19.5.5.8 Side Agreements

A. Article 1 of the Construction Contract requires all side agreements, including documents defining business agreements between identity of interest parties on transactions involving Builder’s and Sponsor’s Profit and Risk Allowance (BSPRA), between the Borrower and General Contractor be disclosed to HUD and provided to the HUD Closing Attorney with the Construction Contract. Such side agreements must include language that in the event of a conflict between the side agreement and the Construction Contract, the Construction Contract will prevail. The HUD Closing Attorney will ensure the required conflicts language is included but will not otherwise review the side agreement.

Note: HUD policy is that the A201 may not be altered or amended, except with regard to the arbitration provisions in the form. See Section 19.5.5.1. As such, side agreements may only address matters outside of the material terms of the Construction Contract, and may not negate the rights, obligations, or any other material terms of the Construction Contract, including the form A201.