Section 576. Regulatory agreements

1.  Every  housing  development fund
  company as a condition precedent to receiving  an  advance  pursuant  to
  this  article,  shall  enter  into an agreement with the commissioner or
  with the supervising agency, as the case may  be,  to  be  regulated  as
  follows:
    a.  Maximum  rentals  shall  be  fixed  by  the  commissioner  or  the
  supervising agency, as the case may  be,  based  upon  the  final  gross
  project  cost, at an amount sufficient to pay the necessary costs of the
  project.
    b. Dwellings in any such project shall be  available  for  persons  or
  families  whose  probable  aggregate  annual  income does not exceed six
  times the rental (including the value or cost to them  of  heat,  light,
  water and cooking fuel) of the dwellings to be furnished such persons or
  families,  except  that in the case of persons or families with three or
  more dependents, such ratio shall not exceed seven to one. For  purposes
  of this paragraph, tenants in a housing project of a housing development
  fund company organized under the provisions of the business corporations
  law  and  this  article  shall have added to their total annual carrying
  charges an amount equal to six per centum of the original investment  of
  such person or family in the equity obligations of such housing company.
    c.  Profits  shall  be  used  for  capital  improvements  or to reduce
  rentals.
    d. Ordinary dividends may not be declared. Capital  dividends  may  be
  declared  only  with  the consent of the commissioner or the supervising
  agency, as the case may be.
    e. The property or franchises of the corporation may not  be  disposed
  of without the consent of the commissioner or the supervising agency, as
  the  case may be, nor may the corporation be dissolved unless payment in
  full is made of remaining balances of principal  and  interest  due  and
  unpaid  on any mortgage or mortgages, of any advances made from the fund
  pursuant to this article  and  of  any  and  all  expenses  incurred  in
  effecting such dissolution.
    f.  The  commissioner  or  the supervising agency, as the case may be,
  shall have power, in his or its discretion, if he or it determines  that
  any advance pursuant to this article is in jeopardy of not being repaid,
  or  that the proposed housing project for which such advance was made is
  in jeopardy of not  being  constructed,  to  appoint  to  the  board  of
  directors  of  the  corporation  a number of new directors, which number
  shall be sufficient to constitute a majority of such board. Directors so
  appointed  need  not  be  stockholders  or   members   or   meet   other
  qualifications   which   may   be   prescribed  by  the  certificate  of
  incorporation or by-laws.    In  the  absence  of  fraud  or  bad  faith
  directors  so  appointed  shall  not be personally liable for the debts,
  obligations or liabilities of the corporation.
    2. A regulatory agreement pursuant to this section shall be terminated
  upon repayment in full of any and all advances  made  pursuant  to  this
  article  provided  that  such termination shall not take place until (a)
  assumption of the regulation of the project by the commissioner, in  the
  case  of  a  state-aided  mortgage, or by the supervising agency, in the
  case of a municipally-aided  mortgage  or  by  the  appropriate  federal
  authorities  in  the  case  of  a federally-aided mortgage or (b) if the
  project is not to be financed with a state-aided,  municipally-aided  or
  federally-aided  mortgage,  the  expiration of any exemption of the real
  property of the project from local and municipal taxes.
    3. The commissioner  or  supervising  agency  may  require  a  housing
  development  fund  company  receiving  advances  under  this  article to
  execute  a  financing  statement  for  real  property  improvement.  The
  financing  statement  shall  be  in  such  form  as  the commissioner or

  supervising agency shall  prescribe  and  shall  include  the  name  and
  address of the housing development fund company and of the agency making
  the advances, the location of the project, with a description sufficient
  to  identify  the  property,  including  street  address,  if any, and a
  statement that funds have or will be advanced to the company pursuant to
  this article and the maximum amount of such advances, together with such
  other information as the form shall  specify.  The  financing  statement
  shall  be  filed  in the office in which a mechanic's lien affecting the
  property would be filed, which office shall accept it for filing without
  fee and docket it in the manner of such lien.  From  the  date  of  such
  filing  the state or municipality, as the case may be, shall have a lien
  for the total of advances under this article made and  not  repaid.  The
  provisions  of  articles two and three of the lien law shall govern such
  lien, except that it shall be valid for a period of three years from the
  date of filing, unless extended as provided in section seventeen of  the
  lien   law.   Upon  repayment  of  the  advances,  the  commissioner  or
  supervising agency shall deliver to the housing development fund company
  a copy of the financing statement with an endorsement thereon  that  the
  lien  is satisfied. Upon filing of such copy, without payment of fee, in
  the office in which the financing statement was filed, the lien shall be
  discharged.