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12. Property Management of HOME-Assisted Units. Developer shall maintain the <br />Development in compliance with all applicable housing quality standards and local code <br />requirements for the duration of this Regulatory Agreement. <br />13. Occupancy Procedures. Developer shall adopt written tenant selection policies and <br />criteria for the HOME assisted units that: <br />a. Are consistent with the purpose of providing housing for Very Low-Income <br />Households; <br />b. Are reasonably related to program eligibility and the applicants' ability to perform <br />the obligations of the lease; and <br />c. Provide for: <br />(1) The selection of tenants from a written waiting list in the chronological <br />order of their application, insofar as is practicable; and <br />(2) The prompt written notification to any rejected applicant of the grounds <br />for any rejection. <br />14. Security Deposits. Any security deposits collected by Developer or Developer's agent <br />shall be kept separate and apart from all other funds of the Development in a trust account with <br />depository insured by the Federal Deposit Insurance Corporation, or other comparable federal <br />deposit insurance program, and shall be held and disbursed in accordance with California law. <br />The balance of such amount shall at all times equal or exceed the aggregate of all outstanding <br />obligations under said account, plus accrued interest thereon. <br />15. Restrictions on Sale, Encumbrance, and Other Acts. <br />a. Except for leases to tenants in the ordinary course of business, Developer shall not <br />make, or allow, any sale, encumbrance, hypothecation, assignment, pledge, conveyance, or <br />transfer in any form of the Development or of any of its interest therein, except as permitted <br />pursuant to the Loan Agreement, the OPLA, or with the prior written approval of the City. <br />b. The City may approve a sale, transfer or conveyance provided that all of the <br />following conditions are met: <br />(1) Developer is in compliance with this Regulatory Agreement or the sale, <br />transfer or conveyance will result in the cure of any existing violations of the Regulatory <br />Agreement; <br />(2) The successor-in-interest to Developer agrees to assume all obligations of <br />Developer pursuant to this Regulatory Agreement and the HOME Program; <br />(3) The successor-in-interest demonstrates to the City's satisfaction that it can <br />own and operate the Development in full compliance with all HOME Program requirements; and <br />144\221\1488729.2