19.4.8.3 Litigation Disclosure

A. Litigation docket searches for the Borrower and Borrower’s general partner, managing member, or similar controlling person(s) or entity(ies), must be conducted in the state, federal district, and bankruptcy courts of the Project jurisdiction and in the jurisdiction of their principal places of business.

B. All litigation identified by a required docket search and any other claim threatened in writing and known to Borrower or Borrower’s Counsel (including litigation arising after the date of the litigation docket search but prior to closing), must be disclosed to the HUD Closing Attorney in writing. This disclosure must be accompanied by an explanation from the Borrower and/or an assessment of risk by Borrower's Counsel to the reasonable satisfaction of the Lender and HUD. The explanation/assessment must describe the nature of the litigation or claim, the status of the proceeding, and whether insurance is/will cover potential liability. Lender’s Counsel is responsible for obtaining any information requested by the HUD Closing Attorney or the RC Director.

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Chapter 19 Closing Guide 19.4 Document and Diligence Requirements

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