19.4.11.9 Post-Closing Requirements for HUD Pre-Approval of SLP

A. If the closing timeline does not allow for this process to be completed prior to closing, pre-approval can be granted, and documents submitted after closing. Because the modified language set forth below makes approval conditional, the language may be used even if some or all of the required information has not been submitted to HUD prior to closing.

1. Requirements and Determinative Criteria. The same requirements for HUD pre-approval apply both before and after closing.

2. Revise LIHTC Rider . Revise paragraph 2(c) of the LIHTC Rider to the following:

   • Borrower has requested that HUD and Lender pre-approve the temporary replacement of the Borrower’s general partner/managing member (GP/MM) with [SPECIAL LIMITED PARTNER ENTITY] (Interim Replacement GP/MM) to act as an interim general partner/managing member in the event Equity Investor removes Borrower’s GP/MM for cause in accordance with Borrower’s organizational documents. If HUD grants Borrower’s request, HUD will send a letter to Interim Replacement GP/MM giving effect to, and providing evidence of, such pre-approval. Approval of such Interim Replacement GP/MM is expressly limited to a period not to exceed 90 days, which commences on the date of such removal, provided that HUD, in its sole discretion, may extend such 90-day period by an additional 30 days.

3. Notice of Decision. If HUD grants Borrower’s request and pre-approves the SLP, HUD will send the Investor and SLP a letter indicating such pre-approval. Sample language for an approval letter follows below. It is the Equity Investor’s responsibility to safeguard such evidence of pre-approval. If HUD denies Borrower’s request for SLP pre-approval, HUD will send written notice to the Equity Investor and SLP that the SLP has not been pre-approved and that paragraph 2 of the LIHTC Rider is inoperable as the preconditions of the paragraph have not been met. This notice does not preclude the SLP from curing any deficiencies and re-submitting a revised request for pre-approval.

4. Sample language for post-closing letters. The following sample language should be used, if necessary:

Sample language for letter granting SLP pre-approval post-closing:

This letter authorizes [Special Limited Partner Entity] to serve as the interim general partner/managing member of [Name of Borrower] (the Borrower) in accordance with the terms set forth in, and expressly limited by, the Rider to Security Instrument LIHTC Properties (LIHTC

MAP Guide, March 2021 Go to beginning of Chapter 19

Bookmarked Version Go to Acronym and Abbreviation List, Glossary, Index

Chapter 19 Page 19-55

To return to this page after clicking a link, press ALT + Back Arrow

Chapter 19 Closing Guide 19.4 Document and Diligence Requirements

Go to Table of Contents

Rider) attached to that certain [ Name of Security Instrument ] dated as of [date]. HUD’s review of the request for pre-approval has been conducted in accordance with the SPL review process.

Should [Special Limited Partner Entity] wish to serve as general partner/managing member for more than the interim period specified in the LIHTC Rider, it must: (1) submit a request for approval to serve as replacement general partner/managing member, (2) certify that none of the documents submitted pursuant to this preapproval request have changed ( i.e. , organizational documents have not been further amended, etc.,), and (3) complete an updated Previous Participation Clearance through HUD’s APPS system or form HUD-2530.

Sample language for letter denying SLP pre-approval post-closing:

This letter denies pre-approval of [Special Limited Partner Entity] to serve as the interim general partner/managing member of [Name of Borrower] (the Borrower). [Special Limited Partner Entity] had requested such pre-approval in accordance with the terms set forth in the Rider to Security Instrument LIHTC Properties (LIHTC Rider) attached to that certain [Name of Security Instrument] dated as of [date]. [Special Limited Partner Entity] has not met the requirements necessary for such pre-approval. Accordingly, paragraph 2 of the LIHTC Rider to Security Instrument has no force or effect.