Construction Contract: Article 1(A) is revised to require HUD`s written consent to ancillary agreements, as opposed to disclosure alone. Other revisions to the construction contract eliminate the potential for incentive payments for “lump sum” contracts and include exposure for the calculation of incentive payments for “cost plus” contracts. In addition, the construction contract has been revised to eliminate the potential for early start before the commitment, but leaves the potential for an early start after the commitment. The new credit documents generally reflect HUD`s efforts to bring the documents into compliance with the LEAN manual published last year. For example, the definition of “principal” has been revised in the safety instrument and regulatory agreements to refer to the LEAN manual, unlike the Code of Federal Regulations. The borrower`s revised regulatory agreement contains a section 38 list, which is executed by the main contracting authorities (this revision reflects the POP regulatory agreement). As part of this revision, the specific references to the main principles of the note and mortgage are replaced by a general reference to this addendum in section 38. In addition, the Borrowers` Regulatory Agreement (Section 29) and the Operators` Regulatory Agreement (Section 13) will be revised to refer to the Management Contract Addendum required by hud and to remove the specific requirements of the Management Agreement. Interconnection Agreement: There are a number of proposed changes to the Interconnection Agreement: (1) Section 2.7(b) has been revised to give FHA lenders an additional day to verify advances on overline (the lender now has two working days to apply to HUD for authorisation) and each application must include a security analysis provided by the AR lender. whereas such an approach is despicable; (2) A new section 2.7(h) provides three options for describing how the AR loan is cross-insured beyond HUD projects (joint and several liability, other HUD-approved or unen applicable agreement); (3) new sections 2.7 (i), (j) and (k) limit the availability of revenues from hud insured projects for the payment of non-HUD affiliation obligations; and (4) Section 3.3 has been revised to specifically allow the use of AR credits to reimburse unrelated management/consulting fees as a second priority. The documents in this publication were written on the aforementioned date and are based on laws, court decisions, administrative decisions and congressional documents that existed at that time and should not be construed as legal advice or legal advice on certain facts. The information contained in this publication is not intended to create an attorney/client relationship and the transmission and receipt of such information does not constitute an attorney-client relationship.
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