As stated on an article by Secretary Julián Castro on May 2016.
Six Best Practices for Closing a RAD Conversion
After completing all the requirements to arrange and submit a Financing Plan, it’s critical for PHAs and their partners to shift gears and prepare for closing. For some PHAs and their partners, especially those completing their first RAD conversion, this poses a new and unique challenge. We’ve culled the following best practices, based on PHAs that have successfully completed closing with minimal disruption and on target with their timeline:
- Review the Closing Checklist. HUD has created a 7-page Closing Overview & Checklist that describes the closing process and provides a full list of the documents that will be required. This is the single most important document that you can read to prepare for and master your closing. Best practice is to begin to compile the related documents once you’ve submitted your Financing Plan.
- Don’t wait for the RCC before reviewing title. We strongly encourage PHAs to order and review the title report early — even before submitting the Financing Plan. In some cases, these items have significantly delayed conversion, as PHAs discovered, and had to resolve unexpected issues related to title. Additionally, let HUD know if the public housing declaration of trust is missing.
- Use Experienced Counsel. Whether they are complex deals using multiple financing sources or no-debt conversions, the smoothest conversions occur when PHAs and developers have used counsel with RAD closing experience. While using in-house counsel for a simple transaction can be tempting, on multiple occasions it has delayed closing. If using inexperienced counsel, build in extra time.
- Submit your draft closing package. Once the RCC is issued, there is nothing HUD can do to assist your closing and work towards a desired closing date until you have submitted the draft closing package. Once the draft closing package is sent in, it is typical to take 4-6 weeks to work with HUD to make sure that all requirements have been met and all documents are complete and ready to be signed by HUD. Don’t forget to plan for the logistics of getting paper documents signed, notarized, and delivered to the closing location.
- Avoid the End of the Year. The end of each calendar year is the busiest time for closings, by far. Accordingly, HUD must prioritize closings during this period, which in years past has meant that some closing s that PHAs hoped would occur in November or December were pushed off until early in the next calendar year. In previous years, PHAs’ assertions of urgency of closing deadlines have proven unreliable. That has led HUD to have to make its own determinations of priority.
- Communicate with your closing coordinator. Unexpected events may delay your closing. Your closing coordinator can help you get to a successful closing, and will be the one gathering the information to determine whether or not to prioritize a closing or extend an RCC in the face of the unexpected. It’s always better to keep your closing coordinator informed. Help us help you.