19.4.10.5 Restrictive Covenants/Tax Regulatory Agreement

A. The HUD Rider must be included in any bond document containing a restrictive covenant, either by attaching and incorporating the form by reference, or by incorporating the form provisions into the bond document itself. In bond financing, such restrictive covenants are often contained in the tax regulatory agreement. Inclusion of the HUD Rider is HUD’s uniform method for ensuring, consistent with Program Obligations, appropriate subordination, supremacy of HUD requirements, invalidity of any cross-default provisions, and that a default under the bond regulatory agreement will not result in a claim against the Project, mortgage Loan proceeds, Project rents, any reserve or deposit required by HUD in connection with the mortgage loan transaction, or other restricted income of the Project. See Section 19.4.9.5 for further discussion.