19.6.1.9 Projects with Expanded Work

A. Section 223(f) transactions involving Level 2 or Level 3 Alterations or per-unit repair and alteration costs of $15,000 or more (223(f) with Expanded Work), often involving LIHTC, are closed as standard 223(f) transactions, with the following possible additional requirements as set out in the Firm Commitment. Projects meeting this expanded work criteria must be closed using the Expanded Work Closing Checklist.

1. Construction Contract. If a General Contractor is required by Chapter 5, Section 5.3.3, Lender’s Counsel must submit the AIA Document A107-2017 Owner-Contractor Agreement, with the additions and deletions report attached. The HUD Closing Attorney will review for completeness (dates, parties, signatures, description of work) and for material additions and deletions to the contract that should be reviewed by the RC Director for programmatic acceptability. Deletions that absolve one party from primary responsibility are not permitted.

2. Owner/Architect Agreement. If a Project Architect is required by Chapter 5, Section 5.3, Lender’s Counsel must submit AIA Document B104-2017 Owner-Architect Agreement, with the additions/deletions report attached. The HUD Closing Attorney will review for completeness (dates, parties, signatures, description of work), and for material additions and deletions to the contract that should be reviewed by the RC Director. The AIA B104 form may not be altered in general, except for the deletion of binding arbitration and mediation provisions. Deletions that absolve one party from primary responsibility are not permitted. If there is an identity of interest between the owner and design Architect, there must be an unaffiliated Supervisory Architect with a separate AIA Document B1042017 agreement between the Borrower/Owner and the non-IOI Supervisory Architect. See Chapter 5, Section 5.2.

3. Dimension Drawings. The Lender will collect and distribute the drawings and specifications in the same fashion as the instructions stated in Chapter 5, Section 5.8.5.

4. Building Permits. Lender’s Counsel must submit evidence satisfactory to the RC Director demonstrating that Borrower has obtained all building permits, other local permits, governmental approvals, and architectural plans required by the applicable building official(s) to complete the Expanded Work. The HUD Closing Attorney will review for completeness (finality, dates, parties, signatures, description of work). The permits, plans, and approvals must be final (issued by the date of closing) and unconditional, unless otherwise approved by the RC Director in consultation with the HUD Closing Attorney.

5. Other Closing Requirements. The following guidance addresses common questions regarding HUD’s policy and form completion for 223(f) transactions with Expanded Work. See also Section 223(f) with Expanded Work Closing Checklist.

   • Regulatory Agreement. Selections in paragraphs 2, 5, 7, and 8 are to be selected as for a Refinance.

• Request for Endorsement of Credit Instrument (form HUD-92455M). Any references to construction and the Certificate of General Contractor are to be stricken.

• Agreement and Certification (form HUD-93305M). The General Contractor should not be a party to the Agreement and Certification.

• Borrower’s Oath (form HUD-92478M). Paragraph 4 shall be stricken.

MAP Guide, March 2021 Go to beginning of Chapter 19

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

Chapter 19 Page 19-77

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

Chapter 19 Closing Guide 19.6 Requirements for Acquisition/Refinance and Other FHA Insurance Programs

Go to Table of Contents

• Davis- Bacon Wage Rate Determination. Davis-Bacon prevailing wages are not required under the National Housing Act.

  • Escrow Agreement for Deferred Repairs (form HUD-92476.1M). This agreement is used to assure completion of repairs and alterations and may be revised as appropriate to incorporate a disbursement agreement or LIHTC equity pay-in schedule where the escrow is not being fullyfunded at the closing.

• Surety. Payment and Performance Bonds are generally not required unless otherwise indicated by the Firm Commitment.

B. Additional requirements may be applicable depending on the transaction. See e.g., Chapter 3, Section 3.7.