Sec. 05.04.09.08. Loan Conditions — General

A. Environmental Review.

(1) A Project financed by a program loan shall comply with applicable local, State, and federal environmental laws and regulations.

(2) Group home sponsors may be required, at the discretion of the Department, to conduct a screening of the proposed site for environmental conditions such as man-made hazards, storm water runoff, underground storage tanks, lead-based paint, radon gas, PCB's, and asbestos.

(3) If the initial screening indicates adverse or potentially adverse environmental conditions, the Department may require a more detailed physical investigation, review of historical records, testing, and treatment, or abatement of the environmental condition as a requirement of the loan.

B. Title Insurance.

(1) The borrower shall provide an American Land Title Association (ALTA) Loan policy or other form of title policy approved by the Department and the Office of the Attorney General for an amount equal to the maximum principal amount of the loan, insuring the Department, evidencing that title to the building and real property in and on which the group home is located on the date of closing is vested in the borrower, and containing only exceptions and encumbrances approved by the Department and the Office of the Attorney General.

(2) The title insurance policy shall be accompanied by a survey, certified in the manner required by the Department and the title company issuing the title insurance, showing that there are no easements or encroachments upon, or other matters pertaining to, the property, except those acceptable to the Department. The title insurance policy may not contain any survey exceptions.

C. Property, Liability, and Other Insurance.

(1) At or before closing of a loan, and at such other times as required by the Department, the borrower shall provide evidence that the borrower, contractor, and other parties, have obtained and maintained the following insurance:

(a) Owner's liability;

(b) Owner's property or hazard or contractor's builder's risk;

(c) Contractor's liability;

(d) Architect's errors and omissions;

(e) Engineer's errors and omissions; and

(f) Flood insurance, if the project is located in a flood hazard zone.

(2) All insurance required under §C(1) of this regulation shall meet the following requirements:

(a) Be written by a company that has a currently issued certificate of authority or other evidence of appropriate registration or licensure from the Maryland Insurance Administration;

(b) Be in force at the time of closing;

(c) Not be terminable without prior notification to the Department; and

(d) Contain such other terms and coverage satisfactory to the Department.

(3) In addition to the requirements of §C(2) of this regulation, owner's liability insurance shall:

(a) Name the Department as an additional insured; and

(b) Remain in force for the duration of the loan.

(4) In addition to the requirements of §C(2) of this regulation, contractor's liability and contractor's builder's risk insurance, if applicable, shall:

(a) Name the Department as an additional insured; and

(b) Remain in place through final closing or such later date as the Department requires.

(5) In addition to the requirements of §C(2) of this regulation, owner's property or hazard insurance shall:

(a) Name the Department as a loss payee and mortgagee; and

(b) Remain in force for the duration of the loan.