RESERVE FOR REPLACEMENT Clause Samples

RESERVE FOR REPLACEMENT. Borrower shall establish and maintain a Reserve for Replacement account for defraying certain costs for replacing major structural elements and mechanical equipment of the Project or for any other purpose. The Reserve for Replacement shall be deposited with Lender or in a safe and responsible depository designated by Lender in accordance with Program Obligations. Such funds shall at all times remain under the control of Lender or ▇▇▇▇▇▇’s designee, whether in the form of a cash deposit or invested in obligations of, or fully guaranteed as to principal by, the United States of America or in such other investments as may be allowed by HUD and shall be held in accounts insured or guaranteed by a federal agency and in accordance with Program Obligations. Borrower shall deposit at endorsement of the Note an initial amount of $__ _, if applicable, and Borrower shall deposit a monthly amount of $__ __, concurrently with the beginning of payments towards amortization of the Note unless a different date or amount is established by HUD. At least every ten years, starting   [Insert New Project Capital Needs Assessment (PCNA) Due Date], and more frequently at HUD’s discretion, Borrower shall submit to HUD a written analysis of its use of the Reserve for Replacement during the prior ten years and the projected use of the Reserve for Replacement funds during the coming ten years in accordance with Program Obligations. The amount of the monthly deposit may be increased or decreased from time to time at the written direction of HUD without a recorded amendment to this Agreement. In connection therewith, every ten years starting   [Insert New PCNA Due Date], the Lender shall obtain a physical and capital needs assessment report for HUD to evaluate. The cost of such report may be paid from the Reserve for Replacements. HUD may, in its sole discretion, require Borrower to maintain a minimum balance in the account, in an amount to be set by HUD. [Insert if applicable: The amount of such required minimum balance is: __ __] [Insert the following sentence, if applicable: In addition to the required monthly deposits to the said reserve fund, the balance in the replacement reserve fund existing with respect to the Project under FHA Project No. __ ___ [Insert old FHA Project Number] shall be transferred to the replacement reserve fund to be established pursuant to this Agreement under FHA Project No. ___ __ [Insert New FHA Project Number]. Borrower shall carry ...