1. (a) In the event of a breach or violation by the borrower of any of the provisions of the standard agreement, the regulatory agreement, the promissory note, or the deed of trust, or any other agreement pertaining or securing the MPROP loan, the department may give written notice to the borrower to cure the breach or violation within a period of not less than 30 days. If the breach or violation is not cured to the satisfaction of the department within the specified time period, the department, at its option, may declare a default under the relevant documents and may seek legal remedies for the default including the following:

   1. (1) The department may accelerate all amounts, including outstanding principal and interest, due under the loan and demand immediate repayment thereof. Upon a failure to repay such accelerated amount in full, the department may proceed with a foreclosure in accordance with the provisions of the deed of trust and state law regarding foreclosures.
   2. (2) The department may seek, in a court of competent jurisdiction, an order for specific performance of the defaulted obligation or the appointment of a receiver to operate the park in accordance with program requirements.
   3. (3) The department may seek such other remedies as may be available under the relevant agreement or any law.
2. (b) In the event that the breach or violation involves charging rent or other charges in excess of those permitted under the regulatory agreement, the department may demand the return or compensation of such excess rents or other charges to the affected households. In any action to enforce the provisions of the regulatory agreement, the department may seek as additional remedy, the repayment of such overcharges.

3. (c) Loan commitments may be cancelled by the department under any of the following conditions:

   1. (1) the objectives and requirements of the program cannot be met;
   2. (2) implementation cannot proceed in a timely fashion in accordance with the approved plans and schedules;
   3. (3) special conditions have not been fulfilled within required time periods;
   4. (4) the conversion has not commenced or been completed within three years of the date of loan approval;

   5. (5) there has been a material change in the principals or management of the sponsor or project, which was not approved by the department.

      Upon receipt of a notice of intent to cancel the loan from the department, the borrower shall have the right to appeal to the Director.

4. (d) The department may use amounts available in the fund for the purpose of curing, or avoiding, defaults on the terms of any loan or other obligation which jeopardize the fiscal integrity of the park or the integrity of any individual interest in a park. Such defaults include defaults or impending defaults in payments on mortgages, failures to pay taxes, or failures to maintain insurance or required operating reserves. The payment or advance of funds by the department pursuant to this subdivision shall be solely within the discretion of the department. All funds so advanced shall be part of and added to the loan and, upon demand, due and payable to the department.

   Where it becomes necessary to use the fund for the purpose of assisting a project to avoid threatened defaults or foreclosures, the department shall take those actions necessary, including but not limited to, foreclosure or forced sale of the project property, to prevent similar occurrences and insure compliance with the terms of the applicable agreements.

Note: Authority cited: Sections 50406(n) and 50786(a), Health and Safety Code. Reference: Section 50406, Health and Safety Code.

History

1. Amendment of section heading, repealer and new section, and amendment of Note filed 5-11-2001; operative 5-11-2001 pursuant to Government Code section 11343.4 (Register 2001, No. 19).