| ID | Status | Date | Public/Private | Industry | AHACPA Contact |
|---|---|---|---|---|---|
| #7290 | Closed | public | Multifamily | Les Sparks |
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I have a non-profit HUD entity that is a real estate only entity that rents to a related party nursing home. When they obtained their mortgage in 2015, they had to fund a debt service escrow. They have now met the debt service coverage ratio and the escrow can be released to the entity. Can those escrow funds be distributed without going through surplus cash? Nothing is stated in the related documents. |
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From Les Sparks: This answer depends on the escrow agreement. It it says to owner, then it goes to owner and does not depend on surplus cash. If it goes to project, well then , it has to wait for surplus cash. It almost always stipulates. I can look it over. From Client: Thanks for getting back to me. Per the agreement, the funds go to the owner. We had a conference call with the entity and [redacted]. They seemed sure that it doesn’t go through surplus cash. We’re going to get something from LP and rely on them. They admitted the agreements weren’t clear but claimed no other CPA had raised this question. From Les Sparks: I have no issues with them taking the money per the agreement. This gets better if the lender agrees. Hope it all came out okay. |