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HomeMy WebLinkAboutSubordination Agreement and Estoppel Certificate RECORDING REQUESTED BY: FOR RECORDER' S USE ONLY AND WHEN RECORDED MAIL TO: • Department of Housing and Community Development P.O. Box 952054 (HOME) Sacramento, CA 94252-2054 THIS DOCUMENT IS RECORDED ON BEHALF OF THE STATE OF CALIFORNIA,DEPARTMENT OF HOUSING AND COMMUNITY DEVELOPMENT AND IS EXEMPT FROM RECORDING FEES PURSUANT TO GOVERNMENT CODE SECTIONS 6103 AND 27383 • SUBORDINATION AGREEMENT AND ESTOPPEL CERTIFICATE (BENEFICIARY DEED OF TRUST AND REGULATORY AGREEMENT) NOTICE: THIS SUBORDINATION AGREEMENT RESULTS IN YOUR SECURITY INTEREST IN THE PROPERTY BECOMING SUBJECT TO AND OF LOWER PRIORITY THAN 1'HE LIEN OF SOME O1'1-Ir;R OR LATER SECURITY INSTRUMENT. THIS SUBORDINATION AGREEMENT AND ESTOPPEL CERTIFICATE (the "Agreement") is dated as of August 6, 1996 and is entered into by and among PEOPLES' SELF- HELP HOUSING CORPORATION, a California nonprofit corporation ("PSHHC"), OAK FOREST ASSOCIATES LIMITED PARTNERSHIP, a California limited partnership (the "Borrower"), the CITY OF ARROYO GRANDE, a political subdivision of the State of California (the "City"), and the STATE OF CALIFORNIA, Department of Housing and Community Development through its Home Investment Partnerships (HOME) Program, a public agency of the State of California (the "Department"). RECITALS A. Borrower is the owner of a leasehold estate in the land more particularly described in Exhibit A hereto (the "Property") and is or will be the owner of the fee estate in the property. The Borrower will construct 20 units of multi-family residential rental units on the Property (the "Improvements"), of which nine units will be HOME assisted. The Property and the Improvements are sometimes referred to collectively as the "Project". Page 1 of 6 pages B. To insure the continued affordability of the Project, the City recorded a Regulatory Agreement by and between the City and PSHHC on June 13, 1996 as Instrument Number 1996- 029391, in the Official records of the County of San Luis Obispo, State of California (the "City Regulatory Agreement"). C. To assist in the construction of the Improvements, the City will provide funds to Borrower in the amount of Four Hundred Forty-Five Thousand Dollars ($445,000.00) the repayment of which is evidenced by a promissory note and secured by a deed of trust to be recorded concurrently herewith in the Official Records of San Luis Obispo County, California (the "City Deed of Trust"). Hereinafter, the Note and Deed of Trust are sometimes collectively referred to as the "City Loan Documents". D. Construction of the Improvements will also be financed by a loan in the amount of One Million Two Hundred Sixty-Eight Thousand Three Hundred Dollars ($1,268,300.00) from Wells Fargo Bank the repayment of which will be evidenced by a promissory note and secured by a deed of trust of even date herewith to be recorded as a senior encumbrance on the Property (the "Bank Deed of Trust"). Hereinafter, the Bank Note and Deed of Trust are sometimes collectively referred to as the "Bank Loan Documents" E. In order to finance construction of the Improvements, the Department has agreed to lend the Borrower a sum not to exceed Nine Hundred Fifty-Two Thousand Three Hundred Eighty-One Dollars ($952,381 00) (the "HOME Loan"), subject to the terms and conditions of: (i) a development agreement (the "HOME Development Agreement"), (ii) a regulatory agreement restricting the use and occupancy of the Project and the income derived therefrom dated of even date herewith and to be recorded as an encumbrance on the Property (the "HOME Regulatory Agreement"), and (iii) other loan documents. The HOME Loan will be evidenced by a promissory note (the "HOME Note"), the repayment of which will be secured by, among other things, a deed of trust by Borrower as trustor, to Department as beneficiary dated of even date herewith and to be recorded as an encumbrance on the Property (the "HOME Deed of Trust") and by such other security as is identified in the HOME Development Agreement. F. The Department is willing to make the HOME Loan provided the HOME Deed of Trust and the HOME Regulatory Agreement are liens, claims or charges upon the Project prior and superior to the City Deed of Trust and the City Regulatory Agreement; and provided that the City specifically and unconditionally subordinates and subjects the City Deed of Trust and the City Regulatory Agreement to the liens, claims or charges of the HOME Deed of Trust and the HOME Regulatory Agreement. AGREEMENT NOW, THEREFORE, in consideration of the mutual benefits accruing to the parties hereto and other valuable consideration, the receipt and sufficiency of which is hereby acknowledged, Page 2 of 6 pages and in order to induce the Department to make its HOME Loan, it is hereby declared, understood and agreed as follows: •1 The HOME Regulatory Agreement and the HOME Deed of Trust securing the HOME Note in favor of the Department, and any and all renewals, modifications, extensions or advances thereunder or secured thereby (including interest thereon) shall unconditionally be and remain at all times liens, claims, or charges on the Project prior and superior to the City Deed of Trust and the City Regulatory Agreement, and to all rights and privileges of the City thereunder; and the City Deed of Trust and the City Regulatory Agreement, together with all rights and privileges of the City thereunder are hereby irrevocably and unconditionally subject and made subordinate to the liens, claims or charges of the HOME Theed of Trust and the HOME Regulatory Agreement. 2. This Agreement shall be the whole and only agreement with regard to the subordination of the City Deed of Trust and the City Regulatory Agreement together with all rights and privileges of the City thereunder to the liens, claims or charges of the HOME Deed of Trust and the HOME Regulatory Agreement, and this Agreement shall supersede and cancel any prior agreements to subordinate the claims, liens or charges of, but only insofar as would affect the priority between the claims, liens or charges of the City Deed of Trust or the City Regulatory Agreement to the HOME Deed of Trust and the HOME Regulatory Agreement including, but not limited to, those provisions, if any, contained in the City Deed of Trust or the City Regulatory Agreement which provide for the subordination of the lien or charge thereof to another lien or charge on the Property or the Improvements. 3 The City declares, agrees and acknowledges that: (a) It consents and approves (i) all provisions of the HOME Note, the HOME Deed of Trust and the HOME Regulatory Agreement, and (ii) all agreements among the Borrower and Department for the disbursement of the proceeds of the HOME Loan, including without limitation the HOME Development Agreement and any loan escrow agreements which have been provided to the City for review; and (b) The Department, in making disbursements of the HOME Loan pursuant to the HOME Development Agreement, the HOME Note or any other agreement, is under no obligation or duty to, nor has the Department represented that it will, see to the application of such proceeds by the person or persons to whom the Department disburses such proceeds, and any application or use of such proceeds for purposes other than those provided for in such agreement or agreements shall not defeat the subordination herein made in whole or in part; (c) The City Loan Documents are in full force and effect, and have not been amended, and there is no breach, event of default or default existing under City Deed of Page 3 of 6 pages , t Trust or the City Regulatory Agreement, or event, omission or failure of condition which would constitute such a breach, default or event of default after notice or lapse of time, or both; and (d) That none of the execution, delivery or recordation of any of the HOME Note, HOME Deed of Trust, or HOME Regulatory Agreement, or the performance of any provision, condition, covenant or other term thereof, will conflict with or result in a breach of the City Loan Documents. (e) The City intentionally and unconditionally waives, relinquishes, subjects and subordinates the claims, liens or charges upon the Project of the City Loan Documents, and all present and future indebtedness and obligations secured thereby, in favor of the claims, liens or charges upon the Project of the HOME Deed of Trust and the HOME Regulatory Agreement, and understands that in reliance upon, and in consideration of, this waiver, relinquishment, subjection, and subordination, the HOME Loan and advances thereof 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 waiver, relinquishment, subjection and subordination. 4. The Department would not make the HOME Loan without this Subordination Agreement. 5 This Agreement shall be binding on and inure to the benefit of the legal representatives, heirs, successors and assigns of the parties. 6. This Agreement shall be governed by and construed in accordance with the laws of the State of California. 7 In the event that any party to this Agreement brings an action to interpret or enforce its rights under this Agreement, the prevailing party in such action shall be entitled to recover its costs and reasonable attorneys' fees as awarded by the court in such action. 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. NOTICE: THIS SUBORDINATION AGREEMENT CONTAINS A PROVISION WHICH ALLOWS [HE ENTITY OBLIGATED ON YOUR REAL PROPERTY SECURITY TO OBTAIN A LOAN WHICH MAY BE EXTENDED FOR PURPOSES 0[HER THAN IMPROVEMENT OF THE LAND. Page 4 of 6 pages IN WITNESS WHEREOF, the parties have executed this Agreement as of the 6the day of August, 1996. "CITY" "DEPARTMENT" CITY OF ARROYO GRANDE, DEPARTMENT OF HOUSING AND a municipal corporation COMMUNITY DEVELOPMENT, of the State of�,CaliforniarnHome Investment Partnerships Program St By: I OI. [ �u-C By: „nlwta O-w2J2 Name: ROBERT L. HUNT Name: Christine Webb-Curtis Title: CITY MANAGER Title: Program Manager "PSHHC" "BORROWER" PEOPLES' SELF-HELP HOUSING OAK FOREST ASSOCIATES LIMITED CORPORATION, a California PARTNERSHIP, a California limited nonprofit public benefit corporation partnership BY: PEOPLES' SELF-HELP HOUSING CORPORATION, a California By: / nonprofit public benefit corporation, Name: its General Partner Title: By: Name: Title: Page 5 of 6 pages STATE OF CALIFORNIA )ss. County of San Luis Obispo On August 13, 1996, before me, Nancy A. Davis, personally appeared Robert L. Hunt, personally known to me to be the person who 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 person, or the entity on behalf of which the person acted, executed the instrument. WITNESS my hand and official seal. �• NANCY A.DAMS S = Canmbgon i 1093759 y ;' •'''' Notny RClb—CaHanio Sm Lub Obb es frpo Signature / anteit. Q• )e , (Seal) My commission expires April 7, 2000. STATE OF CALIFORNIA )ss. County of Sacramento On August 6, 1996 , before me, Patricia Evans , personally appeared Christine Webb-Curtis , personally known to me (or proved tc the buns f caticfastsp evidence) to be the person(s) who is/arc subscribed to the within instrument and acknowledged to me that 14e/she/they executed the same in his/heritheic authorized capacity(les), and that by his/her/theif signature(s) on the instrument the person(s), or the entity on behalf of which the person(s) acted, executed the instrument. WITNESS my hand and official seal. ^ ^ ^ ^ ^ ^ ^ ^ o•-"-" .". ^ rt.is Patricia Evans E V < Comm.#999748 (� 2,B+#NOTARY PUBLIC CALIFORNIAN' ST✓ SACRAMENTO COUNTY N' Comm.Expires July 14,1997 • Signature ►, Ve.B.-_ c- (Seal) My commission expires July 14, 1997 • Exhibit A Legal Description That real property situated in the County of San Luis Obispo, State of California, described as follows: Parcels A, B, C and D of Parcel Map No. AG-77-326, in the City of Arroyo Grande, County of San Luis Obispo, State of California, according to map recorded November 8, 1977 in Book 24, Page 23 of Parcel Maps. - END OF LEGAL DESCRIPTION Page 6 of 6 pages