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• • • approved in writing by the Secretary. for any project subject to regulation of rent by the Secretary. Accommodations shall not be rented for a period of Tess than thirty (30) days. or. unless the mortgage is insured under Section 231. for more than three years. Commercial facilities shall be rented for such use and upon such terms as approved by the Secretary. Subleasing of dwelling accommodations. except for subleases of single dwelling accommodations by the tenant thereof. shall be prohibited without prior written approval of Owners and the Secretary and any lease shall so provide. Upon discovery of any unapproved sublease. Owners shall immediately demand cancellation and notify the Secretary thereof. (b) Upon prior written approval by the Secretary. Owners may charge to and receive from any tenant such amounts as from time to time may be mutually agreed upon between the tenant and the Owners for any facilities and/or services which may be furnished by the Owners or others to such tenant upon his request, in addition to the facilities and services included in the approved rental schedule. Approval of charges for facilities and services is not required for any project not subject to regulation of rent by the Secretary. (c) For any project subject to regulation of rent by the Secretary. the Secretary will at any time entertain a written request for a rent increase properly supported by substantiating evidence and within a reasonable time shall: (i) Approve a rental schedule that is necessary to compensate for any net increase, occurring since the last approved rental schedule, in taxes (other than income taxes) and operating and maintenance cost over which Owners have no effective control or; (ii) Deny the increase stating the reasons therefor. 5. (a) If the mortgage is originally a Secretary-held purchase money mortgage, or is originally endorsed for insurance under any Section other than Sections 231 or 232 and is not designed primarily for occupancy by elderly persons. Owners shall not in selecting tenants discriminate against any person or persons by reason of the fact that there are children in the family. (b) If the mortgage is originally endorsed for insurance under Section 221. Owners shall in selecting tenants give to displaced persons or families an absolute preference or priority of occupancy which shall be accomplished as fol lows: (1) For a period of sixty (60) days from the date of original offering, unless a shorter period of time is approved in writing by the Secretary, all units shall be held for such preferred applicants, after which time any remaining unrented units may be rented to non - preferred applicants; (2) Thereafter, and on a continuing basis, such preferred applicants shall be given preference over non- preferred applicants in their placement on a waiting list to be maintained by the Owners; and (3) Through such further provisions agreed to in writing by the parties. (c) Without the prior written approval of the Secretary not more than 25% of the number of units in a project insured under Section 231 shall be occupied by persons other than elderly persons. (d) All advertising or efforts to rent a project insured under Section 231 shall reflect a bona fide effort of the Owners to obtain occupancy by elderly persons. 6. Owners shall not without the prior written approval of the Secretary: (a) Convey, transfer. or encumber any of the mortgaged property. or permit the conveyance, transfer or encumbrance of such property. (b) Assign. transfer, dispose of, or encumber any personal property of the project, including rents. or pay out any funds except from surplus cash, except for reasonable operating expenses and necessary repairs. (c) Convey, assign, or transfer any beneficial 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 profits from the mortgaged property. (d) Remodel, add to, reconstruct, or demolish any part of the mortgaged property or subtract from any real or personal property of the project. (e) Make, or receive and retain, any distribution of assets or any income of any kind of the project except surplus cash and except on the following conditions: (1) All distributions shall be made only as of and after the end of a semiannual or annual fiscal period, and only as permitted by the law of the applicable jurisdiction; (2) No distribution shall be made from borrowed funds, prior to the completion of the project or when there is any default under this Agreement or under the note or mortgage: (3) Any distribution of any funds of the project, which the party receiving such funds is not entitled to retain hereunder, shall be held in trust separate and apart from any other funds; and (4) There shall have been compliance with all outstanding notices of requirements for proper maintenance of the project. (t) Engage, except for natural persons, in any other business or activity, including the operation of any other rental project. Replaces FHA -2466 which may be used until supply exhausted 370937v1 SJB LN140 -25 Page 2 of 10 Form HUD -92466 (11/2002) ref Handbook 4571.1