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single dwelling accommodations by the tenant thereof, shall be
<br />prohibited without prior written approval of Owners and the
<br />Secretary and any lease shall so provide. Upon discovery of any
<br />unapproved sublease, Owners shall immediately demand cancellation
<br />and notify the Secretary thereof.
<br />(b) Upon prior written approval by the Secretary, Owners may charge to
<br />and receive from any tenant such amounts as from time to time may
<br />be mutually agreed upon between the tenant and the Owners for any
<br />facilities and/or services which may be furnished by the Owners or
<br />others to such tenant upon his request, in addition to the facilities and
<br />services included in the approved rental schedule. Approval of
<br />charges for facilities and services is not required for any project not
<br />subject to regulation of rent by the Secretary.
<br />(c) For any project subject to regulation of rent by the Secretary, the
<br />Secretary will at any time entertain a written request for a rent
<br />increase properly supported by substantiating evidence and within a
<br />reasonable time shall:
<br />(i) Approve a rental schedule that is necessary to compensate for
<br />any net increase, occurring since the last approved rental
<br />schedule, in taxes (other than income taxes) and operating and
<br />maintenance cost over which Owners have no effective control
<br />or;
<br />(ii) Deny the increase stating the reasons therefor.
<br />5. (a) If the mortgage is originally a Secretary-held purchase money
<br />mortgage, or is originally endorsed for insurance under any Section
<br />other than Sections 231 or 232 and is not designed primarily for
<br />occupancy by elderly persons, Owners shall not in selecting tenants
<br />discriminate against any person or persons by reason of the fact that
<br />there are children in the family.
<br />(b) If the mortgage is originally endorsed for insurance under Section
<br />221, Owners shall in selecting tenants give to displaced persons or
<br />families an absolute preference or priority of occupancy which shall
<br />be accomplished as follows:
<br />(1) For a period of sixty (60) days from the date of original
<br />offering, unless a shorter period of time is approved in writing
<br />by the Secretary, all units shall be held for such preferred
<br />applicants, after which time any remaining unrented units may
<br />be rented to non - preferred applicants;
<br />(2) Thereafter, and on a continuing basis, such preferred applicants
<br />shall be given preference over nonpreferred applicants in their
<br />placement on a waiting list to be maintained by the Owners; and
<br />(3) Through such further provisions agreed to in writing by the
<br />parties.
<br />(c) Without the prior written approval of the Secretary not more than
<br />25% of the number of units in a project insured under Section 231
<br />shall be occupied by persons other than elderly persons.
<br />(d) All advertising or efforts to rent a project insured under Section 231
<br />shall reflect a bona fide effort of the Owners to obtain occupancy by
<br />elderly persons.
<br />201107532
<br />(a) Convey, transfer, or encumber any of the mortgaged property, or
<br />permit the conveyance, transfer or encumbrance of such property.
<br />(b) Assign, transfer, dispose of, or encumber any personal property of the
<br />project, including rents, or pay out any funds except from surplus
<br />cash, except for reasonable operating expenses and necessary repairs.
<br />(c) Convey, assign, or transfer any beneficial interest in any trust holding
<br />title to the property, or the interest of any general partner in a
<br />partnership owning the property, or any right to manage or receive the
<br />rents and profits from the mortgaged property.
<br />(d) Remodel, add to, reconstruct, or demolish any part of the mortgaged
<br />property or subtract from any real or personal property of the project.
<br />(e) Make, or receive and retain, any distribution of assets or any income
<br />of any kind of the project except surplus cash and except on the
<br />following conditions:
<br />(1) All distributions shall be made only as of and after the end of a
<br />semiannual or annual fiscal period, and only as permitted by the
<br />law of the applicable jurisdiction; all such distributions in any
<br />one fiscal year shall be limited to six per centum on the initial
<br />equity investment, which shall be determined by the
<br />Secretary; the right to such distribution shall be cumulative;
<br />(2) No distribution shall be made from borrowed funds, prior to the
<br />completion of the project or when there is any default under this
<br />Agreement or under the note or mortgage;
<br />(3) Any distribution of any funds of the project, which the party
<br />receiving such funds is not entitled to retain hereunder, shall be
<br />held in trust separate and apart from any other funds; and
<br />(4) There shall have been compliance with all outstanding notices of
<br />requirements for proper maintenance of the project.
<br />(f) Engage, except for natural persons, in any other business or activity,
<br />including the operation of any other rental project, or incur any
<br />liability or obligation not in connection with the project.
<br />(g) Require, as a condition of the occupancy or leasing of any unit in the
<br />project, any consideration or deposit other than the prepayment of the
<br />first month's rent plus a security deposit in an amount not in excess of
<br />one month's rent to guarantee the performance of the covenants of the
<br />lease. Any funds collected as security deposits shall be kept separate
<br />and apart from all other funds of the project in a trust account the
<br />amount of which shall at all times equal or exceed the aggregate of all
<br />outstanding obligations under said account.
<br />(h) Permit the use of the dwelling accommodations or nursing facilities of
<br />the project for any purpose except the use which was originally
<br />intended, or permit commercial use greater than that originally
<br />approved by the Secretary.
<br />7. Owners shall maintain the mortgaged premises, accommodations and the
<br />grounds and equipment appurtenant thereto, in good repair and condition.
<br />In the event all or any of the buildings covered by the mortgage shall be
<br />destroyed or damaged by fire or other casualty, the money derived from any
<br />insurance on the property shall be applied in accordance with the terms of
<br />the mortgage.
<br />6. Owners shall not without the prior written approval of the Secretary:
<br />8. Owners shall not file any petition in bankruptcy or for a receiver or in
<br />insolvency or for reorganization or composition, or make any assignment
<br />Replaces FHA -2466 which may be used until supply exhausted Page 2 of 8 Form HUD -92466 (11/2002)
<br />ref Handbook 4571.1
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