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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 <br />