1. (a) A sponsor shall not sell, assign, transfer, or convey the rental housing development, or any interest therein or portion thereof, without the express prior written approval of the department. A sale, transfer or conveyance shall be approved only if all of the following requirements are met:

   1. (1) the existing sponsor is in compliance with the Regulatory Agreement or the sale, transfer or conveyance will result in the cure of any existing violations;
   2. (2) the successor-in-interest to the sponsor agrees to assume all obligations of the existing sponsor pursuant to the Regulatory Agreement and this program;
   3. (3) the successor-in-interest is an eligible sponsor and demonstrates to the department's satisfaction that it can successfully own and operate the rental housing development and comply with all program requirements; and
   4. (4) no terms of the sale, transfer, or conveyance jeopardize either the department's security or the successor's ability to comply with all program requirements.

2. (b) The department shall grant its approval of such sale, assignment, transfer, or conveyance subject to such terms and conditions as may be necessary to preserve or establish the fiscal integrity of the project. Such conditions shall include:

   1. (1) the deposit of sales proceeds, or a portion thereof, to maintain required reserves, or to offset negative cash flow;
   2. (2) the recapture of syndication proceeds or other funds in accordance with special conditions included in the Standard Agreement or any other agreement executed by the sponsor;
   3. (3) such conditions as may be necessary to ensure compliance with the program requirements.
3. (c) The sponsor shall not encumber, pledge, or hypothecate the rental housing development, or any interest therein or portion thereof, or allow any lien, charge, or assessment against the rental housing development without the prior written approval of the department. The department may permit refinancing of existing liens or additional financing secured by the rental housing development to the extent necessary to maintain or improve the fiscal integrity of the project, to maintain affordable rents, or to decrease rents.

Note: Authority cited: Section 50771.1, Health and Safety Code. Reference: Section 50771.1, Health and Safety Code.

History

1. New section filed 12-29-89 as an emergency; operative 12-29-89 (Register 90, No. 3). A Certificate of Compliance must be transmitted to OAL within 120 days or emergency language will be repealed by operation of law on 4-30-90.

2. New section refiled 4-26-90 as an emergency; operative 4-26-90 (Register 90, No. 23). A Certificate of Compliance must be transmitted to OAL within 120 days or emergency language will be repealed by operation of law on 8-24-90.

3. New section refiled 8-27-90 as an emergency; operative 8-27-90 (Register 90, No. 42). A Certificate of Compliance must be transmitted to OAL by 12-26-90 or emergency language will be repealed by operation of law on the following day.

4. New section refiled 12-19-90 as an emergency pursuant to Health and Safety Code section 50771.3; operative 12-19-90 (Register 91, No. 4). A Certificate of Compliance must be transmitted to OAL by 4-18-91 or emergency language will be repealed by operation of law on the following day.

5. Certificate of Compliance as to 12-19-90 order transmitted to OAL 1-4-91; disapproved by OAL 2-4-91 (Register 91, No. 13).

6. New section refiled 2-20-91 as an emergency; operative 2-20-91 (Register 91, No. 13). A Certificate of Compliance must be transmitted to OAL by 6-17-91 or emergency language will be repealed by operation of law on the following day.

7. Certificate of Compliance as to 6-14-91 order including amendment of subsection (b) transmitted to OAL 5-15-91 and filed 6-14-91 (Register 91, No. 38).