19.4.11.2 Subordination of Restrictive Covenants

A. As a condition of receiving an allocation of LIHTCs pursuant to Section 42 of the Internal Revenue Code, Borrower will execute and record a Land Use Restriction Agreement (LURA) or similarly named restrictive covenant imposing affordability restrictions on the Project. The LURA must incorporate the Rider to Restrictive Covenants (see Section 19.15), which subordinates the LURA among other objectives. See Section 19.4.9.5 for further discussion. The LURA should be recorded no later than Final Endorsement or Initial/Final endorsement, as applicable. If the LURA cannot be recorded by Final (or Initial/Final), a draft LURA with the HUD Rider must be submitted with the closing package for HUD review and approval prior to Endorsement. Additionally, Borrower must certify to HUD that the approved draft will be recorded as soon as practicable. In such cases, Lender must include the certification and the approved draft LURA in the Closing Docket. If, between the time of HUD’s approval and the recordation of the HUD Rider, the state financing agency allocating the tax credits requires further modifications to the previously reviewed draft, such changes must be resubmitted to the HUD Closing Attorney in blackline format for further review and consideration. Copies of the recorded LURA, consistent with the finally approved draft, must be submitted to the RC Director and HUD Closing Attorney as soon as possible after recording.