EXHIBIT 10.13
FHA FORM NO. 2466
Revised November 1969
(Previous Revision obsolete)
U.S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
FEDERAL HOUSING ADMINISTRATION
REGULATORY AGREEMENT FOR MULTI-FAMILY HOUSING PROJECTS
(Under Sections 207, 220, 221(d)(4),
231 and 232, Except Nonprofits)
Project No. 075-32563-P.M.
Mortgagee First Wisconsin Trust Company (present)
original Mortgage - Mortgage Associates, Inc.
Amount of Mortgage Note $3,335,800.00 Date October 29, 1979
Mortgage: Recorded: October 29, 1979 Date October 29, 1979
State: Wisconsin County: Dane
Book 1284 Page 24
which mortgage was assigned to Government National Mortgage
Association by assignment dated January 20, 1981, recorded February
10, 1981 -- Volume 2576, Page 7, Document No. 1697083; further
assigned to First Wisconsin Trust Company as Trustee by assignment
dated August 12, 1981, recorded November 10, 1981 in Volume 3219.
Originally endorsed for insurance under section
This Agreement entered into this 12th day of December, 1988,
between
whose address is Brookfield Lakes Corporate Center
00000 Xxxx Xxxxx Xxxx, Xxxxxxxxxx XX 00000
their successors, heirs, and assigns (jointly and severally,
hereinafter referred to as Owners) and the undersigned Secretary of
Housing and Urban Development and his successors (hereinafter referred
to as Secretary).
In consideration of the endorsement for insurance by the
Secretary of the above described note or in consideration of the
consent of the Secretary to the transfer of the mortgaged property or
the sale and conveyance of the mortgaged property by the Secretary,
and in order to comply with the requirements of the National Housing
Act, as amended and the Regulations adopted by the Secretary pursuant
thereto, Owners agree for themselves, their successors, heirs and
assigns, that in connection with the mortgaged property and the
project operated thereon and so long as the contract of mortgage
insurance continues in effect, and during such further period of time
as the Secretary shall be the owner, holder or reinsurer of the
mortgage, or during any time the Secretary is obligated to insure a
mortgage on the mortgaged property:
1. Owners, except as limited by paragraph 17 hereof, assume and
agree to make promptly all payments due under the note and
mortgage.
2. (a) Owners shall establish or continue to maintain a
reserve fund for replacements by the allocation to such
reserve fund in a separate account with the mortgagee or in
a safe and responsible depository designated by the
mortgagee, concurrently with the beginning of payments
towards amortization of the principal of the mortgage
insured or held by the Secretary of an amount equal to
$1,116.75 per month unless a different date or amount is
approved in writing by the Secretary.
Such funds, 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 shall at all
times be under the control of the mortgagee. Disbursements
from such fund, whether for the purpose of effecting
replacement of structural elements, and mechanical equipment
of the project or for any other purpose, may be made only
after receiving the consent in writing of the Secretary. In
the event of a default in the terms of the mortgage,
pursuant to which the loan has been accelerated, the
Secretary may apply or authorize the application of the
balance in such fund to the amount due on the mortgage debt
as accelerated.
(b) Where Owners are acquiring a project already subject to
an insured mortgage, the reserve fund for replacements to be
established will be equal to the amount due to be in such
fund under existing agreements or charter provisions at the
time Owners acquire such project, and payments hereunder
shall begin with the first payment due on the mortgage after
acquisition, unless some other method of establishing and
maintaining the fund is approved in writing by the
Secretary.
3. Real property covered by the mortgage and this agreement is
described in Schedule A attached hereto.
(This paragraph 4 is not applicable to cases insured under
Section 232).
4. (a) Owners shall make dwelling accommodation and services
of the project available to occupants at charges not
exceeding those established in accordance with a rental
schedule approved in writing by the Secretary.
Accommodations shall not be rented for a period of less than
thirty (30) days, or, unless the mortgage is insured under
Section 231, for more than three years. Commercial
facilities shall be rented for such use and upon such terms
as approved by the Secretary. Subleasing of dwelling
accommodations, except for subleases of single dwelling
accommodations by the tenant thereof, shall be prohibited
without prior written approval of Owners and the Secretary
and any lease shall so provide. Upon discovery of any
unapproved sublease, Owners shall immediately demand
cancellation and notify the Secretary thereof.
(b) Upon prior written approval by the Secretary, Owners
may charge to and receive from any tenant such amounts as
from time to time may be mutually agreed upon between the
tenant and the Owner for any facilities and/or services
which may be furnished by the Owner or others to such tenant
upon his request, in addition to the facilities and services
included in the approved rental schedule.
(c) The Secretary will at any time entertain a written
request for a rent increase properly supported by
substantiating evidence and within a reasonable time shall:
(i) Approve a rental schedule that is necessary to
compensate for any net increase, occuring since
the last approved rental schedule, in taxes (other
than income taxes) and operating and maintenance
cost over which Owners have no effective control,
or
(ii) Deny the increase stating the reasons therefor.
5. (a) If the mortgage is originally a Secretary-held purchase
money mortgage, or is originally endorsed for insurance
under any Section other than Sections 231 or 232, Owners
shall not in selecting tenants discriminate against any
person or persons by reason of the fact that there are
children in the family.
(b) If the mortgage is originally endorsed for insurance
under Section 221 or 231, Owners shall in selecting tenants
give to persons or families designated in the National
Housing Act an absolute preference or priority of occupancy
which shall be accomplished as follows:
(1) For a period of sixty (60) days from the date of
original offering, unless a shorter period of time
is approved in writing by the Secretary, all units
shall be held for such preferred applicants, after
which time any remaining unrented units may be
rented to non-preferred applicants;
(2) Thereafter, and on a continuing basis; such
preferred applicants shall be given preference
over non-preferred applicants in their placement
on a waiting list to be maintained by the Owners;
and
(3) Through such further provisions agreed in writing
by the parties.
(c) Without the prior written approval of the Secretary not
more than 25% of the number of units in a project insured
under Section 231 shall be occupied by persons other than
elderly persons as defined by the National Housing Act.
(d) All advertising or efforts to rent a project insured
under Section 231 shall reflect a bona fide effort of the
Owners to obtain occupancy by elderly persons as defined by
the National Housing Act.
6. Owners shall not without the prior written approval of the
Secretary:
(a) Xxxxxx, transfer, or encumber any of the mortgaged
property, or permit the conveyance, transfer or encumbrance
of such property.
(b) Assign, transfer, dispose of, or encumber any personal
property of the project, including rents, or pay out any
funds except from surplus cash, except for reasonable
operating expenses and necessary repairs.
(c) Xxxxxx, assign, or transfer any beneficial interest in
any trust holding title to the property, or the interest of
any general partner in a partnership owning the property, or
any right to manage or receive the rents and profits from
the mortgaged property.
(d) Remodel, add to, reconstruct, or demolish any part of
the mortgaged property or subtract from any real or personal
property of the project.
(d) Make, or receive and retain, any distribution of assets
or any income of any kind of the project except surplus cash
and except on the following conditions:
(1) All distributions shall be made only as of and
after the end of a semiannual or annual fiscal
period, and only as permitted by the law of the
applicable jurisdiction;
(2) No distribution shall be made from borrowed funds,
prior to the completion of the project or when
there is any default under this Agreement or under
the note or mortgage;
(3) Any distribution or any funds of the project,
which the party receiving such funds is not
entitled to retain hereunder, shall be held in
trust separate and apart from any other funds; and
(4) There shall have been compliance with all
outstanding notices of requirements for proper
maintenance of the project.
(f) Engage, except for natural persons, in any other
business or activity, including the operation of any
other rental project, or incur any liability or
obligation not in connection with the project.
(g) Require, as a condition of the occupancy or leasing of
any unit in the project any consideration or deposit
other than the prepayment of the first month's rent
plus a security deposit in an amount not in excess of
one month's rent to guarantee the performance of the
covenants of the lease. Any funds collected as
security deposits shall be kept separate and apart from
all other funds of the project in a trust account the
amount of which shall at all times equal or exceed the
aggregate of all outstanding obligations under said
account.
(h) Permit the use of the dwelling accommodations or
nursing facilities of the project for any purpose
except the use which was originally intended, or permit
commercial use greater than that originally approved by
the Secretary.
7. Owners shall maintain the mortgaged premises, accommodations
and the grounds and equipment appurtenant thereto, in good
repair and condition. In the event all or any of the
buildings covered by the mortgage shall be destroyed or
damaged by fire or other casualty, the money derived from
any insurance on the property shall be applied in accordance
with the terms of insured mortgage.
8. Owners shall not file any petition in bankruptcy or for a
receiver or in insolvency or for reorganization or
composition or make any assignment for the benefit of
creditors or to a trustee for creditors, or permit an
adjudication in bankruptcy or the taking possession of the
mortgaged property or any part thereof by a receiver or the
seizure and sale of the mortgaged property or any part
thereof under judicial process or pursuant to any power of
sale, and fail to have such adverse actions set aside within
forty-five (45) days.
(9) (a) Any management contract entered into by Owners or any
of them involving the project shall contain a provision
that, in the event of default hereunder, it shall be subject
to termination without penalty upon written request by the
Secretary. Upon such request Owners shall immediately
arrange to terminate the contract within a period of not
more than thirty (30) days and shall make arrangements
satisfactory to the Secretary for continuing proper
management of the project.
(b) Payment for services, supplies, or materials shall not
exceed the amount ordinarily paid for such services,
supplies, or materials in the area where the services are
rendered or the supplies or materials furnished.
(c) The mortgaged property, equipment, buildings, plans,
offices, apparatus, devices, books, contracts, records,
documents, and other papers relating thereto shall at all
times be maintained in reasonable condition for proper audit
and subject to examination and inspection at any reasonable
time by the Secretary or his duly authorized agents. Owners
shall keep copies of all written contacts or other
instruments which affect the mortgaged property, all or any
of which may be subject to inspection and examination by the
Secretary or his duly authorized agents.
(d) The books and accounts of the operations of the
mortgaged property and of the project shall be kept in
accordance with the requirements of the Secretary.
(e) Within sixty (60) days following the end of each fiscal
year the Secretary shall be furnished with a complete annual
financial report based upon an examination of the books and
records of mortgagor prepared in accordance with the
requirements of the Secretary, certified to by an officer or
responsible Owner and, when required by the Secretary,
prepared and certified by a Certified Public Accountant, or
other person acceptable to the Secretary.
(f) At request of the Secretary, his agents, employees, or
attorneys, the Owners shall furnish monthly occupancy
reports and shall give specific answer to questions upon
which information is desired from time to time relative to
the income, assets, liabilities, contracts, operation, and
condition of the property and the status of the insured
mortgage.
(g) All rents and other receipts of the project shall be
deposited in the name of the project in a bank, whose
deposits are insured by the F.D.I.C. Such funds shall be
withdrawn only in accordance with the provisions of this
Agreement for expenses of the project or for distributions
of surplus cash as permitted by paragraph 6(e) above. Any
Owner receiving funds of the project other than by such
distribution of surplus cash shall immediately deposit such
funds in the project bank account and failing so to do in
violation of this agreement shall hold such funds in trust.
Any Owner receiving property of the project in violation of
this Agreement shall immediately deliver such property to
the project and failing so to do shall hold such property in
trust. As such time as the Owners shall have lost control
and/or possession of the project, all funds held in trust
shall be delivered to the mortgagee to the extent that the
mortgage indebtedness has not been satisfied.
(h) If the mortgage is insured under Section 232:
1. The Owners or lessees shall at all times maintain in full
force and effect from the state or other licensing authority such
license as may be required to operate the project as a nursing
home and shall not lease all or part of the project except on
terms approved by the Secretary.
2. The Owner shall suitably equip the project for nursing home
operations
3. The Owners shall execute a Security Agreement and Financing
Statement (or other form of chattel lien) upon all items of
equipment, except as the Secretary may exempt, which are not
incorporated as security for the insured mortgage. The Security
Agreement and Financing Statement shall constitute a first lien
upon such equipment and shall run in favor of the mortgagee as
additional security for the insured mortgage.
4. No litigation seeking the recovery of a sum on excess of
$3,000 nor any action for specific performance or other equitable
relief shall be instituted nor shall any claim for a sum in
excess of $3,000 be settled or compromised by the Owners unless
prior written consent thereto has been obtained from the
Secretary. Such consent may be subject to such terms and
conditions as the Secretary may prescribe.
(i) If mortgage is insured under Section 231, Owners or lessees
shall at all times maintain in full force and effect from the
state of other licensing authority such license as may be
required to operate the project as housing for the elderly.
10. Owners will comply with the provisions of any Federal,
State, or local law prohibiting discrimination in housing on the
grounds of race, color, creed, or national origin, including
Title VI of the Civil Rights Act of 1964 (Public Law 88-352, 78
Stat. 241), all requirements imposed by or pursuant to the
Regulations of the Department of Housing and Urban Development
(24 CFR, Subtitle A, Part 1) issued pursuant to that title, and
regulations issued pursuant to Executive Order 11063.
11. Upon a violation of any of the above provisions of this
Agreement by Owners, the Secretary may give written notice,
thereof, to Owners, by registered or certified mail, addressed to
the addresses stated in this Agreement, or such other addresses
as may subsequently, upon appropriate written notice thereof to
the Secretary, be designated by the Owners as their legal
business address. If such violation is not corrected to the
satisfaction of the Secretary within thirty (30) days after the
date such notice is mailed or within such further time as the
Secretary determines is necessary to correct the violation,
without further notice the Secretary may declare a default under
this Agreement effective on the date of such declaration of
default and upon such default the Secretary may:
(a)(i) If the Secretary holds the note - declare the
whole of said indebtedness immediately due and
payable and then proceed with the foreclosure of
the mortgage;
(ii) If said note is not held by the Secretary - notify
the holder of the note of such default and request
holder to declare a default under the note and
mortgage, and holder after receiving such notice
and request, but not otherwise, at its option, may
declare the whole indebtedness due, and thereupon
proceed with foreclosure of the mortgage, or
assign the note and mortgage to the Secretary as
provided in the Regulations;
(b) Collect all rents and charges in connection with the
operation of the project and use such collections to pay the
Owner's obligations under this Agreement and under the note
and mortgage and the necessary expenses of preserving the
property and operating the project;
(c) Take possession of the project, bring any action
necessary to enforce any rights of the Owners growing out of
the project operation, and operate the project in accordance
with the terms of this Agreement until such time as the
Secretary in his discretion determines that the Owners again
in a position to operate the project in accordance with the
terms of this Agreement and in compliance with the
requirements of the note and Mortgage;
(d) Apply to any court, State or Federal, for specific
performance of this Agreement, for an injunction against any
violation of the Agreement, for the appointment of a
receiver to take over and operate the project in accordance
with the terms of the Agreement, or for such other relief as
may be appropriate, since the injury to the Secretary,
arising from a default under any of the terms of this
Agreement would be irreparable and the amount of damage
would be difficult to ascertain.
12. As security for the payment due under this Agreement to the
reserve fund for replacements, and to secure the Secretary
because of his liability under the endorsement of the note
for insurance, and as security for the other obligations
under this Agreement, the Owners respectively assign, pledge
and mortgage to the Secretary their rights to the rents,
profits, income and charges of whatsoever sort which they
may receive or be entitled to receive from the operation of
the mortgage property, subject, however, to any assignment
of rents in the insured mortgage referred to herein. Until
a default is declared under this Agreement, however,
permission is granted to Owners to collect and retain under
the provisions of this Agreement such rents, profit, income,
and charges, but upon default this permission is terminated
as to all rents due or collected thereafter.
13. As used in this Agreement the term:
(a) "Mortgage" includes "Deed of Trust", "Chattel
Mortgage", and any other security for the note identified
herein, and endorsed for insurance or held by the Secretary;
(b) "Mortgagee" refers to the holder of the mortgage
identified herein, its successors and assigns;
(c) "Owners" refers to the persons named in the first
paragraph hereof and designated as "Owner, their successors,
heirs and assigned";
(d) "Mortgaged Property" includes all property, real,
personal, or mixed, covered by the mortgage or mortgages
securing the note endorsed for insurance or held by the
Secretary;
(e) "Project" includes the mortgaged property and all its
other assets of whatsoever nature or whatsoever situate,
used in or owned by the business conducted on said mortgaged
property, which business is providing housing and other
activities as are incidental thereto;
(f) "Surplus Cash" means any cash remaining after:
(1) the payment of:
(i) All sums due or currently required to be paid
under the terms of any mortgage or note
insured or held by the Secretary;
(ii) All amounts required to be deposited in the
reserve fund for replacements;
(iii) All obligation of the project other than the
insured mortgage unless funds for payment are
set aside or deferment of payment has been
approved by the Secretary; and
(2) the segregation of:
(i) An amount equal to the aggregate of all
special funds required to be maintained by
the project;
(ii) All tenant security deposits held;
(g) "Distribution" means any withdrawal or taking of cash
or any assets of the project, including the segregation
of cash or assets for subsequent withdrawal within the
limitations of Paragraph 6(c) hereof, and excluding
payment for reasonable expenses incident to the
operation and maintenance of the project.
(h) "Default" means a default declared by the Secretary
when a violation of this Agreement is not corrected to
his satisfaction within the time allowed by this
Agreement or such further time as may be allowed by the
Secretary after written notice;
(i) "Section" refers to Section of the National Housing
Act, as amended.
14. This instrument shall bind, and the benefits shall inure to,
the respective Owners, their heirs, legal representatives,
executors, administrators, successors, in office or
interest, and assigns, and to the Secretary and his
successors so long as the contract of mortgage insurance
continues in effect, and during such further time as the
Secretary shall be the owner, holder, or reinsurer of the
mortgage, or obligated to reinsure the mortgage.
15. Owners warrant that they have not, and will not, execute any
other agreement with provisions contradictory of, or in
opposition to, the provisions hereof, and that, in any
event, the requirements of this Agreement are paramount and
controlling as to the rights and obligations set forth and
supersede any other requirements in conflict therewith.
16. The invalidity of any clause, part or provision of this
Agreement shall not affect the validity or the remaining
portions thereof.
17. The following Owners: Decade Companies, Xxxxxxx Xxxxxxxxxx,
Xxxxxx Xxxxxx and Decade Companies Income Properties
do not assume personal liability for payments due under the
note and mortgage, or for the payments to the reserve for
replacements, or for matters not under their control,
provided that said Owners shall remain liable under this
Agreement only with respect to the matters hereinafter
state; namely:
(a) for funds or property of the project coming into their
hands which, by the provisions hereof, they are not
entitled to retain; and
(b) for their own acts and deeds or acts and deeds of other
which they have authorized in violation of the
provisions hereof.
(To be executed with formalities for recording
a deed to real estate)
LEGAL DESCRIPTION
Lots 2 and 3, Certified Survey Map #2982, recorded in Volume 11
of Certified Surveys on page 399, #1593404 in the City of Madison,
County of Dane, State of Wisconsin.
ADDENDUM TO REGULATORY AGREEMENT
This Addendum is a part of the Regulatory Agreement executed on
even date herewith to which this Addendum is attached:
1. Notwithstanding any provision in the Regulatory Agreement to
the contrary, the parties agree that:
Paragraph 4 of the Regulatory Agreement is hereby deleted and the
following is inserted in lieu thereof:
4(a) The Owner shall not rent the units for a period of less
than thirty (30) days. Commercial facilities shall be
rented for such use and upon such terms as determined by the
Owner. Subleasing of dwelling accommodations, except for
subleases of single dwelling accommodations by the tenant
thereof, shall be prohibited without prior written approval
of the Owner and the Secretary and any lease shall so
provide. Upon discovery of any unapproved sublease, the
Owner shall immediately demand cancellation and notify the
Secretary thereof.
4(b) The Owner may charge to and receive from any tenant
such amounts as from time to time may be mutually agreed
upon between the tenant and the Owner for any rental
accommodations, facilities and/or services which may be
furnished by the Owner or others to such tenant upon his
request.
4(c) In the event the project is under jurisdiction of a
local rent control law or ordinance and the Owner desires
the Secretary to preempt those controls, the Owner shall
comply with applicable regulations or instructions in effect
at the time of application of preemption, currently 24 CFR
403, Subpart B.
DECADE COMPANIES INCOME PROPERTIES, A LIMITED
PARTNERSHIP
By: Decade Companies, General Partner
By: /s/ Xxxxxxx Xxxxxxxxxx_______________
Xxxxxxx Xxxxxxxxxx, General Partner
By: /s/ Xxxxxx Xxxxxx____________________
Xxxxxx Xxxxxx, General Partner
STATE OF WISCONSIN )
) ss.
MILWAUKEE COUNTY )
The foregoing instrument was acknowledged before me this 12 day
of December, 1988 by Xxxxxxx Xxxxxxxxxx and Xxxxxx Xxxxxx as the
general partners of Decade Companies, the general partner of Decade
Companies Income Properties, A Limited Partnership.
/s/ Xxxx Xxxxx Fertl_________________
Notary Public
State of Wisconsin, Milwaukee County
My Commission: is permanent
SECRETARY OF HOUSING AND URBAN
DEVELOPMENT acting by and through
the FEDERAL HOUSING COMMISSIONER
By: /s/ Xxxxxxx X. Xxxxxxxx__________
(Authorized Agent)
Xxxxxxx X. Xxxxxxxx
Manager
STATE OF WISCONSIN )
)ss.
MILWAUKEE COUNTY )
On this 17th day of January, 1989 before me appeared fully
appointed Xxxxxxx X. Xxxxxxxx, who being duly sworn, did say that he
is the duly appointed Manager and the person who executed the
foregoing instrument by virtue of the authority vested in him by 24
C.F.R. 200.118 and 119 and acknowledged the same to, for and on behalf
of the FEDERAL HOUSING COMMISSIONER.
IN TESTIMONY WHEREOF, I have hereunto set my hand and affixed my
notarial seal on the day and year last above written.
/s/ Xxxxx Xxxxx________________________
Notary Public, Milwaukee County
State of Wisconsin
My commission: Dec. 24, 1989
This instrument was drafted by and after recording should be
returned to Attorney Xxxx Xxxxx Xxxxx, Xxxxx & Xxxxxxxxxxx S.C.,
000 Xxxx Xxxxxxxxx Xxxxxx, Xxxxx 0000, Xxxxxxxxx XX 00000
