Page:United States Statutes at Large Volume 103 Part 2.djvu/998

 103 STAT. 2008 PUBLIC LAW 101-235—DEC. 15, 1989 pursuant to section 202, who has agreed in writing, as a condi- tion of a transfer of physical assets, a flexible subsidy loan, a capital improvement loan, a modification of the mortgage terms, or a workout agreement, to use nonproject income to make cash contributions for payments due under the note and mortgage, for payments to the reserve for replacements, to restore the project to good physical condition, or to pay other project liabilities, knowingly and materially fails to comply with any of these commitments, the Secretary may impose a civil money penalty on the mortgagor in accordance with the provi- sions of this section. "(2) AMOUNT.— The amount of the penalty, as determined by the Secretary, for a violation of this subsection may not exceed the amount of the loss the Secretary would incur at a fore- closure sale, or sale after foreclosure, with respect to the prop- erty involved. Real property. "(c) VIOLATIONS OF REGULATORY AGREEMENT. — "(1) IN GENERAL. — The Secretary may also impose a civil money penalty on a mortgagor or property that includes 5 or more living units and that has a mortgage held pursuant to section 202 for any knowing and material violation of the regulatory agreement executed by the mortgagor, as follows: "(A) Conveyance, transfer, or encumbrance of any of the mortgaged property, or permitting the conveyance, trans- fer, or encumbrance of such property, without the prior written approval of the Secretary. "(B) Assignment, transfer, disposition, or encimibrance of any personal property of the project, including rents, or paying out any funds, except for reasonable operating ex- penses and necessary repairs, Mdthout the prior written approval of the Secretary. (C) Conveyance, assignment, or transfer of any bene- ficial 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 profitsfiromthe mortgaged property, without the prior ,^ written approval of the Secretary. ^ "(D) Remodeling, adding to, reconstructing, or demolish- ^~ ing any part of the mortgaged property or subtracting from any real or personal property of the project, without the prior written approval of the Secretary. "(E) Requiring, as a condition of the occupancy or leasing of any unit in the project, any consideration or deposit other than the prepa3mient of the first month's rent, plus a security deposit in an amount not in excess of 1 month's rent, to guarantee the performance of the covenants of the lease. "(F) Not holding any funds collected as security deposits separate and apart from all other funds of the project in a trust account, the amount of which at all times equals or exceeds the aggregate of all outstanding obligations under the account. "(G) Payment for services, supplies, or materials which exceeds $500 and substantially exceeds the amount ordi- narily paid for such services, supplies, or materials in the area where the services are rendered or the supplies or materials furnished.

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