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KEY ISSUES IN DOCUMENTING THE Y10-15 FEE SALE

KEY ISSUES IN DOCUMENTING THE Y10-15 FEE SALE. — The Seller’s Perspective — Allen Lynch Nixon Peabody LLP 100 Summer Street Boston, MA 02110 617-345-1235 alynch@nixonpeabody.com. Preliminary Matters. Portfolio sales & different investors

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KEY ISSUES IN DOCUMENTING THE Y10-15 FEE SALE

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  1. KEY ISSUES IN DOCUMENTING THE Y10-15 FEE SALE — The Seller’s Perspective — Allen Lynch Nixon Peabody LLP 100 Summer Street Boston, MA 02110 617-345-1235 alynch@nixonpeabody.com

  2. Preliminary Matters • Portfolio sales & different investors • Implications of packaging purchase access with equity/debt • Engagement/alignment of all partners • Who drives the bus? • Who takes the pen? • Know your LURA, Reg. Agreement, Loan Agreement

  3. The Property • What’s in? • What’s out?

  4. Feasibility Period • Seller’s materials • Buyer’s reports • LURA

  5. Approvals Period • Seller’s Approvals • LP Consent • Investment Committee • Lender issues • Buyer’s Approvals • State Agency • Municipality • HUD

  6. Title and Survey • Title – before, not after • Permitted Exceptions

  7. Warranties • Not a substitute or supplement for DD • 10 year hold • Limitations • “Actual knowledge” of “Designated Person” • “Acquired knowledge” of Buyer • Survival period • Basket & cap • Disclaimer (“as is”/no re-syndication or subsidy guaranty*)

  8. Tax Credits • Buyer covenants • Compliance • CC annual compliance certification,8609s • Procurement of recapture bond • Who obtains • Who pays premium • Who indemnifies (the “rich Uncle”) • Who fixes noncompliance • When

  9. Tax Credits II • Buyer indemnity of Seller • Breach of compliance/reporting covenants • Post-transfer noncompliance • Cancellation of bond • Cause Guarantor to deliver separate indemnity at closing • Seller indemnity of Buyer • Pre-transfer noncompliance

  10. Tax Credits III • Buyer transfer within compliance period • Risk • Notice • Effect on indemnities • Consent to change of management agent

  11. Pre-Closing Obligations • Maintain normal course ops • Stabilized assets: vacant units rent ready or allowance ($500)

  12. Conditions to Close of Escrow I • Seller • Approvals • Recapture Bond issued (or available for issuance but for payment of premium) • Experienced management agent • No default under “Related Agreements” • No Buyer default

  13. Conditions to Close of Escrow II • Buyer • Approvals • No Seller default • Issuance of title policy • No default under “Related Agreements”

  14. Conditions to Close of Escrow III • Deposits fully refundable for all unsatisfied conditions (e.g., Approvals)? • Extension of Closing for Approvals? • Additional extension deposit (refundable vs. hard) • Additional purchase price

  15. Close of Escrow • Buyer delivers recapture indemnity agreement signed by SPE and the guarantor of the surety (the “rich Uncle”) • They are not parties to the PSA

  16. Default and Remedies • 15 day notice and cure period (excluding title) • Seller default – Buyer gets (i) specific performance or (ii) refund of deposit and if intentional default documented third party costs capped at X. That’s it. • Buyer default – Seller gets deposit and Buyer’s third party reports. That’s it. • Cross default – default under one = all

  17. Why Read the “Boilerplate”? • Assignment – Only to SPE majority controlled/owned by Buyer. Buyer remains obligated. No flipping. • Limited liability – principals excluded.

  18. KEY ISSUES IN DOCUMENTING THE Y10-15 FEE SALE The Seller’s Perspective Allen Lynch Nixon Peabody LLP 100 Summer Street Boston, MA 02110 617-345-1235 alynch@nixonpeabody.com

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