Section 7472 - Defaults, Transfers and Loan Cancellation(a) In the event a sponsor should default on any of its debts to a lender or creditor whose loan is secured in any manner by the subject property, and the lender or secured creditor should proceed to force a sale of the subject property after a foreclosure procedure, or in the event a judgment has been taken against the property owner and the judgment creditor should proceed to force a sale of the subject property in satisfaction of its claim, the Department by this fact approves the sale.(b) No sponsor shall sell, encumber or convey the rental housing development without express, prior written approval of the sale by the Department. Approval of a sale or conveyance shall be given, provided:(1) the successor-in-interest to the grantor agrees to assume the deferred payment loan and all obligations of the existing sponsor pursuant to the regulatory agreement and this program; and(2) 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.(c) In addition, the Department may permit a sale and termination of the regulatory agreement and all other obligations pursuant to this subchapter only if: (1) all sums owed to the Department by the sponsor are paid; and(2) Such an action is necessary to protect the interests and security of the state.(d) In the event a sponsor or successor-in-interest defaults on any material provision of the deed of trust or regulatory agreement, the Department shall provide the sponsor with a written notice of breach or default and seek and encourage correction or compliance. If substantial progress is not made in rectification within 30 days of such notice, the Department may, at its discretion, declare the note evidencing the loan to be due and payable. In addition, the Department may seek any other remedy available in law or equity.(e) In the event of foreclosure, default, or forced sale, the purchaser shall take title subject to the conditions of the regulatory agreement for the remaining duration of the original loan term.(f) Unexpended loans to sponsors may be cancelled by the Department if the objectives of the loan cannot be met, implementation cannot proceed according to the sponsor's plans and schedule, special conditions have not been fulfilled within required periods, control/ownership of the rental housing development has not been obtained within six months, or rehabilitation has not commenced within twelve months of the date of loan approval. Upon receipt of a notice of intention to cancel the loan from the Department, the sponsor shall have a right to a hearing before the Loan Committee within thirty days; the Committee shall make a recommendation to the Director, who shall issue a written decision within ten working days of the hearing.Cal. Code Regs. Tit. 25, § 7472
1. Amendment of subsections (b) and (d) filed 4-5-84; effective thirtieth day thereafter (Register 84, No. 14). Note: Authority cited: Section 50662, Health and Safety Code; Reference: Sections 50669-50670, Health and Safety Code.
1. Amendment of subsections (b) and (d) filed 4-5-84; effective thirtieth day thereafter (Register 84, No. 14).