The RA is a contract entered into between the project owner and HUD at the time the project is purchased. The RA is an essential mechanism in the regulatory scheme of the HUD-insured multifamily housing system. The RA governs the ownership and operation of the project. In exchange for the mortgage insurance from HUD, the owners agree to restrictions on their ability to make payments or distributions of project assets or income. Surplus cash means any cash remaining after the expenses of the project are paid.
Distribution means any withdrawal excluding payments for operating expenses.
These costs are associated with oversight of the management agent and protecting the assets of the ownership entity. Project income cannot pay for asset management except when the project is in a surplus cash position and the asset management fees are paid from surplus cash. Asset management costs cannot be billed to a project's operating account. All rights reserved.