19.6.5.3 Construction Requirements

A. Prior to commencement and during construction, Borrower is responsible for ensuring that the project complies with both HUD new construction/substantial rehabilitation Program Obligations, and applicable state and local laws, including zoning. See 24 CFR 200.72 and Part II of Consolidated Certifications - Borrower (form HUD-91070M). The Borrower and Borrower’s counsel must be able to confirm compliance at Final Endorsement. See Opinion 6 of Opinion of Borrower’s Counsel (form HUD-91725M), and Section (4) of Borrower’s Oath (form HUD-92478M).

B. At least 21 days prior to the start of construction, Lender’s counsel must submit drafts of the following documents for HUD review and approval:

1. Construction Contract (form HUD-92442M), including the attachments to the Construction Contract (the AIA-201 and Supplementary Conditions to the Construction Contract (form HUD-92554M));

2. Evidence of site control, and the right to legally access the site for purposes of construction;

3. HUD-approved set of contract drawings and specifications (see Appendix 5, Section A.5.5); and

4. Agreement and Certification (form HUD-93305M).

C. The HUD Closing Attorney and the RC Director will review and approve the required pre-construction documentation.

D. The HUD pre-construction conference must be completed prior to the start of construction, wherein HUD staff will review the applicable Davis-Bacon wage rates and labor documentation requirements and procedures. See Chapter 12, Section 12.2 and Section 19.2.3.

E. Assurance of Completion is not required for IUC closings. See Chapter 8, Section 8.13.A.4. At final endorsement, the General Contractor must address latent defects with Escrow Agreement for Latent Defects (HUD 92414M).

F. Contractor Guarantee Required. Between Project Substantial Completion and endorsement of the Note, Contractor’s work must be covered by a guarantee against defects due to faulty materials and/or poor workmanship. Article 3.B. of the Construction Contract (form HUD-92442M) defines Project Substantial Completion and Article 3.D. stipulates warranties commence with completion of each portion of the work.

G. Building Loan Agreement (form HUD-92441M) is not required for IUC closings.