deposits being held

7. Obtain rent roll certified by management agent to be true and correct within 30 days of contract, containing tenant name, apartment number, unit type, expiration date of lease, household size, current rent, amount of security deposit, amount of arrearages, other charges, comment on payment history, concessions

8. Obtain occupancy history for property for the last 3 years

9. Obtain rent increase history for the last 3 years by unit number

10. Determine the number of move outs (including transfers) for the last 3 years

11. Obtain list of all miscellaneous income

12. If HUD assisted, obtain TRACS reports

13. If HUD assisted, review PD&R information on project

14. If project has tenant with special needs, determine what social services are provided at property, by whom and under what terms and conditions

15. Determine whether there is a tenant organization, and if so, who its leaders are

16. Obtain local police reports on type and number of complaints emanating from property

U. Title and Survey D/L

1. Obtain from seller or order survey showing property line and all easements, rights of way, etc. that affect the property, showing utilities if possible, and all abutting owners

2. Obtain from Seller most recent owner’s title policy or report with copies of title exceptions

3. Order title update to: a. Confirm seller owns the Property b. Examine existing financing c. Review use restrictions that will survive closing d. Review easements, rights or way, etc. affecting the property e. Review judgments, liens, litigation affecting the property

4. Order tax and utility search

5. Order judgment and lien searches

6. If property consists of part of a tax parcel number, determine whether it needs to be subdivided in order to close

7. Order UCC searches of seller and its principles

8. Confirm access to public roadway (if access is across land owned by others, confirm acceptability of access easement)

9. Order copies of any land disposition agreements, review for continuing use covenants (including any ongoing renewal plan requirements)

10. Confirm existence of certificate of completion if required by land disposition agreement

11. Determine if there are any reverter provisions or agreements and, if so, what the process is for terminating

12. Determine any transfer tax implications from transaction and how they will be addressed

13. Order Survey (determine if boundary survey is adequate or if alta survey is needed)

V. Utility Bills M

1. Obtain copies of last 2 years water, utility and sewer bills

2. Determine how utilities are metered

3. Determine process for converted to submetering/direct metering and any approvals required

W. Warranties and Lien Waivers M

1. Obtain copies of all product warranties and service manuals (roofs, appliances, elevator and other equipment)

2. Obtain lien waivers for all labor and materials supplied in the prior 12 months (or indemnity from seller) M/L

X. Zoning Status D/L

1. Confirm property is properly zoned

2. Confirm building setbacks, density requirements, height restrictions, etc. are met or variances have been obtained

Y. Site Work (Exist. Bldg ONLY)

1. If Property is relatively new or if any site work was recently completed, check to see if Owner posted any escrows or bonds. Try to get them assigned to us as part of sale

Z. Construction

1. Review of Scope – C and D walk at least 10% of units C/D

2. Utility Assessment – Waterline, power capacity, etc. C

3. Structural Review D

4. Mechanical System Evaluation C/D

5. Asbestos Review C/D

6. Mold C

7. Lead Paint

AA. Prior to Closing

1. Complete Environmental C/D

2. Full Building Evaluation Report D

3. Full Scope – Inspect Majority of Units C/D

Land Acquisition Closing RED RUN ASSOCIATES, LLC

9000 & 9100 Garth Road Owings Mills

Baltimore County, Maryland

DONE 1. Purchase Agreement, as extended DONE 2. Assignment of Purchase & Sale Agreement from Conifer to LLC DRAFTED 3. Recorded Plat SELLER 4. Special Warranty Deed from 4626 LLC to Red Run Associates,

LLC (4.762 acres) DRAFTED 5. Access Easement w/ TruAmerica DRAFTED 6. Drainage & Utility Easement to Baltimore County DRAFTED 7. Deed of Declaration & Easement for Stormwater with Baltimore

County DRAFTED 8. Forest Buffer Conservation Declaration of Protective Covenants,

Conditions and Restrictions to Baltimore County DRAFTED 9. Forest Conservation Easement to Baltimore County DRAFTED 9. Public Works Agreement with Baltimore County DRAFTED 10. Right of Way Utility Agreement with Baltimore County DRAFTED 11. Environmental Agreement

DRAFTED 12. Seller Authorization to Transfer DONE 13. Buyer Authorization to Acquire DRAFTED 14. Seller’s Title Affidavit DRAFTED 15. FIRPTA Affidavit

BUYER 16. Survey

BUYER 17. Owner’s Title Policy, Commitment and Exceptions

BUYER 18. Settlement Statement: Purchase Price = $2,000,000.00

Less deposit = $50,000.00 Extension Fees (not applied against PP)

Prorate taxes Seller and Buyer each pay half of transfer tax

Seller and Buyer each pay half of recordation tax Buyer responsible for all other closing costs and expenses Seller pays CBRE broker fees

U.S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT Section 223(f) Initial/Final Closing Checklist

Unless otherwise agreed, the HUD Attorney will obtain 3 sets of all documents: originals (O),certified copies (Cert), or photocopies (C), as noted. Where originals are requested, only 1 needs to be an original, and the rest may be copies. If a copy is requested, an original will be accepted.

Item HUD Form # Status and Comment I. FHA Commitment

1. a. FHA Firm Commitment HUD-92432 C Include all attachments including HUD-executed 92264, 92264-A, and property insurance requirements and schedule. Include extensions, if applicable.

b. Amendments, if any C c. Assignments, if any C

II. Organizational, Due Diligence, and Other Supporting Documents 2. Borrower’s Incumbency Certificate with

Organizational Documents attached O Update checklist as appropriate for entity type.

a. Filed formation documents, from Secretary of State, as amended C e.g., Articles of Organization, Certificate of Limited Partnership,

or Articles of Incorporation. b. Operating Agreement / Partnership Agreement /

Bylaws, as amended C Should include HUD-required provisions and be certified by Borrower as current and correct.

c. Authorizing Resolution C If applicable (authority may be granted in governing agreement). d. Status certificate C Should be dated w/in 30 days of closing. e. Qualification to Do Business in Project State C For out-of-state entities, if applicable.

3.

Borrower’s Managing Member / General Partner’s Incumbency Certificate with Organizational Documents attached

O As applicable.

a. Filed formation documents, from Secretary of State, as amended C e.g., Articles of Organization, Certificate of Limited Partnership,

or Articles of Incorporation. b. Operating Agreement / Partnership Agreement /

Bylaws, as amended C Should be certified by entity as current and correct.

c. Authorizing Resolution C If applicable (authority may be granted in governing agreement). d. Status certificate C Should be dated w/in 30 days of closing.

e. Qualification to Do Business in Project State C For out-of-state entities, if applicable, and if required by state law.

4. ALTA Survey Plat with HUD Survey Certification O Dated within 120 days of closing.

Project Name _______________________ Checklist Draft Date _______________________

FHA Project Number _______________________ Initial/Final Closing Date _______________________

4.4 223(f) Checklist (As of 02/2015)

Section 223(f) Initial/Final Closing Checklist Project Name and/or Number:_______________________

Item HUD Form # Status and Comment 5. HUD Survey Instructions and Surveyor’s Report HUD-91073M O Last inspection within 120 days of closing. 6. Title Insurance Policy, with endorsements

O 2006 ALTA form, where approved for use in the applicable jurisdiction. HUD-required endorsements should be attached. Title exception documents and pro forma policy should be received & reviewed prior to closing. Include authority letter for title agent, if applicable.

a. Title Exception Documents C b. UCC Search Report C

7. Deed or Ground Lease HUD-92070M, if Ground Lease

C

8. Evidence of Zoning Compliance C Usually a zoning endorsement to Title Policy; if not, a zoning opinion or letter from the zoning authority may be needed.

9. Evidence of Building Code Compliance C 10. Opinion of Borrower’s Counsel HUD-91725M O Should include appropriate attachments.

a. Certification of Borrower HUD-91725M-CERT

O

b. Supporting legal opinion C Bond/LIHTC opinions, if applicable. c. List of pending litigation C If applicable.

11. Inspection Fee Check O 12. Mortgage Insurance Premium (MIP) Check O 13. Special Conditions from Firm Commitment C If applicable. 14. Local Requirements C If applicable. 15. Attendance List O If applicable.

HUD Loan Documents

16. Note (Multistate) HUD-94001M & state addendum

C State-specific provisions and/or addenda may be required.

17. Security Instrument HUD-94000M & state addendum

O State-specific provisions and/or addenda may be required.

18. Regulatory Agreement HUD-92466M O 19. UCC Financing Statements (State & County) C 20. Request for Endorsement of Credit Instrument HUD-92455M O With all applicable exhibits and attachments. 21. Agreement and Certification HUD-93305M O If applicable.

4.4 223(f) Closing Checklist (As of 02/2015)


Item HUD Form # Status and Comment 22. Short Form Cost Certification HUD-2205-A O If applicable. 23. Certified Closing Statement O 24. Certificate Regarding Tenant’s Security Deposit O If applicable. 25. Lender’s Assurance of Permanent Financing O 26. Escrow Agreement for Non-critical, Deferred Repairs HUD-92476.1M O If applicable. 27. Operating Deficit Escrow HUD-92476a-M O If applicable. 28. Escrow Agreement for Off-Site Facilities HUD-91071M O 29. Excess Mortgage Proceeds Escrow O 30. Other escrow agreements, if applicable O List as required, see Closing Guide § 2.8.

31. Borrower’s Oath HUD-92478M O Must be given under oath in accordance with state law

requirements for taking an oath, in order to fulfill National Housing Act requirements.

IV. Secondary Financing Loan Documents 32. Restrictive Covenants/Use Agreements C With HUD rider if applicable. 33. Secondary Financing Loan Documents C

a. Loan Agreement C b. Note C c. Mortgage C d. Subordination Agreement, or Rider to Note and Mortgage

HUD-92420M O If private, non-governmental secondary financing is approved, a Rider to the second mortgage is used (see Closing Guide § 5.1); if public financing, the HUD Subordination Agreement is required.

34. Disbursement Agreement O If applicable. V. HUD Administrative Documents and Additional Requirements 35. Administrative Memo with attached Waivers and

HUD-2 forms O If applicable.

36. Document Review Worksheets, if applicable

O To the extent the field office program staff uses checklists or otherwise documents compliance with architectural, cost, valuation, or other underwriting requirements or Program Obligations, such documentation shall be retained.

37. Previous Participation Certification Clearance HUD-92530 C 38. HUD Representative’s Trip Report HUD-95379 O



Item HUD Form # Status and Comment

39. Commercial Space Leases (with Tenant Estoppel Certificates) C If applicable.

40. Subordination, Non-Disturbance and Attornment Agreements C If applicable. See sample form in Housing Notice 2011-07.

41. Lender’s Byrd Amendment Certificate O Unless collected previously by Housing.


Rental Assistance Demonstration Closing Overview & Checklist: Project Based Rental Assistance (PBRA) Conversions

Page 1 of 14 Version 4.20.17

In the following three sections, this document provides an overview of the RAD closing process and instructions on the document submission requirements for PBRA conversions:

1) General overview of the closing process; 2) Quick reference closing document checklist; 3) Full checklist with detailed descriptions and information on each submission requirement.

Part 1: General Overview of the Closing Process for PBRA Conversions

Assignment of a RAD Closing Coordinator, HUD Field Counsel & HUD Multifamily Account Executive Upon issuance of the RAD Conversion Commitment (RCC), the RAD Closing Coordinator will serve as your main point of contact during the closing process. The RAD Closing Coordinator will contact you with instructions and will provide you with the name of the assigned HUD Field Counsel and HUD Multifamily Account Executive. The Closing Coordinator will also arrange a kick-off call with internal and external parties to discuss the closing process, timelines and other topics as needed. Required Closing Documents A full list of closing documents is shown in Part 2. Not all documents are applicable in all closings. Use the full checklist in Part 3 to understand what’s needed for your specific closing document submission. Discuss any questions you may have regarding applicability of documents with your RAD Closing Coordinator and HUD Field Counsel. Closing Package Submission and Review Please submit a complete set of draft closing documents to both your assigned RAD Closing Coordinator and your assigned HUD Field Counsel per their instructions. Only complete draft closing packages will be reviewed. The RAD Closing Coordinator and HUD Field Counsel will review the draft closing package, provide comments and then work with you to finalize all required documents in order to close. For the purposes of RAD, the closing date is the date of recording. You will receive instructions from your RAD Closing Coordinator regarding documents required to be submitted after closing as part of the post-closing docket. Note: FHA-RAD Closings will follow the existing FHA requirements and closing process with the addition of a RAD Closing Coordinator who will review the RAD-specific documents. Additional Guidance and Requirements for PBRA RAD Conversions Please note that this closing checklist only pertains to the closing of the RAD conversion and that there are additional requirements that the PHA and/or new ownership entity must fulfill as part of the conversion from Public Housing to Multifamily Housing including leases, submitting 50058 End of Participation prior to the effective date of the RAD PBRA HAP contract, completing the 50059s, obtaining access to HUD systems, etc. Please refer to “RAD’s Quick Reference Guide to Multifamily Housing Requirements” which can be found on www.radresource.net. RAD Closing Documents & Templates Go to the “Contracts and Closings Documents” section of the RAD Resource Desk, www.radresource.net for the latest documents and templates. Copies of HUD Multifamily forms can be found on HUDCLIPS. FDS Reporting Requirements for all RAD Conversions Projects converting to RAD will experience a series of reporting changes based on the timing of the conversion. Consult PIH-REAC PHA Financial Accounting Brief #22: FDS Reporting Requirements for Projects Converting Under RAD. A copy can be found in the Document Library on www.radresource.net or by clicking here. Important Reminder -for PHAs Leaving Public Housing If this RAD conversion represents the PHA’s last remaining public housing units, consult PIH Notice 2016-23 for specific requirements and guidance for leaving the Public Housing program.



Part 2: Quick Reference Closing Document Checklist for PBRA RAD Conversions

No. Document Included 1 Closing Contact List ☐Yes ☐No 2 Fully executed RAD Conversion Commitment (HUD Form 52624) ☐Yes ☐No 3 Evidence of Completion of RAD Conversion Commitment Special Conditions ☐Yes ☐No ☐N/A 4 Request to Amend the RAD Conversion Commitment ☐Yes ☐No ☐N/A 5 RAD Use Agreement (HUD Form 52625)

a) Lender (Foreclosure) Rider, as applicable ☐Yes ☐No

6 RAD PBRA HAP Contract a) Part 1 (HUD Form 52620), including all exhibits b) Part 2 (HUD Form 52618) c) LIHTC Rider, as applicable d) Lender Rider, as applicable

☐Yes ☐No

7 Declaration(s) of Trust/Declaration(s) of Restrictive Covenants and any title encumbrance and/or exception documents

☐Yes ☐No

8 Release(s) of Declaration(s) of Trust and/or Declaration(s) of Restrictive Covenants ☐Yes ☐No ☐N/A 9 Title Pro Forma and/or Title Report ☐Yes ☐No 10 Survey and Site Plans ☐Yes ☐No 11 Sources & Uses ☐Yes ☐No 12 Consolidated Owner Certification ☐Yes ☐No 13 Certification and Assurances ☐Yes ☐No 14 Opinion of Project Owner’s Counsel (post-conversion owner) ☐Yes ☐No ☐N/A 15 Opinion of PHA’s Counsel ☐Yes ☐No ☐N/A 16 Rental Schedule (HUD Form 92458) ☐Yes ☐No 17 Project Owner’s/Management Agent’s Certification (HUD Form 9839) ☐Yes ☐No 18 Management Entity Profile (HUD Form 9832) ☐Yes ☐No 19 Property Management Agreement ☐Yes ☐No ☐N/A 20 Evidence of Required Amount of Fidelity Bond Coverage ☐Yes ☐No 21 Tenant Leases (sample) ☐Yes ☐No 22 RAD Delayed Conversion Agreement (PBRA) (formerly known as the New

Construction Agreement) ☐Yes ☐No ☐N/A

23 Master Lease/Tenancy Addendum ☐Yes ☐No ☐N/A 24 Organizational Documents for New Ownership Entity

a) Organizational chart and list of key partners/principals b) Articles of Organization; By-Laws; Partnership Agreement (as applicable) c) Certificate of Existence, Certificate of Good Standing, or similar

document from the Secretary of State providing the legal name of the Project Owner

☐Yes ☐No ☐N/A

25 Amendments/Releases of Existing Mixed Finance Documents a) Termination of Mixed Finance Amendment to the ACC b) Termination of Regulatory and Operating Agreement (R&O Agreement) c) Lender and PHA Subordination Agreements, as applicable

☐Yes ☐No ☐N/A

26 Deed ☐Yes ☐No ☐N/A 27 Ground Lease and Memorandum of Ground Lease ☐Yes ☐No ☐N/A 28 Evidence of Payoff, Release or Subordination of Existing Debt ☐Yes ☐No ☐N/A 29 Restrictive Covenants and Land Use Restrictions ☐Yes ☐No ☐N/A 30 General Depository Agreement (HUD Form 51999) ☐Yes ☐No ☐N/A 31 First Mortgage Financing Documentation ☐Yes ☐No ☐N/A



a) Note b) Mortgage/Deed of Trust c) Intercreditor/Subordination Agreement

32 New Junior Debt Supporting Documentation a) Note b) Mortgage/Deed of Trust c) Intercreditor/Subordination Agreement

☐Yes ☐No ☐N/A

33 Bond Financing Documentation a) Documentation that issuance of the bonds has been authorized b) Firm Commitment to purchase the bonds

☐Yes ☐No ☐N/A

34 LIHTC Equity Documentation a) Equity Commitment, including the pay-in schedule b) LIHTC Reservation Letter

☐Yes ☐No ☐N/A

35 New Construction or Substantial Rehabilitation Documentation a) Evidence that the General Contractor has obtained either (i) a payment and

performance bond from a properly licensed surety; or (ii) a letter of credit b) Owner Completion Guarantee Agreement

☐Yes ☐No ☐N/A

36 HUD Form(s) 50075.1 with Budget Line Item 1504 ☐Yes ☐No ☐N/A DOCUMENTS TO BE SUBMITTED IMMEDIATELY AFTER CLOSING

37 HUD Form 50075.1 with Budget Line Item 1503 and Initial Year Funding Tool ☐Yes ☐No 38 Form 50058 End of Participation (EOP) ☐Yes ☐No 39 Recorded Release of Declaration(s) of Trust/Declaration(s) of Restrictive Covenant

and Use Agreement; fully executed HAP Contract, Certification and Assurances ☐Yes ☐No

40 Post Closing Docket ☐Yes ☐No



Part 3: Full Closing Checklist for PBRA Conversions

No. Document Applicability Notes and Instructions 1 RAD Closing Contact List

Always Provide this list to your RAD Closing Coordinator as soon as

possible and no later than with the submission of your draft closing package.

The list should include full contact information for all parties that will be involved in the closing including - but not limited to- PHA, Project Owner, Existing Owner (if different from the PHA or Proposed Project Owner), PHA counsel, Project Owner’s Counsel, Lender’s Counsel, Escrow Agent, etc.

2 RAD Conversion Commitment (RCC) – HUD Form 52624 (fully executed)

Always applicable Execution/Termination/Extensions: o Must be fully executed by authorized representatives of the

PHA, Project Owner, and Existing Owner (if different entities) within 30 days of issuance or the RCC will be terminated and must be reissued.

o For existing Mixed Finance conversions where the PHA is not the current owner, the PHA must still execute the RCC as an acknowledging party.

o Note that the RCC expires 90 days after issuance unless extended by HUD. RCC extension requests should be sent to your assigned RAD Closing Coordinator in advance of expiration.

Return/Submission of Fully Executed RCC: o Return the original hardcopy to the RAD Closing Manager-

address is noted on the signature page of the RCC. Be sure to return the entire document including all exhibits as issued.

o Email a PDF of the fully executed RCC to your RAD Closing Coordinator with a copy to your HUD Field Counsel and MF Account Executive.

o Upload a copy of the fully executed RCC to the RAD Resource Desk (270 Day Milestone).

Changes/Amendments: o No changes to the RCC language are allowed. o If you believe corrections are needed to the HUD-executed

RAD Conversion Commitment please contact your RAD Transaction Manager and RAD Closing Coordinator immediately; HUD may process an amendment to the RCC to incorporate the corrections applicable. The HUD-executed RCC must still be countersigned within the 30-day timeframe.

o If terms outlined in the RCC have changed, submit a written request to your RAD Closing Coordinator outlining the requested changes. See item #4 in this closing checklist for information on submitting RCC amendment requests.

3 Evidence of Completion of RAD Conversion Commitment Special Conditions

Conversions with special conditions listed in the RCC.

Work with your Closing Coordinator to ensure all conditions are satisfied prior to closing. Any certifications can be included in the Consolidated Owner Certification.



4 Requests to Amend the RAD Conversion Commitment

Applicable if proposing changes to the RCC for corrections or revisions

Not required to be submitted with the draft closing package but should be submitted as soon as possible.

An RCC amendment may be required whenever there is a change to the RCC or its’ exhibits, including Sources & Uses, Key Business Terms, etc.

Any changes to the Sources & Uses require an update to the Transaction Log on www.radresource.net.

Please discuss any requested amendments with your RAD Closing Coordinator.

The RCC amendment request should be submitted electronically to your RAD Closing Coordinator and should detail all requested changes and justifications as appropriate.

5 RAD Use Agreement – HUD Form 52625 a) Lender Rider (aka

Foreclosure Rider) must be included if there is financing

Always applicable Parties: The Project Owner and HUD are parties to the Use Agreement. If there is a ground lease, the fee owner (generally the PHA) and the Project Owner both execute the Use Agreement. Prepare HUD’s signature block for the Director, Office of Recapitalization. Include a Washington, D.C. notary block. Your assigned RAD Closing Coordinator can provide you with a copy of the appropriate signature block if needed.

Legal Description: Unless there is a transfer of assistance, the legal description on the Use Agreement(s) will generally cover all property released from DOT. Where assistance is being transferred to a different site, ensure that the Use Agreement encumbers the Covered Project (the project that will be receiving Section 8 subsidy), not the Converting Project (current public housing project).

Term: Ensure that the initial term of the Use Agreement matches the approved HAP contract term.

Local Recording Requirements: The Use Agreement must contain all formalities required for recording a deed in the jurisdiction of recordation (i.e., notary/acknowledgement, seal, etc.).

Priority: The RAD Use Agreement must be superior to all financing documents (including FHA-insured mortgages).

Partial vs Full Release: If the DOTs/DORCs are being partially released, include the word “partially” in the reference to that DOT/DORC Release in the Use Agreement; if the DOTs/DORCs are being fully released, include the word “fully” in the reference to that DOT/DORC Release.

Lender/Foreclosure Rider: If there is financing, include the Use Agreement’s Lender (Foreclosure) Rider.

No changes to the form are allowed (other than changes to the signature pages to reflect state recording requirements).

Include the Covered Project’s name and PBRA HAP project number.



6 RAD PBRA HAP Contract a) Part 1 - HUD Form

52620 b) Part 2 - HUD Form

52618 c) LIHTC Rider (tax

credits) d) Lender Rider (first

mortgage)

Always applicable Completed by PHA/Owner’s Counsel. If applicable, HUD will provide the Rehab Assistance Payment

amount in Part 2 of the PBRA HAP Contract. Note: Exhibit 3 to the RAD PBRA HAP is the Affirmative Fair

Housing Marketing Plan, HUD Form 935.2A. This form should be completed and submitted to the local Multifamily Field Office at the Financing Plan stage. The draft closing package should include the final approved copy of the Plan or an indication that it is in process.

Note that additional language regarding “future changes” is permitted to be added to Section 1.2 of the PBRA HAP Contract. This language is available in the FAQs on www.radresource.net or you can request it from your RAD Closing Coordinator. No other changes to the HAP contracts are permitted.

The PBRA LIHTC Rider is required if the conversion includes tax credit financing.

The PBRA Lender Rider is required if the conversion includes debt financing.

The HAP Contract effective date must be the first day of either the first or second month following closing; for example, for a 9/3/16 closing, the HAP contract effective date should be 10/1/16 or 11/1/16.

7 Declaration of Trust and any title encumbrance and/or exception documents

Always applicable Provide a copy of any Declarations of Trust and/or Declarations of Restrictive Covenants in force, with their recording information, even if they are not shown on the Title Pro Forma.

Submit any documents referenced in the legal description for the project (i.e. Plat/Parcel Map, etc.)

Along with the title report and/or pro forma, provide a copy of all title exceptions and encumbrances

8 Release of the Declaration of Trust (DOT) and/or Declaration of Restrictive Covenants (DORC)

Unless approved by HUD in accordance with RAD requirements, only property that is part of the Covered Project (the project that will receive PBV or PBRA assistance and will be covered by the RAD Use Agreement) is eligible for DOT/DORC Release through RAD.

There is a HUD-approved sample form found on www.radresource.net but variations are allowed.

If all land encumbered by the DOT/DORC is not converting through this transaction, ensure that the title and body of the document indicate that it is a partial release. If all land encumbered by the DOT/DORC is converting through this transaction, ensure that the title and body of the document indicate that it is a full release.

If non-dwelling buildings and/or vacant land are associated with the Covered Project, the PIH Field Office must determine whether such assets may be released per the RAD Notice.

When there is a phased conversion of a public housing project, HUD will look to the deal specifics to determine which property, if any, will be released from the DOT/DORC. In such situations, consult with HUD prior to submitting a draft closing package.

Ensure that the Release fulfills state recording requirements. Prepare HUD’s signature page for the General Deputy Assistant

Secretary for Public and Indian Housing. Include a Washington, D.C. notary block, and a witness statement/signature line below the signature block.

The legal description should identically match the legal description used in the title work. Any deviations must be explained to the satisfaction of HUD.



9 Title Pro Forma and/or Title Report All proposed recorded documents must be listed in proper order.

Always applicable Include a title report (always) and Owner’s Pro Forma Policy (if applicable)

In cases where there is a transfer of assistance, title work must be provided for both the Converting Project and the Covered Project.

The title search must search back at least to the vesting deed to the PHA.

o If the title work reveals that a Converting Project is not covered by the appropriate current DOT/DORC, a DOT/DORC may need to be recorded. Please contact your RAD Closing Coordinator for further instruction. The current versions of the DOTs for Development and Modernization are available at http://portal.hud.gov/hudportal/HUD?src=/program_offices/administration/hudclips/forms/hud5.

o Financial Liens and use restrictions must be subordinated to the RAD Use Agreement or released. All other encumbrances must also be subordinated unless HUD determines, in its sole discretion, that the encumbrance will not negatively impact the Covered Project.

If a title policy will be issued, provide a copy of the pro forma and a copy of the final policy (when issued) to HUD Field Counsel.

If no new debt is proposed as part of the RAD conversion and no party is receiving a title policy, a title report is acceptable. Ensure that the title report is dated within 30 days of when the HUD Field Counsel receives the complete draft package. Depending on the amount of time the deal takes to close, HUD Field Counsel may require an updated title report.

The legal description on the pro forma, title report and Use Agreement must precisely match. If this description does not match the DOT legal description, sufficient evidence must be provided for the HUD Field Counsel to determine (in her sole discretion), that the descriptions cover the same property.

Documents may be recorded in the following order: o Release of DOT/DORC (if applicable) o Deed or Memorandum of Ground Lease (ground lease or

memo of ground lease must contain HUD required provisions subordinating to the Use Agreement)

o RAD Use Agreement (always applicable) o Mortgages and Use Restrictions (as applicable)

RAD-FHA conversions: o The RAD Use Agreement must appear on schedule B-1 of

the title policy. o Include only the lender’s pro forma in the draft closing

package unless HUD Counsel specifically requests to also receive the title commitment or title report.



10 Survey and Site Plans

Always applicable A hard copy full-sized survey of the Covered Project must be included in the draft RAD closing Package sent to the HUD Field Counsel. If DOTs or DORCs will be released from the Converting Project, a full-sized survey must also be provided for the Converting Project.

o If a recent survey is available, include a full-sized copy in the draft closing package submitted to HUD Field Counsel. If a recent survey is unavailable, there is no change to the existing footprint of buildings and no party is requiring a new survey, an old survey may be acceptable at HUD Field Counsel’s sole discretion.

Site plans are encouraged and must be submitted for new construction.

If the transaction also involves FHA financing, the Covered Project’s survey must comply with all FHA requirements.

Discuss any concerns regarding the survey requirements with your HUD Field Counsel.

11 Sources & Uses Always applicable Final executed Sources & Uses must be submitted prior to closing. If the Sources & Uses are changing prior to closing from what’s

shown in the RCC exhibit, the RCC may need to be amended. Check with your RAD Closing Coordinator.

Any change to the Sources & Uses requires an update to the RAD Transaction Log on www.radresource.net

12 Consolidated Owner Certification

Always applicable This document includes required certifications and can be tailored to include any requirements/special conditions noted in the RCC.

A draft of this document must be submitted for review and approval as part of the draft closing package.

Prior to closing, a PDF of the fully executed certification must be sent to your Closing Coordinator.

See sample template available for download on www.radresource.net. The certification is frequently updated so please reference the latest version posted online.

13

Certification and Assurances

Always applicable All submitted closing documents must be listed. A draft of this document must be submitted for review and approval

and then executed prior to or at closing; The executed version must be submitted to HUD Field Counsel

within 3 days of closing. Attach redlines to the executed version showing changes made to the documents listed since sign-off by HUD.

See sample template available for download on www.radresource.net.

The document should reflect the following recording order: 1. [Partial or Full] Release of Declaration of Trust or Declaration of Restrictive Covenants (if applicable) 2. Deed or Memorandum of Ground Lease 3. RAD Use Agreement (always applicable) 4. Mortgages and/or Use Restrictions (if applicable)

14 Opinion of Project Owner’s Counsel (Post-Conversion Owner)

Applicable if the PHA will not retain ownership.

If the PHA will not retain complete, direct ownership of the Covered Project after conversion, opinions are required by both Post-Conversion Owner’s Counsel and PHA’s Counsel.

A template containing HUD-required language is available on www.radresource.net.



15 Opinion of PHA’s Counsel Applicable if the PHA will not retain ownership.



16 Rental Schedule - HUD Form 92458

Always applicable Available for download on HUDCLIPS

17 Project Owner’s/Management Agent’s Certification - HUD Form 9839

Always applicable Available for download on HUDCLIPS Be sure to select the correct version (9839-A, 9839-B or 9839-C)

depending on your Management Agent structure. Discuss any questions with your assigned Multifamily Account Executive.

18 Management Entity Profile - HUD Form 9832

Always applicable Available for download on HUDCLIPS

19 Property Management Agreement

Required on all conversions unless self-managed.

Include a copy of the agreement in the draft closing package.

20 Evidence of Required Amount of Fidelity Bond Coverage

Always applicable See HUD Handbook 4381.5, Section 2.14 for requirements

21 Tenant Leases Always applicable Provide the form of lease and any addendums Use the HUD Form Model Lease (Form HUD-90105a). Available

for download on HUDCLIPS Appendix 1E of the RAD Notice must be attached as part of the

“House Rules” and must control notwithstanding any other provision of the lease.

Must not contain provisions challenging RAD’s tenant rights of return and grievance procedures

Prior to package submission, consult with Recap on HUD’s current guidance related to Tenant Leases

22 RAD Delayed Conversion Agreement (PBRA) (formerly known as the New Construction Agreement)

For conversions in which the assistance is being transferred to a new site and tenants will remain in their current units until construction of the new site is completed. In this scenario, a PHA may choose a Delayed Conversion Agreement (#22) or Master Lease/Tenancy Addendum (#23).

The existing public housing units will continue to receive public housing subsidy and remain subject to PIH requirements until construction is complete.

The PBRA HAP contract is not executed at closing; it is executed and becomes effective at the time that tenants transfer to the new site. The PHA/Owner should still submit a copy of the RAD PBRA HAP Contract, all exhibits and applicable riders for review as part of the draft closing package (as exhibits to the Delayed Conversion Agreement).

Although the HAP contract is not executed at closing, the RAD Use Agreement is recorded against the Covered Project at closing.

The Converting Project’s DOTs are not released. The required Delayed Conversion Agreement template is available

on www.radresource.net.



23 Master Lease/Tenancy Addendum


In transactions involving new construction and a transfer of assistance, if residents are remaining in the Converting Project until the Covered Project is constructed, the parties may elect to enter into a Master Lease between the PHA and Project Owner for leasing the Converting Project. (The other option for this scenario is execution of a Delayed Conversion Agreement – see above)

Under the Master Lease, the RAD conversion occurs at closing, the Converting Project’s dwelling units are removed from PIC at closing and a HAP contract is entered into at the time of closing.

Through the Master Lease, the Project Owner leases the tenants’ units from the PHA and then subleases the units to the tenants (who are now Section 8 tenants).

There is a HUD-approved Master Lease template. A Tenancy Addendum may be used in lieu of a Master Lease.

The PHA should be aware of the limitations on the use of federal funds created by use of the Master Lease structure. For example, if there is an indemnification provision, the PHA cannot use federal funds to fulfill those obligations.

24 Organizational Documents for New Ownership Entity a) Organizational chart &

List of Key Partners/Principals

b) Articles of Organization; By-Laws; Partnership Agreement (as applicable)

c) Certificate of Existence, Certificate of Good Standing, or similar document from the Secretary of State providing the legal name of the Project Owner.

Required when the Covered Project Owner is not the PHA; even if the PHA is transferring ownership to an instrumentality, the instrumentality’s ownership documents must be provided.

The entity must be validly formed and its term of existence must be at least as long as the HAP contract.

With the exception of LIHTC deals, the organizational documents must establish PHA or non-profit ownership/control. This statutory requirement is satisfied if:

o The PHA is retaining ownership of the project. o The Project Owner is an entity in which the PHA is the sole

owner or member. o The Project Owner is organized as a nonprofit entity (it

need not be a 501(c)(3) entity). In LIHTC deals, PHA control may be established through the

owner’s organizational documents or the ground lease. o If control is established through the organizational

structure, use the HUD required provisions. (Note: these provisions are distinct from the provisions that must be included in the organizational documents for FHA deals)

o If control is established through a ground lease, the ground lease must contain the ground lease control provisions available on the RAD Resource Desk.

o Discuss any proposed alternative method of establishing PHA control with HUD Field Counsel prior to submission of a draft closing package.



25 Amendments/Releases of Existing Mixed Finance Documents (if applicable) a) Release of Declaration

of Restrictive Covenants (DORC)

b) Termination of Mixed Finance Amendment to the ACC

c) Termination of Regulatory and Operating Agreement (R & O Agreement)

d) Lender and PHA Subordination Agreements (if applicable)

Applicable where the Converting Project is an existing Mixed Finance Project.

For DORC Releases, follow the procedure and requirements discussed above for DOT Releases.

The Termination of the Mixed Finance Amendment to the ACC is signed by the appropriate PIH Field Office. Once the draft documents have been deemed legally acceptable, your RAD Closing Coordinator will work with the PIH Field Office to obtain the appropriate signature.

If there is a partial conversion of a Mixed Finance Project, with some of the project’s units remaining as public housing, the MF Amendment is not terminated; instead, an amendment must be prepared in HQ’s Office of Public Housing Investments.

Termination of the ACC Amendment and Termination of the R & O Agreement are posted to www.radresource.net.

26 Deed Applicable if title to the property is being conveyed.

When the deed conveys fee simple to the Covered Project Owner, it can contain no reversionary clauses, conditions subsequent or similar provisions; the deed must be for fee simple unless the PHA is ground leasing the land to the Covered Project Owner and simply deeding the improvements.

The deed cannot be a Quitclaim Deed. The legal description must match the title policy/title report and

RAD Use Agreement. 27 Ground Lease and

Memorandum of Ground Lease

Applicable if the property will be subject to a ground lease.

If the Ground Lease is not recorded, submit both the Ground Lease and a Memo of Ground Lease.

Use the HUD-required provisions. The legal description must match the title policy/title report and

RAD Use Agreement. The Ground Lease must be subordinated to the RAD Use Agreement

in accordance with HUD requirements. In deals where the Covered Project is already covered by a ground

lease, the lease must be amended to include the HUD-required provisions unless otherwise approved by HUD.

The lease term must be at least as long as the HAP contract. 28 Evidence of Payoff,

Release or Subordination of Existing Debt

Required if there is an existing EPC, CFFP, OFFP, or other form of debt that will be paid off or subordinated at closing.

Provide evidence that the existing debt has been or will be paid off in conjunction with RAD closing. Existing debt being paid off in conjunction with the RAD closing should be shown on the Sources & Uses.

If existing debt is not being paid off at or prior to closing, the debt must be subordinated to the RAD Use Agreement in conformance with HUD guidance.

See the HUD-approved Subordination Agreement form on www.radresource.net.

29 Restrictive Covenants and Land Use Restrictions

Applicable in all deals with land restrictions

Restrictions must be subordinate to the RAD Use Agreement For non-FHA transactions, use the HUD-approved RAD

Subordination Agreement or ensure that the substantive provisions of the template are included in the Restrictive Covenants document.

Restrictions cannot impact the right of tenants to remain in or return to the property after conversion

For FHA transactions, use the FHA Subordination Agreement or other appropriate form per FHA requirements



30 General Depository Agreement - GDA (Form 51999) Latest version of GDA form is dated 10/2014

Required if Public Housing funds are being used as a source of funds and not being disbursed to Project Owner for an approved use at closing.

Consult your RAD Closing Coordinator for specific guidance and requirements.

Public Housing funds used in the transaction must be shown on the Sources and Uses and are subject to a GDA until they are disbursed for the approved use. Once disbursed, the funds need not be subject to a GDA.

Once the funds are transferred from an account held by the PHA to an account held by the Project Owner, such funds are considered disbursed for purposes of whether a GDA is required.

Until disbursed, public housing funds to be used in the transaction must be held in a segregated account or sub-account. If such account is already subject to a GDA, no new GDA is required.

If a new GDA is required, no changes to the HUD form are permitted.

No changes to the HUD form are permitted, other than those allowed for in the form itself.

Not required for transactions with FHA financing. Follow FHA guidelines.

31

First Mortgage Financing Documentation: a) Note b) Mortgage/Deed of Trust c) Intercreditor /

Subordination Agreement

Required for all conversions obtaining first mortgage financing.

New financing documents must be recorded after and explicitly subordinated to the RAD Use Agreement

For non-FHA transactions, use the HUD-approved RAD Subordination Agreement or ensure the substantive provisions of the template are included in the appropriate debt documents.

In FHA-RAD deals: o Use the appropriate form of HUD-approved

subordination agreement or rider for FHA transactions.

o The RAD Use Agreement shall be recorded before the HUD-insured mortgage.

o In FHA-RAD deals, all financing must comply with all FHA requirements.

If financing terms have changed since RCC issuance, submit revisions to the RAD Closing Coordinator for HUD review and then update the RAD Resource Desk Transaction Log once the financing changes have been approved.

32 New Junior Debt Supporting Documentation a) Note b) Mortgage/Deed of Trust c) Intercreditor /


Required for all conversions with secondary financing or junior debt previously approved in the RAD Financing Plan.


Aside from the Note, Mortgage/Deed of Trust, and Intercreditor/Subordination Agreement, no additional documentation is needed to be submitted in the draft closing package.

33 Bond Financing Documentation a) Documentation that

issuance of the bonds has been authorized

b) Firm Commitment to purchase the bonds

Required for all conversions utilizing bond financing


Aside from the documentation regarding issuance and the firm commitment, no additional documentation is needed to be submitted in the draft closing package.



34 LIHTC Equity Documentation a) Equity Commitment,

including the pay-in schedule

b) LIHTC Reservation Letter

Required for all conversions involving tax credits.


Aside from the reservation letter and equity commitment, no additional documentation is needed to be submitted in the draft closing package.

35 New Construction or Substantial Rehabilitation Documentation a) Evidence that the

General Contractor has obtained either (i) a payment and performance bond from a properly licensed surety or (ii) a letter of credit

b) Owner Completion Guarantee Agreement

New Construction or Substantial Rehabilitation only.

36 HUD Form(s) 50075.1 with Budget Line Item 1504

Required on all conversions that use PH Capital Funds in the development budget

Required before Closing as soon as a final Sources and Uses is available.

Submit to your Closing Coordinator the HUD Form(s) 50075.1 with BLI 1504 manually added that matches the amount of Capital Funds listed as a source in the final executed Sources and Uses. This is to ensure that the Capital Funds used in the Development budget will be available at closing. Note that only prior year Capital Funds can be utilized in this manner and you must submit one form per Capital Fund grant year.

Please see “RAD Initial Year Funding Process Instructions” on the Resource Desk for further information.

IMMEDIATELY AFTER CLOSING- ADDITIONAL REQUIRED STEPS 37 HUD Form 50075.1 with

Budget Line Item 1503 and Initial Year Funding Tool(s)

Required on all conversions

Required immediately after Closing in order to access the final public housing subsidy from Capital Funds that will be available for the converted property for the remainder of the calendar year in which a HAP contract becomes effective

Complete the HUD Form 50075.1 with BLI 1503 manually entered Complete the Initial Year Funding Tool(s) with the correct HAP

effective date Send to your Closing Coordinator within 3 business days of

recording. Operating funds are not to be included on the 50075.1. Please see

“RAD Initial Year Funding Process Instructions” and the “RAD Initial Year Funding Tool” on the Resource Desk for further information.



38 Form 50058 End of Participation (EOP)

Required on all conversions unless there is a Delayed Conversion Agreement; contact the Closing Coordinator for applicability.

Required within 5 business days after Closing. Provide confirmation via email to the Closing Coordinator that

Form-50058 EOP has been submitted. In order for HUD to remove the applicable units from the Public Housing Information Center (PIC), a Form-50058 End of Participation (EOP) for the public housing program for all residents still living at the property at RAD conversion must be submitted into PIC. The 50058 EOP must be effective for each resident on the last day of the month before the new HAP will be effective. For example, a property that will have an October 1 HAP effective date should submit EOPs effective September 30 for all residents still living at the property.

39 Recorded Release of Declaration of Trust, Use Agreement, and HAP Contract (copies)


A PDF of the recorded Release of Declaration of Trust, Use Agreement, HAP contract, final executed Sources & Uses and any other documents identified by HUD must be submitted via email to the Closing Coordinator within 3 business days after recording.

40 Post-Closing Docket Required on all conversions

HUD requests that Post-Closing Dockets be submitted within 30 days of Closing.

See the Post Closing Instructions on www.radresource.net for details 41 Reminder – PIH Close Out

and FDS Reporting Requirements for RAD Projects


Projects converting to RAD will experience a series of reporting changes based on the timing of the conversion. Please see PIH-REAC PHA Financing Accounting Brief #2: FDS Reporting Requirements forProjects Converting Under RAD. A copy can be found in the DocumenLibrary on www.radresource.net.

PHAs who are converting their last remaining Public Housing units will need to work with their PIH Field Office on closing out of Public Housing. Please consult PIH Notice 2016-23

Rental Assistance Demonstration Closing Overview & Checklist: Project Based Voucher (PBV) Conversions


In the following three sections, this document provides an overview of the RAD closing process and instructions on the document submission requirements for PBRA conversions:

1) General overview of the closing process; 2) Quick reference closing document checklist; 3) Full checklist with detailed descriptions and information on each submission requirement.

Part 1: General Overview of the Closing Process for PBV Conversions

Assignment of a RAD Closing Coordinator & HUD Field Counsel Upon issuance of the RAD Conversion Commitment (RCC), the RAD Closing Coordinator will serve as your main point of contact during the closing process. The RAD Closing Coordinator will contact you with instructions and will provide you with the name of the assigned HUD Field Counsel. The Closing Coordinator will also arrange a kick-off call with internal and external parties to discuss the closing process, timelines, and other topics as needed. Required Closing Documents A full list of closing documents is shown in Part 2. Not all documents are applicable in all closings. Use the full checklist in Part 3 to understand what’s needed for your specific closing document submission. Discuss any questions you may have regarding applicability of documents with your RAD Closing Coordinator and HUD Field Counsel. Closing Package Submission and Review Please submit a complete set of draft closing documents to both your assigned RAD Closing Coordinator and your assigned HUD Field Counsel per their instructions. Only complete draft closing packages will be reviewed. The RAD Closing Coordinator and HUD Field Counsel will review the draft closing package, provide comments and then work with you to finalize all required documents in order to close. For the purposes of RAD, the closing date is the date of recording. You will receive instructions from your RAD Closing Coordinator regarding documents required to be submitted after closing as part of the post-closing docket. Note: FHA-RAD Closings will follow the existing FHA requirements and closing process with the addition of a RAD Closing Coordinator who will review the RAD-specific documents. Additional Guidance and Requirements for PBV RAD Conversions Please note that this closing checklist only pertains to the closing of the RAD conversion and that there are additional requirements that the PHA and/or new ownership entity must fulfill as part of the conversion from Public Housing to Section 8 Project Based Vouchers including leases, submitting 50058 End of Participation prior to the effective date of the RAD PBV HAP contract, etc. Please refer to “RAD’s Quick Reference Guide for Projects Converting to Project-Based Voucher Assistance (PBV)” which can be found on www.radresource.net. RAD Closing Documents & Templates Go to the “Contracts and Closings Documents” section of the RAD Resource Desk, www.radresource.net for the latest documents and templates. FDS Reporting Requirements for all RAD Conversions Projects converting to RAD will experience a series of reporting changes based on the timing of the conversion. Consult PIH-REAC PHA Financial Accounting Brief #22: FDS Reporting Requirements for Projects Converting Under RAD. A copy can be found in the Document Library on www.radresource.net or by clicking here. Important Reminder -for PHAs Leaving Public Housing If this RAD conversion represents the PHA’s last remaining public housing units, consult PIH Notice 2016-23 for specific requirements and guidance for leaving the Public Housing program.



Part 2: Quick Reference Closing Document Checklist for PBV RAD Conversions

No. Document Included 1 Closing Contact List ☐Yes ☐No 2 Fully executed RAD Conversion Commitment (HUD Form 52624) ☐Yes ☐No 3 Evidence of Completion of RAD Conversion Commitment Special Conditions ☐Yes ☐No ☐N/A 4 Request to Amend the RAD Conversion Commitment ☐Yes ☐No ☐N/A 5 RAD Use Agreement (HUD Form 52625)

a) Lender (Foreclosure) Rider, as applicable ☐Yes ☐No

6 RAD PBV HAP Contract a) Part 1 (HUD Form 52530A), including all exhibits b) Part 2 (HUD Form 52530A) c) RAD PBV Rider (HUD Form 52621) d) LIHTC Rider, as applicable e) Lender Rider, as applicable

☐Yes ☐No

7 Declaration(s) of Trust/Declaration(s) of Restrictive Covenants and any title encumbrance and/or exception documents

☐Yes ☐No

8 Release(s) of Declaration(s) of Trust and/or Declaration(s) of Restrictive Covenants ☐Yes ☐No ☐N/A 9 Title Pro Forma and/or Title Report ☐Yes ☐No 10 Survey and Site Plans ☐Yes ☐No 11 Sources & Uses ☐Yes ☐No 12 Consolidated Owner Certification ☐Yes ☐No 13 Certification and Assurances ☐Yes ☐No 14 Opinion of Project Owner’s Counsel (post-conversion owner) ☐Yes ☐No ☐N/A 15 Opinion of PHA’s Counsel ☐Yes ☐No ☐N/A 16 Tenant Leases (sample) ☐Yes ☐No 17 RAD Delayed Conversion Agreement (PBV) (formerly known as the New

Construction Agreement) ☐Yes ☐No ☐N/A

18 Master Lease/Tenancy Addendum ☐Yes ☐No ☐N/A 19 Organizational Documents for New Ownership Entity

a) Organizational chart and list of key partners/principals b) Articles of Organization; By-Laws; Partnership Agreement (as applicable) c) Certificate of Existence, Certificate of Good Standing, or similar

document from the Secretary of State providing the legal name of the Project Owner

☐Yes ☐No ☐N/A

20 Amendments/Releases of Existing Mixed Finance Documents a) Termination of Mixed Finance Amendment to the ACC b) Termination of Regulatory and Operating Agreement (R&O Agreement) c) Lender and PHA Subordination Agreements, as applicable

☐Yes ☐No ☐N/A

21 Deed ☐Yes ☐No ☐N/A 22 Ground Lease and Memorandum of Ground Lease ☐Yes ☐No ☐N/A 23 Evidence of Payoff, Release or Subordination of Existing Debt ☐Yes ☐No ☐N/A 24 Restrictive Covenants and Land Use Restrictions ☐Yes ☐No ☐N/A 25 General Depository Agreement (HUD Form 51999) ☐Yes ☐No ☐N/A 26 First Mortgage Financing Documentation

a) Note b) Mortgage/Deed of Trust c) Intercreditor/Subordination Agreement

☐Yes ☐No ☐N/A

27 New Junior Debt Supporting Documentation a) Note

☐Yes ☐No ☐N/A



b) Mortgage/Deed of Trust c) Intercreditor/Subordination Agreement

28 Bond Financing Documentation a) Documentation that issuance of the bonds has been authorized b) Firm Commitment to purchase the bonds

☐Yes ☐No ☐N/A

29 LIHTC Equity Documentation a) Equity Commitment, including the pay-in schedule b) LIHTC Reservation Letter

☐Yes ☐No ☐N/A

30 New Construction or Substantial Rehabilitation Documentation a) Evidence that the General Contractor has obtained either (i) a payment and

performance bond from a properly licensed surety; or (ii) a letter of credit b) Owner Completion Guarantee Agreement

☐Yes ☐No ☐N/A

31 HUD Form(s) 50075.1 with Budget Line Item 1504 ☐Yes ☐No ☐N/A DOCUMENTS TO BE SUBMITTED IMMEDIATELY AFTER CLOSING

32 HUD Form 50075.1 with Budget Line Item 1503 and Initial Year Funding Tool ☐Yes ☐No 33 Form 50058 End of Participation (EOP) ☐Yes ☐No 34 Recorded Release of Declaration(s) of Trust/Declaration(s) of Restrictive Covenant

and Use Agreement; fully executed HAP Contract, Certification and Assurances ☐Yes ☐No

35 Post Closing Docket ☐Yes ☐No



Part 3: Full Closing Checklist for PBV Conversions

No. Document Applicability Notes and Instructions 1 RAD Closing Contact List

Always Provide this list to your RAD Closing Coordinator as soon as

possible and no later than with the submission of your draft closing package.

The list should include full contact information for all parties that will be involved in the closing including - but not limited to- PHA, Project Owner, Existing Owner (if different from the PHA or Proposed Project Owner), PHA counsel, Project Owner’s Counsel, Lender’s Counsel, Escrow Agent, etc.

2 RAD Conversion Commitment (RCC) – HUD Form 52624 (fully executed)

Always applicable Execution/Termination/Extensions: o Must be fully executed by authorized representatives of the

PHA, Project Owner, and Existing Owner (if different entities) within 30 days of issuance or the RCC will be terminated and must be reissued.

o For existing Mixed Finance conversions where the PHA is not the current owner, the PHA must still execute the RCC as an acknowledging party.

o Note that the RCC expires 90 days after issuance unless extended by HUD. RCC extension requests should be sent to your assigned RAD Closing Coordinator in advance of expiration.

Return/Submission of Fully Executed RCC: o Return the original hardcopy to the RAD Closing Manager-

address is noted on the signature page of the RCC. Be sure to return the entire document including all exhibits as issued.

o Email a PDF of the fully executed RCC to your RAD Closing Coordinator with a copy to your HUD Field Counsel and MF Account Executive.

o Upload a copy of the fully executed RCC to the RAD Resource Desk (270 Day Milestone).

Changes/Amendments: o No changes to the RCC language are allowed. o If you believe corrections are needed to the HUD-executed

RAD Conversion Commitment please contact your RAD Transaction Manager and RAD Closing Coordinator immediately; HUD may process an amendment to the RCC to incorporate the corrections applicable. The HUD-executed RCC must still be countersigned within the 30-day timeframe.

o If terms outlined in the RCC have changed, submit a written request to your RAD Closing Coordinator outlining the requested changes. See item #4 in this closing checklist for information on submitting RCC amendment requests.

3 Evidence of Completion of RAD Conversion Commitment Special Conditions

Conversions with special conditions listed in the RCC.

Work with your Closing Coordinator to ensure all conditions are satisfied prior to closing. Any certifications can be included in the Consolidated Owner Certification.



4 Requests to Amend the RAD Conversion Commitment

Applicable if proposing changes to the RCC for corrections or revisions

Not required to be submitted with the draft closing package but should be submitted as soon as possible.

An RCC amendment may be required whenever there is a change to the RCC or its’ exhibits, including Sources & Uses, Key Business Terms, etc.

Any changes to the Sources & Uses require an update to the Transaction Log on www.radresource.net.

Please discuss any requested amendments with your RAD Closing Coordinator.

The RCC amendment request should be submitted electronically to your RAD Closing Coordinator and should detail all requested changes and justifications as appropriate.

5 RAD Use Agreement – HUD Form 52625 a) Lender Rider (aka

Foreclosure Rider) must be included if there is financing

Always applicable Parties: The Project Owner and HUD are parties to the Use Agreement. If there is a ground lease, the fee owner (generally the PHA) and the Project Owner both execute the Use Agreement. Prepare HUD’s signature block for the Director, Office of Recapitalization. Include a Washington, D.C. notary block. Your assigned RAD Closing Coordinator can provide you with a copy of the appropriate signature block if needed.

Legal Description: Unless there is a transfer of assistance, the legal description on the Use Agreement(s) will generally cover all property released from DOT. Where assistance is being transferred to a different site, ensure that the Use Agreement encumbers the Covered Project (the project that will be receiving Section 8 subsidy), not the Converting Project (current public housing project).

Term: Ensure that the initial term of the Use Agreement matches the approved HAP contract term.

Local Recording Requirements: The Use Agreement must contain all formalities required for recording a deed in the jurisdiction of recordation (i.e., notary/acknowledgement, seal, etc.).

Priority: The RAD Use Agreement must be superior to all financing documents (including FHA-insured mortgages).

Partial vs Full Release: If the DOTs/DORCs are being partially released, include the word “partially” in the reference to that DOT/DORC Release in the Use Agreement; if the DOTs/DORCs are being fully released, include the word “fully” in the reference to that DOT/DORC Release.

Lender/Foreclosure Rider: If there is financing, include the Use Agreement’s Lender (Foreclosure) Rider.

No changes to the form are allowed (other than changes to the signature pages to reflect state recording requirements).

Include the Covered Project’s name



6 RAD PBV HAP Contract a) Part 1 (HUD Form

52530A), including all exhibits

b) Part 2 (HUD Form 52530A)

c) RAD PBV Rider (HUD Form 52621)

d) LIHTC Rider, as applicable

e) Lender Rider, as applicable

Always applicable Completed by PHA/Owner’s Counsel. If applicable, HUD will provide the Rehab Assistance Payment

amount to include in the RAD Rider to the PBV HAP Contract. The PBV LIHTC Rider is required if the conversion includes tax

credit financing. The PBV Lender Rider is required if the conversion includes debt

financing. The HAP Contract effective date must be the first day of either the

first or second month following closing; for example, for a 9/3/16 closing, the HAP contract effective date should be 10/1/16 or 11/1/16.

7 Declaration of Trust and any title encumbrance and/or exception documents

Always applicable Provide a copy of any Declarations of Trust and/or Declarations of Restrictive Covenants in force, with their recording information, even if they are not shown on the Title Pro Forma.

Submit any documents referenced in the legal description for the project (i.e. Plat/Parcel Map, etc.)

Along with the title report and/or pro forma, provide a copy of all title exceptions and encumbrances

8 Release of the Declaration of Trust (DOT) and/or Declaration of Restrictive Covenants (DORC)

Unless approved by HUD in accordance with RAD requirements, only property that is part of the Covered Project (the project that will receive PBV assistance and will be covered by the RAD Use Agreement) is eligible for DOT/DORC Release through RAD.

There is a HUD-approved sample form found on www.radresource.net but variations are allowed.

If all land encumbered by the DOT/DORC is not converting through this transaction, ensure that the title and body of the document indicate that it is a partial release. If all land encumbered by the DOT/DORC is converting through this transaction, ensure that the title and body of the document indicate that it is a full release.

If non-dwelling buildings and/or vacant land are associated with the Covered Project, the PIH Field Office must determine whether such assets may be released per the RAD Notice.

When there is a phased conversion of a public housing project, HUD will look to the deal specifics to determine which property, if any, will be released from the DOT/DORC. In such situations, consult with HUD prior to submitting a draft closing package.

Ensure that the Release fulfills state recording requirements. Prepare HUD’s signature page for the General Deputy Assistant

Secretary for Public and Indian Housing. Include a Washington, D.C. notary block, and a witness statement/signature line below the signature block.

The legal description should identically match the legal description used in the title work. Any deviations must be explained to the satisfaction of HUD.



9 Title Pro Forma and/or Title Report All proposed recorded documents must be listed in proper order.

Always applicable Include a title report (always) and Owner’s Pro Forma Policy (if applicable)

In cases where there is a transfer of assistance, title work must be provided for both the Converting Project and the Covered Project.

The title search must search back at least to the vesting deed to the PHA.

o If the title work reveals that a Converting Project is not covered by the appropriate current DOT/DORC, a DOT/DORC may need to be recorded. Please contact your RAD Closing Coordinator for further instruction. The current versions of the DOTs for Development and Modernization are available at http://portal.hud.gov/hudportal/HUD?src=/program_offices/administration/hudclips/forms/hud5.

o Financial Liens and use restrictions must be subordinated to the RAD Use Agreement or released. All other encumbrances must also be subordinated unless HUD determines, in its sole discretion, that the encumbrance will not negatively impact the Covered Project.

If a title policy will be issued, provide a copy of the pro forma and a copy of the final policy (when issued) to HUD Field Counsel.

If no new debt is proposed as part of the RAD conversion and no party is receiving a title policy, a title report is acceptable. Ensure that the title report is dated within 30 days of when the HUD Field Counsel receives the complete draft package. Depending on the amount of time the deal takes to close, HUD Field Counsel may require an updated title report.

The legal description on the pro forma, title report and Use Agreement must precisely match. If this description does not match the DOT legal description, sufficient evidence must be provided for the HUD Field Counsel to determine (in her sole discretion), that the descriptions cover the same property.

Documents may be recorded in the following order: o Release of DOT/DORC (if applicable) o Deed or Memorandum of Ground Lease (ground lease or

memo of ground lease must contain HUD required provisions subordinating to the Use Agreement)

o RAD Use Agreement (always applicable) o Mortgages and Use Restrictions (as applicable)

RAD-FHA conversions: o The RAD Use Agreement must appear on schedule B-1 of

the title policy. o Include only the lender’s pro forma in the draft closing

package unless HUD Counsel specifically requests to also receive the title commitment or title report.



10 Survey and Site Plans

Always applicable A hard copy full-sized survey of the Covered Project must be included in the draft RAD closing Package sent to the HUD Field Counsel. If DOTs or DORCs will be released from the Converting Project, a full-sized survey must also be provided for the Converting Project.

o If a recent survey is available, include a full-sized copy in the draft closing package submitted to HUD Field Counsel. If a recent survey is unavailable, there is no change to the existing footprint of buildings and no party is requiring a new survey, an old survey may be acceptable at HUD Field Counsel’s sole discretion.

Site plans are encouraged and must be submitted for new construction.

If the transaction also involves FHA financing, the Covered Project’s survey must comply with all FHA requirements.

Discuss any concerns regarding the survey requirements with your HUD Field Counsel.

11 Sources & Uses Always applicable Final executed Sources & Uses must be submitted prior to closing. If the Sources & Uses are changing prior to closing from what’s

shown in the RCC exhibit, the RCC may need to be amended. Check with your RAD Closing Coordinator.

Any change to the Sources & Uses requires an update to the RAD Transaction Log on www.radresource.net

12 Consolidated Owner Certification

Always applicable This document includes required certifications and can be tailored to include any requirements/special conditions noted in the RCC.

A draft of this document must be submitted for review and approval as part of the draft closing package.

Prior to closing, a PDF of the fully executed certification must be sent to your Closing Coordinator.

See sample template available for download on www.radresource.net. The certification is frequently updated so please reference the latest version posted online.

13

Certification and Assurances

Always applicable All submitted closing documents must be listed. A draft of this document must be submitted for review and approval

and then executed prior to or at closing; The executed version must be submitted to HUD Field Counsel

within 3 days of closing. Attach redlines to the executed version showing changes made to the documents listed since sign-off by HUD.

See sample template available for download on www.radresource.net.

The document should reflect the following recording order: 1. [Partial or Full] Release of Declaration of Trust or Declaration of Restrictive Covenants (if applicable) 2. Deed or Memorandum of Ground Lease 3. RAD Use Agreement (always applicable) 4. Mortgages and/or Use Restrictions (if applicable)

14 Opinion of Project Owner’s Counsel (Post-Conversion Owner)

Applicable if the PHA will not retain ownership.





15 Opinion of PHA’s Counsel Applicable if the PHA will not retain ownership.



16 Tenant Leases Always applicable Provide the form of lease and any addendums. There is no model lease for the PBV program. The owner must

provide a written lease that meets the requirements spelled out in 24 CFR §983.256 24 CFR. The lease must include the HUD-required tenancy addendum (HUD Form 52530), which is available for download on HUDCLIPS.

The “House Rules” should be attached and must control notwithstanding any other provision of the lease. A sample is available on www.radresource.net.

Must not contain provisions challenging RAD’s tenant rights of return and grievance procedures.

17 RAD Delayed Conversion Agreement (PBV) (formerly known as the New Construction Agreement)


The existing public housing units will continue to receive public housing subsidy and remain subject to PIH requirements until construction is complete.

The PBV HAP contract is not executed at closing; it is executed and becomes effective at the time that tenants transfer to the new site. The PHA/Owner should still submit a copy of the RAD PBVHAP Contract, all exhibits and applicable riders for review as part of the draft closing package (as exhibits to the Delayed Conversion Agreement).

Although the HAP contract is not executed at closing, the RAD Use Agreement is recorded against the Covered Project at closing.

The Converting Project’s DOTs are not released. The required Delayed Conversion Agreement template is available

on www.radresource.net. 18 Master Lease/Tenancy

Addendum For conversions in which the assistance is being transferred to a new site and tenants will remain in their current units until construction of the new site is completed. In this scenario, a PHA may choose a Delayed Conversion Agreement (#17) or Master Lease/Tenancy Addendum (#18).

In transactions involving new construction and a transfer of assistance, if residents are remaining in the Converting Project until the Covered Project is constructed, the parties may elect to enter into a Master Lease between the PHA and Project Owner for leasing the Converting Project. (The other option for this scenario is execution of a Delayed Conversion Agreement – see above)

Under the Master Lease, the RAD conversion occurs at closing, the Converting Project’s dwelling units are removed from PIC at closing and a HAP contract is entered into at the time of closing.

Through the Master Lease, the Project Owner leases the tenants’ units from the PHA and then subleases the units to the tenants (who are now Section 8 tenants).

There is a HUD-approved Master Lease template. A Tenancy Addendum may be used in lieu of a Master Lease.

The PHA should be aware of the limitations on the use of federal funds created by use of the Master Lease structure. For example, if there is an indemnification provision, the PHA cannot use federal funds to fulfill those obligations.



19 Organizational Documents for New Ownership Entity a) Organizational chart &

List of Key Partners/Principals

b) Articles of Organization; By-Laws; Partnership Agreement (as applicable)

c) Certificate of Existence, Certificate of Good Standing, or similar document from the Secretary of State providing the legal name of the Project Owner.

Required when the Covered Project Owner is not the PHA; even if the PHA is transferring ownership to an instrumentality, the instrumentality’s ownership documents must be provided.

The entity must be validly formed and its term of existence must be at least as long as the HAP contract.

With the exception of LIHTC deals, the organizational documents must establish PHA or non-profit ownership/control. This statutory requirement is satisfied if:

o The PHA is retaining ownership of the project. o The Project Owner is an entity in which the PHA is the sole

owner or member. o The Project Owner is organized as a nonprofit entity (it

need not be a 501(c)(3) entity). In LIHTC deals, PHA control may be established through the

owner’s organizational documents or the ground lease. o If control is established through the organizational

structure, use the HUD required provisions. (Note: these provisions are distinct from the provisions that must be included in the organizational documents for FHA deals)

o If control is established through a ground lease, the ground lease must contain the ground lease control provisions available on the RAD Resource Desk.

o Discuss any proposed alternative method of establishing PHA control with HUD Field Counsel prior to submission of a draft closing package.

20 Amendments/Releases of Existing Mixed Finance Documents (if applicable) a) Release of Declaration

of Restrictive Covenants (DORC)

b) Termination of Mixed Finance Amendment to the ACC

c) Termination of Regulatory and Operating Agreement (R & O Agreement)

d) Lender and PHA Subordination Agreements (if applicable)

Applicable where the Converting Project is an existing Mixed Finance Project.

For DORC Releases, follow the procedure and requirements discussed above for DOT Releases.

The Termination of the Mixed Finance Amendment to the ACC is signed by the appropriate PIH Field Office. Once the draft documents have been deemed legally acceptable, your RAD Closing Coordinator will work with the PIH Field Office to obtain the appropriate signature.

If there is a partial conversion of a Mixed Finance Project, with some of the project’s units remaining as public housing, the MF Amendment is not terminated; instead, an amendment must be prepared in HQ’s Office of Public Housing Investments.

Termination of the ACC Amendment and Termination of the R & O Agreement are posted to www.radresource.net.

21 Deed Applicable if title to the property is being conveyed.

When the deed conveys fee simple to the Covered Project Owner, it can contain no reversionary clauses, conditions subsequent or similar provisions; the deed must be for fee simple unless the PHA is ground leasing the land to the Covered Project Owner and simply deeding the improvements.

The deed cannot be a Quitclaim Deed. The legal description must match the title policy/title report and

RAD Use Agreement.



22 Ground Lease and Memorandum of Ground Lease

Applicable if the property will be subject to a ground lease.

If the Ground Lease is not recorded, submit both the Ground Lease and a Memo of Ground Lease.

Use the HUD-required provisions. The legal description must match the title policy/title report and

RAD Use Agreement. The Ground Lease must be subordinated to the RAD Use Agreement

in accordance with HUD requirements. In deals where the Covered Project is already covered by a ground

lease, the lease must be amended to include the HUD-required provisions unless otherwise approved by HUD.

The lease term must be at least as long as the HAP contract. 23 Evidence of Payoff,

Release or Subordination of Existing Debt

Required if there is an existing EPC, CFFP, OFFP, or other form of debt that will be paid off or subordinated at closing.

Provide evidence that the existing debt has been or will be paid off in conjunction with RAD closing. Existing debt being paid off in conjunction with the RAD closing should be shown on the Sources & Uses.

If existing debt is not being paid off at or prior to closing, the debt must be subordinated to the RAD Use Agreement in conformance with HUD guidance.

See the HUD-approved Subordination Agreement form on www.radresource.net.

24 Restrictive Covenants and Land Use Restrictions

Applicable in all deals with land restrictions

Restrictions must be subordinate to the RAD Use Agreement For non-FHA transactions, use the HUD-approved RAD

Subordination Agreement or ensure that the substantive provisions of the template are included in the Restrictive Covenants document.

Restrictions cannot impact the right of tenants to remain in or return to the property after conversion

For FHA transactions, use the FHA Subordination Agreement or other appropriate form per FHA requirements

25 General Depository Agreement - GDA (Form 51999) Latest version of GDA form is dated 10/2014

Required if Public Housing funds are being used as a source of funds and not being disbursed to Project Owner for an approved use at closing.

Consult your RAD Closing Coordinator for specific guidance and requirements.

Public Housing funds used in the transaction must be shown on the Sources and Uses and are subject to a GDA until they are disbursed for the approved use. Once disbursed, the funds need not be subject to a GDA.

Once the funds are transferred from an account held by the PHA to an account held by the Project Owner, such funds are considered disbursed for purposes of whether a GDA is required.

Until disbursed, public housing funds to be used in the transaction must be held in a segregated account or sub-account. If such account is already subject to a GDA, no new GDA is required.

If a new GDA is required, no changes to the HUD form are permitted.

No changes to the HUD form are permitted, other than those allowed for in the form itself.

Not required for transactions with FHA financing. Follow FHA guidelines.



26

First Mortgage Financing Documentation: a) Note b) Mortgage/Deed of Trust c) Intercreditor /


Required for all conversions obtaining first mortgage financing.

New financing documents must be recorded after and explicitly subordinated to the RAD Use Agreement

For non-FHA transactions, use the HUD-approved RAD Subordination Agreement or ensure the substantive provisions of the template are included in the appropriate debt documents.

In FHA-RAD deals: o Use the appropriate form of HUD-approved

subordination agreement or rider for FHA transactions.

o The RAD Use Agreement shall be recorded before the HUD-insured mortgage.

o In FHA-RAD deals, all financing must comply with all FHA requirements.


27 New Junior Debt Supporting Documentation a) Note b) Mortgage/Deed of Trust c) Intercreditor /


Required for all conversions with secondary financing or junior debt previously approved in the RAD Financing Plan.


Aside from the Note, Mortgage/Deed of Trust, and Intercreditor/Subordination Agreement, no additional documentation is needed to be submitted in the draft closing package.

28 Bond Financing Documentation a) Documentation that

issuance of the bonds has been authorized

b) Firm Commitment to purchase the bonds

Required for all conversions utilizing bond financing


Aside from the documentation regarding issuance and the firm commitment, no additional documentation is needed to be submitted in the draft closing package.

29 LIHTC Equity Documentation a) Equity Commitment,

including the pay-in schedule

b) LIHTC Reservation Letter

Required for all conversions involving tax credits.


Aside from the reservation letter and equity commitment, no additional documentation is needed to be submitted in the draft closing package.

30 New Construction or Substantial Rehabilitation Documentation a) Evidence that the

General Contractor has obtained either (i) a payment and performance bond from a properly licensed surety or (ii) a letter of credit

b) Owner Completion Guarantee Agreement

New Construction or Substantial Rehabilitation only.



31 HUD Form(s) 50075.1 with Budget Line Item 1504

Required on all conversions that use PH Capital Funds in the development budget

Required before Closing as soon as a final Sources and Uses is available.

Submit to your Closing Coordinator the HUD Form(s) 50075.1 with BLI 1504 manually added that matches the amount of Capital Funds listed as a source in the final executed Sources and Uses. This is to ensure that the Capital Funds used in the Development budget will be available at closing. Note that only prior year Capital Funds can be utilized in this manner and you must submit one form per Capital Fund grant year.

Please see “RAD Initial Year Funding Process Instructions” on the Resource Desk for further information.

IMMEDIATELY AFTER CLOSING- ADDITIONAL REQUIRED STEPS 32 HUD Form 50075.1 with

Budget Line Item 1503 and Initial Year Funding Tool(s)


Required immediately after Closing in order to access the final public housing subsidy from Capital Funds that will be available for the converted property for the remainder of the calendar year in which a HAP contract becomes effective

Complete the HUD Form 50075.1 with BLI 1503 manually entered Complete the Initial Year Funding Tool(s) with the correct HAP

effective date Send to your Closing Coordinator within 3 business days of

recording. Operating funds are not to be included on the 50075.1. Please see

“RAD Initial Year Funding Process Instructions” and the “RAD Initial Year Funding Tool” on the Resource Desk for further information.

33 Form 50058 End of Participation (EOP)

Required on all conversions unless there is a Delayed Conversion Agreement; contact the Closing Coordinator for applicability.

Required within 5 business days after Closing. Provide confirmation via email to the Closing Coordinator that

Form-50058 EOP has been submitted. In order for HUD to remove the applicable units from the Public Housing Information Center (PIC), a Form-50058 End of Participation (EOP) for the public housing program for all residents still living at the property at RAD conversion must be submitted into PIC. The 50058 EOP must be effective for each resident on the last day of the month before the new HAP will be effective. For example, a property that will have an October 1 HAP effective date should submit EOPs effective September 30 for all residents still living at the property.

34 Recorded Release of Declaration of Trust, Use Agreement, and HAP Contract (copies)


A PDF of the recorded Release of Declaration of Trust, Use Agreement, HAP contract, final executed Sources & Uses and any other documents identified by HUD must be submitted via email to the Closing Coordinator within 3 business days after recording.

35 Post-Closing Docket Required on all conversions

HUD requests that Post-Closing Dockets be submitted within 30 days of Closing.

See the Post Closing Instructions on www.radresource.net for details 36 Reminder – PIH Close Out

and FDS Reporting Requirements for RAD Projects


Projects converting to RAD will experience a series of reporting changes based on the timing of the conversion. Please see PIH-REAC PHA Financing Accounting Brief #2: FDS Reporting Requirements forProjects Converting Under RAD. A copy can be found in the DocumenLibrary on www.radresource.net.

PHAs who are converting their last remaining Public Housing units will need to work with their PIH Field Office on closing out of Public Housing. Please consult PIH Notice 2016-23

RESP PARTY DOC ID # STATUSI.

1 Mixed Finance ACC Amendmenta. Participating Partiesb. Overall Activities and Financingc. Units and Bedroom Mixd. Development Schedulee. Required Evidentiary Documentsf. Sources and Uses (Construction and Permanent)g. Draw Down Ratiog(1) - Draw Scheduleh. Program Income Certification

2 Regulatory and Operating Agreement3 Declaration of Restrictive Covenants4 Mixed-Finance Certifications and Assurances5 Development Proposal (if updated since HUD approval issued)

II.6 ALTA Survey7 Memo of Ground Lease8 Ground Lease9 Title

a. Commitmentb. Proforma

III.10 Management Agreement11 Management Plan12 Lease

VI.13 Mixed-Finance Opinion to HUD

a. HUD Counselb. Local Counsel

14 Certification of No Changes

OPINIONS/CERTIFICATIONS

DOCUMENT

[PROJECT NAME]

[PHA/OWNER]

EVIDENTIARY CHECKLIST

MANAGEMENT DOCUMENTS

PROPERTY AND TITLE

MIXED FINANCE DOCUMENTS

Document # 17013926 1

Due Diligence Checklist for Investor’s Tax Opinion

In Tax Credit Transactions*

* This is a sample list of items collected by the firm issuing an opinion on receipt of the low income housing tax credit. Each investor will have its own requirements for due diligence that will include more than just those documents identified here.

Status

A. TAX CREDIT APPLICATION AND TAX CREDIT DOCUMENTS

1. Projections _____

A. Confirm Accountant will permit prorated construction-perm loan fees in eligible basis _____

2. LIHTC Application/Tax-Exempt Bond Application _____

A. Qualified Allocation Plan [check whether Developer Fee within limits set by QAP] _____

3. Tax Credit Reservation _____ [3. 42(m) Determination Letter _____

A. Issuer/ Tax Credit Authority Letter of Feasibility [see IRC Section 42(m)(2)(D)] _____

(1) Issuer Delegation Letter [if Issuer delegating determination responsibility to Tax Credit Authority] _____

(2) Issuer Certification to Tax Credit Authority re: Bond Issuance Month and Percentage of Costs financed by Bonds [if locking tax credit rate at closing and issuer other than tax credit authority] [See Treas. Reg. 1.42-8(b)(4)] - must be provided to tax credit authority by 5th of month following bond issuance _____

B. BIN # for each building [if investor not admitted at closing in acquisition credit projects] _____]

3. Binding Agreement / Election Fixing Applicable Percentage [if not at PIS date] – must be provided to tax credit authority by 5th of month following bond issuance _____

5. Carryover Allocation Documents A. Application for Carryover Allocation _____ B. Carryover Allocation Agreement _____

[5. Bond Opinion _____]

203321.4

Status

[6. 50% Test Calculations (Bond Transactions) _____]

6. Accountant's 10% Carryover Certification [if not PC] _____ A. Evidence of 10% Expenditures _____ B. Expense Advance Agreement/Reimbursement Agreement (if

applicable)

_____

7. Evidence of 10 year placed in service compliance (acquisition/rehab projects only) _____

A. Seller’s Certification (BE will draft) [B. Seller’s 10-year Partnership Documents (if Seller is partnership) _____ C. Seller’s 10-year Tax Returns (if Seller is partnership)]

_____]

8. Evidence of 130% Basis Qualification (if applicable) _____

9. Extended Use Agreement/Low-Income Housing Tax Credit Covenant [draft prior to closing]

___/ PC for executed document

10. State Tax Credit Materials (if applicable) _____

B. REAL ESTATE TAX EXEMPTION DOCUMENTS

1. PILOT Agreement _____

2. Evidence of Other Real Estate Tax Exemption / Abatement _____

3. Real Estate Tax Opinion, if applicable _____

C. PROJECT ACQUISITION DOCUMENTS

1. Purchase and Sale Agreements _____

2. Warranty Deed / Ground Lease _____

A. Memorandum of Ground Lease _____

3. Condominium Documents, if applicable _____

4. Title Commitment _____

5. Owner’s Pro Forma _____

6. Will Issue Letter _____ 7. Exceptions to Title Commitment _____

8. Endorsements required: _____

A. Comprehensive _____

B. Zoning _____

C. Fairway _____

D. Non-imputation _____

2 203321.4

Status

E. Survey _____

F. Access _____

G. Separate Tax Lot _____

H. Blanket Easement, if applicable (Owner’s form of CLTA 103.1) _____

I. Contiguity, if applicable _____

J. Subdivision, if applicable _____

K. Condominium, if applicable _____

L. Leasehold, if applicable _____

9. Ten Year Title Search (if acquisition credits) _____

10. Settlement Statement _____

11. Appraisal (must be appraisal prepared for lender) _____

12. ALTA Survey (must address flood zone) _____

13. Subdivision Plat/Consolidation Plat/Lot Line Adjustment (if applicable) _____

14. Site Plan _____

15. Zoning Letter (check for right to rebuild in event of catastrophe if legal nonconforming use) _____

16. Right of First Refusal Agreement _____

D. RENTAL SUBSIDY

1. RAD Documents, if applicable

A. [RAD Conversion Commitment _____

B. Amendment to RAD Conversion Commitment, if applicable _____

C. RAD HAP Contract Part I _____

D. RAD HAP Contract Part II _____

E. RAD HAP LIHTC Rider _____

F. RAD Memorandum of Understanding _____

G. RAD Use Agreement _____

H. Master Development Agreement _____

I. Additional RAD Documents _____]

2. HAP Contract, if applicable _____

[A. AHAP Contract ____ B. HAP Contract ____ C. Approval of Transfer of LP Interest (if applicable) ____

3 203321.4

Status

D. Confirmation that recorded restrictions allow an increase to 60% AMI on all Section 8 units at less than 60% in the event of a loss of Section 8 subsidies (if applicable)

____]

E. OPINIONS

1. Corporate Opinion _____

2. Tax Opinion _____

3. Tax Representation Letter _____

F. AMENDED AND RESTATED OPERATING AGREEMENT & EXHIBITS

1. Amended & Restated Operating Agreement & Exhibits

A. Exhibit A – Partnership Management Fee Agreement _____

B. Exhibit B – Development Agreement _____

C. Exhibit C – Description of Property _____

D. Exhibit D – Unconditional Guaranty _____

E. Exhibit E – Certification and Agreement _____

F. Exhibit F – Development Budget _____

G. Exhibit G– Certificate of Managing Member/ General Partner and Guarantor _____

H. Exhibit H – Insurance Guidelines _____

I. Exhibit I – Projections _____

J. Exhibit J – Post-Closing Construction Documentation List _____

K. Exhibit K – Security Plan _____

L. Exhibit L – Social Services Agreement _____

M. Exhibit M - Social Services Plan _____

G. LOAN DOCUMENTS

1. Construction Loan (Name of Lender and amount) A. Commitment Letter _____ B. Construction Loan Agreement _____ C. Promissory Note _____ D. Deed of Trust / Mortgage _____ E. Guaranty Agreement [check against LPA for match] _____ F. Other _____

2. First Mortgage Loan (Name of Lender and amount) A. Commitment Letter _____ (1) Rate Lock [if perm only; PC on remainder of docs] _____

4 203321.4

B. Note (to include non-recourse language) _____ C. Mortgage/Deed of Trust _____ D. Loan Agreement _____ E. Regulatory Agreement/Restrictive Covenants _____ [F. Bond Documents (if applicable) (1) Resolution _____ (2) Bond _____ (3) IRS Form 8038 _____ (4) Financing Agreement _____ (5) Trust Indenture _____ (6) Tax Regulatory Agreement _____] [G. IRP Documents (if applicable) (1) Agreement for Interest Reduction Payments _____ (2) 236(e)(2) Use Agreement _____ (3) Assignment (if applicable) _____ (4) All Consent to Assignment (if applicable) _____] [H.] Other _____

3. Second Mortgage Loan (Name of Lender and amount) A. Commitment Letter _____ B. Note (to include non-recourse language) _____ C. Mortgage/Deed of Trust _____ D. Loan Agreement _____ E. Regulatory Agreement/Restrictive Covenants (if applicable) _____ F. Other _____

4. Third Mortgage Loan (Name of Lender and amount) A. Commitment Letter _____ B. Note (to include non-recourse language) _____ C. Mortgage/Deed of Trust _____ D. Loan Agreement _____ E. Regulatory Agreement/Restrictive Covenants (if applicable) _____ F. Other _____

5. Fourth Mortgage Loan (Name of Lender and amount) A. Commitment Letter _____

B. Note (to include non-recourse language) _____ C. Mortgage/Deed of Trust _____ D. Loan Agreement _____ E. Regulatory Agreement/Restrictive Covenants (if applicable) _____ F. Other _____

6. General Partner/Sponsor Loan (Amount) A. Note (recourse) _____ B. Mortgage/Deed of Trust _____ [C. Underlying AHP Documents (if applicable)

(1) AHP Application to FHLB Bank _____

5 203321.4

(2) AHP Award Letter to Member Bank & Sponsor/GP _____ (3) [AHP [Loan / Grant] Agreement] / [Memorandum of

Understanding] _____

(4) Promissory Note to Member Bank (if loan to Sponsor/GP) _____ (5) Collateral Assignment of Mortgage/Deed of Trust to Member

Bank (if loan to Sponsor/GP) _____

(6) AHP Real Estate Retention Agreement _____] [D. Underlying HOME Documents (if applicable)

(1) HOME Award Letter _____ (2) HOME Agreement _____ (3) Promissory Note from GP/ Sponsor (if loan to Sponsor/GP) _____ (4) Collateral Assignment of Mortgage/Deed of Trust by GP /

Sponsor (if loan to Sponsor/GP) _____

(5) HOME Regulatory Agreement/Restrictive Covenants _____]

7. Source of GP Capital Contribution (Amount) (if applicable) _____

8. No Tax-Exempt Funds Letter [only if 9% deal] A. Construction Loan _____ B. First Mortgage Loan _____ C. Second Mortgage Loan (if applicable) _____ D. Third Mortgage Loan (if applicable) _____ E. Fourth Mortgage Loan (if applicable) _____ F. GP Capital Contribution (if applicable) _____]

9. HUD Approval of Prepayment of HUD Loan ($_______) A. Application for Prepayment _____ B. HUD Approval of Prepayment Application _____ C. Existing Regulatory Agreement _____ D. Termination of Regulatory Agreement _____ E. Replacement Use Agreement _____ F. Existing Mortgage _____ G. Confirmation of Replacement Reserve Amount [determine affect

on purchase price, if any] _____

H. Clarification of Residual Receipts Account Amount and HUD Consent to Transfer (if applicable)

_____

I. Agreement for Transfer of Physical Assets (if applicable) _____] 10. Lien Searches Ordered by Lenders

H. ORGANIZATIONAL DOCUMENTS

1. Initial Formation Documentation: _____

A. Initial Operating Agreement _____

B. Amendment to Agreement (prior to LP admission, if applicable for acquisition credits) _____

C. Certificate of Formation _____

6 203321.4

D. Amended Certificate of L.P. (if applicable for acquisition credits) _____

E. Good Standing Certificate (must be dated within thirty (30) days of closing) _____

F. IRS Employer Identification Number: EIN # _______________ _____

2. Original Development Services Agreement (if applicable) _____

3. Managing Member/General Partner

A. Articles of Organization _____

B. Operating Agreement (certified) _____

C. 501(c)(3) Determination (if applicable for real estate tax exemption, etc./nonprofit set aside) _____

(1) [IRS Form 8832 - Election to be treated as a corporation (to be filed with tax return)] [to be used if GP is an LLC but needs to make 168 election or needs to be unrelated from lender; include representation in LPA and tax rep letter] _____

(2) [168(h)(6)(F) election [include representation in LPA and tax rep letter] _____

D. Resolutions _____


F. IRS Employer Identification Number: EIN # _______________ _____

4. Sponsor/Developer

A. Articles of Incorporation _____

B. By-laws/Operating Agreement (certified) _____




5. Guarantor

A. Articles of Organization _____

B. By-laws/Operating Agreement (certified) _____




7 203321.4

I. PROJECT DOCUMENTS

1. Investor Commitment Letter _____

2. Property Management Agreement _____

A. Addendum to Property Management Agreement _____

3. Property Management Plan _____

8 203321.4

American Land Title Association® (ALTA®) Minimum Standard Detail Requirements National Society of Professional Surveyors (NSPS) For ALTA/NSPS Land Title Surveys

MINIMUM STANDARD DETAIL REQUIREMENTS FOR

ALTA/NSPS LAND TITLE SURVEYS (Effective February 23, 2016)

NOTE - Attention is directed to the fact that the National Society of Professional Surveyors, Inc. (NSPS) is the legal successor organization to the American Congress on Surveying and Mapping (ACSM) and that these 2016 Minimum Standard Detail Requirements for ALTA/NSPS Land Title Surveys are the next version of the former Minimum Standard Detail Requirements for ALTA/ACSM Land Title Surveys.

1. Purpose - Members of the American Land Title Association® (ALTA®) have specific needs, unique to title insurance matters, when asked to insure title to land without exception as to the many matters which might be discoverable from survey and inspection, and which are not evidenced by the public records. For a survey of real property, and the plat, map or record of such survey, to be acceptable to a title insurance company for the purpose of insuring title to said real property free and clear of survey matters (except those matters disclosed by the survey and indicated on the plat or map), certain specific and pertinent information must be presented for the distinct and clear understanding between the insured, the client (if different from the insured), the title insurance company (insurer), the lender, and the surveyor professionally responsible for the survey. In order to meet such needs, clients, insurers, insureds, and lenders are entitled to rely on surveyors to conduct surveys and prepare associated plats or maps that are of a professional quality and appropriately uniform, complete, and accurate. To that end, and in the interests of the general public, the surveying profession, title insurers, and abstracters, the ALTA and the NSPS jointly promulgate the within details and criteria setting forth a minimum standard of performance for ALTA/NSPS Land Title Surveys. A complete 2016 ALTA/NSPS Land Title Survey includes:

(i) the on-site fieldwork required pursuant to Section 5, (ii) the preparation of a plat or map pursuant to Section 6 showing the results of the fieldwork

and its relationship to documents provided to or obtained by the surveyor pursuant to Section 4,

(iii) any information from Table A items requested by the client, and (iv) the certification outlined in Section 7.

2. Request for Survey - The client shall request the survey, or arrange for the survey to be requested, and shall provide a written authorization to proceed from the person or entity responsible for paying for the survey. Unless specifically authorized in writing by the insurer, the insurer shall not be responsible for any costs associated with the preparation of the survey. The request shall specify that an "ALTA/NSPS LAND TITLE SURVEY" is required and which of the optional items listed in Table A, if any, are to be incorporated. Certain properties or interests in real properties may present issues outside those normally encountered on an ALTA/NSPS Land Title Survey (e.g., marinas, campgrounds, trailer parks; easements, leases, other non-fee simple interests). The scope of work related to surveys of such properties or interests in real properties should be discussed with the client, lender, and insurer; and agreed upon in writing prior to commencing work on the survey. The client may need to secure permission for the surveyor to enter upon the property to be surveyed, adjoining properties, or offsite easements.

Page 1 of 11

Copyright 2016. All rights reserved. American Land Title Association and National Society of Professional Surveyors


3. Surveying Standards and Standards of Care

A. Effective Date - The 2016 Minimum Standard Detail Requirements for ALTA/NSPS Land Title Surveys are effective February 23, 2016. As of that date, all previous versions of the Minimum Standard Detail Requirements for ALTA/ACSM Land Title Surveys are superseded by these standards.

B. Other Requirements and Standards of Practice - Many states and some local jurisdictions have adopted statutes, administrative rules, and/or ordinances that set out standards regulating the practice of surveying within their jurisdictions. In addition to the standards set forth herein, surveyors shall also conduct their surveys in accordance with applicable jurisdictional survey requirements and standards of practice. Where conflicts between the standards set forth herein and any such jurisdictional requirements and standards of practice occur, the more stringent shall apply.

C. The Normal Standard of Care - Surveyors should recognize that there may be unwritten local, state, and/or regional standards of care defined by the practice of the “prudent surveyor” in those locales.

D. Boundary Resolution - The boundary lines and corners of any property being surveyed as part of an ALTA/NSPS Land Title Survey shall be established and/or retraced in accordance with appropriate boundary law principles governed by the set of facts and evidence found in the course of performing the research and fieldwork.

E. Measurement Standards - The following measurement standards address Relative Positional Precision for the monuments or witnesses marking the corners of the surveyed property. i. “Relative Positional Precision” means the length of the semi-major axis, expressed in feet or

meters, of the error ellipse representing the uncertainty due to random errors in measurements in the location of the monument, or witness, marking any corner of the surveyed property relative to the monument, or witness, marking any other corner of the surveyed property at the 95 percent confidence level. Relative Positional Precision is estimated by the results of a correctly weighted least squares adjustment of the survey.

ii. Any boundary lines and corners established or retraced may have uncertainties in location resulting from (1) the availability, condition, history and integrity of reference or controlling monuments, (2) ambiguities in the record descriptions or plats of the surveyed property or its adjoiners, (3) occupation or possession lines as they may differ from the written title lines, or (4) Relative Positional Precision. Of these four sources of uncertainty, only Relative Positional Precision is controllable, although, due to the inherent errors in any measurement, it cannot be eliminated. The magnitude of the first three uncertainties can be projected based on evidence; Relative Positional Precision is estimated using statistical means (see Section 3.E.i. above and Section 3.E.v. below).

iii. The first three of these sources of uncertainty must be weighed as part of the evidence in the determination of where, in the surveyor’s opinion, the boundary lines and corners of the surveyed property should be located (see Section 3.D. above). Relative Positional Precision is a measure of how precisely the surveyor is able to monument and report those positions; it is not a substitute for the application of proper boundary law principles. A boundary corner or line may have a small Relative Positional Precision because the survey measurements were precise, yet still be in the wrong position (i.e., inaccurate) if it was established or retraced using faulty or improper application of boundary law principles.

iv. For any measurement technology or procedure used on an ALTA/NSPS Land Title Survey, the surveyor shall (1) use appropriately trained personnel, (2) compensate for systematic errors, including those associated with instrument calibration, and (3) use appropriate error propagation and measurement design theory (selecting the proper instruments, geometric layouts, and field and computational procedures) to control random errors such that the

Page 2 of 11



maximum allowable Relative Positional Precision outlined in Section 3.E.v. below is not exceeded.

v. The maximum allowable Relative Positional Precision for an ALTA/NSPS Land Title Survey is 2 cm (0.07 feet) plus 50 parts per million (based on the direct distance between the two corners being tested). It is recognized that in certain circumstances, the size or configuration of the surveyed property, or the relief, vegetation, or improvements on the surveyed property, will result in survey measurements for which the maximum allowable Relative Positional Precision may be exceeded. If the maximum allowable Relative Positional Precision is exceeded, the surveyor shall note the reason as explained in Section 6.B.x. below.

4. Records Research - It is recognized that for the performance of an ALTA/NSPS Land Title Survey, the surveyor will be provided with appropriate and, when possible, legible data which can be relied upon in the preparation of the survey. The request for an ALTA/NSPS Land Title Survey shall set forth the current record description of the property to be surveyed or, in the case of an original survey prepared for purposes of locating and describing real property that has not been previously separately described in documents conveying an interest in the real property, the current record description of the parent parcel that contains the property to be surveyed. In order to complete an ALTA/NSPS Land Title Survey, the surveyor must be provided with complete copies of the most recent title commitment or, if a title commitment is not available, other title evidence satisfactory to the title insurer. In addition, the surveyor must be provided with the following:

(i) The following records established under state statutes for the purpose of imparting constructive notice of matters relating to real property (public records): (a) The current record descriptions of any adjoiners to the property to be surveyed, except

where such adjoiners are lots in platted, recorded subdivisions; (b) Any recorded easements benefitting the property; (c) Any recorded easements, servitudes, or covenants burdening the property;

(ii) Any unrecorded documents affecting the property being surveyed and containing information to which the survey shall make reference, if desired by the client.

Except, however, if the documents outlined above in (i) and (ii) of this section are not provided to the surveyor or if non-public or quasi-public documents are required to complete the survey, the surveyor shall be required to conduct only that research which is required pursuant to the statutory or administrative requirements of the jurisdiction where the property being surveyed is located and that research (if any) which is negotiated and outlined in the terms of the contract between the surveyor and the client. 5. Fieldwork - The survey shall be performed on the ground (except as otherwise negotiated pursuant to Table A, Item 15 below, if selected by the client). The fieldwork shall include the following, located to what is, in the surveyor’s professional opinion, the appropriate degree of precision based on (a) the planned use of the property, if reported in writing to the surveyor by the client, lender, or insurer, or (b) the existing use, if the planned use is not so reported:

A. Monuments i. The location, size, character, and type of any monuments found during the fieldwork. ii. The location, size, character, and type of any monuments set during the fieldwork, if item 1 of

Table A was selected or if otherwise required by applicable jurisdictional requirements and/or standards of practice.

iii. The location, description, and character of any lines that control the boundaries of the

Page 3 of 11



surveyed property.

B. Rights of Way and Access i. The distance from the appropriate corner or corners of the surveyed property to the nearest

right of way line, if the surveyed property does not abut a right of way. ii. The name of any street, highway, or other public or private way abutting the surveyed

property, together with the width of the travelled way and the location of each edge of the travelled way including on divided streets and highways. If the documents provided to or obtained by the surveyor pursuant to Section 4 indicate no access from the surveyed property to the abutting street or highway, the width and location of the travelled way need not be located.

iii. Visible evidence of physical access (e.g., curb cuts, driveways) to any abutting streets, highways, or other public or private ways.

iv. The location and character of vehicular, pedestrian, or other forms of access by other than the apparent occupants of the surveyed property to or across the surveyed property observed in the process of conducting the fieldwork (e.g., driveways, alleys, private roads, railroads, railroad sidings and spurs, sidewalks, footpaths).

v. Without expressing a legal opinion as to ownership or nature, the location and extent of any potentially encroaching driveways, alleys, and other ways of access from adjoining properties onto the surveyed property observed in the process of conducting the fieldwork.

vi. Where documentation of the location of any street, road, or highway right of way abutting, on, or crossing the surveyed property was not disclosed in documents provided to or obtained by the surveyor, or was not otherwise available from the controlling jurisdiction (see Section 6.C.iv. below), the evidence and location of parcel corners on the same side of the street as the surveyed property recovered in the process of conducting the fieldwork which may indicate the location of such right of way lines (e.g., lines of occupation, survey monuments).

vii. Evidence of access to and from waters adjoining the surveyed property observed in the process of conducting the fieldwork (e.g., paths, boat slips, launches, piers, docks).

C. Lines of Possession and Improvements along the Boundaries i. The character and location of evidence of possession or occupation along the perimeter of

the surveyed property, both by the occupants of the surveyed property and by adjoiners, observed in the process of conducting the fieldwork.

ii. Unless physical access is restricted, the character and location of all walls, buildings, fences, and other improvements within five feet of each side of the boundary lines, observed in the process of conducting the fieldwork. Trees, bushes, shrubs, and other natural vegetation need not be located other than as specified in the contract, unless they are deemed by the surveyor to be evidence of possession pursuant to Section 5.C.i.

iii. Without expressing a legal opinion as to the ownership or nature of the potential encroachment, the evidence, location and extent of potentially encroaching structural appurtenances and projections observed in the process of conducting the fieldwork (e.g., fire escapes, bay windows, windows and doors that open out, flue pipes, stoops, eaves, cornices, areaways, steps, trim) by or onto adjoining property, or onto rights of way, easements, or setback lines disclosed in documents provided to or obtained by the surveyor.

D. Buildings The location of buildings on the surveyed property observed in the process of conducting the fieldwork.

E. Easements and Servitudes i. Evidence of any easements or servitudes burdening the surveyed property as disclosed in

the documents provided to or obtained by the surveyor pursuant to Section 4 and observed in the process of conducting the fieldwork.

Page 4 of 11



ii. Evidence of easements, servitudes, or other uses by other than the apparent occupants of

the surveyed property not disclosed in the documents provided to or obtained by the surveyor pursuant to Section 4, but observed in the process of conducting the fieldwork if they appear to affect the surveyed property (e.g., roads; drives, sidewalks, paths and other ways of access; utility service lines; water courses; ditches; drains; telephone, fiber optic lines, or electric lines; or water, sewer, oil or gas pipelines on or across the surveyed property and on adjoining properties).

iii. Surface indications of underground easements or servitudes on or across the surveyed property observed in the process of conducting the fieldwork (e.g., utility cuts, vent pipes, filler pipes).

iv. Evidence on or above the surface of the surveyed property observed in the process of conducting the fieldwork, which evidence may indicate utilities located on, over or beneath the surveyed property. Examples of such evidence include pipeline markers, manholes, valves, meters, transformers, pedestals, clean-outs, utility poles, overhead lines and guy wires.

F. Cemeteries As accurately as the evidence permits, the perimeter of cemeteries and burial grounds, and the location of isolated gravesites not within a cemetery or burial ground, (i) disclosed in the documents provided to or obtained by the surveyor, or (ii) observed in the process of conducting the fieldwork.

G. Water Features i. The location of springs, ponds, lakes, streams, rivers, canals, ditches, marshes, and swamps

on, running through, or outside, but within five feet of the perimeter boundary of, the surveyed property, observed during the process of conducting the fieldwork.

ii. The location of any water feature forming a boundary of the surveyed property. The attribute(s) of the water feature located (e.g., top of bank, edge of water, high water mark) should be congruent with the boundary as described in the record description or, in the case of an original survey, in the new description (see Section 6.B.vi. below).

6. Plat or Map - A plat or map of an ALTA/NSPS Land Title Survey shall show the following information. Where dimensioning is appropriate, dimensions shall be annotated to what is, in the surveyor’s professional opinion, the appropriate degree of precision based on (a) the planned use of the property, if reported in writing to the surveyor by the client, lender, or insurer, or (b) existing use, if the planned use is not so reported.

A. The evidence and locations gathered, and the monuments and lines located during the fieldwork pursuant to Section 5 above, with accompanying notes if deemed necessary by the surveyor or as otherwise required as specified below.

B. Boundary, Descriptions, Dimensions, and Closures i. (a) The current record description of the surveyed property, or

(b) In the case of an original survey, the current record description of the parent tract that contains the surveyed property.

ii. Any new description of the surveyed property that was prepared in conjunction with the survey, including a statement explaining why the new description was prepared. Except in the case of an original survey, preparation of a new description should be avoided unless deemed necessary or appropriate by the surveyor and insurer. Preparation of a new description should also generally be avoided when the record description is a lot or block in a platted, recorded subdivision. Except in the case of an original survey, if a new description is prepared, a note shall be provided stating (a) that the new description describes the same real estate as the record description or, if it does not, (b) how the new description differs from

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the record description.

iii. The point of beginning, the remote point of beginning or point of commencement (if applicable) and all distances and directions identified in the record description of the surveyed property (and in the new description, if one was prepared). Where a measured or calculated dimension differs from the record by an amount deemed significant by the surveyor, such dimension shall be shown in addition to, and differentiated from, the corresponding record dimension. All dimensions shown on the survey and contained in any new description shall be ground dimensions unless otherwise noted.

iv. The directional, distance and curve data necessary to compute a mathematical closure of the surveyed boundary. A note if the record description does not mathematically close. The basis of bearings and, where it differs from the record basis, the difference.

v. The remainder of any recorded lot or existing parcel, when the surveyed property is composed of only a portion of such lot or parcel, shall be graphically depicted. Such remainder need not be included as part of the actual survey, except to the extent necessary to locate the lines and corners of the surveyed property, and it need not be fully dimensioned or drawn at the same scale as the surveyed property.

vi. When the surveyed property includes a title line defined by a water boundary, a note on the face of the plat or map noting the date the boundary was measured, which attribute(s) of the water feature was/were located, and the caveat that the boundary is subject to change due to natural causes and that it may or may not represent the actual location of the limit of title. When the surveyor is aware of natural or artificial realignments or changes in such boundaries, the extent of those changes and facts shall be shown or explained.

vii. The relationship of the boundaries of the surveyed property with its adjoiners (e.g., contiguity, gaps, overlaps), where ascertainable from documents provided to or obtained by the surveyor pursuant to Section 4 and/or from field evidence gathered during the process of conducting the fieldwork. If the surveyed property is composed of multiple parcels, the extent of any gaps or overlaps between those parcels shall be identified. Where gaps or overlaps are identified, the surveyor shall, prior to or upon delivery of the final plat or map, disclose this to the insurer and client.

viii. When, in the opinion of the surveyor, the results of the survey differ significantly from the record, or if a fundamental decision related to the boundary resolution is not clearly reflected on the plat or map, the surveyor shall explain this information with notes on the face of the plat or map.

ix. The location of all buildings on the surveyed property, located pursuant to Section 5.D., dimensioned perpendicular to those perimeter boundary lines that the surveyor deems appropriate (i.e., where potentially impacted by a setback line) and/or as requested by the client, lender or insurer.

x. A note on the face of the plat or map explaining the site conditions that resulted in a Relative Positional Precision that exceeds the maximum allowed pursuant to Section 3.E.v.

xi. A note on the face of the plat or map identifying areas, if any, on the boundaries of the surveyed property, to which physical access within five feet was restricted (see Section 5.C.ii.).

xii. A note on the face of the plat or map identifying the source of the title commitment or other title evidence provided pursuant to Section 4, and the effective date and the name of the insurer of same.

C. Easements, Servitudes, Rights of Way, Access, and Documents i. The location, width, and recording information of all plottable rights of way, easements, and

servitudes burdening and benefitting the property surveyed, as evidenced by documents provided to or obtained by the surveyor pursuant to Section 4.

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ii. A summary of all rights of way, easements and servitudes burdening the property surveyed

and identified in the title evidence provided to or obtained by the surveyor pursuant to Section 4. Such summary shall include the record information of each such right of way, easement or servitude, a statement indicating whether or not it is shown on the plat or map, and a related note if: (a) the location cannot be determined from the record document; (b) there was no observed evidence at the time of the fieldwork; (c) it is a blanket easement; (d) it is not on, or does not touch, the surveyed property; (e) it limits access to an otherwise abutting right of way; (f) the documents are illegible; or (g) the surveyor has information indicating that it may have been released or otherwise

terminated. In cases where the surveyed property is composed of multiple parcels, indicate which of such parcels the various rights of way, easements, and servitudes cross or touch.

iii. A note if no physical access to a public way was observed in the process of conducting the fieldwork.

iv. The locations and widths of rights of way abutting or crossing the surveyed property, and the source of such information, (a) where available from the controlling jurisdiction, or (b) where disclosed in documents provided to or obtained by the surveyor pursuant to Section 4.

v. The identifying titles of all recorded plats, filed maps, right of way maps, or similar documents which the survey represents, wholly or in part, with their recording or filing data.

vi. For non-platted adjoining land, recording data identifying adjoining tracts according to current public records. For platted adjoining land, the recording data of the subdivision plat.

vii. Platted setback or building restriction lines which appear on recorded subdivision plats or which were disclosed in documents provided or obtained by the surveyor.

D. Presentation i. The plat or map shall be drawn on a sheet of not less than 8 ½ by 11 inches in size at a

legible, standard engineering scale, with that scale clearly indicated in words or numbers and with a graphic scale.

ii. The plat or map shall include: (a) The boundary of the surveyed property drawn in a manner that distinguishes it from other

lines on the plat or map. (b) If no buildings were observed on the surveyed property in the process of conducting the

fieldwork, a note stating “No buildings observed.” (c) A north arrow (with north to the top of the drawing when practicable). (d) A legend of symbols and abbreviations. (e) A vicinity map showing the property in reference to nearby highway(s) or major street

intersection(s). (f) Supplementary or detail diagrams when necessary. (g) Notes explaining any modifications to Table A items and the nature of any additional

Table A items (e.g., 21(a), 21(b), 21(c)) that were negotiated between the surveyor and client.

(h) The surveyor’s project number (if any), and the name, registration or license number, signature, seal, street address, telephone number, company website, and email address (if any) of the surveyor who performed the survey.

(i) The date(s) of any revisions made by the surveyor who performed the survey. (j) Sheet numbers where the plat or map is composed of more than one sheet. (k) The caption “ALTA/NSPS Land Title Survey.”

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iii. When recordation or filing of a plat or map is required by law, such plat or map shall be

produced in recordable form. 7. Certification - The plat or map of an ALTA/NSPS Land Title Survey shall bear only the following certification, unaltered, except as may be required pursuant to Section 3.B. above:

To (name of insured, if known), (name of lender, if known), (name of insurer, if known), (names of others as negotiated with the client):

This is to certify that this map or plat and the survey on which it is based were made in accordance with the 2016 Minimum Standard Detail Requirements for ALTA/NSPS Land Title Surveys, jointly established and adopted by ALTA and NSPS, and includes Items ___________ of Table A thereof. The fieldwork was completed on ___________ [date].

Date of Plat or Map: ___________ (Surveyor’s signature, printed name and seal with

Registration/License Number) 8. Deliverables - The surveyor shall furnish copies of the plat or map of survey to the insurer and client and as otherwise negotiated with the client. Hard copies shall be on durable and dimensionally stable material of a quality standard acceptable to the insurer. A digital image of the plat or map may be provided in addition to, or in lieu of, hard copies pursuant to the terms of the contract. When required by law or requested by the client, the plat or map shall be produced in recordable form and recorded or filed in the appropriate office or with the appropriate agency.

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TABLE A

OPTIONAL SURVEY RESPONSIBILITIES AND SPECIFICATIONS NOTE: The twenty (20) items of Table A may be negotiated between the surveyor and client. Any additional items negotiated between the surveyor and client shall be identified as 21(a), 21(b), etc. and explained pursuant to Section 6.D.ii.(g). Notwithstanding Table A Items 5 and 11, if an engineering design survey is desired as part of an ALTA/NSPS Land Title Survey, such services should be negotiated under Table A, Item 21. If checked, the following optional items are to be included in the ALTA/NSPS LAND TITLE SURVEY, except as otherwise qualified (see note above): 1. _____ Monuments placed (or a reference monument or witness to the corner) at all major

corners of the boundary of the property, unless already marked or referenced by existing monuments or witnesses in close proximity to the corner.

2. __X___ Address(es) of the surveyed property if disclosed in documents provided to or obtained

by the surveyor, or observed while conducting the fieldwork. 3. __X___ Flood zone classification (with proper annotation based on federal Flood Insurance Rate

Maps or the state or local equivalent) depicted by scaled map location and graphic plotting only.

4. __X___ Gross land area (and other areas if specified by the client). 5. _____ Vertical relief with the source of information (e.g., ground survey, aerial map), contour

interval, datum, and originating benchmark identified. 6. _____ (a) If set forth in a zoning report or letter provided to the surveyor by the client, list the

current zoning classification, setback requirements, the height and floor space area restrictions, and parking requirements. Identify the date and source of the report or letter.

_____ (b) If the zoning setback requirements are set forth in a zoning report or letter provided to the surveyor by the client, and if those requirements do not require an interpretation by the surveyor, graphically depict the building setback requirements. Identify the date and source of the report or letter.

7. _____ (a) Exterior dimensions of all buildings at ground level. (b) Square footage of: _____ (1) exterior footprint of all buildings at ground level. _____ (2) other areas as specified by the client. _____ (c) Measured height of all buildings above grade at a location specified by the client. If no

location is specified, the point of measurement shall be identified.

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8. ___X__ Substantial features observed in the process of conducting the fieldwork (in addition to

the improvements and features required pursuant to Section 5 above) (e.g., parking lots, billboards, signs, swimming pools, landscaped areas, substantial areas of refuse).

9. ___X__ Number and type (e.g., disabled, motorcycle, regular and other marked specialized

types) of clearly identifiable parking spaces on surface parking areas, lots and in parking structures. Striping of clearly identifiable parking spaces on surface parking areas and lots.

10. _____ (a) As designated by the client, a determination of the relationship and location of certain

division or party walls with respect to adjoining properties (client to obtain necessary permissions).

_____ (b) As designated by the client, a determination of whether certain walls are plumb (client

to obtain necessary permissions). 11. __X___ Location of utilities existing on or serving the surveyed property as determined by:

• observed evidence collected pursuant to Section 5.E.iv. • evidence from plans requested by the surveyor and obtained from utility companies,

or provided by client (with reference as to the sources of information), and • markings requested by the surveyor pursuant to an 811 utility locate or similar

request Representative examples of such utilities include, but are not limited to: • Manholes, catch basins, valve vaults and other surface indications of

subterranean uses; • Wires and cables (including their function, if readily identifiable) crossing the

surveyed property, and all poles on or within ten feet of the surveyed property. Without expressing a legal opinion as to the ownership or nature of the potential encroachment, the dimensions of all encroaching utility pole crossmembers or overhangs; and

• Utility company installations on the surveyed property. Note to the client, insurer, and lender - With regard to Table A, item 11, source

information from plans and markings will be combined with observed evidence of utilities pursuant to Section 5.E.iv. to develop a view of the underground utilities. However, lacking excavation, the exact location of underground features cannot be accurately, completely, and reliably depicted. In addition, in some jurisdictions, 811 or other similar utility locate requests from surveyors may be ignored or result in an incomplete response, in which case the surveyor shall note on the plat or map how this affected the surveyor’s assessment of the location of the utilities. Where additional or more detailed information is required, the client is advised that excavation and/or a private utility locate request may be necessary.

12. _____ As specified by the client, Governmental Agency survey-related requirements (e.g., HUD

surveys, surveys for leases on Bureau of Land Management managed lands).

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13. __X___ Names of adjoining owners according to current tax records. If more than one owner,

identify the first owner’s name listed in the tax records followed by “et al.” 14. _____ As specified by the client, distance to the nearest intersecting street. 15. _____ Rectified orthophotography, photogrammetric mapping, remote sensing, airborne/mobile

laser scanning and other similar products, tools or technologies as the basis for the showing the location of certain features (excluding boundaries) where ground measurements are not otherwise necessary to locate those features to an appropriate and acceptable accuracy relative to a nearby boundary. The surveyor shall (a) discuss the ramifications of such methodologies (e.g., the potential precision and completeness of the data gathered thereby) with the insurer, lender, and client prior to the performance of the survey, and (b) place a note on the face of the survey explaining the source, date, precision, and other relevant qualifications of any such data.

16. __X___ Evidence of recent earth moving work, building construction, or building additions

observed in the process of conducting the fieldwork. 17. _____ Proposed changes in street right of way lines, if such information is made available to the

surveyor by the controlling jurisdiction. Evidence of recent street or sidewalk construction or repairs observed in the process of conducting the fieldwork.

18. __X___ If there has been a field delineation of wetlands conducted by a qualified specialist hired

by the client, the surveyor shall locate any delineation markers observed in the process of conducting the fieldwork and show them on the face of the plat or map. If no markers were observed, the surveyor shall so state.

19. __X___ Include any plottable offsite (i.e., appurtenant) easements or servitudes disclosed in

documents provided to or obtained by the surveyor as a part of the survey pursuant to Sections 5 and 6 (and applicable selected Table A items) (client to obtain necessary permissions).

20. _____ Professional Liability Insurance policy obtained by the surveyor in the minimum amount

of $____________ to be in effect throughout the contract term. Certificate of Insurance to be furnished upon request, but this item shall not be addressed on the face of the plat or map.

21. _____ ___________________________________________________________________ Adopted by the Board of Governors, American Land Title Association, on October 8, 2015. American Land Title Association, 1800 M St., N.W., Suite 300S, Washington, D.C. 20036-5828. www.alta.org Adopted by the Board of Directors, National Society of Professional Surveyors, on October 9, 2015. National Society of Professional Surveyors, Inc., 5119 Pegasus Court, Suite Q, Frederick, MD 21704. http://www.nsps.us.com/

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http://www.alta.org/

http://www.nsps.us.com/

3.2 Title and Survey Matters A. General Title Insurance Requirements. Borrower and/or Lender are responsible for

providing the title documents, which HUD must review for initial closing.

1. Marketable title to the property must be vested in the Borrower on the date the Security Instrument is recorded. Please see 24 CFR §§ 200.61, 200.72, and 200.73.

2. The Multifamily Hub Director is responsible for:

a. Ensuring that the project is free of unacceptable liens and encumbrances, and the project complies with the regulations cited immediately above. Any title exceptions must be consistent with the anticipated financial structure of the project and must not adversely affect the project value or marketability, except to the extent accounted for by HUD in the underwriting of the project. The HUD Closing Attorney shall bring any questionable title exceptions to the Hub Director’s attention for review. When a clear determination cannot be made, the Hub Director shall refer the exception to Headquarters Office of Multifamily Housing Programs.

b. The Hub Director must determine that the project will not violate applicable zoning laws or regulations. See 24 CFR § 200.72. The zoning laws and regulations must permit the construction (if applicable) and operation of multifamily rental housing of the type covered under the applicable section of the National Housing Act.

c. Ensuring that the proposed construction contract documents and other contractual obligations do not violate any title conditions, covenants or restrictions identified by the HUD Closing Attorney. See MAP Guide Chapter 5 and 6 for Architectural Analysis and Cost Processing requirements.

d. Ensuring survey has been reviewed and HUD Closing Attorney has been provided with findings of completeness.

3. The HUD Closing Attorney is responsible for:

a. Making the Lender and Borrower aware of any objections to the selected Title Company or Title Agent, including prior negative experience.

b. Determining that the insured mortgage constitutes a valid enforceable first lien against the Mortgaged Property, provided that absent his or her knowledge to the contrary, the HUD Closing Attorney may rely on the title policy.

c. Ensuring the elimination of any unacceptable exceptions or conditions, including covenants and restrictions that violate federal law or the Regulatory Agreement.

d. Bringing any title exceptions or conditions, including air right provisions, leasehold contracts, use restrictions, easements, and maintenance agreements, to the Hub Director’s attention. The Hub Director shall decide whether to insure the loan with these exceptions.

4. Lender must provide a policy of title insurance that is acceptable to HUD, at no expense to HUD. The Note cannot be endorsed without delivery to HUD of an original title policy or of an alternative acceptable to the HUD Closing Attorney. Marked up title commitments are not acceptable.

B. Contents and Form of Title Insurance Policy.

1. The title policy must be issued by a title company and in an ALTA format acceptable to HUD, with an effective date the day of HUD’s endorsement of the Note.

2. Lender and/or the Secretary of Housing and Urban Development, “and their successors and/or assigns, as their interests may appear,” must be the named insureds of the policy. It may not name other parties such as junior lenders. The amount of the policy must be at least equal to the full amount of the insured loan.

3. The insured loan shall be shown as the first lien. The Security Instrument, and the Regulatory Agreement because it is incorporated in the Security Instrument, must appear in Schedule A, and any UCC-1 Financing Statement filed in the real estate records must appear in Schedule B, Part II.

4. No other monetary lien may be shown, except that approved secondary financing liens, and other liens approved by the Hub Director, may be shown as subordinate to the lien of the insured loan. Real estate taxes shall be shown as not yet due and payable; all due and payable taxes shall be paid prior to or at closing.

5. The legal description in the title policy, on the survey, and attached to all recorded documents shall match exactly, provided that minor differences, such as differences in abbreviations or other minor stylistic differences, are allowed.

6. Only exceptions acceptable to HUD may be listed. All standard exceptions, including those concerning the survey or matters that a survey would show and those concerning mechanic’s liens, must be deleted, except where such deletions are prohibited by applicable state law. Affirmative coverage shall be provided over any claims to project resources, such as water, patent reservations, etc. Mandatory arbitration requirements shall be deleted, except where such deletions are prohibited by state law.

7. Lender or Lender’s counsel, as applicable, must disclose in writing to HUD at the time of submission of the draft closing package whether or not the title policy is issued by a broker title agent. If the title policy is issued by a broker title agent, rather than issued directly by the national title company, the agent shall provide a so-called closing protection or insured closing letter, or other equivalent letter of authority, on the letterhead of the national title company, indicating that the agent has the authority to issue the policy, which letter must be issued to Lender and HUD, as its interests may appear.

C. Endorsements to Title Insurance Policy. The title insurance policy must include the endorsements listed immediately below. However, in the event state or local title practice requires or prohibits certain endorsements, or makes certain endorsements prohibitively expensive, the HUD Closing Attorney may permit endorsements other than those listed below if such endorsements provide substantially equivalent coverage. If HUD Field Counsel exercises its discretion in this area, HUD Field Counsel must ensure that the each state has a consistent approach to title policy endorsements that is applied uniformly for all transactions in that state.

1. Restrictions, Encroachments, Minerals, ALTA Endorsement Form 9-06 and Private Rights, ALTA Endorsement Form 9.6-06;

2. Access, ALTA Endorsement Form 17-06;

3. Zoning, ALTA Endorsement Form 3.2-06 based on plans and specifications (for unimproved land) or Form 3.1-06 (for improved land and upon final closing), each with parking; provided, however, that a zoning letter may be accepted by the HUD Closing Attorney instead of a zoning endorsement, if zoning endorsements are not permitted in the project jurisdiction or are (in Housing’s determination) prohibitively expensive;

4. Environmental Protection Lien, ALTA Endorsement Form 8.1-06;

5. Same as Survey, ALTA Endorsement Form 25-06;

6. Easement endorsements, including insurance over blanket easements or other easements that cannot be plotted;

7. Deletion of arbitration provisions, except where such deletions are prohibited by state law;

8. For Construction Loans with a Pending Disbursement clause, an endorsement, or a provision within the Pending Disbursement clause, stating the amount insured as of initial closing. At each draw for such loans, the amount insured must be sufficient to cover the total amounts drawn and the date of the title insurance policy brought forward to the date of the current draw, in a manner consistent with local practice (for example, a date down endorsement where such endorsement is consistent with local practice);

9. Leasehold, ALTA Endorsement Form 13.1-06, if a leasehold estate;

10. Any others determined necessary and appropriate by the HUD Closing Attorney.

D. ALTA Survey General Requirements.

1. An ALTA/NSPS Land Title Survey is required and must conform to the instructions set forth on form HUD-91073M, HUD Survey Instructions and Surveyor’s Report (including the Table A items listed and certification set forth in the form), which instructions relate both to form HUD-91073M, HUD Survey Instructions and Surveyor’s Report, and to the Survey that the surveyor must produce. The Survey shall be dated, signed and sealed within 120 days before initial closing, meaning that the field work was performed or updated no earlier than 120 days prior to closing. Local discretion, in accordance with local waiver procedures as applicable, is given to the HUB Director to waive the 120 day limit.

2. The Survey shall show all easements, apparent interests (including railroads) or encroachments upon the property or from the property onto contiguous parcels of land. These easements or encroachments must be acceptable to HUD.

a. All easements, restrictions and exceptions on the title policy shall be shown. Blanket easements that cannot be plotted shall be listed with their recording information.

b. Maintenance, joint use, easement and other agreements may be required. In cases where common facilities exist between the insured parcel and an adjacent parcel, Borrower must provide for recordation of an agreement for the common use of land and facilities (e.g., common drives, common lobbies, elevators, walkways, utility roads, parking structures, recreation facilities, storm water management facilities

(retention ponds detention ponds, swales and culverts) or other common facilities). The agreement must grant rights to the HUD project site and its tenants to use the common facilities.

c. If the HUD project is subject to condominium and property/homeowner association documents, these documents may provide for maintenance, access and cost sharing.

3. All access roads must be labeled as public or private roads.

4. Surveyor’s Report. Lender must provide form HUD-91073M, HUD Survey Instructions and Surveyor’s Report, signed within 120 days before initial closing by a licensed surveyor, not by an engineer, and bearing the surveyor's original signature and professional seal. Local discretion, in accordance with local waiver procedures as applicable, is given to the HUB director to waive the 120 day limit. The Surveyor’s Report supplements the ALTA/NSPS Land Title Survey, and must describe with specificity where the conditions described in the Surveyor’s Report are physically observed on the property.

E. Air Rights and Other Shared Interest Projects

1. For transactions involving air rights, a three dimensional air rights map is required. The existence of adequate vertical ways to the ground for required services (e.g., utility and fire suppression lines, chimneys, trash chutes, elevators and emergency exit stairs) must be verified. In addition, there must be an acceptable discharge to a public way from all building egresses, including emergency exits, and services (e.g., trash removal). See MAP Guide §11.5 (Title Matters) for additional requirements.

2. The Hub Director must:

a. Ensure that the integrity and maintenance of air rights platform foundations and other structural members are defined as the air rights provider's responsibility.

b. Verify that shared maintenance/operating costs are equitable and that enforcement rights protect the project interests.

c. Require easements, cross easements or other documents to provide the HUD project and its tenants the right to use the common facilities.

F. Projects Involving Leasehold Estates.

1. Ground Leases must conform to form HUD-92070M, Lease Addendum, which must be attached to or incorporated into the body of the Ground Lease, except as otherwise permitted for certain Section 223(a)(7) closings, as set forth in Section 2.2.C. of this Closing Guide.

2. The term of the leasehold must either (a) run for a term of 99 years and be renewable, or (b) satisfy the applicable following requirements:

a. for Sections 220 and 221(d) transactions, the term must run at least 10 years after the maturity date of the insured loan;

b. for Section 207/223(f) transactions, the term must run for at least 50 years from the date the Security Instrument is executed.

3. The leasehold estate must have been directly granted by the holder of the fee simple

estate (“landlord”). Unless otherwise approved by Housing, the landlord must be able to convey the fee to HUD in accord with form HUD-92070M without subdivision or any other government approval.

4. HUD must ensure the non-default status of the mortgaged leasehold at the time of endorsement. An estoppel certificate from the landlord dated within 30 days of the Note endorsement shall be required as a closing document. The landlord shall also confirm the property description is correct.

5. ALTA Endorsement Form 13.1-06 to the title insurance policy shall be required for Security Instruments secured by leaseholds.

G. Commercial Leases. Commercial leases must comply with the requirements as set forth in Section 4 of the Security Instrument, provided however that it is acknowledged that many commercial tenants will not execute a long-term lease unless they are given assurance of non-disturbance. Therefore, consistent with Housing Notice 2011-07 (or any successor Housing guidance), the Hub Director may approve the use of the form of Subordination, Non-Disturbance and Attornment Agreement promulgated by the referenced Notice for commercial leases, with modifications, as applicable, in accordance with Program Obligations. Unless otherwise provided by the Hub Director, telecommunications agreements, such as cable agreements, shall not be treated as commercial leases and shall not be subject to a Subordination, Non-Disturbance and Attornment Agreement.

H. Local Rent/Use Restrictions. Title encumbrances in the form of rent and affordability

restrictions imposed on a project by a local jurisdiction or governing body, and not in connection with secondary financing as discussed further below in Section 3.3.C. of the Closing Guide, must be carefully reviewed by HUD staff in accordance with the procedures for reviewing title encumbrances set forth in Section 3.2.A. of the Closing Guide, above. These restrictions greatly affect underwriting, project marketability and viability, and potentially HUD’s recovery value in a Note or asset sale.