PIH Handbook 7417-1 Ch 12

Public and Indian Housing

Public Housing Development Handbook 7417.1 REV-1

CHAPTER 12. PROJECT CONSTRUCTION AND COMPLETION

Section 6. Contract Settlement

12-71. GENERAL. The PHA, upon receipt of written authorization from the

Area Office, shall notify the contractor to prepare for settlement.

The PHA shall also advise the contractor to submit the

documentation identified in this section for PHA and Area Office

approval prior to settlement.

12-72. SETTLEMENT DOCUMENTS. The contractor is responsible for preparing

and submitting the following to the PHA:

a. Conventional and Turnkey Projects. The following documents

are required for all projects, whether developed under the

conventional or turnkey method.

(1) a certificate of occupancy issued by the responsible

local agency for each building;

(2) two notarized originals of the contractor's release

and certification which indicates:

(a) the work was completed in accordance with the

construction documents (including change orders)

except any minor items identified on the

PHA architect's final inspection report;

(b) the total amount due the contractor and a

separately stated amount for each unsettled

claim against the PHA;

(c) the PHA is released of all claims, other than

those stated in the contractor's release; and

(d) wages paid to laborers or mechanics were

consistent with the wage rate requirements

of the contract, and there are no

outstanding claims for unpaid wages.

(3) an assignment of all guarantees and warranties to the PHA.

b. Conventional Projects. In addition to the documents

identified in paragraph a, the general contractor shall submit

a "final" Periodical Estimate for Partial Payment (Form

HUD 51001).

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c. Turnkey Projects. In addition to the documents identified

in subparagraph a, the turnkey developer Shall submit the

following:

(1) the as-built drawings (paragraph 12-23);

(2) a copy of the receipt for real property taxes paid by

the developer during the construction period;

(3) the title binder, evidencing that good and marketable

title will be conveyed to the PHA; and

(4) a copy of the proposed deed.

12-73. PHA CONTRACT SETTLEMENT REPORT. The PHA in consultation with

the PHA architect and attorney shall review the contractor's

settlement documents and prepare a report on its findings.

a. PHA Review. The PHA shall review the construction documents,

the PHA records, and completed work, to determine whether

the contractor's statements concerning compliance with the

construction documents (including change orders) and identified

work to be completed are accurate.

b. PHA Report. Upon completing its review, the PHA shall prepare

a contract settlement report indicating PHA agreement

with the contractor's statements. The PHA report shall

also identify:

(1) the current status of any incomplete or seasonal work;

(2) any outstanding disputes or claims;

(3) any PHA exceptions to the contractor's settlement

documents; and

(4) the PHA attorney statement as to the adequacy of the

proposed deed and title information (turnkey projects

only).

c. Certificate of Completion. The PHA or PHA architect shall

prepare the proposed certificate of completion in the form

prescribed by the Area Office.

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d. PHA Submission The PHA shall submit a copy of the following

to the Area Office for approval:

(1) all settlement documents identified in paragraph 12-72

for the applicable development method;

(2) the PHA contract settlement report; and

(3) the proposed certificate of completion.

12-74. AREA OFFICE REVIEW. The AE Chief is responsible for coordinating

the review and recommending approval of the certificate of

completion.

a. Standard Processing Time. The standard processing time (SPT)

is the number of calendar days from receipt of the settlement

documents and certificate of completion by the PCR Unit and

a decision by the Housing Director. The SPT for Area Office

review and approval (or disapproval) of the certificate of

completion is ten (10) calendar days.

b. AE Branch. The AE Chief in order to recommend approval must

determine that:

(1) all work has been completed in accordance with the

construction documents;

(2) the proposed certificate of completion is acceptable;

and

(3) the amount to be withheld from the contractor is

sufficient to complete any items on the PHA architect's

punch list, including seasonal work.

c. Legal Division. The Area Counsel, in order to recommend

approval, must determine and advise the AE Chief that:

(1) the contractor's release and certification is consistent

with the terms of the contract;

(2) for turnkey projects, the proposed deed and title

information is acceptable and are consistent with

the contract of sale; and

(3) for turnkey projects, the scheduled closing date.

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d. Labor Relations Staff. The Labor Relations Staff,

in order to recommend approval, must determine and advise

the AE Chief that the contractor's wage certification is

acceptable.

e. PHA Notification. The AE Chief, upon determining that the

contract settlement documents are in order, must sign the

certificate of completion and submit it for the

Housing Director's signature. The original shall be

promptly sent to the PHA. If applicable, the PHA and

turnkey developer shall be advised of the scheduled closing

date.

12-75. PAYMENT OF CONTRACTOR. The PHA upon receipt of the approved

certificate of completion is authorized to make payment to the

contractor of the amounts approved by the Area Office. For

turnkey projects, payment shall be made at the closing of the

sale.

a. Contract Payment. The PHA payment to the contractor shall

be the amount specified in the certificate of completion

approved by the Area Office and shall not include any amount

to be retained for:

(1) warranty retainage or disputed items; and

(2) incomplete work, such as punch list or seasonal

items.

b. Final Payments. The PHA is not authorized to make final

payment of any amounts withheld without prior Area Office

approval. When punch list or seasonal work items are

completed, the PHA shall submit a revised certificate of

completion for Area Office approval.

12-76. TURNKEY CLOSING PROCEDURES. The closing for turnkey projects

shall take place in accordance with the following requirements:

a. Title Insurance. The PHA must obtain a title insurance

policy, or other title guarantee acceptable to the Area

Office, at closing. The title policy shall guarantee

that title is good and marketable and is free of any

mortgage, lease, lien or other encumbrances, such as use

or building restrictions, zoning ordinances, easements

or rights-of way which would affect the value or proposed

use of the site. In those instances where several

contiguous parcels are being acquired, a blanket title

insurance policy should be obtained for the entire site.

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b. Curing Title Defects. The PHA attorney shall ensure that

any outstanding mortgages, leases, or liens have been cleared.

c. Settlement Record. The closing details for each transaction

shall be recorded in triplicate on the Real Estate Settlement

Record (Form HUD 51975) or a similar locally used and accepted

settlement record.

d. Deed Recordation. The PHA shall ensure that the deed is

promptly recorded by its attorney.

e. Declaration of Trust. The PHA shall execute and record the

Declaration of Trust (Form HUD 52190) prepared by the Area

Counsel. A copy of the executed Declaration of Trust shall

be returned to the Area Office as soon as it has been

recorded.