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HomeMy WebLinkAboutBuyer's Occupancy and Resale Agreement with Option to PurchaseRECORDItiG REQLESTED B`'� F1RST A1IiRIC.�\' l ITLE CG„�'�\Y Complimentary Recording Requested Pursuant To Government Code Section 6103 and 27383 When Recorded Mail To: City of Arroyo Grande P. O. Box 550 Arroyo Grande, CA 93421 Attn: City Clerk �1 JULIE RODEWALD San Luis Obispo Counry—Clerk/Recorder Hacorded at Ihe request ol First American Title Company LO 11/30/2005 4:08 PM �oca: 2005100170 I IIII II IIII II II II IIIII II I I I I BUYER'S OCCUPANCY AND RESALE AGREEMENT WITH OPTION TO PURCHASE Titles: 2 Pages: �] Fees 0.00 Taxes o.00 Others 0.00 PAID $0.00 CITY OF ARROYO GRANDE INCLUSIONARY HOUSING PROGRAM Owner: Address of Home: Development: Income Category of Home: Nuxnber of Bedrooms in Home: Sales Price at Original Purchase: Kristin and Jamey Hunstad 1180-F Ash Tract 2532 Moderate This Buyer's Occupancy and Resale Agreement with Option to Purchase (the "Agreement") is entered into as of this aanc\ day of ��V , 200 S> by and between the CiTy of Arroyo Grande (the "City") and Kristin and Jamev Hunstad (the "Owner"). RECITALS A. Pursuant to the City of Arroyo Grande's Affordable Housing Ordinance (Ordinance No. 514), Chapter 16.80 of the Arroyo Grande Municipal Code, a portion of a11 new housing constructed in the City of Anoyo Grande is required to be affordable to moderate- income households. B. Mal-Hun, LLC (the "Developer") entered into an Affordable Housing Agreement dated March 8, 2005. Pursuant to the Affordable Housing Agreement, the Developer agreed to restrict two (2) homes to moderate-income households at affordable prices (the "Affordable Units"). C. Owner intends to purchase the property located in the City of Arroyo Grande, and more particularly described in Eachibit A attached hereto and incorporated herein (the "Home"). The Home is one of the Affordable Units. The Home has been designated by the City and the Developer as a moderate-income unit. D. 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 Owner to execute this G1 L � Agreement as a condition of the Owner's purchase of the Home. The Owner has agreed to execute and comply with tius Agreement in consideration of the Developer's agreement to sell the Home to the Owner at an affordable price that is below the fair market value of the Home. E. The purpose of this Agreement is to place resale controls on the Home and to require the payment of any excess proceeds of sale to the City. 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 Owner resulting from purchase of the Home at a below market price under the City's Affordable Housing Program. F.The Owner is receiving a first mortgage loan (the "First Mortgage Loan") from H,mstad Lending (the "First Lender"). The First Mortgage Loan is secured by a deed of trust executed by the Owner in favor of First Lender and recorded in the County of San Luis Obispo (the "First Mortgage Deed of Trust"). The Owner may receive a second mortgage loan (the "Second Mortgage Loan), not to exceed fifteen percent (15%) of the total purchase price, from Mal — Hunt, LLC (the "Second Lender"). The Second Mortgage Loan is secured by a deed of trust executed by the Owner in favor of the Second Lender and recorded in the County of San Luis Obispo (the "Second Mortgage Deed of TrusY'). G. This Agreement shall be secured by a deed of trust on the Home (the "City Deed of TrusY'). This Agreement and the City Deed of Trust shall be subordinate to the lien of the First Mortgage Deed of Trust and Second Mortgage Deed of Trust. NOW, THEREFORE, in consideration of the benefits received by the Owner and the City hereunder, the Owner and the City agree, as follows: 1. DEFINITIONS The following terms azc specially defined for this Agreement and their definitions can be found in the sections indicated below: A. "Affordable Housing Ordinance" — Recital A B. "Agreemeut" - First sentence of the Agreement on page 1 C. "Affordable Price" — Section lOB D. "City" - First sentence of the Agreement on page 1 E. "City Deed of TrusY' - Recital G F. "City Option" - Section 12A G. "City Option Price" — Secrion 12B H. "Eligible Purchaser" - Section 11B I. "Excess Sales Proceeds" - Section 14 C-2 U "Unrestricted Fair Mazket Value" - Section lOB K. "First City Response Notice" - Section 8 L. "First Lender" or "Second Lender"- Recital F � M. "First Mortgage Deed of Trust" and "Second Mortgage Deed of TrusY' - Recital F N. "First Mortgage Loan" and "Second Mortgage Loan" - Recital F O. "Home" - Recital C and Section 2 P. "Housing Price Index" — Section l0A Q. "Indexed Value" — Section l0A R. "Mazket Purchaser" - Section 14 "Marketing Period" - Section 11A T. "Maximum Allowable Sales Price" - Section 10 U. "Owner" - First sentence of the Agreement on Page 1 V. "Owner's Notice of Failure to Locate Eligible Purchaser" - Section 11E W. "Owner's Notice of Intent to Sell" - Section 7 X. "Second City Response Notice" - Section 11E Y. "Transfer" - Section 6 2. DESCRIPTION OF PROPERTY This Agreement concerns the real property in the City of Arroyo Grande, State of California with the street address set forth on page 1 of this Agreement, which is more fully described in Exhibit A attached hereto and incorporated in this Agreement by reference (the "Home"). 3. OWNER CERTIFICATIONS; OWNER OCCUPANCY REQUIREMENT The Owner certifies 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 Owner shall occupy the Home as the Owner's principal place of residence. The Owner sha:l be considered as occupying the Home if the Owner is living in the unit for at least ten (10) months out of each calendaz year. The Owner shall provide an annual written certification to the City that the Owner is occupying the Home as his or her principal place of residence. C-3 � � 4. LEASING OF HOME The Owner is allowed to lease the Home only to another qualified moderate-income family. The maxunum rent shall not exceed what is defined in the Affordable Housing Standazds for moderate-income households established by the San Luis Obispo Department of Planning and Building. MAINTENANCE AND INSURANCE REQUIREMENTS A. The Owner 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 Owner shall maintain a standazd all risk property insurance policy equal to the replacement value of the Home (adjusted every five (5) yeazs by appraisal, if requested by City, naming the City as an additional insured. Additional insurance requirements are set forth in Secrion 5 of the City Deed of Trust. 6. RESTRICTIONS ON RESALE OF THE HOME Any Transfer of the Home 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 Owner retains 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 Owner intends to Transfer or vacate the Home, the Owner shall promptly give the City written notice of such intent (the "Owner's Notice of Intent to Sell"). The Owner's Notice of Intent to Sell shall be sent to the City by certified mail, return receipt requested at the address provided in Section 31 of this Agreement. The Owner's Notice of Intent to Sell shall include the information necessary for the City to determine the Ma�cimum Allowable Sales Price of the Home, including the following information: (1) the address of the Property; (2) the date of purchase of the Home by the Owner; (3) the purchase price of the Home paid by the Owner at the time of his/her purchase; (4) a copy of the HUD-1 Settlement Statement or equivalent document from the close of escrow on the Owner's purchase of the Home; C-4 v � (5) the date on which Owner intends to vacate Home; (6) the date Home will be placed on the mazket; and (7) the name and phone nuxnber of the person to contact to schedule inspection of the Home by the City. B. Following delivery to the City of the Owner's Notice of Intent to Sell, the Owner shall prepaze the Home for sale, as follows: (1) within thirty (30) days of delivery of the Owner's Notice of Intent to Sell, the Owner shall obtain and deliver to the City a current written report of inspecrion 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 Owner's Notice of Intent to Sell, or (b) prior to close of escrow on the Transfer, the Owner shall repair all damage noted in the pest report including damage caused by infestation or infection by wood-destroying pests; (3) within ten (10) business days of the date of the Owner's Notice of Intent to Sell, the Owner shall allow the City, or its designee, to inspect the Home to determine its physical condition; (4) if the Home is vacant, the Owner shall maintain utility connections until the close of escrow on the Transfer; 8. CITY RESPONSE TO OWNER'S NOTICE OF INTENT TO SELL The City shall respond in writing (the "First City Response Notice") to the Owner's Notice of Intent to Sell within ten (10) business days of City receipt of a complete Owner's Notice of Intent to Sell that includes all information required under Section 7 above and access to inspect the Home as required under Section 7(B)(3) above. The First City Response Notice shall inform the Owner of the following information: (1) the maximum qualifying income for an Eligible Purchaser; (2) the certifications required of an Eligible Purchaser; and (3) the Ma�cimum Allowable Sales Price the Owner may receive for the Home, calculated by the City pursuant to Section 11 below. 9. OWNER ACKNOWLEDGMENT OF CITY RESPONSE NOTICE No later than seven (7) days following the date of the First City Response Notice, the Owner shall acknowledge in writing to the City that he/she has received the City Response Notice and still intends to Transfer the Home. 10. DETERMINATION OF MAXIMUM ALLOWABLE SALES PRICE FOR RESTRICTED SALE If the Owner sells to an Eligible Purchaser, the maacimum sales price (the "Ma�cimum Allowable Sales Price") that the Owner shall receive from the Eligible Purchaser for purchase of the Home shall be the greater of the Indexed Value or the Affordable Price, but in no event greater than the Unrestricted Fair Mazket Value. C-5 ... .: A. Indexed Value The Indexed Value of the Home means the sales price of the Home at the time of purchase by the Owner, as set forth on page 1 of this Agreement, increased by fiRy 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 Owner to the date of receipt by the City of the Owner's Notice of Intent to Transfer, and, where applicable, adjusted pursuant to subsection D 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 rime by the office of Federal Housing Enterprise Oversight or, if such index is no longer published, a compazable index designated by the City of Arroyo Grande. B. Affordable Pric The Affordable Price of the Home means the affordable price for a Median Income Home, Moderate Income Home, or Above Moderate Income Home (as applicable, pursuant to the designation of the Home on page 1 of this Ag�eement), �ursuant to Section 16.80.060 of the Affordable Housing Ordinance. C. Unrestricted Fair Market Value. In certain circumstances it may be necessary to determine the fair mazket value of the Home (the "Unrestricted Fair Mazket Value"). These circumstances include: (1) where the parties wish to determine if the Maacimum Allowable Sales Price exceeds the Unrestricted Fair Mazket Value in order to determine the Ma�cimuxn Allowable Sales Price pursuant to Section 10; (2) where the Owner is selling the Home to an Market Purchaser at an unrestricted price pursuant to Section 13; and (3) where the Owner wishes to refinance the First or Second Mortgage Loan as described in Section 24 below. 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 mazket area during the preceding three (3)-month period. The cost of the appraisal shall be shazed equally by the City and the Owner, unless the appraisal is obtained from a new purchaser, or unless the appraisal is necessary because the Owner wishes to refinance the First or Second Mortgage Loan pursuant to Section 24 below, in which event the Owner shall pay the cost of the appraisal. Nothing in this section shall preclude the Owner and the City from establishing the Unrestricted Fair Mazket ValuE of the Home by mutual agreement in lieu of an appraisal pursuant to this section. D. Holdback for Damage Repair Cost. If the City finds that the Owner, through neglect, abuse, or lack of adequate maintenance, has damaged the Home, the City may require that repairs te made at thE Owner's cost priar 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 Owner of the Maximum Allowable Sales Price, the Owner may proceed to sell the Home in compliance with the following requirements: A. Mazketing Period. The Owner shall have ninety (90) days from the date of the First City Response Notice (the "Mazketing Period") to mazket the Home and find an Eligible Purchaser. During the Mazketing Period, the Owner 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 C� � � Purchaser requirements, including income qualifications and the City's form of disclosure statement summarizing the terms of the buyer's resale agreement. A proposed purchaser ("Proposed Purchaser"), who the Owner believes will qualify as an Eligible Purchaser, shall be referred to the City for an eligibility determinarion. B. EliQible 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 Owner 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 ownership, except for lease as allowed by Secrion 4 above. (2) Agreement to Sign Buver's Resale Agreement and to Cooperate with City. The Proposed Purchaser shall agree to sign a buyer's 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 buyer's 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. Ma�cimum Allowable Sales Price and Closing Costs. The purchase price for the sale of the Home by the Owner to the Eligible Purchaser shall not exceed the Mazcimum Allowable Sales Price calculated by the City pursuant to Section 16.80.060 of the Af'fordable Housing Ordinance and 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. D. Disclosure and Submittals. The Owner and the Proposed Purchaser shall provide the following information and docuxnents 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 Pmposed Purchaser. (3) The proposed sales contract and all other related docuxnents 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 Owner's �ersonal property, if any, for the services of the Owner, if any, and any credits, allowances or other consideration, if any. C-7 � ..� (4) A written certification, from the Owner 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 Owner, and the Owner has 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. 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 aze 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 obligarions incurred by the Owner and the Proposed Purchaser for the retum of any moneys paid or received in violarion of this Agreement or for any of the Owner's and/or the Proposed Purchaser's costs and legal expenses, sha11 be bome by the Owner 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 acrion they reasonably take in good faith in enforcing the terms of this Agreement. (5) An executed buyer's 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 buyer's resale and occupancy agreement and 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 nuxnber, 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 buyer's resale agreement, a copy of the final sales contract, settlement statement, escrow instructions, and any other documents which the City may reasonably request. E. Failure To Locate EliQible Purchaser: Notice to City. If, despite bona fide good faith marketing efforts, the Owner is unable to locate an Eligible Purchaser during the Mazketing Period and any extensions to the Marketing Period granted by the City, the Owner shall provide written notice to the City of this fact (the "Owner's Notice of Failure to Locate Eligible Purchaser"). Within thirty (30) days of receipt of the Owner's Notice of Failure to Locate Eligible Purchaser, the City shall provide a second response notice to the Owner (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 Owner may Transfer the Home to a person of the Owner's choosing (a "Mazket 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 13 below. 12. CITY PURCHASE OPTION A. Exercise of Option. If the Owner fails to sell the Home to an Eligible Purchaser at or below the Ma�cimum 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 11 E above), to be sent by the City to the Owner witlun thirty (30) days of receipt of the Owner's Notice of Failure to Locate Eligible Purchaser. If the Second City Response Notice C�3 .� .� states that the City will exercise the City Oprion, the City sha11 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 Oprion and purchase of the Home by the City or its designee, the Owner 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 Owner, 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 Owner may proceed to Transfer the Home to a person of the Owner's choosing (a "Mazket Purchaser") who is not an Eligible Purchaser, at an unrestricted price (supported by an MAI or other qualified appraisal), the Owner may proceed to do so, but the Owner shall pay all Excess Sales Proceeds to the City as set forth in Section 14 below. If the Owner Transfers the Home pursuant to this Section 13, the purchaser shall not be required to execute a buyer's 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 Owner pays the Excess Sales Proceeds to the City pursuant to Section 14 below. The Owner shall provide the City with the following documentahon 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 Owner's personal property, if any, for the services of the Owner, if any, and any credits, allowances or other consideration, if any. (3) A written certification, from the Owner and the Mazket 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 Mazket Purchaser or any other party has not paid and will not pay to the Owner, and the Owner has not received and will not receive from the Mazket 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 Owner and the Mazket Purchaser for the return of any moneys paid or received in violation of tlus Agreement or for any costs and legal expenses, shall be bome by the Owner C-9 � � 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 Owuer Transfers the Home at an unrestricted price pursuant to Section 13 above, or if the Owner makes a Transfer in violation of this Agreement, the Owner shall pay the Excess Sales Proceeds to the City. For purposes of this Agreement, "Excess Sales Proceeds" shall mean ninety percent (90%) of the amount by which the Unrestricted Fair Mazket Value for the Home exceeds the Ma�cimum Allowable Sales Price for the Home (in the amount that was stated in the First City Response Notice). This amount shall be a debt of the Owner to the City, secured by the City Deed of Trust. The Owner aclmowledges that the City shall have no obligation to cause reconveyance of this Agreement or of the City Deed of Trust unril the Excess Sales Proceeds are paid to the City. The City shall utilize the Excess Sales Proceeds for City affordable housing programs. The Owner and the City acknowledge that the formula for calculation of the amount of Excess Sales Proceeds due from the Owner to the City is intended to cause the Owner to receive the same net sales proceeds (following payment by Owner of a standazd broker's commission) from sale of the Home at an unrestricted price to an Mazket Purchaser as the Owner 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 Owner under this Agreement: (1) The City determines that the Owner has made a misrepresentation to obtain the benefits of purchase of the Home or in connection with its obligations un3er this Agreement; (2) The Owner fails to owner 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 Owner makes a Transfer in violation of this Agreement; (4) The Owner 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 Owner of such violation; or (5) A notice of default is issued under First or Second Mortgage Loan or other financing secured by the Home. G10 � mortgage loan. .� (6) A lien is recorded against the Home other than the lien of a bone fide (7) Owner 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; (3) Declaze a Default under the City Deed of Trust and pursue all City remedies under the City Deed of Tnxst; and 17 below. (4) Exercise the City Purchase Option Upon Default as described in Section 16. NOTICE OF DEFAULT AND FORECLOSURE A request for norice of default and any notice of sale under any deed of trust or mortgage with power of sale encumbering the Home shall be recorded by the City in the Office of the Recorder of the County of San Luis Obispo for the benefit of the City. The City may declaze a Default under this Agreement upon receipt of any notice given to the City pursuant to Civil Code Section 2924b, and may exercise its rights as provided in Sections 15 and 17. In the event of default and foreclosure, the City shall have the same right as the Owner to cure defaults and redeem the Home prior to the foreclosure sale. Nothing herein shall be construed as creating any obligarion of the City to cure any such default, nor shall this right to cure and redeem operate to extend any time limitarions in the default provisions of the underlying deed of trust or mortgage. If the City failed to file the request for notice of default, the City's right to purchase the Home shall commence from the date a norice of default is given by the City to the Owner. 17. 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 Secrion 12, the Owner hereby grants to the City the option to purchase the Home following written notice by the City to the Owner 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 Owner resulting from ownership of the Home made possible by the City's Affordable Housing Program. The City shall have thirty (30) days after a Default is declazed to notify the Owner and the First Lender and Second Lender of its decision to exercise its oprion to purchase under this Section 17. Not later than ninety (90) days after the notice is given by the City to the Owner of the City's intent to exercise its option under this Section 17, the City shall purchase the Home for Gll �.. ..� the City Option Price, payable in cash or by assuming existing debt and paying the balance in cash, calculated in the manner set forth in Section 12B. 18. NONLIABILITY OF THE CITY A. No ObliQation 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 Owner or any successor-in-interest to the Owner by reason of its option to purchase under Sections 12 and 17 nor shall the City be in any way obligated or liable to the Owner or any successor-in-interest to the Owner for any failure to exercise its option to purchase. B. Nonliability for NeQliQence, Loss, or DamaQe. Owner acknowledges, understands and agrees that the relationship between Owner and the City is solely that of an owner and an administrator of a City affordable housing program, and that the City does not undertake or assuxne any responsibility for or duty to Owner to select, review, inspect, supervise, pass judgment on, or inform Owner of the quality, adequacy or suitability of the Home or any other matter. The City owes no duty of caze to protect Owner against negligent, faulty, inadequate or defective building or construction or any condition of the Home and Owner agrees that neither Owner, or Owner's 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 hannless from any liability, loss or damage for these things. C. Indemni . Owner agrees 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 o£ (1) Owner's 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 Owner's representations to the City to be true and coaect. 19. RESTRICTIONS ON FORECLOSURE PROCEEDS If a creditor acquires title to the Home through a deed in lieu of foreclosure, a trustee's deed upon sa1e, or otherwise, the Owner shall not be entitled to the proceeds of sale to the extent that such proceeds otherwise payable to the Owner when added to the proceeds paid or credited to the creditor exceed the Mazcimum Allowable Sales Price. The Owner shall instruct the holder of such excess proceeds to pay such proceeds to the City in consideration of the benefits received by the Owne: through purchase of the Home under the City's Affordable Housing Ordinance. 20. RESTRICTION ON INSURANCE PROCEEDS If the Home is damaged or destroyed and the Owner elects not to rebuild or repair the Home, the Owner shall pay the City the portion of any insurance proceeds received by the Owner for such destruction or damage which is in excess of the Maximum Allowable Sales Price calculated pursuant to Section 10 above. 21. 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 Owner, his or her heirs, legal representarives, executors, successors in interest and assigns, and to the City and its successors, until the eazlier of (i) thirty (30) years from the date of purchase of the Home by G12 �.. ..� Owner, or (ii) the date of Transfer of the Home to the City or another purchaser in compliance with this Agreement. 22. SUPERIORITY OF AGREEMENT The Owner covenants that he or she has 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 Owner, the City and their respective successors. 23. SUBORDINATION Notwithstanding any provision herein, this Agreement shall not diminish or affect the rights of the First and Second Lender under the First and Second Lender Deed of Trust or any subsequent First and Second Lender deeds of trust hereafter recorded against the Home in compliance with Section 24 of this Agreement. Notwithstanding any other provision hereof, the provisions of this Agreement and the City Deed of Trust shall be subordinate to the lien of the First and Second Lender Deed of Trust and shall not impair the rights of the First and Second Lender, or such lender's assignee or successorin interest, to exercise its remedies under the First and Second Lender Deed of Trust in the event of default under the First or Second Lender Deed of Trust by the Owner. Such remedies under the First and Second Lender Deed of Trust include the right of foreclosure or acceptance of a deed or assignment in lieu of foreclosure. After such foreclosure or acceptance of a deed in lieu of foreclosure, this Agreement and the City Deed of Trust shall be forever terminated and shall have no fixrther effect as to the Home or any transferee thereafter; provided, however, if the holder of such First or Second Lender Deed of Trust acquires title to the Home pursuant to a deed or assigunent in lieu of foreclosure, this Agreement and the City Deed of Trust shall automatically terminate upon such acquisition of title, only if (i) the City has been given written notice of default under such First or Second Lender Deed of Trust with a sixty (60)-day cure period and (ii) the City shall not have cured the default within such sixty (60)-day period or commenced to cure and given its firnt commitment to complete the cure in form and substance acceptable to the First and Second Lender, or (iii) the City shall not have exercised its option to purchase the Home pursuant to Section 17 above within such sixty (60)-day period and then proceeded diligently to cure the default within sixty (60) days of acquiring title to the Home. 24. REFINANCE OF FIl2ST OR SECOND MORTGAGE LOAN; FURTHER ENCUMBRANCE OF HOME A. The City agrees to promptly upon request execute and deliver any docuxnents reasonably requested to subordinate ttus Agreement and the City Deed of Trust to a deed of trust securing a refinanced First Mortgage Loan and Second Mortgage Loan provided that, following such refinance, the principal amount of all debt secured by the Home will not exceed the greater of the outstanding principal balance of the refinanced First and Second Mortgage Loan or ninety- five percent (95%) of the Indexed Value of the Home, determined in accordance with Secrion l0A above. B. The Owner covenants and agrees: (i) not to place any additional mortgage or deeds of trust on the Property without obtaining prior written consent of the City; and (ii) that the total principal amount of all debt secured by the Property shall not exceed ninety-five percent (95%) of the Indexed Value of the Home, determined in accordance with Section l0A above, C-13 �., .i unless specifically approved in writing by the City. The City and the Owner agree that the requirements of this Section 24B are necessary to ensure the continued affordability of the Home to Owner and to minimize the risk of loss of the Home by Owner through default and foreclosure of mortgage loans. Owner further aclrnowledges that violation of the provisions of this Section 24B shall constitute a Default under this Agreement. 25. NONDISCRIMINATION The Owner covenants by and for itself and its 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 enjoyxnent of the Home, nor shall the Owner or any person claiming under or through the Owner establish or perxnit any such practice or practices of discrimination ar segregation with reference to the use, occupancy, or transfer of the Home. The foregoing covenant shall run with the land. 26. Trust. This Agreement shall not diminish or affect the rights of the City under the City Deed of Notwithstanding any other provision in this Agreement to the contrary, this Agreement shall not diminish or affect the rights of the California Housing Finance Agency ("CHFA"), United States Department of Housing and Urban Development ("HUD"), the Federal National Mortgage Association ("FNMA"), or the Veterans Administration ("VA") under the First and Second Mortgage Deed of Trust or any subsequent First or Second Lender deeds of trust hereafter recorded against the Home in compliance with Section 24 above. Notwithstanding any other provisions in this Agreement to the contrary, all of the provisions of this Agreement shall terminate and have no fixrther force and effect upon the occurrence of one of the following events: A. Title is acquired by CHFA, HUD, FNMA, VA, the First or Second Lender or another party upon foreclosure of a deed of tnxst to the First or Second Lender or CHFA, or a deed of trust insured by HUD or guazanteed by VA. B. Title is acquired by another party by a deed in lieu of foreclosure of the First or Second Lender, CHFA, or FNMA deed of trust. 27. HUD FORBEARANCE RELIEF Notwithstanding other provisions of this Agreement, the City Option on Default pursuant to Section 17 above shall not be exercised by the City when a deed of trust insured by HUD is secured by the Home, and: (i) the owner is undergoing considerarion by HUD for assignment forbearance relief; or (ii) the owner is undergoing consideration for relief under HUD's Temporary Mortgage Assistance Payment (TMAP) program. 28. INVALID PROVISIONS 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 Ageement, and this G14 ... `: Agreement shall be construed as if such invalid, illegal or unenforceable provision had never been contained herein. 29. CONTROLLING LAW The terms of this Ageement shall be interpreted under the laws of the State of California. The venue for any legal action pertaining to this Ageement shall be San Luis Obispo County, Califomia. KZI�.[�i�.+ ���►�i�;� No delay or omission in the exercise of any right or remedy of City upon any default by Owner 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. 31. 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 refixsed as indicated on the return receipt as follows: To the Owner: 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. 32. 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 payxnents remain affordable to persons and families of low- and/or moderate-income. 33. EXHIBITS Any eachibits referred to in this Agreement are incorporated by such reference. G15 �. u IN WITNESS WHEREOF, the parties have executed this Agreement on or as of the date first written above. CITY: By: -- � } TY� AGER STATE OF CALIFORNIA ) ) ss COUNTY OF SAN LUIS OBISPO ) On N U�E�►1gER c2 �, 2005, be£ore me, ��iL �F �U�77�10Q� N��iei/ ��G�ttC, personally appeazed S?�V �hJ A t>FFm 5 � � , personally known to me (cx-gro ) to be the person(s� whose nameEs) is/are subscribed to the within instrument and acknowledged to me that he/� executed the same in his/�eir authorized capacity(-iesj, and that by his/laerkkeir signature(sj on the instnxment the person(� or the entity upon behalf of which the personEej acted, executed the instrument. WITNESS my hand and official seal. V��T ��� STATE OF CALIFORNIA COUNTY OF SAN LiJIS OBISPO ) ) ss ) �LYWEIMONE CamMWOn � 1619779 �Y hibrc . Ca�o�Y� MY Camm. Ef�Iw fN J, On �6 ,w,�r al3 , 2005, before me,5 � Na:rn i r..l u personally appeazed �ri7k jy1� ��n<y -Fwa n� Ltwl u��4� �e�'� me (or proved to me on the basis of satisfactory evidence) to be the person(s) whose name(s) is(�subscribed to the within instrument and acknowledged to me that he/sh they xecuted the same in his/he eir uthorized capacity(ies), and that by his/he their ignature(s on the instrument the person(s) or the enrity upon behalf of which the person(s) acted, executed the instrument. WITNESS my hand and official seal. G16 SHeRYL NA4RN � COMM. # 14C�124 < � N�tary Pcb!lc-Cal�fomia � County of Sania 9aroara N h4v Comm Eep Feb, 1 t, 2007 � � Title Order Number. File Number: 4010-2143019 Exhibit "A" Real property in the Ciry of Arroyo Grande, County of San Luis Obispo, State of California, described as follows: Lot 6 of Trad 2532, in the City of Arroyo Grande, Counry of San Luis Obispo, State of California, according to map recorded March 23, 2005 in Book 25, Pages 80 through 82 of Maps. IIJ�I[�Yf�E:3C�➢.il END OF DOCU9�"�N7