ÿWPC j¹.¹@שç>´Æ7Öyη ÿÛ¡Éëß³h!ˆ²ÕàÇd{,RSQÒ®9Îí©­o&æ>;­rÄëD Á5–ŠVÏ( W0©h `0n¹›Öiª)üämH÷ƒ2¥±X¥†B~Rú mÅ7Ã3`,U_*·ÐåxR'R2V—½g”õFËq3蜔Šr()Šf›"ý_×LÈ Õå§=l\4.i¯ïvŒÏõÉ—r«\œ™C”Þ‚m~ëÂèq›õRm;ï át˜ xÍ%Ix\JÁ„ƒZé~•øÔøþ<·r—åvßcŠÈißšö§C…ǃ¡ö H0†’X߉Ñ%S”ä]XÂ{>1Ä4D…!ÊãÔCêÌ¥dx—~ø+Î<¤xç|¨ŽUòÅà‘ý)’¦øñlCÁD)å$sYútŠÞÄȉ 0S~ 0CÑ 0C 03W BŠ B*§ BÑ Bî B B( CE UBˆ %Ê Ð Ð 0oØ Ø w@G 4‡ › Eª ª ª ª ̬ UJx x x ² U6tttttttttttttttttttttttttttttttttttttttttttttttttttttttttttttttttttttttttttttttttttttttttttttttttttttttttt 0oª(+4v$¡¡Ô€XÍý XX XÔÑ  Ñ(ÿÿ$òòÚ  ÚÚ  Úóó(ÿÿ$òòÚ  ÚÚ  Úóó( ÿÿ$Ó  Ó d&ÿÿ0 d dþÿ dýÿ düÿP Pdûÿ   d< Œ p`‹*Times New RomanTT< Œ p`‹*Times New RomanTT X(G3x$ªªÝ ƒ4v!ÝÔ€X«6XX XÔÑ  ÑÝ  Ý ®D¯°E±²[³D´µE¶·D@1däi{‹*Ti3|x· ÂÝ ƒx*ÝÔ€X«6XX XÔÝ  ÝÔ€X«6XXX«6ÔÔ€hÍÁhXX«6Ô1„19377.1/JJW:PHÐ ° ÐÔ"US ú/ú/úÔ11/30/95Ì),hä  Z 2CG Times (W1) Regular ¨Ý ƒˆx)ÝÔ€X«6XX XÔÝ  ÝßA€) °°xdOLE°¯xAßÐ ° ÐHMIP:€Distribution:à0 ¸ àW„3„1,€W„2(H)(ZAOO)(OGC),W„4(H)(OGC),R„1,R„2,R„3-1(H)(RC),Ð ¿ ÐR-3„2,R„3„3,R„6,R„6„2,R„7,R„7„2,R„8Ð ¸ (#¸ (# ÐÌPrevious€Editions€Are€Obsoleteà€44?(#àHUD21B(3„80)ˆÐ ß Ðà€ÊÊ@(#àGPO€871€902),hä  Z times roman(G3x$©©Ý ƒ4v!ÝÔ€X«6XX XÔÑ  ÑÝ  Ýñ·ñ›Ö€ÿÿÖñ·ñ›Ñ7€åéXdðdÈ7ÑÑ ! ÑÖ€ÿÿÖÝ ƒ4vÿÝÔ€X«6XX XÔÑ  ÑÝ  Ýà€(#àò òU.S.€Department€of€Housing€and€Urban€Developmentó óˆÐ ° Ðà€VV(#àH€O€U€S€I€N€G€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€ˆÌÌßA€) °°xdE°xAßÐ €Ð ÐÌSpecial€Attention€of:à ¸ àà  àà h àà À àò òNoticeó ó€€€H€95„66€(HUD)Ð Ï ÐÌSecretaryððs€Representatives;ÌState€Coordinators;€Directorsà h àà À àœIssued:›€€€7/25/95Ð O Ÿ Ðof€Housing;€Directors€of€Multi„à h àà À àExpires:€7/31/96Ð ?   Ðfamily€Housing;€and€Chiefà  àà h àà À àà€(#(#K(#àßA€)°°hdEÀÝ hA߈Ð /   ÐCounselsà ` àà ¸ àà  àà h àà À àCross€References:à€ÐÐ;(#àHB€4430.01€REV„1ˆÐ o  Ðà€¦¦B(#àHB€4425.1ˆÌà€ÐÐ;(#àHB€4350.01€REV„1ˆÌà€>>=(#àForm€HUD„92466ßA€) °°xdE°xA߈Ð ï?  ÐSubject:Ìà0  àRequirements€for€Accepting€Limited€Liability€œCompanies›€and€Partnerships€asÏMortgagor€Entities€for€Insured€Multifamily€Housing€ProjectsÐ (#(# ÐÌA.à  àòòPURPOSEóó:€€This€Notice€provides:Ð Ÿï ÐÌà  à1.à0 ` àòòImplementing€Instructionsóó€concerning€the€acceptance€of€limited€liabilityÐ Ï Ðcompanies€(LLCS)€as€mortgagor€entities,€and€as€general€partners€or€partners€ofÏmortgagor€entities,€for:Ð ` (#` (# ÐÌà  àà ` àa.à0 ¸ àNew€applications€for€mortgage€insurance,€andÐ?¸ (#¸ (# ÐÌà  àà ` àb.à0 ¸ àThe€transfer€of€physical€assets€(TPA)€to€a€LLC,€the€conversion€from€aÐ o Ðpartnership€mortgagor€entity€to€a€LLC,€the€conversion€of€œthe€general›Ïpartner€of€a€limited€partnership€(LP)€mortgagor€or€partner€of€a€generalÏpartnership€(GP)€mortgagor€to€a€œLLC,›€and€the€transfer€of€interests€toÏnew€members€in€a€LLC€mortgagor.Ð ¸ (#¸ (# ÐÌ2.à0  àòòRequirements€for€The€Organizational€Documentsóó€of€LPS€and€GPs€for€new€applicationsÐ ¿"! Ðfor€mortgage€insurance€and€TPAs€to:Ð (#(# ÐÌà  àa.à0 ` àHelp€protect€HUD's€interests€in€the€mortgage€and€to€preclude€modification€ofÐ %ß $ Ðthe€partnership€agreements€in€a€manner€that€would€violate€HUD's€requirements,ÏandÐ ` (#` (# ÐÌœñ·ñÖ€¿Öñ·ñ›à  àb.à0 ` àMaintain€consistent€HUD€requirements€in€certain€areas€of€concern€in€whichÐ O)Ÿ$( Ðmortgagor€entities€function€essentially€the€same.Ð ` (#` (# ÐÌB.à  àòòBACKGROUND€„„€LLCs€AS€MORTGAGORSóó:Ð ,o'+ ÐÐ -_(,!  Ðà  à1.à0 ` àòòIndustry€and€Staff€Inquiriesóó€indicate€an€increasing€interest€in€LLCs€asÐ ` ° Ðmortgagors€and€general€partners.Ð ` (#` (# ÐÌà  à2.à0 ` àòòCurrent€Statutory€and€Regulatory€Provisionsóó€do€not€preclude€acceptance€ofÐ 0 € ÐLLCs€as€mortgagors€for€the€mortgage€insurance€programs,€subject€to€certainÏprovisions.€€ñ€ñòòñ€ñSeeñ€ñóóñ€ñ€Sections€207(b)(2),€œ213(a)(3)ññ,ññ›€220(d)(2),€221(d)(3),€221(d)(4),Ð `  Ð231(c)(4),€232(d)(1)€and€234(d)€of€the€National€Housing€Act€and€24€CFRÏSections€207.17(a),€220.505(a),€221.510(a)(2),(c),(d)(2),€and€(e),€231.1,Ï231.2(f),€232.20(a)€and€234.501€which€incorporates€207.17(a).Ð ` (#` (# ÐÌà  à3.à0 ` àòòLLC€œLegislationóóñ‚ñ,ñ‚ñ›€has€not€originated€from€a€uniform€act€as€did€LP€legislation,Ð À Ðtherefore,€variations€between€state€provisions€affecting€LLCs€are€moreÏextensive€than€for€LPS,€and€greater€attention€to€organizational€documents€isÏrequired€by€the€mortgagors'€and€HUD's€attorneys.Ð ` (#` (# ÐÌC.à0  àòòBACKGROUND€„„€PARTNERSHIP€ORGANIZATIONAL€DOCUMENTS:óó€ThereÐ pÀ Ðhave€been€limited€instructions€and€a€lack€of€uniform€guidance€regarding€provisions€inÏthe€organizational€documents€for€GP€and€LP€mortgagor€entities€concerning€theÏmodification€of€those€documents€in€a€manner€that€would€affect€HUD's€interests.€òò(See,Ð @ Ðe.g.óó,€Instructions€to€Closing€Attorney€at€p.1€of€Form€HUD„92466.)€This€Notice€givesÐ 0€ Ðadditional€guidance€in€this€area.Ð (#(# ÐÌD.à0  àòòCOMMITMENT€REQUIREMENTS€FOR€LLCS,€GPs€AND€œLPñƒñSñƒñ›œñ„ñsñ„ñ›€ASÐ P ÐMORTGAGORS:óóÐð@(#(# ÐÌ1.à0  àòòNew€Commitment:óó€When€an€application€is€made€for€a€LLC,€GP€or€LP€mortgagor,Ð Ð  Ðinclude€as€special€conditions€of€the€Firm€Commitment€compliance€with:€(1)€the€"HUDÏRequirements€for€LLC,€GP€and€LP€Mortgagors"€in€paragraph€F€below,€and€(2)€theÏrequirement€for€"Specimen€Provisions€for€Organizational€Documents"€set€forth€inÏparagraph€G€below.Ð (#(# ÐÌ2.à0  àòòExisting€Commitment:óó€When€the€sponsor€wishes€to€change€to€a€LLC,€GP€or€LPÐ p&À!$ Ðmortgagor€after€HUD€has€issued€a€Firm€Commitment€that€does€not€call€for€complianceÏwith€paragraphs€F€and€G,€the€existing€Firm€Commitment€may€be€amended€by€òòmutualóóÐ P( #& Ðagreement€between€HUD,€the€mortgagee€and€the€sponsor€to€add€as€special€conditionsÏthe€mortgagor's€compliance€with€paragraphs€F€and€G€below.Ð (#(# ÐÐ  +p&) Ðà  àà ` àa.à0 ¸ àRecite€in€a€letter€accompanying€the€amended€Firm€Commitment€œthatñ…ñ„ñ…ññ†ñ€ñ†ñthe›Ð ° Ðnew€special€conditions€are€in€consideration€of€HUD's€agreeing€to€acceptÏa€change€in€mortgagor.Ð ¸ (#¸ (# ÐÌà  àà ` àb.à0 ¸ àThe€mortgagor€and€mortgagee€shall€evidence€their€consent€to€theÐ pÀ Ðamendment€by€returning€the€HUD€letter€bearing€their€signed€statementÏof€acceptance€or€by€separate€letter€on€the€mortgagee's€letterhead.Ð ¸ (#¸ (# ÐÌE.à  àòòUNACCEPTABLE€CONDITIONS€INCLUDE:óóÐ 0 € ÐÌà  à1.à0 ` àòòA€LLC,€GP,€or€LP€Mortgagoróó€that€does€not€meet€the€requirements€ofÐ `  Ðparagraphs€F€and€G€below.Ð ` (#` (# ÐÌà  à2.à0 ` àòòThe€Following€œñ‡ñoñ‡ññˆñOñˆñccur›€Without€Prior€Written€HUD€Approval:óóÐà0 ` (#` (# ÐÌà  àà ` àa.à0 ¸ àConversion€of:ÐÀ¸ (#¸ (# ÐÌà  àà ` àà ¸ à(1)à0  àA€GP€or€LP€mortgagor€to€a€LLC€mortgagor,Рð(#(# ÐÌà  àà ` àà ¸ à(2)à0  àThe€partner€of€a€GP€mortgagor€to€a€LLC,€Ð€Ð(#(# ÐÌà  àà ` àà ¸ à(3)à0  àThe€general€partner€of€a€LP€mortgagor€to€a€LLC,€orÐ`°(#(# ÐÌà  àà ` àb.à0 ¸ àSubstitution€or€addition€of€a€new€LLC€member.Ð@¸ (#¸ (# ÐÌà  àà ` àNOTE:à0  àSuch€unauthorized€actions€are€subject€to€HUD's€enforcementÐ  p Ðactions,€œregardñ‰ñ„ñ‰ñless›€of€potentially€conflicting€state€laws.Ð (#(# ÐÌà  à3.à0 ` àòòMortgagor€Proposals€Conflict€With€HUD€Requirements:óóÐð@` (#` (# ÐÌà  àà ` àa.à0 ¸ àIt€is€expected€that€HUD€generally€will€rely€upon€a€LLC's€complianceÐ Ð  Ðwith€paragraphs€F€and€G€below,€including€the€opinions€of€mortgagor'sÏcounsel.Ð ¸ (#¸ (# ÐÌà  àà ` àb.à0 ¸ àThe€Director€of€Housing,€however,€may€reject€a€LLC€as€a€mortgagor€orÐ $à" Ðgeneral€partner€of€a€LP€or€GP€mortgagor€if€HUD's€Local€CounselÏadvises€that€state€law€or€provisions€of€a€LLC's€Articles€of€œñŠñoñŠññ‹ñOñ‹ñrganization,›ÏOperating€Agreement€or€other€controlling€documents,€howeverÏdesignated,€conflict€with€HUD's€requirements.Ð ¸ (#¸ (# Ðâ âÐ @)$' Ðà  àà ` àNOTE:à0  àGreater€reliance€upon€a€single€comprehensive€national€instructionÐ ° Ðmay€be€possible€upon€gaining€greater€experience€in€stateÏvariations€and€court€interpretations€for€such€mortgagor€entities.Ð (#(# Ðâ âÌF.à0  àòòHUD€REQUIREMENTS€FOR€LLC,€GP€and€LP€MORTGAGORS:óó€The€type€ofÐ pÀ Ðmortgagor€subject€to€each€requirement€is€identified€within€brackets€[].€€Note€thatÏmortgagors€still€are€subject€to€other€requirements€contained€in€outstanding€regulationsÏand€guidelines.Ð (#(# ÐÌà  à1.à0 ` àAll€LLC€members€must€execute€a€rider€to€the€HUD€note,€mortgage€andÐ  p  ÐRegulatory€Agreement,€in€accordance€with€paragraph€H.€of€this€Notice,€thatÏmakes€them€individually€liable€to€HUD€as€guarantors:€[LLC]Ð ` (#` (# ÐÌà  àà ` àa.à0 ¸ àFor€funds€or€property€of€the€Project€coming€into€their€hands,€which€byÐ à0  Ðthe€provisions€of€the€Regulatory€Agreement,€they€are€not€entitled€toÏretain;Ð ¸ (#¸ (# ÐÌà  àà ` àb.à0 ¸ àFor€their€own€acts€and€deeds,€or€acts€and€deeds€of€others€which€theyÐ  ð Ðhave€authorized,€in€violation€of€the€provisions€of€the€RegulatoryÏAgreement;€andÐ ¸ (#¸ (# ÐÌà  àà ` àc.à0 ¸ àFor€their€acts€which€violate€statutes€governing€the€conduct€of€owners€ofÐ `° Ðmultifamily€projects€with€FHA„insured€mortgages.Ð ¸ (#¸ (# ÐÌà  àà ` àNOTE:à0  àThe€guaranty€of€each€member€in€his€or€her€individual€capacity€isÐ 0€ Ðrequired€because€some€members€might€assert€that€the€state€lawÏunder€which€their€LLC€is€organized€does€not€permit€a€member€ofÏa€LLC€to€undertake€liability€as€a€member€of€the€LLC.Ð (#(# ÐÌà  à2.à0 ` àIn€addition€to€paragraph€1.€above,€any€member„manager,€member€withÐ à0 Ðgovernance€interests€equalling€or€exceeding€10€percent,€or€member€withÏfinancial€interests€equalling€or€exceeding€25€percent,€shall€be€liable€on€a€jointÏand€several€basis,€in€the€amount€of€any€loss,€damage€or€cost€(including€but€notÏlimited€to€attorneys'€fees)€resulting€from€fraud€or€intentional€misrepresentationÏby€the€mortgagor,€the€mortgagor's€agents€or€employees€or€a€member€of€theÏmortgagor€in€connection€with€obtaining€the€loan€evidenced€by€the€note,€or€inÏcomplying€with€any€of€the€mortgagor's€obligations€under€the€loan€documents.€Ï[LLC]Ð ` (#` (# ÐÌà  à3.à0 ` àAny€member€of€a€LLC€mortgagor€and€LLC€general€partner€or€partner€must€be€aÐ @)$' Ðnatural€person.€[LLC]Ð ` (#` (# ÐÐ  +p&) Ðà  à4.à0 ` àThe€entity€must€be€formed,€or€qualified€as€a€foreign€entity,€under€the€laws€ofÐ ° Ðthe€state€in€which€the€insured€property€or€proposed€insured€property€is€located,Ïi.e.,€the€property€jurisdiction.€[LLC/GP/LP]Ð ` (#` (# ÐÌà  à5.à0 ` àThe€articles€of€organization€must€be€executed€in€accordance€with€state€law.€Ð pÀ Ð[LLC]Ð ` (#` (# ÐÌà  à6.à0 ` àThe€LLC€must€be€governed€by€an€operating€agreement€that€is€executed€by€allÐ @  Ðmembers.€[LLC]Ð ` (#` (# ÐÌà  à7.à0 ` àThe€partnership€agreement€must€be€executed€in€accordance€with€state€law€andÐ `  Ðexecuted€by€all€general€partners,€and€where€applicable,€all€limited€partners.Ï(GP/LP)Ð ` (#` (# ÐÌà  à8.à0 ` àAny€specified€duration€of€the€mortgagor€entity€in€its€organizational€documentsÐ Ð  Ðmust€not€be€less€than€the€term€of€the€HUD„insured€or€coinsured€mortgage,Ïincluding€the€construction€period€when€insured€advances€are€a€consideration.€Ï[LLC/GP/LP]Ð ` (#` (# ÐÌà  à9.à0 ` àThe€entity€must€be€a€single„asset€entity€as€described€in€paragraph€6(f)€of€theÐ €Ð ÐRegulatory€Agreement,€Form€HUD„92466.€[LLC/GP/LP]Ð ` (#` (# ÐÌà  à10.à0 ` àThe€entity€must€have€authority€to€legally€purchase€or€hold€in€its€own€name€aÐ P  Ðmortgageable€interest€in€real€property€in€the€property€jurisdiction.€Ï[LLC/GP/LP]Ð ` (#` (# ÐÌà  à11.à0 ` àThe€organizational€documents€may€not€contain€any€provision€that€is€inconsistentÐ ` Ðwith€the€obligations€to€be€undertaken€by€the€mortgagor€under€the€note;Ïmortgage,€deed€of€trust€or€security€deed;€security€agreement;€and€regulatoryÏagreement.€[LLC/GP/LP]Ð ` (#` (# ÐÌà  à12.à0 ` àThe€operating€agreements€for€LLCs€and€partnership€agreements€for€GPs€andÐ À! ÐLPS€must€include€provisions€stating€that:Ð ` (#` (# ÐÌà  àà ` àa.à0 ¸ àIf€any€of€the€provisions€of€the€organizational€documents€conflict€with€theÐ $à" Ðterms€of€the€note;€mortgage,€deed€of€trust€or€security€deed;€securityÏagreement€or€HUD€Regulatory€Agreement€("Regulatory€Agreement"),Ïthe€provisions€of€the€note,€mortgage,€deed€of€trust,€security€deed,Ïsecurity€agreement€or€Regulatory€Agreement€will€control.€[LLC/GP/LP]Ð ¸ (#¸ (# Ðâ âÐ @)$' Ðà  àà ` àb.à0 ¸ àNo€provision€required€by€HUD€to€be€inserted€into€the€organizationalÐ ° Ðdocuments€may€be€amended€without€prior€HUD€approval,€so€long€asÏHUD€is€the€insurer€or€holder€of€the€œnote.ñŒñ„ñŒñññ€ññ[LLC/GP/LP]›Ð ¸ (#¸ (# Ðâ âÌà  àà ` àc.à0 ¸ àAny€party€acquiring€any€of€the€following€positions€anew€must€meet€theÐ pÀ Ðapplicable€requirements€for€HUD€previous€participation€clearance:€Ï[LLC/GP/LP]Ð ¸ (#¸ (# ÐÌà  àà ` àà ¸ à(1)à0  àManager€of€the€mortgagor€entity€whether€or€not€a€mortgagorÐ 0 € Ðmember,Ð (#(# ÐÌà  àà ` àà ¸ à(2)à0  àGeneral€partner,ÐP (#(# ÐÌà  àà ` àà ¸ à(3)à0  àLLC€member€with€10€percent€or€greater€governance€interest,€andÐà0 (#(# ÐÌà  àà ` àà ¸ à(4)à0  àLimited€partner€or€LLC€member€with€25€percent€or€greaterÐ À Ðfinancial€interest.Ð (#(# ÐÌà  àà ` àd.à0 ¸ àSo€long€as€the€Secretary€of€HUD€or€the€Secretary's€successors€or€assignsÐ à Ðis€the€insurer€or€holder€of€the€note€on€the€project,€without€the€priorÏwritten€approval€of€the€œñŽñsñŽñññSññecretary:›Ð ¸ (#¸ (# ÐÌà  àà ` àà ¸ à(1)à0  àThe€mortgagor€entity€may€not€be€voluntarily€dissolved€orÐ P  Ðchanged€to€another€type€of€entity€[LLC/GP/LP],Ð (#(# ÐÌà  àà ` àà ¸ à(2)à0  àThe€partner€of€a€GP€mortgagor€or€general€partner€of€a€LPÐ  p Ðmortgagor€may€not€be€voluntarily€changed€to€a€LLC€[GP/LP],ÏandÐ (#(# ÐÌà  àà ` àà ¸ à(3)à0  àA€member€may€neither€be€added€nor€substituted.€[LLC]Ðà0(#(# ÐÌà  à13.à0 ` àThe€mortgagor€entity€shall:€€[LLC/GP/LP]ÐÀ!` (#` (# ÐÌà  àà ` àa.à0 ¸ àDesignate€an€official€œrepresentativeñ‘ñ[ñ‘ñsññ]ññ›€for€all€matters€concerning€theÐ  #ð! Ðproject€which€require€HUD€consent€or€approval,€and€the€signature€ofÏthis€person€œñ’ñ(ñ’ññ“ñ[ñ“ñthese›€persons]€shall€bind€the€mortgagor€in€all€such€matters,Ð ¸ (#¸ (# ÐÌà  àà ` àb.à0 ¸ àIdentify€where€a€œpartner„managerñ”ñ(ñ”ññ•ñ[ñ•ñs]›€or€member„manager[s]€is€vestedÐ `'°"% Ðwith€management€authority€in€any€project€matters€other€than€noted€inÏparagraph€a.€above,€and€identify€such€management€authority€andÏmanager[s],€andÐ ¸ (#¸ (# ÐÐ  +p&) Ðà  àà ` àc.à0 ¸ àThe€mortgagor€may€from€time€to€time€appoint€a€new€representative€toÐ ° Ðperform€such€functions,€but€within€3€business€days€of€doing€so,€shallÏprovide€HUD€with€written€notification€of€the€name,€address,€andÏtelephone€number€of€its€new€œrepresentativeñ˜ñ[ñ˜ñsñ–ñ]ñ–ññ—ññ–ñ€ñ–ññ—ñ.›Ð ¸ (#¸ (# ÐÌà  à14.à0 ` àWhere€appropriate€because€of€state€law,€include€provisions€for€the€followingÐ ` ° Ðconcerns€in€the€Articles€of€Organization€in€addition€to€or€in€lieu€of€theirÏinclusion€in€the€Operating€Agreement,€as€may€be€provided€by€paragraph€G€ofÏthis€Notice:€[LLC]Ð ` (#` (# ÐÌà  àà ` àa.à0 ¸ àDuration€of€the€LLC,Ð` ¸ (#¸ (# ÐÌà  àà ` àb.à0 ¸ àThe€right€to€continue€the€LLC€after€dissociation€of€member,€andÐð@ ¸ (#¸ (# ÐÌà  àà ` àc.à0 ¸ àVesting€of€management€authority€in€a€member„manager€for€all€mattersÐ Ð  Ðconcerning€the€project€which€require€HUD€consent€or€approval.Ð ¸ (#¸ (# ÐÌà  à15.à0 ` àIf€the€mortgagor€is€a€LLC,€in€addition€to€the€other€legal€opinions€to€be€providedÐ  ð Ðwithin€the€comprehensive€opinion€of€mortgagor's€counsel€required€œbyñ™ñ„ñ™ññšñ€ñšñHUD›ÏHandbook€4430.1€REV„1,€"Initial€Closing€for€Project€Mortgages":€€[LLC]Ð ` (#` (# ÐÌà  àà ` àa.à0 ¸ àMortgagor's€attorney€must€opine€to€the€authority€of€the€LLC's€members,Ð `° Ðunder€applicable€state€laws€and€the€LLC's€organizational€documents,€toÏexecute€and€perform€under€the€terms€of€the€Regulatory€Agreement€andÏthe€LLC€Rider€to€the€Note,€Mortgage€and€Regulatory€Agreement;Ð ¸ (#¸ (# ÐÌà  àà ` àb.à0 ¸ àIf€the€property€jurisdiction€is€not€the€state€of€formation€for€the€LLC,Ð ` Ðmortgagor's€attorney€must€opine€that€the€LLC€is€qualified€to€hold€title€toÏreal€property€and€transact€business€in€the€property€jurisdiction;Ð ¸ (#¸ (# ÐÌà  àà ` àc.à0 ¸ àLocal€Office€Counsel€may,€in€their€discretion,€require€additional€legalÐ Ð  Ðopinions€or€legal€analysis€regarding€the€LLC€from€mortgagor's€orÏmortgagee's€counsel€as€appropriate€in€light€of€state€law.Ð ¸ (#¸ (# ÐÌà  àà ` àNOTE:à0  àThe€current€"Guide€for€Opinion€of€Mortgagor's€Counsel"€shouldÐ $à" Ðbe€adapted€to€include€any€legal€opinions€of€mortgagor's€counselÏrequired€or€permitted€by€this€paragraph.Ð (#(# ÐÌG.à0  àòòSPECIMEN€PROVISIONS€FOR€ORGANIZATIONAL€DOCUMENTS:óó€The€operatingÐ P( #& Ðagreement€for€each€LLC€mortgagor,€and€the€partnership€agreement€for€each€GP€and€LPÏmortgagor€(whether€organized€as€the€initial€mortgagor€for€an€insured€mortgage€or€inÏñ•ñœñ•ñrelation€to€a€TPA€or€conversion)€must€include€provisions€substantially€as€providedÐ  +p&) Ðbelow.€€Mortgagor's€attorney€must€make€appropriate€modifications€to€the€specimenÏprovisions€to€reflect€applicable€terminology€for€the€specific€type€of€mortgagor€entity,Ïand€pertinent€state€provisions,€and€to€conform€the€document€with€HUD's€requirements.€ÏAs€examples:€Make€the€following€substitutions€for€general€partnerships€and€limitedÏpartnerships:€€"General€Partnership"€or€"Limited€Partnership"€for€"Company,"Ï"Partnership€Agreement"€for€"Operating€Agreement,"€and€"Partner"€for€"Member."Ð (#(# ÐÌòò"HUD€REQUIREMENTSóó.Ð @  ÐÌ1.à0  àSo€long€as€the€Secretary€of€The€Department€of€Housing€and€Urban€DevelopmentÐ  p  Ð("Secretary")€or€the€Secretary's€successors€or€assigns€is€the€insurer€or€holder€of€theÏnote€secured€by€the€[insert€mortgage,€deed€of€trust€or€security€deed]€on€[insert€project'sÏname€and€FHA€project€number]€in€[insert€the€city€or€county€and€state]€(the€"Project"),Ïno€amendment€to€the€Articles€of€Organization€or€the€Company's€œñ›ñoñ›ññœñOñœñperating›€AgreementÏdated€[insert€date]€(the€"Operating€Agreement")€that€results€in€any€of€the€following€willÏhave€any€force€or€effect€without€the€prior€written€consent€of€the€Secretary:Ð (#(# ÐÌà  àa.à0 ` àAny€amendment€that€modifies€the€term€of€the€Company;Рð` (#` (# ÐÌà  àb.à0 ` àAny€amendment€that€activates€the€requirement€that€a€HUD€previousÐ €Ð Ðparticipation€certification€be€obtained€from€any€additional€member;Ð ` (#` (# ÐÌà  àc.à0 ` àAny€amendment€that€in€any€way€affects€the€note,€[insert€mortgage,€deed€of€trustÐ P  Ðor€security€œdeedññ)ñññžñ]ñžñ,›€or€security€agreement€on€the€Project€or€the€RegulatoryÏAgreement€between€HUD€and€the€Company€(the€"Regulatory€Agreement");Ð ` (#` (# ÐÌà  àd.à0 ` àAny€amendment€that€would€authorize€any€member€other€than€the€Manager€orÐ ` Ðpreapproved€Successor€Manager€to€bind€the€Company€for€all€matters€concerningÏthe€project€which€require€HUD's€consent€or€approval;Ð ` (#` (# ÐÌà  àe.à0 ` àA€change€in€the€Manager€or€preapproved€Successor€Manager€of€the€Company;Ð Ð  ÐorÐ ` (#` (# ÐÌà  àf.à0 ` àAny€change€in€a€guarantor€of€any€obligation€to€the€Secretary.Р#ð!` (#` (# ÐÌ2.à0  àThe€Company€is€authorized€to€execute€a€note,€[insert€mortgage,€deed€of€trust,€orÐ €%Ð # Ðsecurity€deed]€and€security€agreement€œñŸñ„›€ñŸñin›€order€to€secure€a€loan€to€be€insured€by€theÏSecretary€and€to€execute€the€Regulatory€Agreement€and€other€documents€required€byÏthe€Secretary€in€connection€with€the€HUD„insured€loan.Ð (#(# ÐÌ3.à0  àAny€incoming€member€must€as€a€condition€of€receiving€an€interest€in€the€CompanyÐ 0*€%( Ðagree€to€be€bound€by€the€note,€[insert€mortgage,€deed€of€trust,€or€security€deed],Ð  +p&) Ðsecurity€agreement,€the€Regulatory€Agreement€and€any€other€documents€required€inÏconnection€with€the€HUD„insured€loan€to€the€same€extent€and€on€the€same€terms€as€theÏother€members.Ð (#(# ÐÌ4.à0  àNotwithstanding€any€other€provisions€of€the€œñ ñoñ ññ¡ñOñ¡ñperating›€Agreement€or€the€Articles€ofÐ pÀ Ðœñ¢ñoñ¢ññ£ñOñ£ñrganization,›€upon€any€dissolution,€no€title€or€right€to€possession€and€control€of€theÏProject,€and€no€right€to€collect€the€rents€from€œñ¤ñ.›€ñ¤ñthe›€Project,€shall€pass€to€any€person€whoÏis€not€bound€by€the€Regulatory€Agreement€in€a€manner€satisfactory€to€the€Secretary.Ð (#(# ÐÌ5.à0  àNotwithstanding€any€other€provisions€of€this€Operating€Agreement€or€the€Articles€ofÐ  p  ÐOrganization,€in€the€event€that€any€provision€of€this€Operating€Agreement€or€theÏArticles€of€Organization€conflicts€with€the€Regulatory€Agreement,€the€provision€of€theÏRegulatory€Agreement€shall€control.Ð (#(# ÐÌ6.à0  àSo€long€as€the€Secretary€or€the€Secretary's€successors€or€assigns€is€the€insurer€or€holderÐ Ð  Ðof€the€note€on€the€Project,€the€Company€may€not€voluntarily€be€dissolved€without€theÏprior€written€approval€of€the€Secretary.Ð (#(# ÐÌ7.à0  àThe€members,€and€any€assignee€of€a€member,€agree€to€be€liable€in€their€individualÐ à Ðcapacities€to€HUD€with€respect€to€the€following€matters:Ð (#(# ÐÌà  àa.à0 ` àFor€funds€or€property€of€the€Project€coming€into€their€hands,€which€by€theÐ `° Ðprovisions€of€the€Regulatory€Agreement,€they€are€not€entitled€to€retain;€andÐ ` (#` (# ÐÌà  àb.à0 ` àFor€their€own€acts€and€deeds,€or€acts€and€deeds€of€others€which€they€haveÐ 0€ Ðauthorized,€in€violation€of€the€provisions€of€the€Regulatory€Agreement."Ð ` (#` (# ÐÌH.à0  àòòSPECIMEN€LLC€RIDER€TO€THE€REGULATORY€AGREEMENT:óó€Before€HUDÐ P Ðinsures€a€loan€to€a€LLC,€approves€a€TPA€to€a€LLC,€approves€the€conversion€of€theÏmortgagor€from€a€partnership€to€a€LLC,€or€approves€the€conversion€of€the€generalÏpartner€of€a€limited€partnership€mortgagor€or€partner€of€a€general€partnershipÏmortgagor€to€a€LLC,€the€LLC€shall€sign€a€standard„form€Regulatory€Agreement€and€aÏrider€substantially€as€provided€below,€and€amended€where€appropriate€to€comply€withÏapplicable€state€law.€€The€closing€attorney€is€to€ensure€that€the€Regulatory€AgreementÏitself€specifically€refers€to€and€incorporates€the€rider€and€that€òòall€membersóó€of€the€LLCÐ $à" Ðsign€the€Regulatory€Agreement€òòandóó€the€rider.Ѐ%Ð #(#(# ÐÌà0  àð ðòòLLC€RIDER€TO€NOTE,€MORTGAGE,€AND€REGULATORY€AGREEMENTóóÐ`'°"%(#(# ÐÌà0  àà ` àIn€further€consideration€of€the€endorsement€for€insurance€by€the€Secretary€ofÏHousing€and€Urban€Development€("HUD")€of€the€note€between€___________________Ï("the€Owner")€and€___________________,€dated€_______________€__,€199_,€or€inÐ  +p&) Ðconsideration€of€the€consent€of€the€Secretary€to€1)€the€transfer€of€the€mortgagedÏproperty,€2)€the€sale€and€conveyance€of€the€mortgaged€property€by€the€Secretary,€3)€theÏconversion€of€the€mortgagor€from€a€partnership€to€a€limited€liability€company,€or€4)€theÏconversion€of€the€general€partner€of€a€limited€partnership€mortgagor€or€partner€of€aÏgeneral€partnership€mortgagor€to€a€limited€liability€company,€and€in€order€to€complyÏwith€the€requirements€of€the€National€Housing€Act,€as€amended€and€the€regulationsÏadopted€by€the€Secretary€pursuant€thereto,€the€œñ¥ñoñ¥ññ¦ñOñ¦ñwners›€agree€as€described€below€forÏthemselves,€their€successors,€heirs€and€assigns,€in€connection€with€the€mortgagedÏproperty€and€the€project€operated€thereon€and€so€long€as€the€contract€of€mortgageÏinsurance€continues€in€effect€and€during€such€further€period€of€time€as€the€SecretaryÏshall€be€the€owner,€holder,€or€reinsurer€of€the€mortgage,€or€during€any€time€theÏSecretary€is€obligated€to€insure€a€mortgage€on€the€mortgaged€property.€€The€signatoriesÏto€this€document€undertake€the€following€obligations€in€their€individual€capacities€asÏguarantors€and€as€members€of€the€Owner,€and€the€consideration€described€above€runsÏto€the€signatories€in€both€capacities.€€The€following€provisions€are€added€to€and€made€aÏpart€of€the€project€Mortgage€Note,€Mortgage,€and€Regulatory€Agreement,€all€datedÏ___________€__,€199_.Ð (#(# ÐÌà  à1.à0 ` àIf€any€provision€of€the€Owner's€Articles€of€Organization,€Operating€Agreement,Ð à Ðother€organizational€documents,€or€any€later€amendment€to€those€documents,Ïconflicts€with€the€terms€of€the€project€loan€documents€(e.g.,€the€note,€mortgage,Ïdeed€of€trust,€security€agreement,€security€deed€and/or€this€RegulatoryÏAgreement),€the€provisions€of€the€project€loan€documents€will€control.Ð ` (#` (# ÐÌà  à2.à0 ` àNotwithstanding€any€provision€of€state€law€to€the€contrary,€any€signatory€to€thisÐ 0€ Ðrider€receiving€funds€of€the€project€other€than€by€distribution€of€surplus€cash€asÏauthorized€in€paragraph€œñ§ñ___,€ñ§ñabove,›€shall€immediately€deposit€such€funds€in€theÏproject€bank€account€and€failing€to€do€so€in€violation€of€this€Agreement€shallÏhold€such€funds€in€trust.€€Notwithstanding€any€provision€of€state€law€to€theÏcontrary,€any€signatory€to€this€rider€receiving€property€of€the€project€inÏviolation€of€this€agreement€shall€immediately€deliver€such€property€to€theÏproject€and€failing€to€do€so€shall€hold€such€property€in€trust.Ð ` (#` (# ÐÌà  à3.à0 ` àNotwithstanding€any€provision€of€state€law€to€the€contrary,€all€signatories€to€thisÐ  #ð! Ðrider€are€liable€for:Ð ` (#` (# ÐÌà  àà ` àa.à0 ¸ àFunds€or€property€of€the€project€coming€into€their€hands€which,€by€theÐ p&À!$ Ðprovisions€hereof,€they€are€not€entitled€to€retain;€andÐ ¸ (#¸ (# ÐÌà  àà ` àb.à0 ¸ àTheir€own€acts€and€deeds€or€acts€and€deeds€of€others€which€they€haveÐ @)$' Ðauthorized€in€violation€of€the€provisions€hereof;Ð ¸ (#¸ (# ÐÐ  +p&) Ðà  à4.à0 ` àNotwithstanding€any€provision€of€state€law€to€the€contrary,€any€member„Ð ° Ðmanager,€member€with€governance€interests€equalling€or€exceeding€10€percent,Ïor€member€with€financial€interests€equalling€or€exceeding€25€percent,€who,€onÏthe€date€of€the€Regulatory€Agreement€to€which€this€Rider€is€attached,€includeÏthe€following:€___________________,€shall€be€liable€on€a€joint€and€severalÏbasis,€in€the€amount€of€any€loss,€damage€or€cost€(including€but€not€limited€toÏattorneys'€fees)€resulting€from€fraud€or€intentional€misrepresentation€by€theÏmortgagor,€the€mortgagor's€agents€or€employees,€or€a€member€of€mortgagor€inÏconnection€with€obtaining€the€loan€evidenced€by€the€note,€or€in€complying€withÏany€of€the€mortgagor's€obligations€under€the€loan€documents.Ð ` (#` (# ÐÌà  à5.à0 ` àAll€signatories€to€this€rider€will€be€considered€agents€of€the€Owner€for€theÐ P  Ðpurpose€of€establishing€liability€under€the€double€damages€provision€at€12ÏU.S.C.€ðð1715z„4a€and€the€equity€skimming€penalty€under€12€U.S.C.€ðð1715z„¼19,€unless€HUD€agrees€in€writing€to€the€contrary.Ð ` (#` (# ÐÌà  à6.à0 ` àEach€signatory€to€this€rider€will€be€individually€liable€for€payment€of€the€entireÐ ° Ðamount€of€any€civil€money€penalty€imposed€on€the€mortgagor€pursuant€toÏSection€537€of€the€National€Housing€Act,€12€U.S.C.€ðð1735f„15.Ð ` (#` (# ÐÌà  à7.à0 ` àThe€owner€has€designated€__________________€as€its€official€representative€forÐ pÀ Ðall€matters€concerning€the€project€which€require€HUD€consent€or€approval.€€TheÏsignature€of€this€person€will€bind€the€Owner€in€all€such€matters.€€The€OwnerÏmay€from€time€to€time€appoint€a€new€representative€to€perform€this€function,Ïbut€within€3€business€days€of€doing€so,€will€provide€HUD€with€writtenÏnotification€of€the€name,€address,€and€telephone€number€of€its€newÏrepresentative.€€When€a€member€other€than€the€member€identified€above€has€fullÏor€partial€authority€for€management€of€the€project,€the€owner€will€promptlyÏprovide€HUD€with€the€name€of€that€member€and€the€nature€of€that€member'sÏmanagement€authority."Ð ` (#` (# ÐÌà  à8.à0 ` àNotwithstanding€any€provision€of€state€law€to€the€contrary,€no€signatory€to€thisÐ À! Ðrider€shall€have€any€right€of€subrogation€or€indemnification€against€the€OwnerÏor€the€property€of€the€project€by€reason€of€any€payment€made€or€liabilityÏincurred€pursuant€to€this€rider€or€any€statute€to€which€this€rider€refers.Ð ` (#` (# ÐÌI.à  àòòLLC€MORTGAGOR€REVIEWS:óóÐ p&À!$ ÐÌà  à1.à0 ` àòòMortgage€Credit€Examineróó€must€review€credit€reports€and€the€financialÐ P( #& Ðstatements€for€the€managing€member(s)€and€each€member€with€a€10€percent€œorñ©ñ„ñ©ññ¨ññ¨ññ«ññªñ€ñªññ«ññ¨ñÏñ¨ñgreater›€ownership€interest,€except€that€financial€statements€are€not€requiredÏwhere€the€LLC€is€fully€capitalized.Ð +p&)` (#` (# Їà  à2.à0 ` àòòConduct€Previous€Participation€Clearance€Reviewsóó€for€all€members€withÐ ° Ðmanagement€authority,€all€members€owning€at€least€a€10€percent€interest€in€theÏLLC,€and€if€applicable,€all€officers€and€non„member€managers.Ð ` (#` (# ÐÌà  à3.à0 ` àòòLocal€Office€Counselóó€must€review€the€opinion€of€mortgagor's€attorney€to€ensureÐ pÀ Ðthat€the€proposed€LLC€is€legally€able€to€meet€HUD€requirements.Ð ` (#` (# ÐÌJ.à0  àòòGP€AND€LP€MORTGAGOR€REVIEWS:óó€Continue€all€reviews€as€provided€inÐ @  Ðoutstanding€instructions,€and€review€for€compliance€with€paragraphs€F€and€G€above.Ð (#(# ÐÌK.à0  àòòTPAs€AND€OTHER€TRANSFERS€INVOLVING€LLC€MORTGAGORS:óóÐ` (#(# ÐÌà  à1.à0 ` àòòEvery€New€Member€of€a€LLCóó,€regardless€of€the€percentage€or€type€ofÐ ð@  Ðparticipation,€or€means€of€acquisition,€must€sign€the€Regulatory€Agreement€andÏRider€in€accordance€with€paragraph€H€above.Ð ` (#` (# ÐÌà  à2.à0 ` àòòAll€TPAsóó€must€comply€with€the€requirements€of€paragraphs€F€and€G€of€thisÐ ° ÐNotice,€and€be€reviewed€in€accordance€with€Handbook€4350.1,€Chapter€13€andÏits€Appendices€A€and€B,€œñ¬ñAñ¬ññ­ñañ­ñs›€modified€herein.Ð ` (#` (# ÐÌà  àà ` àa.à0 ¸ àòòFull€Project€Complianceóó€must€be€evidenced€for€paragraphs€b,€c€and€dÐ pÀ Ðbelow€by€a€HUD€site€inspection€and/or€mortgagor's€certification€as€theÏDirectors€of€Housing€may€determine€at€their€discretion.Ð ¸ (#¸ (# ÐÌà  àà ` àb.à0 ¸ àòòAppendix€A€Review€and€Fee€of€Fifty€œñ®ñcñ®ññ¯ñCñ¯ñentsóó›€per€thousand€dollars€of€theÐ 0€ Ðface€amount€of€the€original€mortgage€is€required€for€a:Ð ¸ (#¸ (# ÐÌà  àà ` àà ¸ à(1)à  àTransfer€of€title:Ð P ÐÌà  àà ` àà ¸ àà  à(a)à0 h àFrom€the€mortgagor„seller€to€the€buyer,€includingÐ à0 Ðconveyance€by€an€installment€sales€contract,€land€contractÏor€wrap„around€mortgage,€orÐ h(#h(# ÐÌà  àà ` àà ¸ àà  à(b)à0 h àResulting€from€a€mortgagor€entity€conversion€to€a€LLC,Ð  #ð! Ðwhere€applicable€state€laws€entail€a€transfer€of€title€fromÏthe€existing€entity€to€the€LLC,€andÐ h(#h(# ÐÌà  àà ` àà ¸ à(2)à0  àTransfer€of€any€interest€in€a€LLC€which€causes€a€dissolution€ofÐ `'°"% Ðthe€LLC€under€applicable€state€law.Ð (#(# ÐÌà  àà ` àc.à0 ¸ àòòAppendix€B€Review€and€Fee€of€Fifty€Centsóó€per€thousand€dollars€of€theÐ 0*€%( Ðface€amount€of€the€original€mortgage€is€required:Ð +p&)¸ (#¸ (# Їà  àà ` àà ¸ à(1)à0  àWhere€more€than€50€percent€of€the€governance€interests€areÐ ° Ðtransferred€or€reallocated€by€a€single€action,€or€any€series€ofÏactions,Ð (#(# ÐÌà  àà ` àà ¸ à(2)à0  àWhere€there€is€a€change€of€control€resulting€from€a€mortgagorÐ pÀ Ðconversion€to€a€LLC€that€does€not€involve€a€transfer€of€title,€orÏthe€conversion€of€a€LP€or€GP€mortgagor's€general€partner€to€aÏLLC,Ð (#(# ÐÌà  àà ` àà ¸ à(3)à0  àWhere€there€is€a€substitution€or€addition€of€a€member„managerÐ  p  Ðthat€has€not€undergone€reviews€for€previous€participationÏclearance,€or€credit€and€financial€statements€for€the€subject€Ïmortgage€within€six€months,€andÐ (#(# ÐÌà  àà ` àà ¸ à(4)à0  àFor€all€transactions,€not€otherwise€identified€in€this€paragraph€KÐ Ð  Ðthat€result€in€a€change€of€control€of€the€company.Ð (#(# ÐÌà  àà ` àd.à ¸ àòòAppendix€B€Review€and€Local€Office€Determined€Fee:óóÐ  ð ÐÌà  àà ` àà ¸ à(1)à  àApplicable€conditions:Ð €Ð ÐÌà  àà ` àà ¸ àà  à(a)à0 h àA€single€transfer€of€between€10€percent€and€50€percentÐ `° Ðgovernance€interest,€orÐ h(#h(# ÐÌà  àà ` àà ¸ àà  à(b)à0 h àA€single€transfer€of€between€25€and€50€percent€ofÐ 0€ Ðfinancial€interests.Ð h(#h(# ÐÌà  àà ` àà ¸ à(2)à0  àA€fee€shall€be€charged€for€site€inspection,€document€review€andÐ P Ðrelated€tasks,€as€determined€appropriate€by€the€Director€ofÏHousing€in€consultation€with€Local€Office€Counsel:Ð (#(# ÐÌà  àà ` àà ¸ àà  à(a)à0 h àAfter€discussion€with€mortgagor€regarding€the€nature€andÐ À! Ðcomplexity€of€the€transaction,€andÐ h(#h(# ÐÌà  àà ` àà ¸ àà  à(b)à0 h àNot€to€exceed€50€cents€per€thousand€dollars€of€the€faceÐ $à" Ðamount€of€the€original€mortgage.Ð h(#h(# ÐÌà  àà ` àe.à0 ¸ àòòNo€TPA€Review€or€Feeóó,€but€signed€Regulatory€Agreement€and€Rider€toÐ `'°"% Ðnote,€mortgage€and€Regulatory€Agreement€required€for€each€memberÏwhere€there€is:Ð ¸ (#¸ (# ÐÌà  àà ` àà ¸ à(1)à0  àA€single€transfer€of€less€than€10€percent€governance€interest,€orÐ +p&)(#(# Їà  àà ` àà ¸ à(2)à0  àA€single€transfer€of€less€than€25€percent€of€financial€interestsÐ ° Ðonly.Ð (#(# ÐÌL.à0  àòòCONVERSIONS€TO€LLC€MORTGAGORSóó€require€prior€HUD€written€consent€to€theÐ €Ð Ðconversion,€whether€or€not€the€applicable€state€laws€treat€the€new€LLC€as€the€sameÏentity€from€which€it€was€converted.€€A€failure€to€obtain€HUD's€written€consent€shall€beÏtreated€as€an€unauthorized€transfer€and€be€subject€to€enforcement€measures.€€HUD'sÏconsent€to€the€proposed€conversion€shall€be€conditioned€as€follows:Ð (#(# ÐÌà  à1.à0 ` àòòTitle€Transfer€Involvedóó€as€a€result€of€applicable€state€laws.€€Comply€withÐ  p  Ðparagraph€K.2.b.€of€this€Notice.Ð ` (#` (# ÐÌà  à2.à0 ` àòòManagement€Control€Changedóó€due€to€any€change€in€the€management€authorityÐ ð@  Ðor€governance€interests€arising€from€the€conversion,€but€there€is€no€transfer€ofÏtitle,€comply€with€paragraph€œKñ°ñ„ñ°ññ±ñ.ñ±ñ2.c.›€of€this€Notice.€€If€both€a€change€inÏmanagement€control€and€title€transfer€are€involved,€comply€with€paragraphÏK.2.b.Ð ` (#` (# ÐÌà  à3.à0 ` àòòTitle€Transfer/Control€Change€Not€Involvedóó,€i.e.,€there€is€a€statutoryÐ à Ðconversion€of€a€GP€or€LP€mortgagor€in€which€all€existing€partners€remain€asÏmembers€of€the€LLC€without€change€in€ownership€interests€or€managementÏauthority,€under€state€laws€the€LLC€is€"for€all€purposes€the€same€entity€thatÏexisted€before€the€conversion,"€and€all€property€of€the€converted€partnership€isÏeither€vested€in€the€LLC€without€further€act€or€deed,€or€remains€with€theÏconverted€entity.€€The€following€apply:Ð ` (#` (# ÐÌà  àà ` àa.à0 ¸ àMortgagor€must€comply€with€the€requirements€of€paragraphs€F€and€G€ofÐ ` Ðthis€Notice,Ð ¸ (#¸ (# ÐÌà  àà ` àb.à0 ¸ àHUD€must€receive€a€proposed€title€binder€or€letter€from€the€companyÐ à0 Ðissuing€the€original€mortgagee's€title€policy€that€shows€that€after€theÏconversion:Ð ¸ (#¸ (# ÐÌà  àà ` àà ¸ à(1)à0  àThe€mortgage€will€remain€a€first€lien€on€the€property,€andР#ð!(#(# ÐÌà  àà ` àà ¸ à(2)à0  àThe€mortgagee€and€HUD€will€still€be€protected€by€a€mortgagee'sÐ €%Ð # Ðtitle€policy,Ð (#(# ÐÌà  àà ` àc.à0 ¸ àFull€project€compliance€must€be€evidenced€by€a€HUD€site€inspectionÐ P( #& Ðand/or€mortgagor's€certification€at€the€discretion€of€the€Director€ofÏHousing,Ð ¸ (#¸ (# ÐÐ  +p&) Ðà  àà ` àd.à0 ¸ àMortgagor's€attorney€must€opine:а¸ (#¸ (# ÐÌà  àà ` àà ¸ à(1)à0  àThat€the€LLC€complies€with€paragraph€F.4€of€this€Notice,Ðà(#(# ÐÌà  àà ` àà ¸ à(2)à0  àIn€accordance€with€paragraphs€F.15.a€and€b€of€this€Notice,€andÐpÀ(#(# ÐÌà  àà ` àà ¸ à(3)à0  àThat€the€conversion€will€not€alter€any€outstanding€obligation€ofÐ P   Ðthe€mortgagor€or€its€partners€under€the€mortgage€documents,€andÐ (#(# ÐÌà  àà ` àe.à0 ¸ àPayment€of€a€conversion€fee€determined€in€accordance€with€paragraphÐ  p  ÐK.2.d.(2)€above.Ð ¸ (#¸ (# ÐÌM.à  àòòLLC€GENERAL€PARTNERS€OF€LP€OR€GP€MORTGAGORS:óóÐ ð@  ÐÌà  à1.à0 ` àòòAny€LLC€That€is€or€Will€be€a€General€Partner€or€Partneróó€of€a€proposed€orÐ Ð  Ðexisting€mortgagor€must€comply€with€the€requirements€and€instructions€in€thisÏNotice€for€LLCs€as€mortgagors,€e.g.:Ð ` (#` (# ÐÌà  àà ` àa.à0 ¸ àAny€LLC€general€partner€of€a€LP€or€GP€mortgagor€must€comply€withÐ à Ðparagraphs€F€and€G€of€this€Notice,€andÐ ¸ (#¸ (# ÐÌà  àà ` àb.à0 ¸ àAll€members€of€the€LLC€must€sign€the€Regulatory€Agreement€and€aÐ `° ÐLLC€rider€to€the€note,€mortgage,€and€Regulatory€Agreement.Ð ¸ (#¸ (# ÐÌà  à2.à0 ` àòòConversion€to€añ²ñóóñ²ñ€LLCñ²ñóóñ²ñ€of€the€general€partner€of€an€existing€LP€mortgagor€orÐ 0€ Ðpartner€of€an€existing€GP€mortgagor€also€requires:Ð ` (#` (# ÐÌà  àà ` àa.à0 ¸ àPrior€HUD€written€consent€to€the€conversion€whether€or€not€the€stateÐ P Ðlaw€treats€the€new€LLC€as€the€same€entity€from€which€it€was€converted,Ð ¸ (#¸ (# ÐÌà  àà ` àb.à0 ¸ àFull€project€compliance,€which€may€be€evidenced€at€the€Director€ofÐ Ð  ÐHousing's€discretion€by€a€HUD€site€inspection€and/or€mortgagor'sÏcertification,€andÐ ¸ (#¸ (# ÐÌà  àà ` àc.à0 ¸ àPayment€of€a€conversion€fee€determined€in€accordance€with€paragraphÐ $à" ÐK.2.d.(2)€above.Ð ¸ (#¸ (# ÐÌN.à0  àòòAPPLICABILITY:óó€The€provisions€of€this€Notice€are€effective€immediately.€€QuestionsÐ `'°"% Ðregarding€this€Notice€should€be€addressed€as€follows:Ð (#(# ÐÌà  à1.à0 ` àòòDevelopment€Issues:óó.€€Office€of€Insured€Multifamily€Housing€Development,Ð 0*€%( ÐPolicies€and€Procedures€Division€at€(202)€708„1113.Ð +p&)` (#` (# Їà  à2.à0 ` àòòManagement€Issues:óó€Office€of€Multifamily€Housing€Management,€OperationsÐ ° ÐDivision€at€(202)€708„0547.Ð ` (#` (# ÐÌà  à3.à0 ` àòòLegal€Issues:óó€œñ³ñoñ³ññµññ´ñPñ´ññµññ¶ñOñ¶ñffice›€of€Insured€Housing,€Assistant€General€Counsel,Ð €Ð ÐMultifamily€Mortgage€Division,€at€(202)€708„4090.Ð ` (#` (# ÐÌÌÌà  àà ` àà ¸ àà  àà h àà À à____________________________________Ìà  àà ` àà ¸ àà  àà h àà À àNicolas€P.€RetsinasÌà  àà ` àà ¸ àà  àà h àà À àAssistant€Secretary€for€Housing„Ìà  àà ` àà ¸ àà  àà h àà À à€€Federal€Housing€CommissionerÌ