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HomeMy WebLinkAboutOccupancy and Resale Agreement with Option to Purchase Recording Requested B� JULIE RODEW�' 0 MEL Fidelity National Title n _1 San Luis Obispo Cu�y— Clerk/Recorder 2/02/2005 Complimentary Recording Requested v N L Recorded at the request of 8:00 AM Pursuant To Government Code Fidelity Title Company Section 6103 and 27383 • D 0 C # : 2005008689 Titles: 2 Pages: 17 When Recorded Mail To: City of Arroyo Grande TFaexeess P. O. Box 550 I 101 I II 11111111111 I Others 0.00 Arroyo Grande, CA 93421 PAID 50.00 Attn: City Clerk OCCUPANCY AND RESALE AGREEMENT WITH OPTION TO PURCHASE CITY OF ARROYO GRANDE INCLUSIONARY HOUSING PROGRAM f Deleted: 1 Buyer: Department of Veterans Affairs of the State of Califomia (Vista Montana Affordable Homes)y • Qualified Buyers: Andrew and Cheri Jennings Address of Home: 253 Courtland Street, Arroyo Grande, California 93420 Development: Jasmine Place Income Category of Home: Moderate Number of Bedrooms in Home: Three Sales Price at Original Purchase: $315,255.00 This Occupancy and Resale Agreement with Option to Purchase (the "Agreement ") is entered into as of this day of January, 2005, by and between the City of Arroyo Grande (the "City ") and Andrew and Cheri Jennings (the "Qualified Buyers "). RECITALS A. Pursuant to the City of Arroyo Grande's Affordable Housing Ordinance (Ordinance No. 514 C.S.), Chapter 16.80 of the Arroyo Grande Municipal Code, a portion of all new housing constructed in the City of Arroyo Grande is required to be affordable to median to above moderate- income households. B. Jasmine Place, LLC, a Limited Liability Company,(the "Developer" )and the City - Deleted: The Ovum Corporation, the entered intopn Affordable Housing Agreement dated 8/10/04. Pursuant to ,the Affordable developer of vats Mnntada Housing Agreement, the Developerpgreed to sell seventeen (17) homes ( "the Affordable Units ") yes' • to moderate income households, as defined in Health and Safety Code §50093. Deleted: a Development Agreement with the City of Watsonville dated October 17, 2001, and C. The Department of Veterans Affairs of the State of Califomia ( "Buyer ") intends ` Deleted; the Development Agreement to purchase certain real property located in the Jasmine Place subdivision in the City of Arroyo and Grande, and commonly described as 253 Courtland Street, Arroyo Grande, San Luis Obispo Deleted: sold County, California (the "Home "), for sale to and occupancy by the Qualified Buyers. The Home '� Deleted: 62 has been designated by the City and the Developer as one of the Affordable Units. A -1 • C MG b 7 LOT 5 OF TRACT NO. 2505, IN THE CITY OF ARROYO GRANDE, COUNTY OF SAN LUIS OBISPO, STATE OF CALIFORNIA, RDIN COUNTY RECORDER OF SAID COUNTY. IN BOOK 24, PAGES 121 15 OF MAPS, IN TH OFFICE OF D. The City's Community Development Director has received an application to purchase from the Qualified Buyers. The Community Development Director has determined that the Qualified Buyers qualify as a moderate income household. E. Buyer and the Qualified Buyers have concurrently herewith given to the City a Grant of First Refusal With Respect to Purchase of Home. These restrictions have enabled the Buyer to purchase the Home for occupancy by the Qualified Buyers. F. Buyer intends to sell the Home to the Qualified Buyers by means of a Cal -Vet Loan Contract under which the Qualified Buyers will make monthly installment payments until the purchase price and interest as set forth in the Cal -Vet Loan Contract are paid in full. Upon payment in full, Buyer shall transfer title to the Home to the Qualified Buyers. In the event the Qualified Buyers fail to make payments as set forth in the Cal -Vet Loan Contract, the Buyer has the right to cancel the Cal -Vet Loan Contract, take possession of the Home and sell the Home to another buyer. G. Notwithstanding Sections 6.4.1 through 6.4.3 of the Affordable Housing Agreement, City is willing to allow the sale to Buyer subject to the terms hereof and execution by the Qualified Buyers of a Grant of Right of First Refusal With Respect to Purchase of Home. H. Pursuant to the Affordable Housing Ordinance and the Affordable Housing Agreement, the Developer and the City are required to ensure the continued affordability of the Home as an Affordable Unit, and the City therefore requires the Qualified Buyers to execute this Agreement as a condition of the purchase of the Home. Concurrently herewith, and in consideration of the Developer's agreement to sell the Home to the Buyer at an affordable price that is below the fair market value of the Home for occupancy by the Qualified Buyers, the Buyer and the Qualified Buyers are executing and delivering to the City a Grant of Right of First Refusal which will grant a right of first refusal to City in the event of a sale of the Home by the Buyer. I. The purpose of this Agreement is to place occupancy and resale controls on the Home. This Agreement also provides the City an option to purchase the Home at a restricted price, given in consideration of the economic benefits to the Buyer and Qualified Buyer resulting from purchase of the Home at a below market price under the City's Affordable Housing Program. AGREEMENT NOW, THEREFORE, in consideration of the benefits received by the Qualified Buyers and the City hereunder, the Qualified Buyers and the City agree, as follows: 1. DEFINITIONS The following terms are specially defined for this Agreement and their definitions can be found in the sections indicated below: A. "Affordable Housing Ordinance" — Recital A B. "Agreement" - First sentence of the Agreement on page 1 A -2 C. "Affordable Price" — Section IOC D. "Buyer" — Recital C E. "City" - First sentence of the Agreement on page 1 F. "City Option " - Section 12A G. "City Option Price" — Section 12B H. "Eligible Purchaser" - Section 11B I. "Excess Sales Proceeds" - Section 14 J. "First City Response Notice" - Section 8 K. "Home" - Recital C and Section 2 L. "Housing Price Index" — Section 10A M. "Indexed Value" — Section 10A N. "Market Purchaser" - Section 14 O. "Marketing Period" - Section 1 I A P. "Maximum Allowable Sales Price" - Section 10 Q. "Qualified Buyers" - First sentence of the Agreement on Page 1 R. "Qualified Buyers' Notice of Failure to Locate Eligible Purchaser" - Section 11E S. "Qualified Buyers' Notice of Intent to Sell" - Section 7 T. "Second City Response Notice" - Section 11E U. "Transfer" - Section 6 V. "Unrestricted Fair Market Value" - Section IOC 2. DESCRIPTION OF PROPERTY This Agreement concerns certain real property located in the Jasmine Place subdivision in the City of Arroyo Grande, and commonly described as 253 Courtland Street, Arroyo Grande, San Luis Obispo County, California (the "Home "). A -3 3. QUALIFIED BUYERS' CERTIFICATIONS AND OCCUPANCY REQUIREMENT The Qualified Buyers certify that the financial and other information previously provided in order to qualify to purchase the Home is true and correct as of the date first written above. The Qualified Buyers shall occupy the Home as the Qualified Buyers' principal place of residence. The Qualified Buyers shall be considered as occupying the Home if the Qualified Buyers are living in the unit for at least ten (10) months out of each calendar year. The Qualified Buyers shall provide an annual written certification to the City that the Qualified Buyers are occupying the Home as their principal place of residence. 4. LEASING OF HOME The Qualified Buyers shall not lease the Home to another party. Any lease in violation of this Agreement is prohibited, and shall be a default under this Agreement. 5. MAINTENANCE AND INSURANCE REQUIREMENTS A. The Qualified Buyers shall maintain the Home, including landscaping, in good repair and in a neat, clean and orderly condition and will not commit waste or permit deterioration of the Home. B. The Qualified Buyers shall maintain a standard all risk property insurance policy equal to the replacement value of the Home (adjusted every five (5) years by appraisal, if requested by City), naming the City as an additional insured. 6. RESTRICTIONS ON RESALE OF THE HOME Any Transfer of the Home, other than a sale of the Home by the Buyer after default and cancellation of the Cal -Vet Loan Contract, will be subject to the provisions of this Agreement including, without limitation, the City Option described in Section 12 below. "Transfer" means any sale, assignment or transfer, voluntary or involuntary, of any interest in the Home, including, but not limited to, a fee simple interest, a joint tenancy interest, a life estate, a leasehold interest, or an interest evidenced by a land contract by which possession of the Home is transferred and Buyer and/or Qualified Buyers retain title. Any Transfer without satisfaction of the provisions of this Agreement is prohibited. Transfers by devise or inheritance to an existing spouse or domestic partner, or a spouse as part of a dissolution proceeding, or in connection with marriage shall not be considered a Transfer for the purposes of this Agreement. 7. NOTICE OF INTENDED TRANSFER; PREPARATION OF HOME FOR SALE A. In the event the Qualified Buyers intend to Transfer or vacate the Home, the Qualified Buyers shall promptly give the City written notice of such intent (the "Qualified Buyers' Notice of Intent to Sell "). The Qualified Buyers' Notice of Intent to Sell shall be sent to the City by certified mail, return receipt requested at the address provided in Section 26 of this Agreement. The Qualified Buyers' Notice of Intent to Sell shall include the information necessary for the City to determine the Maximum Allowable Sales Price of the Home, including the following information: A -4 (1) the address of the Property; (2) the date of purchase of the Home by the Buyer /Qualified Buyers; (3) the purchase price of the Horne paid by the Buyers /Qualified Buyers at the time of purchase; (4) a copy of the HUD-1 Settlement Statement or equivalent document from the close of escrow on the Buyer's /Qualified Buyers' purchase of the Home; (5) the date on which Qualified Buyers intend to vacate Home; (6) the date Home will be placed on the market; and (7) the name and phone number of the person to contact to schedule inspection of the Home by the City. B. Following delivery to the City of the Qualified Buyers' Notice of Intent to Sell, the Qualified Buyers shall prepare the Home for sale, as follows: (1) within thirty (30) days of delivery of the Qualified Buyers' Notice of Intent to Sell, the Qualified Buyers shall obtain and deliver to the City a current written report of inspection of the Home by a licensed structural pest control operator; (2) within the sooner of (a) sixty (60) days from the date of delivery of the Qualified Buyers' Notice of Intent to Sell, or (b) prior to close of escrow on the Transfer, the Qualified Buyers shall repair all damage noted in the pest report including damage caused by infestation or infection by wood - destroying pests; (3) withini(10) business days of the date of the Qualified Buyers' Notice { Deleted: thirt of Intent to Sell, the Qualified Buyers shall allow the City, or its designee, to inspect the Home to Deleted: 30 determine its physical condition; (4) if the Home is vacant, the Qualified Buyers shall maintain utility connections until the close of escrow on the Transfer. 8. CITY RESPONSE TO QUALIFIED BUYERS' NOTICE OF INTENT TO SELL The City shall respond in writing (the "First City Response Notice ") to the Qualified Buyers' Notice of Intent to Sell within en 1Q0) business days of City receipt of a complete . - -{ Deleted: thirty Qualified Buyers' Notice of Intent to Sell that includes all information required under Section 7 - l Deleted: 30 51 above and access to inspect the Home as required under Section 7(B)(3) above. The First City Response Notice shall inform the Qualified Buyers of the following information: (1) the maximum qualifying income for an Eligible Purchaser; (2) the certifications required of an Eligible Purchaser; and (3) the Maximum Allowable Sales Price the Qualified Buyers may receive for the Home, calculated by the City pursuant to Section 10 below. A -5 9. QUALIFIED BUYERS' ACKNOWLEDGMENT OF CITY RESPONSE NOTICE No later than seven (7) days following the date of the First City Response Notice, the Qualified Buyers shall acknowledge in writing to the City that the City Response Notice was received and that Qualified Buyers still intend to Transfer the Home. 10. DETERMINATION OF MAXIMUM SALES PRICE FOR RESTRICTED SALE If the Qualified Buyers sell to an Eligible Purchaser, the maximum sales price that the Qualified Buyers shall receive from the Eligible Purchaser for purchase of the Home shall be the greater of the Indexed Value or the Maximum Allowable Sales Price, but in no event greater than the Unrestricted Fair Market Value. A. Indexed Value. The Indexed Value of the Home means the sales price of the Home at the time of purchase by the Qualified Buyers, as set forth on page 1 of this Agreement, increased by fifty percent (50 %) of the annual percentage of increased value in the Housing Price Index from the date of the original purchase of the Home by the Qualified Buyers to the date of receipt by the City of the Qualified Buyers' Notice of Intent to Transfer, and, where applicable, adjusted pursuant to subsection (2) below to reflect the cost of deferred maintenance. "Housing Price Index" shall mean the San Luis Obispo - Arroyo Grande Metropolitan Statistical Area Housing Price Index as published from time to time by the office of Federal Housing Enterprise Oversight or, if such index is no longer published, a comparable index designated by the City of Arroyo Grande. B. Maximum Allowable Sales Price. The Maximum Allowable Sales Price means the Affordable Price for a Moderate Income Unit, pursuant to the designation of the Home on page 1 of this Agreement, calculated in accordance with the Maximum Allowable Sales Price Calculation for a Moderate Income Unit attached hereto as Exhibit "B" and incorporated herein. C. Unrestricted Fair Market Value. In certain circumstances it may be necessary to determine the fair market value of the Home (the "Unrestricted Fair Market Value "). These circumstances include: (1) where the parties wish to determine if the Maximum Allowable Sales Price exceeds the Unrestricted Fair Market Value in order to determine the Maximum Allowable Sales Price pursuant to Section 10; and (2) where the Qualified Buyers are selling the Home to a Market Purchaser at an unrestricted price pursuant to Section 13. If it is necessary to determine the Unrestricted Fair Market Value of the Home, it shall be determined by a certified MAI or other qualified real estate appraiser approved in advance by the City. If possible, the appraisal shall be based upon the sales prices of comparable properties sold in the market area during the preceding three (3) -month period. The cost of the appraisal shall be shared equally by the City and the Qualified Buyers, unless the appraisal is obtained from a new purchaser, in which event the Qualified Buyers shall pay the cost of the appraisal. Nothing in this section shall preclude the Qualified Buyers and the City from establishing the Unrestricted Fair Market Value of the Home by mutual agreement in lieu of an appraisal pursuant to this section. A -6 D. Holdback for Damage Repair Cost. If the City finds that the Qualified Buyers, through neglect, abuse, or lack of adequate maintenance, have damaged the Home, the City may require that repairs be made at the Qualified Buyers' cost prior to sale or through the escrow for the sale of the Home. 11. SALE OF HOME TO ELIGIBLE PURCHASER AT RESTRICTED PRICE Following receipt of the First City Response Notice notifying the Qualified Buyers of the Maximum Allowable Sales Price, the Qualified Buyers may proceed to sell the Home in compliance with the following requirements: A. Marketing Period. The Qualified Buyers shall have ninety (90) days from the date of the First City Response Notice (the "Marketing Period ") to market the Home and find an Eligible Purchaser. During the Marketing Period, the Qualified Buyers shall use bona fide good faith efforts to sell the Home to an Eligible Purchaser in compliance with this Section 11, including listing the Home on the Multiple Listing Service, keeping the Home in an orderly condition, making the Home available to show to agents and prospective buyers, and providing buyers with Eligible Purchaser requirements, including income qualifications and the City's form of disclosure statement summarizing the terms of the Qualified Buyers' resale agreement. A proposed purchaser ( "Proposed Purchaser "), who the Qualified Buyers believe will qualify as an Eligible Purchaser, shall be referred to the City for an eligibility determination. B. Eligible Purchaser. A Proposed Purchaser shall qualify as an "Eligible Purchaser" if he or she meets the following requirements, as determined by the City: (1) Intent to Oualified Buyers Occupy. The Proposed Purchaser shall certify that he or she will occupy the Home as his or her principal place of residence throughout his or her Qualified Buyership. (2) Agreement to Sign Qualified Buyers' Resale Agreement and to Cooperate with City. The Proposed Purchaser shall agree to sign a Qualified Buyers' Resale and Occupancy Agreement with Option to Purchase restricting future resale of the Home and shall agree to cooperate fully with the City in promptly providing all information requested by the City to assist the City in monitoring the Proposed Purchaser's compliance with the Qualified Buyers' resale and occupancy agreement with option to purchase. (3) Income Eligibility. The combined maximum income for all household members of the Proposed Purchaser shall not exceed the income level designated by the City in the First City Response Notice. C. Maximum Allowable Sales Price and Closing Costs. The purchase price for the sale of the Home by the Qualified Buyers to the Eligible Purchaser shall not exceed the Maximum Allowable Sales Price calculated by the City pursuant to Section 10 above, as set forth in the First City Response Notice. The Maximum Allowable Sales Price shall not include closing costs paid by the Eligible Purchaser. The closing costs paid by the Eligible Purchaser shall not exceed reasonable and customary buyers' closing costs in the County of San Luis Obispo. A -7 • D. Disclosure and Submittals. The Qualified Buyers and the Proposed Purchaser shall provide the following information and documents to the City: (1) The name, address and telephone number in writing of the Proposed Purchaser. (2) A signed financial statement of the Proposed Purchaser in a form acceptable to the City and any other supporting documentation requested by the City. The financial information shall be used by the City to determine the income eligibility of the Proposed Purchaser. (3) The proposed sales contract and all other related documents which shall set forth all the terms of the sale of the Home. Said documents shall include at least the following terms: (a) the sales price; and (b) the price to be paid by the Proposed Purchaser for the Qualified Buyers' personal property, if any, for the services of the Qualified Buyers, if any, and any credits, allowances or other consideration, if any. (4) A written certification, from the Qualified Buyers and the Proposed Purchaser in a form acceptable to the City that the sale shall be closed in accordance with the terms of the sales contract and other documents submitted to and approved by the City. The certification shall also provide that the Proposed Purchaser or any other party has not paid and will not pay to the Qualified Buyers, and the Qualified Buyers have not received and will not receive from the Proposed Purchaser or any other party, money or other consideration, including personal property, in addition to what is set forth in the sales contract and documents submitted to the City. In any event, any costs, liabilities or obligations incurred by the Qualified Buyers and the Proposed Purchaser for the retum of any moneys paid or received in violation of this Agreement or for any of the Buyer's and/or Qualified Buyers' and/or the Proposed Purchaser's costs and legal expenses, shall be borne by the Qualified Buyers and/or the Proposed Purchaser and they shall hold the City and its designee harmless and reimburse the City's and its designee's expenses, legal fees and costs for any action they reasonably take in good faith in enforcing the terms of this Agreement. (5) An executed Qualified Buyers' resale and occupancy agreement and option to purchase and an executed deed of trust from the Proposed Purchaser in forms provided by the City. The recordation of the new deed of trust and Qualified Buyers' Resale and Occupancy Agreement with Option to Purchase shall be a condition of the City's approval of the proposed sale. (6) The name of the title company escrow holder for the sale of the Home, the escrow number, and name, address, and phone number of the escrow officer. (7) Upon the close of the proposed sale, certified copies of the recorded City deed of trust and Qualified Buyers' Qualified Buyers' Resale and Occupancy Agreement with Option to Purchase, a copy of the final sales contract, settlement statement, escrow instructions, and any other documents which the City may reasonably request. A -8 E. Failure To Locate Eligible Purchaser: Notice to City. If, despite bona fide good faith marketing efforts, the Qualified Buyers are unable to locate an Eligible Purchaser during the Marketing Period and any extensions to the Marketing Period granted by the City, the Qualified Buyers shall provide written notice to the City of this fact (the "Qualified Buyers' Notice of Failure to Locate Eligible Purchaser "). Within thirty (30) days of receipt of the Qualified Buyers' Notice of Failure to Locate Eligible Purchaser, the City shall provide a second response notice to the Qualified Buyers (the "Second City Response Notice ") stating either (1) that the City will exercise the City Option to purchase the Home pursuant to Section 12 below, or (2) that the Qualified Buyers may Transfer the Home to a person of the Buyer's and/or Qualified Buyers choosing (a "Market Purchaser ") who is not an Eligible Purchaser, at an unrestricted price (supported by an MAI or other qualified appraisal), but shall pay all Excess Sales Proceeds to the City as set forth in Section 14 below. 12. CITY PURCHASE OPTION A. Exercise of Option. If the Qualified Buyers fail to sell the Home to an Eligible 1 Purchaser at or below the Maximum Allowable Sales Price, the City shall then have the option to purchase the Home (the "City Option ") for the City Option Purchase Price, as defined below. The City Option may be exercised by the City in the Second City Response Notice (as described in Section 11E above), to be sent by the City to the Qualified Buyers within thirty (30) days of receipt of the Qualified Buyers' Notice of Failure to Locate Eligible Purchaser. If the Second City Response Notice states that the City will exercise the City Option, the City shall purchase the Home within forty -five (45) days of the date of the City's Second Response Notice. The City may, instead of purchasing the Home itself, assign its right to purchase the Home pursuant to the City Option to another public agency, a nonprofit corporation, or to an Eligible Purchaser. In the event of exercise of the City Option and purchase of the Home by the City or its designee, the Qualified Buyers shall permit a final walk - through of the Home by the City in the final three (3) days prior to close of escrow on the Transfer. B. City Option Price. If the City exercises the City Option, the purchase price to be paid by the City (the "City Option Purchase Price ") shall be the highest of the following: (1) the outstanding principal balance of the First Mortgage Loan; (2) the total of the outstanding principal balance of the First Mortgage Loan and any purchase money Second Mortgage Loan; or (3) the appraised value of the Home with the affordability covenants intact, as determined by an appraiser selected by the City and approved by the Qualified Buyers, and who employs standard appraisal practices. 13. UNRESTRICTED SALES If the Second City Response Notice states that the City will not exercise the City Option and that the Qualified Buyers may proceed to Transfer the Home to a person of the Buyer's and/or Qualified Buyers' choosing (a "Market Purchaser ") who is not an Eligible Purchaser, at an unrestricted price (supported by an MAI or other qualified appraisal), the Qualified Buyers may proceed to do so, but the Qualified Buyers shall pay all Excess Sales Proceeds to the City as set forth in Section 14 below. If the Qualified Buyers Transfers the Home pursuant to this Section A -9 .1 13, the purchaser shall not be required to execute a Qualified Buyers' resale and occupancy agreement with option to purchase, and the City shall reconvey the liens of this Agreement and the City Deed of Trust from the Home, provided that the Qualified Buyers pay the Excess Sales Proceeds to the City pursuant to Section 14 below. The Qualified Buyers shall provide the City with the following documentation associated with such a Transfer: (1) The name and address of the purchaser; (2) The final sales contract and all other related documents which shall set forth all the terms of the sale of the Home. Said documents shall include at least the following terms: (a) the sales price; and (b) the price to be paid by the Market Purchaser for the Buyer's and/or Qualified Buyers' personal property, if any, for the services of the Qualified Buyers, if any, and any credits, allowances or other consideration, if any. (3) A written certification, from the Qualified Buyers and the Market Purchaser in a form acceptable to the City that the sale shall be closed in accordance with the terms of the sales contract and other documents submitted to and approved by the City. The certification shall also provide that the Market Purchaser or any other party has not paid and will not pay to the Qualified Buyers, and the Qualified Buyers have not received and will not receive from the Market Purchaser or any other party, money or other consideration, including personal property, in addition to what is set forth in the sales contract and documents submitted to the City. The written certification shall also include a provision that in the event a Transfer is made in violation of the terms of this Agreement or false or misleading statements are made in any documents or certification submitted to the City, the City shall have the right to foreclose on the Home or file an action at law or in equity as may be appropriate. In any event, any costs, liabilities or obligations incurred by the Qualified Buyers and the Market Purchaser for the return of any moneys paid or received in violation of this Agreement or for any costs and legal expenses, shall be borne by the Qualified Buyers and/or the Market Purchaser and they shall hold the City and its designee harmless and reimburse their expenses, legal fees and costs for any action they reasonably take in good faith in enforcing the terms of this Agreement. (4) A copy of the MAI or other qualified appraisal for the Home. (5) Upon the close of the proposed sale, a copy of the final sales contract, settlement statement, escrow instructions, and any other documents which the City may reasonably request. 14. PAYMENT TO CITY OF EXCESS SALES PROCEEDS If the Qualified Buyers Transfer the Home at an unrestricted price pursuant to Section 13 above, or if the Qualified Buyers make a Transfer in violation of this Agreement, the Qualified Buyers shall pay the Excess Sales Proceeds to the City. For purposes of this Agreement, "Excess Sales Proceeds" shall mean ninety,percent (20%) of the amount by which the Unrestricted Fair Deleted: -four Market Value for the Home pxceeds the Maximum Allowable Sales Price for the Home (in the Deleted: 94 amount that was stated in the First City Response Notice). This amount shall be a debt of the -- Deleted: gross sales proceeds received Qualified Buyers to the City, secured by the City Deed of Trust. The Qualified Buyers by the Owner from the new purchaser acknowledge that the City shall have no obligation to cause reconveyance of this Agreement or of the City Deed of Trust until the Excess Sales Proceeds are paid to the City. The City shall utilize the Excess Sales Proceeds for City affordable housing programs. The Qualified Buyers A -10 and the City acknowledge that the formula for calculation of the amount of Excess Sales Proceeds due from the Qualified Buyers to the City is intended to cause the Qualified Buyers to receive the same net sales proceeds (following payment by Qualified Buyers of a standard broker's commission) from sale of the Home at an unrestricted price to an Market Purchaser as the Qualified Buyers would receive from sale of the Home to the City or to an Eligible Purchaser at the Maximum Allowable Sales Price. 15. DEFAULTS A. The following events shall constitute a Default by the Qualified Buyers under this Agreement: (1) The City determines that the Qualified Buyers have made a misrepresentation to obtain the benefits of purchase of the Home or in connection with its obligations under this Agreement; (2) The Qualified Buyers fail to Qualified Buyers occupy the home, as required pursuant to Section 3 above, and such failure continues following written notice by the City and sixty (60) days opportunity to cure following the date of such notice. (3) The Qualified Buyers make a Transfer in violation of this Agreement; (4) The Qualified Buyers otherwise fails to comply with the requirements of this Agreement and such violation is not corrected to the satisfaction of the City within ten (10) days after the date of written notice by the City to the Qualified Buyers of such violation; or (5) A notice of default is issued under First or Second Mortgage Loan or other financing secured by the Home. (6) A lien is recorded against the Home other than the lien of a bone fide mortgage loan. (7) Qualified Buyers places a mortgage on the Home in violation of Section 24 below. B. Upon a declaration of Default by the City under this Agreement, the City may exercise any remedies at law or in equity, including without limitation, any or all of the following : (1) Declare all Excess Sales Proceeds immediately due and payable without further demand and invoke the power of sale under the City Deed of Trust; (2) Apply to a court of competent jurisdiction for such relief at law or in equity as may be appropriate; and (3) Exercise the City Purchase Option Upon Default as described in Section 16 below. A -11 16. PURCHASE OPTION UPON DEFAULT Notwithstanding, and in addition to, the remedies provided the City in Section 16, and the City Option provided to the City in Section 12, the Qualified Buyers hereby grant to the City the option to purchase the Home following written notice by the City to the Qualified Buyers of the declaration of a Default by the City under this Agreement. This option to purchase is given in consideration of the economic benefits received by the Qualified Buyers resulting from Qualified Buyership of the Home made possible by the City's Affordable Housing Program. The City shall have thirty (30) days after a Default is declared to notify the Qualified Buyers and the First Lender and Second Lender of its decision to exercise its option to purchase under this Section 16. Not later than ninety (90) days after the notice is given by the City to the Qualified Buyers of the City's intent to exercise its option under this Section 16, the City shall purchase the Home for the City Option Price calculated in the manner set forth in Section 12B. - Deleted: --- ' Deleted: 9 5 1 17. NONLIABILITY OF THE CITY A. No Obligation to Exercise Option. The City shall have no obligation to exercise any option granted it under this Agreement. In no event shall the City become in any way liable or obligated to the Qualified Buyers or any successor -in- interest to the Qualified Buyers by reason of its option to purchase under Sections 12 and 16 nor shall the City be in any way obligated or liable to the Qualified Buyers or any successor -in- interest to the Qualified Buyers for any failure to exercise its option to purchase. B. Nonliability for Negligence, Loss, or Damage. Qualified Buyers acknowledge, understand and agree that the relationship between Qualified Buyers and the City is solely that of a Qualified Buyer and an administrator of a City affordable housing program, and that the City does not undertake or assume any responsibility for or duty to Qualified Buyers to select, review, inspect, supervise, pass judgment on, or inform Qualified Buyers of the quality, adequacy or suitability of the Home or any other matter. The City owes no duty of care to protect Qualified Buyers against negligent, faulty, inadequate or defective building or construction or any condition of the Home and Qualified Buyers agrees that neither Qualified Buyers, or Qualified Buyers' heirs, successors or assigns shall ever claim, have or assert any right or action against the City for any loss, damage or other matter arising out of or resulting from any condition of the Home and will hold the City harmless from any liability, loss or damage for these things. C. Indemnity. Qualified Buyers agree to defend, indemnify, and hold the City harmless from all losses, damages, liabilities, claims, actions, judgments, costs, and reasonable attorneys fees that the City may incur as a direct or indirect consequence of: (1) Qualified Buyers' default, performance, or failure to perform any obligations as and when required by this Agreement or the Deed of Trust; or (2) the failure at any time of any of Qualified Buyers' representations to the City to be true and correct. 18. RESTRICTIONS ON FORECLOSURE PROCEEDS If a creditor acquires title to the Home through a deed in lieu of foreclosure, a trustee's deed upon sale, or otherwise, the Qualified Buyers shall not be entitled to the proceeds of sale to the extent that such proceeds otherwise payable to the Qualified Buyers when added to the proceeds paid or credited to the creditor exceed the Maximum Allowable Sales Price. The A -12 Qualified Buyers shall instruct the holder of such excess proceeds to pay such proceeds to the City in consideration of the benefits received by the Qualified Buyers through purchase of the Home under the City's Affordable Housing Ordinance. 19. RESTRICTION ON INSURANCE PROCEEDS If the Home is damaged or destroyed and the Qualified Buyers elect not to rebuild or repair the Home, the Qualified Buyers shall pay the City the portion of any insurance proceeds received by the Qualified Buyers for such destruction or damage which is in excess of the Maximum Allowable Sales Price calculated pursuant to Section 10 above. 20. TERM OF AGREEMENT All the provisions of this Agreement, including the benefits and burdens, run with the Home and this Agreement shall bind, and the benefit hereof shall inure to, the Qualified Buyers, their heirs, legal representatives, executors, successors in interest and assigns, and to the City and its successors, until the earlier of (i) thirty (30) years from the date of purchase of the Home by Qualified Buyers, or (ii) the date of Transfer of the Home to the City or another purchaser in compliance with this Agreement. 21. SUPERIORITY OF AGREEMENT The Qualified Buyers covenant that they have not, and will not, execute any other agreement with provisions contradictory to or in opposition to the provisions hereof, and that, in any event, this Agreement is controlling as to the rights and obligations between and among the Qualified Buyers, the City and their respective successors. 22. NONDISCRIMINATION The Qualified Buyers covenant by and for themselves and their successors and assigns that there shall be no discrimination against or segregation of a person or of a group of persons on account of race, color, religion, creed, age, disability, sex, sexual orientation, marital status, ancestry or national origin in the sale, transfer, use, occupancy, tenure or enjoyment of the Home, nor shall the Qualified Buyers or any person claiming under or through the Qualified Buyers establish or permit any such practice or practices of discrimination or segregation with reference to the use, occupancy, or transfer of the Home. The foregoing covenant shall run with I the land. 23, INVALID PROVISIONS { Deleted: 1 If any one or more of the provisions contained in this Agreement shall for any reason be held to be invalid, illegal or unenforceable in any respect, then such provision or provisions shall be deemed severable from the remaining provisions contained in this Agreement, and this Agreement shall be construed as if such invalid, illegal or unenforceable provision had never been contained herein. { Deleted:1 J A -13 • 24. CONTROLLING LAW The terms of this Agreement shall be interpreted under the laws of the State of California. The venue for any legal action pertaining to this Agreement shall be San Luis Obispo County, California. _... { Deleted: 25. NO WAIVER No delay or omission in the exercise of any right or remedy of City upon any default by Qualified Buyers shall impair such right or remedy or be construed as a waiver. The City's failure to insist in any one or more instance upon the strict observance of the terms of this Agreement shall not be considered a waiver of the City's right thereafter to enforce the provisions of the Agreement. The City shall not waive its rights to enforce any provision of this Agreement unless it does so in writing, signed by an authorized agent of the City. I . - { Deleted: 9 { 26. NOTICES All notices required herein shall be sent by certified mail, return receipt requested or express delivery service with a delivery receipt and shall be deemed to be effective as of the date received or the date delivery was refused as indicated on the return receipt as follows: To the Qualified Buyers: At the address of the Home. To the City: City of Arroyo Grande P. O. Box 550 Arroyo Grande, CA 93421 Attn: City Manager The parties may subsequently change addresses by providing written notice of the change in address to the other parties in accordance with this Section. 27. INTERPRETATION OF AGREEMENT The terms of this Agreement shall be interpreted so as to avoid speculation on the Home and to insure to the extent possible that its sales price and mortgage payments remain affordable to persons and families of low- and/or moderate - income. IN WITNESS WHEREOF, the parties have executed this Agreement on or as of the date first written above. • CITY: QUALIFI ' • L' i By: Sfgrit,r____ • 4 CITY MANAGER A -14 • STATE OF CALIFORNIA ) ss COUNTY OF SAN LUIS OBISPO ) On , 2004, before m- , personally appeared Carlos J. Palacios, personal own to me to be the person • . se name is subscribed to the within instrument and ackn• ' !edged to me that he execute. e same in his authorized capacity, and that by his sign. ' re on the instrument the pers. or the entity upon behalf of which the person acted, e - uted the instrument. WITNESS my han• and official seal. STATE OF CALIFORNIA ) ss COUNTY OF SAN LUIS OBISPO ) OT , On JANUA /Cy 3I , 200f ,, before me, 44.Y' »ETM7OR C, N , personally appeared S e vE I A b ttM S , personally known to me iice) to be the person(e) whose name(s). is/are subscribed to the within instrument and acknowledged to me that he /she1Shey executed the same in his/herltheir authorized capacity(iea), and that by his/her/their signature() on the instrument the persons) or the entity upon behalf of which the persons) acted, executed the instrument. WITNESS hand and official seal. KELLY WETMORE l% "�--- :Or;.. Commission 0 1289289 /Is. . • . / • . Notary Public - CdUomlo f San L O bbpo County Mg Comm.Eci eaJon30. 2005 A -15 9 STATE OF California COUNTY OF San Luis Obispo On January 31, 2005 before me, Stephanie L. Monk, notary (Name, Title of Officer) personally appeared Andrew C. Jeninqs and Cheri Jeninqs personally known to me (or proved to me on the basis of satisfactory evidence) to be the person(s) whose name(s) is /are subscribed to the within instrument and acknowledged to me that he /she /they executed the same in his /her /their authorized capacity(ies), and that by his /her /their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. WITNESS my han d official seal. STEPHANIE L. MONK t N# COMM. # 1354429 < �` J �� + �' ��j' Notary PuhlicL. MONK of ` *►f Cour�ry of San Luk Obispo (Signature Notary Pub Comm. Et Apr. 30, 2006 (This area for notarial seal) END OF DOCUMENT