HomeMy WebLinkAboutSubordination Agreement e .
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RECORDING REQUESTED BY:
At \
Ofr k9\
WHEN RECORDED RETURN TO: lJ
Maria A. Majczinger
California Community Reinvestment Corporation
225 W Broadway, Suite 120
Glendale, CA 91204
SPACE ABOVE LINE FOR
RECORDER'S USE
SITBORDINATION AGREEMENT
(Deed of Trust and Regulatory Agreement to Deed of Trust,.
Assignment of Leases and UCC-1)
NOTICE: THIS SUBORDINATION AGREEMENT RESULTS IN YOUR SECURITY
INTERESTS IN THE PROPERTY BECOMING SUBJECT TO AND OF LOWER PRIORITY
THAN THE LIEN OF SOME OTHER OR LATER SECURITY INSTRUMENT
THIS SUBORDINATION AGREEMENT is made as of the 18th day of November, 1997
by OAK FOREST ASSOCIATES LIMITED PARTNERSHIP, a California limited partnership
("Borrower"), and CITY OF ARROYO GRANDE, a municipal corporation ("City"), in favor
of CALIFORNIA COMMUNITY REINVESTMENT CORPORATION, a California nonprofit
public benefit corporation ("CCRC")
RECITALS:
A. City and Peoples' Self-Help Housing Corporation have executed that (i) certain
Regulatory Agreement (" a . is 41 "), dated March 13, 1996, setting forth
certain use restrictions affecting that certain real property located in the City of Arroyo Grande,
County of San Luis Obispo, State of California, as more particularly described in Exhibit_A
attached hereto (the "Property"), pursuant to which City has agreed to make a $445,000.00 loan
to Borrower as described below. The City Regulatory Agreement was recorded in the San Luis
Obispo County Official Records ("Official Records") on June 13, 1996, as Instrument No. 1996-
029391. In addition, Borrower executed a deed of trust, as modified from time to time (as so
modified, the "City D/T") encumbering the Property in favor of City securing Borrower's
obligations under a promissory note in favor of City in the original amount of$445,000.00, dated
August 14, 1996, which was recorded in the Official Records on August 19, 1996, as Instrument
No. 1996-041180 The City Regulatory Agreement and City D/T are hereinafter collectively
referred to as the "City Encumbrances").
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B. Borrower has executed, or is about to execute, a promissory note in favor of CCRC
in the face amount of$284,899.00 (as supplemented or amended from time to time, the "CCRC
Note") dated of even date herewith, and evidencing a loan ("CCRC man") in such amount to
Borrower by CCRC pursuant to a Loan Agreement (as supplemented or amended from time to
time, the "CCRC Loan Agreement") between CCRC and Borrower. The CCRC Note is to be
secured by a deed of trust (as supplemented or amended from time to time, the "CCRC Deed of
Trust"), a security agreement (as supplemented or amended from time to time, the "CCRC
S tri r m n ") and an Assignment of Leases (as supplemented or amended from time to
time, the "CCRC Assignment"), each executed by Borrower, dated of even date herewith and
encumbering the Property. In addition, Borrower has executed, or is about to execute, a UCC-1
Local Financing Statement(the "CCRC T.ocal TICC") and a UCC-1 State Financing Statement(the
"CCRC State !ICC") covering the collateral described in the CCRC Security Agreement and
CCRC Deed of Trust (the "Personal Property Collateral"). The CCRC Deed of Trust, the CCRC
Assignment and the CCRC Local UCC will be recorded in the Official Records. The CCRC State
UCC will be filed with the.Secretary of State. The CCRC Loan Agreement, the CCRC Deed of
Trust, the CCRC Assignment, the CCRC Security Agreement, the CCRC Local UCC and the
CCRC State UCC are hereinafter collectively, the "CCRC Encumbrances"
C. As a condition to making the CCRC Loan, CCRC requires that the CCRC
Encumbrances be unconditionally and at all times remain a lien or charge upon the Property, prior
and superior to all rights of City under the City Encumbrances and all indebtedness secured
thereby, and that City specifically and unconditionally subordinate the City Encumbrances and all
the indebtedness secured thereby to the CCRC Encumbrances.
D. City and Borrower intend that the CCRC Encumbrances shall unconditionally be
and remain at all times a lien or charge upon the Property prior and superior to City's rights under
the City Encumbrances and all indebtedness secured thereby. City has agreed to specifically and
unconditionally subordinate and subject the City Encumbrances and all indebtedness secured
thereby, together with all rights and privileges of City thereunder, to the lien and charge of the
CCRC Encumbrances.
E. It is to the mutual benefit of the parties hereto that CCRC make the CCRC Loan
to Borrower; and City is willing that the CCRC Encumbrances shall, when recorded, constitute
a lien or charge upon the Property which is unconditionally prior and superior to the City
Encumbrances and all indebtedness secured thereby.
NOW, THEREFORE, in consideration of the mutual benefits accruing to the parties
hereto and other valuable consideration, the receipt and sufficiency of which consideration is
hereby acknowledged, it is hereby declared, understood and agreed as follows:
1. The foregoing Recitals are hereby incorporated into this Agreement as agreements
among the parties.
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2. The CCRC Encumbrances, and (subject to paragraph 3) any modifications,
renewals or extensions thereof, and any advances (including interest thereon) thereunder or
secured thereby, shall unconditionally be, and remain at all times, liens or charges on the
Property, prior and superior to (a) the City Encumbrances and all indebtedness and obligations
secured thereby, (b) all loans, grants and advances of money made pursuant thereto, and (c) all
rights and privileges of City thereunder; and the City Encumbrances and all indebtedness and
obligations secured thereby, and all loans, grants and advances of money made pursuant thereto,
together with all rights and privileges of City thereunder, are hereby subjected, and made
subordinate, to the lien or charge of the CCRC Encumbrances.
3. This Agreement shall be the whole and only agreement between the parties hereto
with regard to the subordination of the City Encumbrances and all indebtedness and obligations
secured thereby, and all loans, grants and advances of money made pursuant thereto, together with
all rights and privileges of City thereunder, to the lien or charge of the CCRC Encumbrances, and
shall supersede and cancel any prior agreements to subordinate the City Encumbrances and all
indebtedness and obligations secured thereby to the CCRC Encumbrances. The subordination
herein granted shall not apply to (a) any extension of the scheduled maturity date of the CCRC
Loan, unless an event of default has occurred under the CCRC Loan Agreement, (b) increases in
the interest rate applicable to the CCRC Loan resulting from any amendment to or modification
of the Loan Documents (as defined in the CCRC Loan Agreement) after the date hereof, (c)
increases in the principal amount of the CCRC Loan beyond the original principal amount thereof,
except for increases which result from advances made by CCRC, following written notice to
Borrower and City, for payment of taxes or insurance or in order to preserve and protect its
security, or (d) changes in the amortization of the CCRC Loan amount, if as a result of such
changes the regularly scheduled monthly principal and interest payment amounts are increased,
unless an event of default has occurred under the CCRC Loan Agreement and except for increases
which result from advances made by CCRC, following written notice to Borrower and City, for
payment of taxes or insurance or in order to preserve and protect its security. The subordination
herein granted shall apply to any increases in indebtedness resulting from accrued interest,
increases in interest from default interest or from other obligations of Borrower to CCRC under
the Loan Documents.
4. City declares, agrees, and acknowledges that:
a. Subject to the limitations set forth in paragraph 3 above, City consents to
all provisions of the CCRC Loan Agreement, CCRC Note, the CCRC Encumbrances, and all
other documents and agreements evidencing, securing or otherwise relating to the CCRC Loan;
b. CCRC in disbursing the proceeds of the CCRC Loan is under no obligation
or duty to, nor has CCRC represented that it will, see to the application of such proceeds by the
person or persons to whom CCRC disburses such proceeds, and any application or use of such
proceeds for purposes other than those provided for in the CCRC Loan Agreement or the CCRC
Deed of Trust shall not defeat the subordination herein made in whole or in part;
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c. Subject to Paragraph 3, it intentionally and unconditionally subjects and
subordinates the City Encumbrances and all indebtedness and obligations secured thereby, and all
loans, grants, and advances of money pursuant thereto, together with all rights and privileges of
City thereunder, in favor of the lien or charge upon the Property of the CCRC Encumbrances and
understands that in reliance upon, and in consideration of, this subjection and subordination,
specific loans and advances are being and will be made and, as part and parcel thereof, specific
monetary and other obligations are being and will be entered into which would not be made or
entered into but for said reliance upon this subjection and subordination, and
d. If City receives any proceeds of collateral securing the CCRC Loan from and
after an event of default under any of the CCRC Loan Documents, then, in such event, City shall
remit such proceeds to CCRC until the CCRC Loan is paid in full.
5. In consideration of City's covenants and agreements contained in this Agreement,
CCRC hereby agrees for the benefit of City as follows:
a. In the event of any default by Borrower under the CCRC Note or CCRC
Encumbrances, CCRC agrees that City shall be entitled to receive a copy of any notice of default
to Borrower given by CCRC under the CCRC Encumbrances, and that City shall have the right,
but not the duty, to cure such default within thirty (30) days.
b. In the event that prior to the foreclosure of the CCRC Loan, City acquires
title to or possession of the Property from Borrower pursuant to any provision of the City
Encumbrances or documents executed pursuant thereto, City may assume and succeed to
Borrower's obligations under the CCRC Loan on the terms and conditions set forth in the CCRC
Loan Documents without acceleration of the CCRC Loan by CCRC, and CCRC will recognize
City as Borrower, on condition that City assume and agree to perform all of Borrower's
obligations under the CCRC Loan Agreement and the related Loan Documents and timely cure
all outstanding defaults of Borrower under the CCRC Loan by written documentation in form and
substance satisfactory to CCRC, and pay the reasonable administrative and/or legal costs CCRC
may actually incur in connection with such assumption and succession. In connection with curing
all defaults under the CCRC Loan, City shall pay (i) all outstanding principal due and owing under
the CCRC Note (including all unpaid monthly principal installments) and (ii) all outstanding
interest due and owing under the CCRC Note, calculated in accordance therewith.
6. This Agreement shall be binding on and inure to the benefit of the legal
representatives, heirs, successors and assigns of the parties.
7. This Agreement shall be governed by and construed in accordance with the laws
of the State of California.
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7 This Agreement shall be governed by and construed in accordance with the laws
of the State of California.
8. This Agreement may be signed by different parties hereto in counterparts with the
same effect as if the signatures to each counterpart were upon a single instrument. All counterparts
shall be deemed an original of this Agreement.
9. City acknowledges that CCRC's address for purposes of receiving notice to which
it is entitled under this Agreement is as follows:
California Community Reinvestment Corporation
225 W. Broadway, Suite 120
Glendale, California 91204
Attention: Ms. Mary Kaiser, President
10. CCRC acknowledges that City's address for purposes of receiving notice to which
it is entitled under this Agreement is as follows:
City of Arroyo Grande
214 East Branch Street
Arroyo Grande, CA 93421
Attention. Community Development Director
11 Each of the parties hereto will, whenever and as often as they shall be requested to
do so by the other, execute, acknowledge and deliver, or cause to be executed, acknowledged and
delivered, any and all such further instruments and documents as may be reasonably necessary to
carry out the intent and purpose of this Agreement, and to do any and all further acts reasonably
necessary to carry out the intent and purpose of this Agreement.
12. In the event any legal action is commenced by any party hereto concerning this
Agreement or the rights and duties hereunder of any party hereto, whether such action be an action
for damages, or for equitable or declaratory relief, the prevailing party in such litigation shall be
entitled to, in addition to all other relief as may be granted by the court, reasonable sums as and
for attorneys' fees in an amount to be set by the court.
13. Each person executing this Agreement on behalf of a party hereto represents and
warrants that such person is duly and validly authorized to do so on behalf of such party with full
right and authority to execute this Agreement and to bind such party with respect to all of its
obligations hereunder.
NOTICE. THIS SUBORDINATION AGREEMENT RESULTS IN YOUR SECURITY
INTERESTS IN THE PROPERTY BECOMING SUBJECT TO AND OF LOWER PRIORITY
THAN THE LIEN OF SOME OTHER OR LATER SECURITY INSTRUMENT.
N:\USERS\MARIA\LNDOCS\OAKFORST\CITYSUB.04 5
"Borrower"
OAK FOREST ASSOCIATES LIMITED
PARTNERSHIP, a California limited partnership
BY C-COURT INC., a California nonprofit
public benefit corporation, its General
Partner
•
By:
Name:
Title:
"PSHHC"
PEOPLES' SELF-HELP HOUSING
CORPORATION, a California nonprofit public
benefit corporation
By:
Name:
Title:
"City"
APPROVED AS TO FORM: CITY OF ARROYO GRANDE,
City Attorney a municipal corporationi
By: l�(J ' ` 'c
By AA a • Name: Robert L. Hunt
N. ' e: Ti'othy J. Carmel Title: City Manager
e: City A for•ey
"CCRC"
CALIFORNIA COMMUNITY REINVESTMENT
CORPORATION, a California nonprofit public
benefit corporation
•
By:
ewe
Mary,
H:\USERS\MARIA\LNDOCS\OAKFORST\CITYSUB.04
STATE OF CALIFORNIA )
) ss.
COUNTY OF SAN LUIS OBISPO)
onDecember 10 , 1997, before me, Nancy A. Davisa Notary Public of the
State of California personally appeared Robert L. Hunt , personally known to me (or proved
to me on the basis of satisfactory evidence) to be the person whose name is subscribed to the
within instrument and acknowledged to me that he executed the same in his authorized capacity,
and that by his signature on the instrument the entity upon behalf of which the person acted,
executed the instrument.
WITNESS my hand and official seal.
NANCY a DANS
Conrrisbn�1093759
::/fir.:..
Signature C ({1• (Seal) z' San t
G � . ^/ 6,y con E>PDes AP'"X°
STATE OF CALIFORNIA )
) ss.
COUNTY OF )
On , 1997, before me, , a Notary Public of the
State of California, personally appeared ,personally
known to me (or proved to me on the basis of satisfactory evidence) to be the person whose name
is subscribed to the within instrument and acknowledged to me that he/she executed the same in
his/her authorized capacity, and that by his/her signature on the instrument the person, or the
entity upon behalf of which the person acted, executed the instrument.
WITNESS my hand and official seal.
Signature (Seal)
H:\USERS\MARIA\LNDOCS\OAKFORST\CITYSUB.04
STATE OF CALIFORNIA )
) ss.
COUNTY OF )
On , 1997, before me, , a Notary Public of the
State of California personally appeared , personally known to me (or proved
to me on the basis of satisfactory evidence) to be the person whose name is subscribed to the
within instrument and acknowledged to me that he executed the same in his authorized capacity,
and that by his signature on the instrument the entity upon behalf of which the person acted,
executed the instrument.
WITNESS my hand and official seal.
Signature (Seal)
STATE OF CALIFORNIA )
ss.
COUNTY OFA )
vOOniina if, 1997,before me,/4,1;2 /t ... , a Notary
Public of the State of California,personally appeared MARYSER,pe ally known to me
(or proved to me on the basis of satisfactory evidence)to be the person whose name is subscribed
to the within instrument and acknowledged to me that she executed the same in her authorized
capacity), and that by her signature on the instrument the person,or the entity upon behalf of which
the person acted, executed the instrument.
WITNESS my hand and official seal.
y."^.. WRY JONAnEZ
Signa h _ (Seal) s
/ 't •,.
My� oY Public a
e*�aCommAl1�xeaEa
Sep 10,1990
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EXHIBIT A
Le.al Description of Real Property
PARCEL 1 OF PARCEL MAP AGAL 94-142, IN THE CITY OF ARROYO GRANDE,
COUNTY OF SAN LUIS OBISPO, STATE OF CALIFORNIA, ACCORDING TO MAP
RECORDED JULY 30, 1996 IN BOOK 52, PAGE 10 OF PARCEL MAPS.
PROPERTY ADDRESS: 163 SOUTH ELM STREET
ARROYO GRANDE, CALIFORNIA
ASSESSOR'S PARCEL NO.: 077-171-006