Costs) and an Estimate of Total Required Annual Contributions (see § 1277.213).

(b) Preparation of Agreement. The Agreement shall be prepared by the HUD field office at the time the ACC is prepared (see § 1277.214), and shall conform to the prescribed form shown as Appendix IV. The Agreement shall include all required information and required attachments.

(c) Execution of ACC and Agreement. After receipt of the PHA-executed ACC, accompanied by the Estimates of Required Annual Contributions, HUD shall review the Estimates and, if approved, execute the ACC, HUD shall then transmit a fully executed copy of the ACC to the PHA, together with four copies of the unexecuted Agreement. After execution of the Agreement by the PHA and the Owner, all copies shall be returned by the PHA to HUD for approval. HUD shall return three copies to the PHA, retaining one for its records.

§ 1277.213 Submission of estimates of required annual contributions (private-owner/PHA projects).

(a) Initial submission. An allowance may be provided for preliminary costs incurred by the PHA prior to the beginning of the first fiscal year. When the ACC is executed by the PHA, it shall submit an Initial Estimate of Required Annual Contributions (Preliminary Costs) together with an Estimate of Total Required Annual Contributions on the prescribed forms. This submission includes estimates of costs of administration and non-expendable equipment up to the beginning of the first fiscal year.

(b) First fiscal year submission. Not earlier than 150 and not later than 90 days prior to the estimated date of the beginning of the first fiscal year, the PHA shall submit an Estimate of Required Annual Contributions (Housing Assistance and Administration) covering the estimated amount required for the first fiscal year for housing assistance payments and for the fee for administration together with an Estimate of Total Required Annual Contributions.

(c) Subsequent fiscal year submissions. Not earlier than 150 and not later than 90 days prior to the beginning of each subsequent fiscal year, the PHA shall submit an Estimate of Required Annual Contributions (Housing Assistance and Administration) and an Estimate of Total Required Annual Contri

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butions, with supporting documentation, for any requested changes in the amount of housing assistance payments and the fee for administration.

(d) Revisions of estimates. Any of the above Estimates may be revised to reflect changes in circumstances and available data.

(e) HUD approval. All Estimates of Required Annual Contributions and any revisions thereto submitted by the PHA shall be subject to HUD approval. § 1277.214 Preparation and Execution of agreement (private-owner and PHA-owner projects).

After receipt of a copy of the accepted notification (and, where required, the architect's certification and the working drawings and specifications), the HUD field office shall prepare the Agreement in the prescribed form shown as Appendix I. The Agreement shall include all required information and required attachments. HUD shall transmit to the Owner three copies of the unexecuted Agreement. After the Owner executes all copies of the Agreement, he shall return them to HUD. HUD shall execute the Agreement, returning one copy to the Owner and retaining two for its records.

§ 1277.215 Rehabilitation period.

(a) Timely performance of work. After execution of the Agreement, the Owner shall promptly proceed with the rehabilitation work as provided in the Agreement. In the event the work is not so commenced, diligently continued, and/ or completed, HUD (or the PHA with HUD approval, as appropriate) reserves the right to rescind the Agreement, or take other appropriate action.

(b) Delays. Although extensions of time may be granted for the reasons specified in the Agreement, no increases in Contract Rents may be granted on that account.

(c) Changes. The Owner shall submit for HUD approval any changes from the approved Final Proposal which will materially reduce or alter his obligations or any changes which alter the design or materially reduce the quality or amenities of the project. HUD may condition its approval of such changes on a reduction of Contract Rents. If such changes are made without prior HUD approval, HUD may determine that Contract Rents shall be reduced or that the Owner shall remedy the deficiency as a

condition for acceptance of the project. Contract Rents may not be increased by reason of any changes or modifications.

(d) Inspection of HUD-FHA insured projects. For projects financed with HUD-FHA insured mortgages, required HUD inspection procedures shall be followed including compliance with equal opportunity requirements.

(e) Equal opportunity review. Equal opportunity review may be conducted with any scheduled HUD inspection or at any other time deemed advisable by HUD.

(f) Commencement of marketing. The Owner shall commence and diligently continue marketing as soon as possible, but in any event no later than 60 days prior to the estimated completion date. The Owner shall notify HUD (or the PHA in the case of a Private-Owner/ PHA Project) of the date of the commencement of marketing. The Owner shall also comply with all reporting requirements under the Affirmative Fair Housing Marketing Regulations. Not later than 30 days prior to the estimated completion date and periodically thereafter, the Owner shall notify HUD (or the PHA in the case of a Private-Owner/ PHA Project) of any units which he anticipates will be vacant on the effective date of the Contract. At the time the Contract is executed (see § 1277.217), the Owner will be required to submit a list of the dwelling units leased as of the effective date of the Contract and a list of the units not so leased, if any. The Owner will be entitled to housing assistance payments for any unleased units, pursuant to § 1277.103 (e) (2), only if he has fully complied with the requirements of that section and of this paragraph.

(g) Management certification. Prior to acceptance of the project by HUD, the Owner must certify in writing that there has been no change in the evidence of management capability or in the proposed management program (if one was required) specified in his Final Proposal other than changes approved in writing by HUD in accordance with the Agreement.

(h) Labor standards certification. Prior to acceptance by HUD of any project consisting of nine or more Contract units, the Owner must certify in writing that he has complied with the provisions of the Agreement relating to the payment of not less than prevailing wage-rates and that to the best of his knowledge and belief there are no claims of

underpayment in alleged violation of said provisions of the Agreement. In the event there are any such pending claims to the knowledge of the Owner, HUD, or the PHA (if applicable), the Owner shall be required to place a sufficient amount in escrow, as determined by HUD, to assure such payments.

§ 1277.216 Project completion.

(a) Notification of completion. The Owner shall notify HUD (with a copy to the PHA in the case of a Private-Owner/ PHA Project) when the work is completed and shall submit to HUD the evidence of completion described in paragraph (b) of this section.

(b) Evidence of completion. Completion of the project shall be evidenced by furnishing HUD with all of the following:

(1) A certification by the Owner that (i) the property was treated and is in compliance with applicable HUD Lead Based Paint regulations 24 CFR 35, (ii) if the property was constructed prior to 1950, the Family upon occupancy will receive the notice required by HUD Lead Based Paint regulations and procedures regarding the hazards of lead based paint poisoning, the symptoms and treatment of lead poisoning and the precautions to be taken against lead poisoning and that records showing receipt of such notice by each tenant will be maintained.

(2) A certificate of occupancy and/or other official approvals necessary for oc

cupancy.

(3) A certification by the Owner, which will be supported by the Owner's warranty in the Contract, that:

(i) All work has been completed in accordance with the requirements of the Agreement;

(ii) The project is in good and tenantable condition; and

(iii) There are no defects or deficiencies in the project except for ordinary punchlist items, or incomplete work awaiting seasonal opportunity such as landscaping and heating system test (such excepted items to be specified).

(iv) The project has been rehabilitated in accordance with applicable zoning, building, housing and other codes, ordinances or regulations, as modified by any waivers obtained from the appropriate officials.

(4) A certification (if working drawings and specifications were prepared and certified to by a registered architect) by the registered architect responsible for

inspection of construction that such inspection was performed by him or under his supervision with the frequency and thoroughness required by the generally accepted standards of professional care and judgment, and that to the best of his knowledge, belief, and professional judgment:

(i) All work has been completed in conformance with the certified working drawings and specifications for the project or approved changes thereto (such changes to be listed);

(ii) The project is in good and tenantable condition; and

(iii) There are no defects or deficiencies in the project except for ordinary punchlist items, or incomplete work awaiting seasonal opportunity such as landscaping and heating system test (such excepted items to be specified by the architect).

(iv) The project has been rehabilitated in accordance with applicable zoning, building, housing and other codes, ordinances or regulations, as modified by any waivers obtained from the appropriate officials.

(c) Inspection. (1) Within ten working days of the receipt of the Owner's notification of project completion, a HUD representative (accompanied by a PHA representative, if applicable) shall inspect the project and review the evidence of completion listed in paragraph (b) of this section. Such inspection shall be sufficient to enable the HUD inspector to state in his inspection report that he has inspected the observable elements and features of the project in accordance with professional standards of care and judgment and that, in the basis of such inspection, the project has been completed in accordance with the Agreement and, in particular, that there are no observable conditions inconsistent with the certification of the Owner or the design architect or the inspecting architect. As promptly as possible, HUD shall notify the Owner in writing as to whether or not the project has been completed in an acceptable manner.

(2) In the event the Owner disputes HUD's determinations, he may submit the controversy to third-party arbitration, at his expense, provided that the arbitration is advisory only.

(d) Acceptance of project. If HUD determines that the project is not acceptable under paragraph (c) (1) of this section, the following shall apply:

(1) If the defects or deficiencies are only punchlist items or incomplete items awaiting seasonal opportunity, the project may be accepted and the Contract executed. If the Owner fails to complete such items within a reasonable time to the satisfaction of HUD, HUD may, upon 30 days notice, terminate or require termination of the Contract or exercise its other rights under the Contract.

(2) If the defects or deficiencies are other than punchlist items or incomplete work awaiting seasonal opportunity, but HUD determines that: (i) a certificate of occupancy and/or other official approvals necessary for occupancy has been issued, (ii) the project is in good and tenantable condition, and (iii) the project has been rehabilitated in accordance with the applicable zoning, building, housing and other codes, ordinances or regulations, as modified by any waivers obtained from the appropriate officials, the project may be accepted after the Owner corrects the defects or deficiencies or the project may be accepted subject to a specified reduction of the Contract Rents as determined by HUD.

(3) If HUD determines that the project is not acceptable under paragraphs (d) (1) or (d) (2) of this section, HUD shall determine: (i) whether the defects or deficiencies can be corrected, and (ii) whether a reduction in Contract Rents will be required as a condition to acceptance of the project. If it is determined that the defects or deficiencies can be corrected, the Owner thereupon shall be notified of HUD's determinations under paragraphs (d) (3) (i) and (d) (3) (ii) of this section, and, if he agrees to comply with the conditions, an agreement shall be entered into pursuant to which the defects or deficiencies will be corrected and the project then accepted. If the Owner is unwilling to enter into such agreement or if he fails to perform the agreement, the project shall not be accepted.

Owner and the PHA and then approved by HUD.

(b) At the time of execution of the Contract, HUD (or the PHA, as appropriate) shall examine the lists of dwelling units leased and not leased, referred to in § 1277.215 (f), and shall determine whether or not the Owner has met his obligations under that section with respect to any unleased units. HUD (or the PHA, as appropriate) shall state in writing its determination with respect to the unleased units and for which of those units it will make housing assistance payments. The Owner shall indicate in writing his concurrence with this determination or his disagreement, reserving his rights to claim housing assistance payments for the unleased units pursuant to the Contract, without prejudice by reason of his signing the Contract. Copies of all documents referred to in this paragraph shall be furnished HUD in the case of a Private-Owner/ PHA project.

§ 1277.218 Project operation.

(a) Compliance with Equal Opportunity requirements. Marketing of units and selection of Families by the Owner shall be in accordance with the Owner's HUD-approved Affirmative Fair Housing Marketing Plan, if required, and with all regulations relating to fair housing advertising including use of the equal opportunity logotype, statement, and slogan in all advertising. Projects shall be managed and operated without regard to race, color, creed, religion, sex, or national origin.

(b) Eligiblity, selection and admission of families. (1) The Owner shall be responsible for determination of eligibility of applicants, selection of families from among those determined to be eligible, and computation of the amount of housing assistance payments on behalf of each selected Family, in accordance with schedules and criteria established by HUD.

(2) For every family that wishes to apply for admission, the Owner and the applicant shall complete and sign the form of application prescribed by HUD, except that if there are no vacant units and the Owner's waiting list is such that there would be an unreasonable length of time before the applicant could be admitted, the Owner may advise the applicant that the Owner is not accepting applications for that reason. The Owner

shall retain copies of all completed applications together with any related correspondence for three years. For each Family selected for admission, the Owner shall submit one copy of the completed and signed application to the HUD field office (in the case of Private-Owner/ PHA Projects, the Owner simultaneously shall send a copy of the form to the PHA). Housing assistance payments will not be made on behalf of an admitted Family until after this copy has been received by the HUD field office.

(3) If the Owner determines that the applicant is eligible on the basis of income and family composition and is otherwise acceptable but the Owner does not have a suitable unit to offer, the Owner shall place such Family on his waiting list and so advise the Family.

(4) If the Owner determines that the applicant is eligible on the basis of income and family composition and is otherwise acceptable and if the Owner has a suitable unit, the Owner and the Family shall enter into a Lease. Such Lease shall be on the form of Lease included in the Owner's approved Final Proposal and shall otherwise be in conformity with the provisions of this Part.

(5) Records on applicant families and approved Families shall be maintained by the Owner so as to provide HUD with racial, ethnic and gender data and shall be retained by the Owner for three years.

(6) In the case of a PHA-Owner project, (i) if the PHA places a Family on its waiting list, it shall notify the Family of the approximate date of availability of a suitable unit insofar as such date can be reasonably determined, and (ii) if the PHA determines that an applicant is ineligible on the basis of income or family composition, or that the PHA is not selecting the applicant for other reasons, the PHA shall send the applicant a letter notifying him of the determination and the reasons and that the applicant has the right within a reasonable time (specified in the letter) to request an informal hearing. If, after conducting such an informal hearing, the PHA determines that the applicant shall not be admitted, the PHA shall so notify the applicant in writing and such notice shall inform the applicant that he has the right to request a review by HUD of the PHA's determination. The procedures of this subparagraph do not preclude the applicant from exercising his other

rights if he believes he is being discriminated against on the basis of race, color, creed, religion, sex, or national origin. The PHA shall retain for three years a copy of the application, the letter, the applicant's response if any, the record of any informal hearing, and a statement of final disposition.

(c) Lease requirements. The Lease shall contain all required provisions specified in paragraph (c) (2) of this section and none of the prohibited provisions listed in paragraph (c)(3) of this section and shall otherwise conform to the form of Lease included with the Owner's approved Final Proposal.

(1) Term of lease. The term of the Lease shall be generally for not less than one year. The Lease may (or, in the case of a Lease for a term of more than one year, shall) contain a provision permitting termination upon 30 days advance written notice by either party.

(2) Required provisions. The Lease between the Owner (Lessor) and the Family (Lessee) shall contain the following provisions:

"ADDENDUM TO LEASE

"The following additional Lease provisions are incorporated in full in the Lease between (Lessor) and

--(Lessee) for the following dwelling unit: In case of any conflict between these and any other provisions of the Lease, these provisions shall prevail.

"a. The total rent shall be $------ per month.

"b. Of the total rent, $‒‒‒‒‒ shall be payable by or at the direction of the Department of Housing and Urban Development ("HUD") as housing assistance payments on behalf of the Lessee and $------ shall be payable by the Lessee. These amounts shall be subject to change by reason of changes in the Lessee's family income, family composition, or extent of exceptional medical or other unusual expenses, or by reason of adjustment by HUD of any applicable Allowance for Utilities and Other Services. Any such change shall be determined in accordance with HUDestablished schedules and criteria and shall be effective as of the date stated in a notification to the Lessee.

"c. The Lessor shall not discriminate against the Lessee in the provision of services, or in any other manner, on the grounds of race, color, creed, religion, sex, or national origin.

"d. The Lessor shall provide the following services and maintenance: [Here insert the complete list as contained in the approved Final Proposal.]

(3) Prohibited provisions. Lease clauses which fall within the classifications listed below shall not be included in any Lease.

(i) Confession of judgment. Prior consent by tenant to any lawsuit the landlord may bring against him in connection with the Lease and to a judgment in favor of the landlord.

(ii) Distraint for rent or other charges. Authorization to the landlord to take property of the tenant and hold it as a pledge until the tenant performs any obligation which the landlord has determined the tenant has failed to perform.

(iii) Exculpatory clause. Agreement by tenant not to hold the landlord or landlord's agents liable for any acts or omissions whether intentional or negligent on the part of the landlord or the landlord's authorized representative or agents.

(iv) Waiver of legal notice by tenant prior to actions for eviction or money judgments. Agreement by tenant that the landlord may institute suit without any notice to the tenant that the suit has been filed.

(v) Waiver of legal proceedings. Authorization to the landlord to evict the tenant or hold or sell the tenant's possessions whenever the landlord determines that a breach or default has occurred, without notice to the tenant or any determination by a court of the rights and liabilities of the parties.

(vi) Waiver of jury trial. Authorization to the landlord's lawyer to appear in court for the tenant and to waive the tenant's right to a trial by jury.

(vii) Waiver of right to appeal judicial error in legal proceedings. Authorization to the landlord's lawyer to waive the tenant's right to appeal on the ground of judicial error in any suit or the tenant's right to file a suit in equity to prevent the execution of a judgment.

(viii) Tenant chargeable with costs of legal actions regardless of outcome. Agreement by the tenant to pay attorney's fees or other legal costs whenever the landlord decides to take action against the tenant even though the court finds in favor of the tenant. (Omission of such clause does not mean that the tenant as a party to a lawsuit may not be obligated to pay attorney's fees or other costs if he loses the suit.)