HomeMy WebLinkAboutAffordable Housing Agreement - Mal-Hun LLC0
JULIE RODEWALQrWRecorder
San Luis 0b1sp0 County
DG .tr
3/23I2005
8:00 AM
RECORDING REQUESTED BY:
FIRST AMERICAN TITLE INSURMCE Co'
his document is recorded for the
enefit of the City of Arroyo Grande
nd is exempt from recording fees
ursuant to Government Code Sect
103 and 27383.
ORDING REQUESTED BY:
of Arroyo Grande
Recorded al the requasl of
First American Title Comp
Doc#: 2005022478
VI��'NI�I
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NHEN RECORDED MAIL TO:
,ity of Arroyo Grande
,ommunity Development Director
?14 East Branch Street Space above reserved for use of County
P.O. Box 550 Recorder
Arroyo Grande, CA 93421
Sl-0— I2na l C
AFFORDABLE HOUSING AGREEMENT
WHEREAS, THIS AGREEMENT is made and entered into this it day of M tRc FI ,
2005, by and between the CITY OF ARROYO GRANDE, a municipal corporation (the
"City"), and MAL-HUN, LLC, whose principal office is located at 120 N. Halcyon Road
(the "Developer"); and
WHEREAS, Developer is the owner and developer of approximately 0.58 acres of real
property that is described in the attached Exhibit A (the "Property"); and
WHEREAS, Developer proposes to develop and construct eight (8) residential single-
family attached units in four (4) duplexes and associated improvements, (the "Project"),
on the above -described Property; and
WHEREAS, as a condition of approval, the Project is required to include two (2)
residential units to be reserved as affordable housing unit(s) for sale to Moderate -
or for sale to the Developer and subsequent rental to Low- and
Income Households
ectively, the "Affordable Units") pursuant to the City's
Moderate -Income Renters (coll
Affordable Housing Ordinance, Chapter 16.80 of the Arroyo Grande Municipal Code
("Affordable Housing Ordinance"); and
WHEREAS, it is the intention of Developer and the City to set forth in greater detail and
Specificity within this separate document the terms and conditions for producing the
Households or for pur
Affordable Units either forDeveloper and subsequentale rental ooLow derafor Moderate -Income Renters; andase by the
eveloper and the City that this Agreement run with the
WHEREAS, it is the intention of D
title of the Property and be prior tog on the sa eparties
rent rentalthat
the Afforwill
dableacquire
Units torindiv dual
or interest in said Property
home buyers or renters.
March 2005
Affordable Housing Agreement Page I
Kevin Hunted Residential Subdivision
"1
NOW, THEREFORE, in consideration of the foregoing, and of the mutual terms and
covenants hereinafter set forth, the parties hereby agree that Developer shall produce
and sell or rent Affordable Units as described in this Agreement.
1.0 Definitions. Depending upon their context, certain words and phrases used in
this Agreement shall have the same meaning as the definitions that are included
in the Affordable Housing Ordinance. Other words and phrases used in this
Agreement shall have the meanings that are defined below:
1.1 "Above Moderate Income" means Above Moderate Income as defined in the
Affordable Housing Ordinance.
1.2 "Administering Agency" means the San Luis Obispo Housing Authority, or any
other agency as determined by the City Council, which has experience in the
administration of affordable housing programs.
1.3 "Affordable Housing Ordinance" means Chapter 16.80 of the Arroyo Grande
Municipal Code as adopted by the Arroyo Grande City Council by Ordinance No.
514 on March 31, 2000, and as subsequently amended.
1.4 "Affordable Housing Standards" means the income, rent and sales price limits and
related standards adopted from time to time by the City for use in regulating the
rental, sale and occupancy of affordable housing units.
1.5 "Affordable Rent" means housing affordable, based upon monthly rent, to
moderate -income households. Affordable rental housing payments are
approximately thirty percent of gross monthly target income less utilities, and are
based on the most recent estimate of the median income for the County of San
Luis Obispo as summarized in the County's Affordable Housing Standards,
available through the County Planning and Building Department.
1.6 "Affordable Unit(s)" means, depending upon the context, either one or more of
the affordable housing units, the development, sale and/or rental of which are
regulated by this Agreement.
1.7 "Agreement" means this Affordable Housing Agreement.
1.8 "Eligible Household" means a person or family that meets one of the definitions
set forth in Sections 1.11 and 1.14 of this Agreement for rental of an Affordable
Unit.
1.9 "Eligible Purchaser" means a household that is qualified by the Administering
Agency as meeting the requirements of this Agreement for the purchase of an
Affordable Unit or the Developer where purchase is made by the Developer for
the purpose of renting the Affordable Unit(s) to Eligible Households.
Affordable Housing Agreement
Kevin Hunted Residential Subdivision Page 2 March 2005
1.10 "Independent Agency" means the Housing Authority of the City of San Luis
Obispo or another qualified entity that has been approved in advance by the City.
1.11 "Low Income Household" means a person and family whose income does not
exceed eighty percent (80%) of the area median income for the County of San
Luis Obispo, adjusted for family size, as set forth in the Affordable Housing
Standards.
1.12 "Maximum Allowable Sales Price" means the maximum price at which an
Affordable Unit may be sold under the Affordable Housing Ordinance. The
Maximum Allowable Sale Price established for each Affordable Unit is the
absolute maximum price that the Developer or individual may charge for the unit
or may receive as compensation for the unit. The Developer or individual owner
may not charge or receive any additional amount or compensation for an
Affordable Unit regardless of whether the additional amount is 1) for options,
upgrades or additional improvements to the unit, 2) paid through escrow or
outside of escrow, 3) paid prior to, after or as part of the purchase escrow or 4)
paid in cash or in kind.
1.13 "Median Income" means the median family income of City of Arroyo Grande
households as defined in California Health and Safety Code §50093 and
annually estimated by the US Department of Housing and Urban Development.
1.14 "Moderate Income Household" means a person and family whose income does
not exceed one hundred twenty percent (120%) of the area median income for
the County of San Luis Obispo, adjusted for family size, as set forth in the
Affordable Housing Standards.
1.15 "Unrestricted Fair Market Value" means the amount that an Affordable Unit could
sell for if its sales price and occupancy were not restricted under the Affordable
Housing Ordinance. The City may, at its sole option, require that the
Unrestricted Fair Market Value be established through an appraisal by an MAI or
other qualified appraiser.
2.0 Compliance with Affordable Housina Agreement. Developer shall comply with
this Affordable Housing Agreement, all of the applicable requirements and
conditions of the Affordable Housing Ordinance and any special terms,
conditions, requirements and/or waivers that were specifically applied to the
Project as part of the City's approval of the Project.
3.0 Number. Location and Distribution of Affordable Units. The Developer shall
develop two (2) Affordable Units. The Affordable Units shall be a minimum of
1,500 square feet in size, three (3) bedroom and two (2) bathrooms, and shall
occur on Lots 6 and 7 of Tract Map 2532 (addresses 1180 'F' and 1180 'G' Ash
Street).
Affordable Housing Agreement
Kevin Hunted Residential Subdivision Page 3 March 2005
J
4.0 Recordation and Release of Agreement. This Agreement shall be recorded
against the title to the Property prior to the recordation of the Final Subdivision
Map(s) for the Project. Upon the recordation of a Final Subdivision Map(s), the
City shall release from this Agreement all parcels created by the Final
Subdivision Map(s) that are not designated as Affordable Units.
5.0 Participation in Affordable Housing Programs. Developer shall to the greatest
extent reasonably possible participate in the available local, State and Federal
affordable housing programs.
6.0 Restrictions on Marketing and Sale of Affordable Units. The following shall apply
to Affordable Units offered for sale to Eligible Purchasers other than the
Developer:
6.1 Verification of Buyer Eligibility. Prior to the close of escrow for the sale of each
Affordable Unit, the Developer shall provide verification to the City that the
buyer's income does not exceed the maximum allowed for the Moderate Income
Level for that unit. Incomes shall be verified (or previous verifications shall be
updated) no earlier than sixty (60) days prior to close of escrow. The San Luis
Obispo Housing Authority, or similar non-profit entity, shall qualify owners.
6.2 Pricing of Affordable Units for Sale. Developer shall sell each Affordable Unit for
no more than the Maximum Allowable Sales Price set for the unit as established
by the City pursuant to the Affordable Housing Ordinance. Developer shall notify
City thirty (30) days prior to offering each Affordable Unit for sale to allow City
adequate time to calculate and notify Developer of the Maximum Allowable Sales
Price for the unit and the income limits for Eligible Purchasers. The method for
calculating the Maximum Allowable Sales Price is described in Exhibit B of this
Agreement.
6.3 Individual Regulatory, Security and Disclosure Documents. Prior to the sale of
each Affordable Unit, Developer shall ensure that:
6.3.1 The buyer and the City sign a Buyer's Occupancy and Resale
Agreement with Option to Purchase (hereinafter "Resale Agreement"), which is in
the form that is attached as Exhibit C to this Agreement. The Resale
Agreements shall be recorded against the title to each unit immediately following
the liens for any loans that are obtained by the homebuyer to finance the
purchase of the unit.
6.3.2 The buyer signs a Deed of Trust, which is in the form that is
attached as. Exhibit D to this Agreement, to secure performance of the Buyer's
obligations under the Resale Agreement and, should the buyer fail to comply with
the terms of the Resale Agreement, payment of Excess Sales Proceeds. The
Deed of Trust shall be recorded against the title to the unit following the liens for
any loans that are obtained by the homebuyer to finance the purchase of the unit.
Affordable Housing Agreement
Kevin Hunted Residential Subdivision Page 4 March 2005
6.3.3 The buyer signs a Disclosure concerning the Affordable Housing
Ordinance, the Resale Agreement and the Deed of Trust, which is in a form that
will be provided or approved by the City.
6.4 Default. The City of Arroyo Grande shall have the first opportunity to purchase an
affordable unit that has a defaulted loan.
7.0 Restrictions on Rental of Affordable Units. In furtherance of the City's objective
to provide affordable housing to its citizens, the Developer may purchase an
Affordable Unit or Units for the purpose of renting said Unit(s) to Eligible
Households. The following shall apply to Affordable Units purchased by the
Developer and offered for rent to Eligible Households:
7.1 Rental and Occupancy of Affordable Units. The Developer and the City shall sign
a Buyer's Occupancy and Resale Agreement with Option to Purchase (hereinafter
"Developer Resale Agreement"), which is in the form that is attached as Exhibit C
to this Agreement. The Developer Resale Agreement shall be recorded against
the title to each unit immediately following the liens for any loans that are obtained
by the Developer to finance the purchase of the unit. Each Affordable Unit offered
for rent under the terms of this Affordable Housing Agreement shall be rented to
and occupied by an Eligible Household throughout the term of this Agreement.
7.2 Maximum Allowable Rent. The rent that is charged to occupy each rented
Affordable Unit shall not exceed the lower of (1) the affordable rent set forth in the
Affordable Housing Standards for an Eligible Household for a unit with the same
number of bedrooms; or (2) the unrestricted market rent charged for a comparable
unit in the community.
7.3 Verification of Tenant's Initial Eligibility. Prior to the occupancy of each rented
Affordable Unit by a new tenant, the tenant's income shall be verified and
documented by an Independent Agency to determine that the tenant's income
does not exceed the maximum allowed under the Affordable Housing Standards.
7.4 Recertification of Tenant Eligibility. Each year on the anniversary date of the
tenancy, or another date approved in advance by the City, an Independent Agency
shall conduct a recertification of the income and eligibility of the household that
occupies each Affordable Unit.
7.5 Annual Report. With respect to each rented Affordable Unit, the Developer shall
provide an Annual Report to the City on or before June 30th of each year, or at
such other interval as mutually agreed by the parties, to enable the City to
determine Developer's compliance with the terms of this Agreement. The Annual
Report shall include the following information: (1) the certified income,
household size, length of residency and other demographic and financial
characteristics of the household that occupies each rented Affordable Unit; (2)
Affordable Housing Agreement
Kevin Hunstad Residential Subdivision Page 5 March 2005
the rent charged for each rented Affordable Unit; (3) the rent charged for
comparable market -rate units at the Project; and (4) other pertinent information
as may be required by the City. Annual reports shall be submitted to the City
from an Independent Agency verifying compliance with the restrictions on rental
of Affordable Units, pursuant to Arroyo Grande Planning Commission Resolution
No. 02-1834.
8.0 Other Provisions. The following terms and conditions shall also apply to this
Agreement and the development and sale of the Affordable Units that are
governed by this Agreement.
8.1 Term of Agreement. This Agreement shall remain in force as long as any of the
two (2) Affordable Units are offered for rent, or until six (6) months following the
sale of the last Affordable Unit to an Eligible Purchaser.
8.2 Term of Affordability. Each Affordable Unit shall remain affordable for a minimum
period of thirty (30) years from the date of its sale or initial rental by Developer to
an Eligible Purchaser or tenant.
8.3 Arroyo Grande Municipal Code. Unless the text of this Agreement species
otherwise, any reference to a Section number is a reference to the Arroyo
Grande Municipal Code.
8.4 No Joint Venture or Partnership. Nothing contained in this Agreement or any
document executed with this Agreement shall be construed as creating a joint
venture or partnership between the City and Developer.
8.5 Reporting and Compliance Monitoring. Compliance with the requirements of this
Agreement covering the initial sale or rental of the Affordable Units shall be
reported to the City by the Developer and certified by a third party such as a
Certified Public Accountant approved by the City Manager. Developer shall
provide the City with other reports as reasonably required by the City to verify
compliance with this Agreement.
8.6 Appointment of Other Agencies. At its sole discretion, City may designate,
appoint or contract with any other public agency, for -profit or non-profit
organization to perform the City's obligations under this Agreement.
8.7 Burden to Run with Property. The covenants and conditions herein contained
shall apply to and bind the heirs, executors, administrators, successors,
transferees, and assignees of all the parties having or acquiring any right, title or
interest in or to any part of the Property and shall run with and burden the
Property until terminated or released in accordance with the provisions hereof.
Prior to the issuance of building pen -nits, the Developer shall expressly make the
Affordable Housing Agreement
Kevin Hunsted Residential Subdivision Page 6 March 2005
D
conditions and covenants contained in this Agreement a part of any deed or
other instrument conveying any interest in the Property. Notwithstanding
anything to the contrary set forth in this Agreement, individual purchasers of units
pursuant to any approved public report in compliance with the California
Subdivided Lands Act, and mortgage lenders holding deeds of trust on such
individual units after sale to such purchasers, shall not be subject to the terms of
this Agreement; and the terms of this Agreement shall be of no further force or
effect with respect to such completed unit on the date of the recordation of a
deed to the individual purchaser.
8.8 Hold Harmless. Developer will indemnify and hold harmless (without limit as to
amount) City and its elected officials, officers, employees and agents in their
official capacity (hereinafter collectively referred to as "Indemnities"), and any of
them, from and against all loss, all risk of loss and all damage (including
expense) sustained or incurred because of or by reason of any and all claims,
demands, suits, actions, judgments and executions for damages of any and
every kind and by whomever and whenever made or obtained, allegedly caused
by, arising out of or relating in any manner to the development of the Property or
the sale of units on the Property, and shall protect and defend Indemnities, and
any of them with respect thereto.
8.9 Insurance. Developer shall obtain, at its expense, comprehensive general
liability insurance for the development of the Property naming Indemnities as
additional named insureds with aggregate limits of not less than Two Million
Dollars ($2,000,000) for bodily injury and death and property damage, including
coverage for contractual liability and products and completed operations
purchased by Developer from an insurance company duly licensed to engage in
the business of issuing such insurance in the State, with a current Best's Key
Rating of not less than A-VII, such insurance to be evidenced by an endorsement
which so provides and delivered to the City Clerk prior to the issuance of any
building permit for the development of the Property.
8.10 Recording of Agreement. The parties hereto shall cause this Agreement to be
recorded against the Property in the official Records of the County of San Luis
Obispo.
8.11 Third Partv Beneficiaries. This Agreement is made for the sole protection and
benefit of City, and their permitted Successors. No other person shall have the
right of action based on any provision of this Agreement.
8.12 Applicable Law. This Agreement shall be construed and enforced in accordance
with the laws of the State of California. Any dispute arising out of this
Development Agreement shall be determined by the State Courts of the County
of San Luis Obispo.
Affordable Housing Agreement
Kevin Hoastad Residential Subdivision Page 7 March 2005
8.13 Partial Invalidity or Unenforceability. If any provision of this Agreement shall be
determined by a court to be invalid and/or unenforceable, or if any provision of
this Agreement is rendered invalid or unenforceable according to the terms of
any statute of the State of California which became effective after the effective
date of this Agreement, then the remaining provisions of this Agreement shall
nevertheless remain in full force and effect.
8.14 Notices and Correspondence. Any notices and correspondence concerning this
Agreement shall be sent to the parties at the following address:
City of Arroyo Grande
P. O. Box 550
Arroyo Grande, CA 93421
Attn: City Manager
Mal -Hun, LLC
120 N. Halcyon Road
Arroyo Grande, CA 93420
Attn: Kevin Hunstad
IN WITNESS WHEREOF, this Agreement has been duly executed by the
Xnnedd asof a date setforth below.
�� ATE
DATE
CITY:
ST EN ADAMS, City Manager
APPROVED AS TO FORM AND LEGAL EFFECT:
TIM THY J. A L, CI ney
Affordable Housing Agreement
Kevin Hunted Residential Subdivision Page 8 March 2005
STATE OF CALIFORNIA )
)SS
COUNTY OF SAN LUIS OBISPO )
On InAlUff g ZooS before
me, .K6LLy ()e'rMOPL�
NoTRRy PU&IC,
personally appeared Steven Adams personally
known to me to be the person whose name is C�
subscribed to the within instrument and Cahnlnlonlloom
acknowledged to me that he executed the same in po
his authorized capacity and that by his signature on MVC0ffML=ftb&
the instrument the entity upon behalf of which the
person acted, executed the instrument.
WITNESS my han and official seal.
Signature
(The above area for official notarial seal)
STATE OF CALIFORNIA
) SS
COUNTY OF S/AN LLUIS OBISPO )
On WA.V./1 D . e)00:5 before
personally appeared / t eUUI /t[>/18 �
(or proved to me on the
basis of satisfactory evidence) to be the person*
whose name(c) is/ere subscribed to the within
instrument and acknowledged to me that
he/eheffhey executed the same in his/her/ theirMillim11tlwr
authorized capacity(ies) and that by his/her/Heir Ms4r O�MN
signature* on the instrument the person(e), or the M'�� �•
entity upon behalf of which the persons} acted,
executed the instrument.
WITNESS my hand and official seal.
Signature /�0�1�yh /l
���,/ j�(The above area for official notarial seal)
Affordable Housing Agreement
Kevin Hunstad Residential Subdivision Page 9 March 2005
N
Exhibits
Exhibit A - Legal Description
Exhibit B - Calculation of Maximum Allowable Sales Prices
Exhibit C - Form of Buyers Occupancy and Resale Agreement with Option to Purchase
Exhibit D - Form of Deed of Trust
Affordable Housing Agreement
Kevin Hunsted Residential Subdivision Page 10 March 2005
Exhibit A
Legal Description
THAT PORTION OF LOTS 13 AND 14 IN BLOCK 4 OF THE FAIR OAKS TRACT, IN
THE COUNTY OF SAN LUIS OBISPO, STATE OF CALIFORNIA, ACCORDING TO
MAP RECORDED NOVEMBER 18, 1926, IN BOOK 3, PAGE 82 OF MAPS, IN THE
OFFICE OF THE COUNTY RECORDER OF SAID COUNTY, DESCRIBED AS
FOLLOWS'
BEGINNING AT THE SOUTHEAST CORNER OF SAID LOT 14; THENCE WEST
ALONG THE SOUTH LINE OF SAID LOT, 120 FEET; THENCE NORTH AND
PARALLEL WITH THE EAST LINE OF SAID LOTS 13 AND 14, 211.73 FEET TO THE
NORTH LINE OF SAID LOT 13; THENCE EAST ALONG SAID NORTH LINE 120
FEET TO THE NORTHEAST CORNER OF SAID LOT 13; THENCE SOUTH ALONG
THE EAST LINE OF SAID LOTS 13 AND 14, 211.73 FEET TO THE POINT OF
BEGINNING.
Property Location
Exhibit B
Maximum Allowable Sales Price Calculation for a Moderate Income Unit
The Maximum Allowable Sales Price for Affordable Units shall be calculated using the
procedures and formulas described below. For Affordable Units that are restricted to
occupancy by Moderate Income households, as defined in this Agreement, the current
Arroyo Grande Moderate Income Limits as established pursuant to the Affordable
Housing Ordinance shall be used in these calculations. The prevailing interest rate
used in these calculations shall be determined by the City at its sole discretion.
1. Determine the annual Arroyo Grande Moderate Income Limit for a household
size that is one person larger than the number of bedrooms in the affordable unit;
2. Multiply the income limit determined in the previous step by thirty percent (30%)
to obtain an annual housing allowance of thirty percent (30%) of income;
3. Divide the annual housing allowance determined in the previous step by twelve
(12) to determine the monthly housing allowance;
4. Using a standard amortization table or formula, calculate the loan amount that
can be repaid over thirty (30) years with equal monthly payments equal to the
monthly housing allowance using the prevailing interest rate for thirty (30) years,
and assuming a fully amortized fixed rate mortgage; and
5. Divide the loan amount calculated in the previous step by 0.95 to determine the
Maximum Allowable Sales Price assuming a five percent (5%) down payment.
The following calculations are for a three (3) bedroom Affordable Unit based on the
Affordable Housing Standards for San Luis Obispo County as of July 2004. These
calculations illustrate how Moderate Income home prices are calculated.
Step 1
Annual moderate Income Limit for a 4 person household
$74,050
Step 2
30% of the Income Limit determined in Step 1
$22,215
Step 3
One twelfth of the amount calculated in Step 2
$1,851
Step 4
Amount that can be financed with payment calculated in Step 3
with a 30 year fixed-rate loan at a 6.25% interest rate
$300,742
Step 5
Loan amount in Step 4 divided by 95%
$316,570
The Maximum Allowable Sales Price Calculation for resale by individual home owners
who purchased an affordable unit shall be the higher of 1) the above calculation or 2)
the owner's original purchase price plus an amount equal to the original purchase price
times fifty percent (50%) of the change in the House Price Index since the purchase
date.
Exhibit C
Form of Buyers Occupancy and Resale Agreement with Option to Purchase
(A copy of the proposed individual Buyers Occupancy and Resale Agreement with
Option to Purchase follows this page)
D
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
DEVELOPER BUYER'S OCCUPANCY AND RESALE AGREEMENT
WITH OPTION TO PURCHASE
CITY OF ARROYO GRANDE INCLUSIONARY HOUSING PROGRAM
Owner:
Address of Home:
Development:
Income Category of Home:
Number of Bedrooms in Home:
Sales Price at Original Purchase:
This Developer Buyer's Occupancy and Resale Agreement with Option to Purchase (the
"Agreement") is entered into as of this day of , 200_, by and between the City of
Arroyo Grande (the "City") and Mal -Hun LLC (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 all new housing
constructed in the City of Arroyo Grande is required to be affordable to moderate -income
households.
B. Mal -Hun, LLC (the "Developer") entered into an Affordable Housing Agreement
dated . 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 Exhibit A attached hereto and incorporated herein (the "Home") for
subsequent rental to Eligible Households under the Affordable Housing Agreement. The Home is
one of the Affordable Units. The Home has been designated by the City and the Developer as a
moderate -income unit.
C-1
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 Agreement as
a condition of the Owner's purchase of the Home. The Owner has agreed to execute and comply with
this Agreement in consideration of its ability to purchase the Home for rent to Eligible Households at
a 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
(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 (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 Trust").
G. This Agreement shall be secured by a deed of trust on the Home (the "City Deed of
Trust"). 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 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
C. "Affordable Price" — Section I OB
D. "City" - First sentence of the Agreement on page 1
E. "City Deed of Trust" Recital G
F. "City Option" - Section 12A
G. "City Option Price" — Section 12B
H. "Eligible Purchaser" - Section 11B
C-2
I. "Excess Sales Proceeds" - Section 14
"Unrestricted Fair Market Value" - Section 1 OB
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 Trust" - Recital F
N. "First Mortgage Loan" and "Second Mortgage Loan" - Recital F
O. "Home" - Recital C and Section 2
P. "Housing Price Index" — Section 10A
Q. "Indexed Value" — Section I OA
R. "Market Purchaser" - Section 14
S. "Marketing Period" - Section I IA
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 I I
W. "Owner's Notice of Intent to Sell" - Section 7
X. "Second City Response Notice" - Section 11 E
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, ELIGIBLE HOUSEHOLD OCCUPANCY REOUIREMENT
The Owner certifies that the Home shall be rented to a qualified Eligible Household and that
the Home shall be occupied by such Eligible Household as the Eligible Household's principal place
of residence. The Eligible Household shall be considered as occupying the Home if the Eligible
Household is living in the unit for at least ten (10) months out of each calendar 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
As set forth in Section 3, the Owner is allowed to lease the Home only to a qualified
moderate -income family. The maximum rent shall not exceed what is defined in the Affordable
Housing Standards 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 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. Additional insurance requirements are set forth in Section 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
C. 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 mall, 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 Maximum 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;
(5) the date on which Owner intends to vacate Home;
(6) the date Home will be placed on the market; and
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(7) the name and phone number of the person to contact to schedule inspection of
the Home by the City.
D. Following delivery to the City of the Owner's Notice of Intent to Sell, the Owner shall
prepare 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 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
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 Maximum 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 maximum sales price (the "Maximum
Allowable Sales Price") that the Owner shall receive from the Eligible Purchaser for purchase of the
Home shall be the rg eater of the Indexed Value or the Affordable Price, but in no event greater than
the Unrestricted Fair Market Value.
E. 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 I 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 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
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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.
F. Affordable Price. 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 Agreement), pursuant to Section 16.80.060
of the Affordable Housing Ordinance.
G. 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; (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 market area during the preceding
three (3)-month period. The cost of the appraisal shall be shared 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 Market Value of the Home by mutual
agreement in lieu of an appraisal pursuant to this section. .
H. 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 be
made at the Owner's 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 Owner of the Maximum
Allowable Sales Price, the Owner may proceed to sell the Home in compliance with the following
requirements:
I. Marketin Period. eriod. The Owner 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 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 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 determination.
J. Eligible Purchaser. A Proposed Purchaser shall qualify as an "Eligible Purchaser" if
he or she meets the following requirements, as determined by the City:
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(1) Intent to Owner Occunv. 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 Section 4 above.
(2) Agreement to Sign Buyer's Resale Agreement and to Cooperate with Citv.
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.
K. Maximum 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 Maximum Allowable Sales
Price calculated by the City pursuant to Section 16.80.060 of the Affordable 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.
L. Disclosure and Submittals. The Owner 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 Owner's personal
property, if any, for the services of the Owner, if any, and any credits, allowances or other
consideration, if any.
(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
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 Proposed Purchaser for the return of
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any moneys paid or received in violation of this Agreement or for any of the Owner's and/or the
Proposed Purchaser's costs and legal expenses, shall be borne 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 action 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 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 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.
M. Failure To Locate Eligible Purchaser: Notice to City. If, despite bona fide good faith
marketing efforts, the Owner is unable to locate an Eligible Purchaser during the Marketing 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 "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 13
below.
12. CITY PURCHASE OPTION
N. Exercise of Option. If the Owner fails to sell the Home to an Eligible 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 I I above), to be
sent by the City to the Owner within thirty (30) days of receipt of the Owner's 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 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.
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O. 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
Indexed Value as calculated pursuant to Section 10(A).
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 "Market
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 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 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 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 Owner, and the Owner
has 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 Owner 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 Owner 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.
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14. PAYMENT TO CITY OF EXCESS SALES PROCEEDS
If the Owner 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 Market Value for the Home exceeds the
Maximum 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 acknowledges 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 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 standard broker's commission) from sale of the Home at an
unrestricted price to an Market 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
P. 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 under this Agreement;
(2) The Owner fails to rent the Home to an Eligible Household and/or to ensure
that the Home is occupied by the Eligible Household, as required pursuant to Sections 3 and 4 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.
(6) A lien is recorded against the Home other than the lien of a bone fide mortgage
loan.
(7) Owner places a mortgage on the Home in violation of Section 24 below.
Q. 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;
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(2) Apply to a court of competent jurisdiction for such relief at law or in equity as
may be appropriate;
(3) Declare a Default under the City Deed of Trust and pursue all City remedies
under the City Deed of Trust; and
(4) Exercise the City Purchase Option Upon Default as described in Section 17
below.
16. NOTICE OF DEFAULT AND FORECLOSURE
A request for notice 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 declare 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 obligation of the City to cure any such default, nor shall this right to cure and redeem
operate to extend any time limitations 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 notice 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 Section 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 declared to notify the Owner and the
First Lender and Second Lender of its decision to exercise its option 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 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
R. 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 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.
S. Nonliability for Negligence, Loss, or Damage. Owner acknowledges, understands and
agrees that the relationship between Owner and the City is solely that of an owner and an
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administrator of a City affordable housing program, and that the City does not undertake or assume
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 care 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 harmless from any liability, loss or damage for these things.
T. Indemnity. 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 of: (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 correct.
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 sale, 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 Maximum 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 Owner
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
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 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.
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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 successor in 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 further 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 assignment 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 firm 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.
U. REFINANCE OF FIRST OR SECOND MORTGAGE LOAN; FURTHER
ENCUMBRANCE OF HOME
A. The City agrees to promptly upon request execute and deliver any documents
reasonably requested to subordinate this 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 Section 10A 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, 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
acknowledges that violation of the provisions of this Section 24B shall constitute a Default under this
Agreement.
24. 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 enjoyment of the Home, nor shall the Owner or any person
claiming under or through the Owner 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 the land.
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25. RIGHTS OF BENEFICIARIES UNDER DEEDS OF TRUSTS
This Agreement shall not diminish or affect the rights of the City under the City Deed of
Trust.
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 further force and effect upon the occurrence of one of
the following events:
V. Title is acquired by CHFA, HUD, FNMA, VA, the First or Second Lender or another
party upon foreclosure of a deed of trust to the First or Second Lender or CHFA, or a deed of trust
insured by HUD or guaranteed by VA.
W. 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.
26. 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 consideration by HUD for assignment forbearance
relief; or (ii) the owner is undergoing consideration for relief under HUD's Temporary Mortgage
Assistance Payment (TMAP) program.
27. 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 Agreement, and this Agreement
shall be construed as if such invalid, illegal or unenforceable provision had never been contained
herein.
28. 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.
29. NO WAIVER
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.
C-14
30. 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 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.
31. 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.
32. EXHIBITS
Any exhibits referred to in this Agreement are incorporated by such reference.
IN WITNESS WHEREOF, the parties have executed this Agreement on or as of the date first
written above.
C-15
Is) 0Ira
M
) ss
COUNTY OF SAN LUIS OBISPO )
OWNER:
STATE OF CALIFORNIA
On , 2005, before me, , personally
appeared Carlos J. Palacios, personally known to me to be the person whose name is subscribed to
the within instrument and acknowledged to me that he executed the same in his authorized capacity,
and that by his signature on the instrument the person or the entity upon behalf of which the person
acted, executed the instrument.
WITNESS my hand and official seal.
STATE OF CALIFORNIA )
) ss
COUNTY OF SAN LUIS OBISPO )
On 2005, before me, , personally appeared
, 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 hand and official seal.
C-16
EXHIBIT A
Legal Description
THAT PORTION OF LOTS 13 AND 14 IN BLOCK 4 OF THE FAIR OAKS TRACT, IN THE
COUNTY OF SAN LUIS OBISPO, STATE OF CALIFORNIA, ACCORDING TO MAP
RECORDED NOVEMBER 18, 1926, IN BOOK 3, PAGE 82 OF MAPS, IN.THE OFFICE OF
THE COUNTY RECORDER OF SAID COUNTY, DESCRIBED AS FOLLOWS:
BEGINNING AT THE SOUTHEAST CORNER OF SAID LOT 14; THENCE WEST ALONG
THE SOUTH LINE OF .SAID LOT, 120 FEET; THENCE NORTH AND PARALLEL WITH
THE EAST LINE OF SAID LOTS 13 AND 14, 211.73 FEET TO THE NORTH LINE OF SAID
LOT 13; THENCE EAST ALONG SAID NORTH LINE 120 FEET TO THE NORTHEAST
CORNER OF SAID LOT 13; THENCE SOUTH ALONG THE EAST LINE OF SAID LOTS 13
AND 14, 211.73 FEET TO THE POINT OF BEGINNING.
Property Location
3
w
C-17
Exhibit D
Form of Deed of Trust
(A copy of the proposed individual Deed of Trust follows this page)
Complimentary Recording Requested
Pursuant To Government Code
Sections 6103 And 27383
when Recorded Mail To:
City of Arroyo Grande
P. O. Box 550
Arroyo Grande, CA 93421
Attn: City Clerk
DEED OF TRUST
AND SECURITY AGREEMENT
THIS DEED OF TRUST AND SECURITY AGREEMENT ("Deed of Trust") made this
day of , 200_, among the Trustor, ("Owner"), whose
address is and City of Arroyo Grande ("Trustee"), and the
City of Arroyo Grande, a municipal (the "City") as Beneficiary.
The Owner, in consideration of the promises herein recited and the trust herein created,
irrevocably grants, transfers, conveys and assigns to Trustee, in trust, with power of sale, the
property located in the City of Arroyo Grande, San Luis Obispo County, State of California,
described in the attached Exhibit A.
TOGETHER with all the improvements now or hereafter erected on the property,
and all easements, rights, appurtenances, and all fixtures now or hereafter attached to the
property, all of which, including replacements and additions thereto, shall be deemed to be and
remain a part of the property covered by this Deed of Trust; and
TOGETHER with all articles of personal property or fixtures now or hereafter attached to
or used in and about the building or buildings now erected or hereafter to be erected on the
Property which are necessary to the complete and comfortable use and occupancy of such
building or buildings for the purposes for which they were or are to be erected, including all
other goods and chattels and personal property as are ever used or furnished in operating a
building, or the activities conducted therein, similar to the one herein described and referred to,
and all renewals or replacements thereof or articles in substitution therefore, whether or not the
same are, or shall be attached to said building or buildings in any manner; and all of the
foregoing, together with the Property, is herein referred to as the "Security";
To have and to hold the Security together with acquittances to the Trustee, its successors
and assigns forever;
TO SECURE to the City the performance of the covenants and agreements of Owner
contained in that certain Buyer's Occupancy and Resale Agreement with Option to Purchase
executed by and between the Owner and the City of even date herewith (the "Resale
Agreement") and to secure the payment of Excess Sales Proceeds (as defined in the Resale
Agreement) that may become due by Owner to City.
TO SECURE the payment of all other sums, with interest thereon, advanced in
accordance herewith to protect the security of this Deed of Trust; and the performance of the
covenants and agreements of Owner herein contained.
OWNER AND CITY COVENANT AND AGREE AS FOLLOWS:
1. Owner's Estate. That Owner is lawfully seized of the estate hereby conveyed and has the
right to grant and convey the Security, that other than this Deed of Trust, the Security is
encumbered only by: (a) that deed of trust executed by Owner in connection with a loan made to
Owner by (the "First Lender"), securing a promissory note executed
by Owner in favor of the First Lender ("First Lender Note"), to assist in the purchase of the
Property and (b) the Resale Agreement. Owner agrees to warrant and defend generally the title
to the Security against all claims and demands, subject to any declarations, easements or
restrictions listed in a schedule of exceptions to coverage in any title insurance policy insuring
the City's interest in the Security. (As used in this Deed of Trust, the term "First Lender" shall
include all successors and assigns of the First Lender.)
2. Payment of Excess Sales Proceeds. Owner will promptly pay to the City, when and if
due pursuant to the Resale Agreement, the Excess Sales Proceeds (as defined in the Resale
Agreement).
3. Resale Agreement. Owner will observe and perform all of the covenants and agreements
of the Resale Agreement.
4. Charges; Liens. Owner will pay all taxes, assessments and other charges, fines and
impositions attributable to the Security which may attain a priority over this Deed of Trust, by
Owner making any payment, when due, directly to the payee thereof. Upon request by the City,
Owner will promptly furnish to the City all notices of amounts due under this paragraph. In the
event Owner makes payment directly, Owner will promptly discharge any lien which has priority
over this Deed of Trust; provided, that Owner will not be required to discharge the lien of the
Deed of Trust securing the First Lender Note (the "First Lender Deed of Trust") or any other lien
described in this paragraph so long as Owner will agree in writing to the payment of the
obligation secured by such lien in a manner acceptable to the City, or will, in good faith, contest
such lien by, or defend enforcement of such lien in, legal proceedings which operate to prevent
the enforcement of the lien or forfeiture of the Security or any part thereof.
5. Hazard Insurance. Owner will keep the Security insured by a standard all risk property
insurance policy equal to the replacement value of the Security (adjusted every five (5) years by
appraisal, if requested by the City). If the Security is located in a flood plain, Owner shall also
flood insurance. The insurance carrier providing this insurance shall be licensed to do business
in the State of California and be chosen by Owner subject to approval by the City.
All insurance policies and renewals thereof will be in a form acceptable to the City and
will include a standard mortgagee clause with standard lender's endorsement in favor of the
holder of the First Lender Note and the City as their interests may appear and in a form
acceptable to the City. The City shall have the right to hold, or cause its designated agent to
hold, the policies and renewals thereof, and Owner shall promptly furnish to the City, or its
designated agent, the original insurance policies or certificates of insurance, all renewal notices
and all receipts of paid premiums. In the event of loss, Owner will give prompt notice to the
"1
insurance carrier and the City or its designated agent. The City, or its designated agent, may
make proof of loss if not made promptly by Owner. The City shall receive thirty (30) days
advance notice of cancellation of any insurance policies required under this section.
Unless the City and Owner otherwise agree in writing, insurance proceeds, subject to the
rights of the First Lender, will be applied to restoration or repair of the Security damaged,
provided such restoration or repair is economically feasible and the security of this Deed of Trust
is not thereby impaired. If such restoration or repair is not economically feasible or if the
security of this Deed of Trust would be impaired, the insurance proceeds will be used to repay
any amounts due under the Resale Agreement, with the excess, if any, paid to Owner. If the
Security is abandoned by Owner, or if Owner fails to respond to the City, or its designated agent,
within thirty (30) days from the date notice is mailed by either of them to Owner that the
insurance carrier offers to settle a claim for insurance benefits, the City, or its designated agent,
is authorized to collect and apply the insurance proceeds at the City's option either to restoration
or repair of the Security or to pay amounts due under the Resale Agreement.
If the Security is acquired by the City, all right, title and interest of Owner in and to any
insurance policy and in and to the proceeds thereof resulting from damage to the Security prior to
the sale or acquisition will pass to the City to the extent of the sums secured by this Deed of
Trust immediate prior to such sale or acquisition, subject to the rights of the First Lender.
6. Preservation and Maintenance of Security. Owner will keep the Security in good repair
and in a neat, clean, and orderly condition and will not commit waste or permit impairment or
deterioration of the Security. If there arises a condition in contravention of this Section 5, and if
the Owner has not cured such condition within thirty (30) days after receiving a City notice of
such a condition, then in addition to any other rights available to the City, the City shall have the
right (but not the obligation) to perform all acts necessary to cure such condition, and to establish
or enforce a lien or other encumbrance against the Security to recover its cost of curing.
7. Protection of the City's Security. If Owner fails to perform the covenants and agreements
contained in this Deed of Trust or if any action or proceeding is commenced which materially
affects the City's interest in the Security, including, but not limited to, default under the First
Lender Deed of Trust, eminent domain, insolvency, code enforcement, or arrangements or
proceedings involving a bankrupt or decedent, then the City, at the City's option, upon notice to
Owner, may make such appearances, disburse such sums and take such action as it determines
necessary to protect the City's interest, including but not limited to, disbursement of reasonable
attorney's fees and entry upon the Security to make repairs.
Any amounts disbursed by the City pursuant to this paragraph, with interest thereon, will
become an indebtedness of Owner secured by this Deed of Trust. Unless Owner and City agree
to other terms of payment, such amount will be payable upon notice from the City to Owner
requesting payment thereof, and will bear interest from the date of disbursement at the lesser of
(i) ten percent (10%); or (ii) the highest rate permissible under applicable law. Nothing
contained in this paragraph will require the City to incur any expense or take any action
hereunder.
8. Inspection. The City may make or cause to be made reasonable entries upon and
inspections of the Security; provided that the City will give Owner reasonable notice of
inspection.
9. Forbearance by the City Not a Waiver. Any forbearance by the City in exercising any
right or remedy will not be a waiver of the exercise of any such right or remedy. The
procurement of insurance or the payment of taxes or other liens or charges by the City will not be
a waiver of the City's right to require payment of any amounts secured by this Deed of Trust.
10. Remedies Cumulative. All remedies provided in this Deed of Trust are distinct and
cumulative to any other right or remedy under this Deed of Trust or any other document, or
afforded by law or equity, and may be exercised concurrently, independently or successively.
11. Successors and Assigns Bound. The covenants and agreements herein contained shall
bind, and the rights hereunder shall inure to, the respective successors and assigns of the City and
Owner subject to the provisions of this Deed of Trust.
12. Joint and Several Liability. All covenants and agreements of Owner shall be joint and
several.
13. Notice. Except for any notice required under applicable law to be given in another
manner, (a) any notice to Owner provided for in this Deed of Trust will be given by certified
mail, addressed to Owner at the address shown in the first paragraph of this Deed of Trust or
such other address as Owner may designate by notice to the City as provided herein, and (b) any
notice to the City will be given by express delivery, return receipt requested, to the City of
Arroyo Grande at P. O. Box 50000, Arroyo Grande, California, 95007-5000, Attention: City
Manager, or to such other address as the City may designate by notice to Owner as provided
above. Notice shall be effective as of the date received by City as shown on the return receipt.
14. Governing Law. This Deed of Trust shall be governed by the laws of the State of
California.
15. Severability. In the event that any provision or clause of this Deed of Trust or the Resale
Agreement conflicts with applicable law, such conflict will not affect other provisions of this
Deed of Trust or the Resale Agreement which can be given effect without the conflicting
provision, and to this end the provisions of the Deed of Trust and the Resale Agreement are
declared to be severable.
16. Captions. The captions and headings in this Deed of Trust are for convenience only and
are not to be used to interpret or define the provisions hereof.
17. 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 enjoyment of the
Property, nor shall the Owner or any person claiming under or through the Owner 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 the land.
18. Nonliability for Negligence, Loss, or Damage. Owner acknowledges, understands and
agrees that the relationship between Owner and City is solely that of an owner and an
administrator of a City density bonus program, and that City neither undertakes nor assumes 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 Security or any other matter. City
owes no duty of care to protect Owner against negligent, faulty, inadequate or defective building
or construction or any condition of the Security and Owner agrees that neither Owner, or
Owner's heirs, successors or assigns shall ever claim, have or assert any right or action against
City for any loss, damage or other matter arising out of or resulting from any condition of the
Security and will hold City harmless from any liability, loss or damage for these things.
19. Indemnity. Owner agrees to defend, indemnify, and hold City and Agency harmless from
all losses, damages, liabilities, claims, actions, judgments, costs, and reasonable attorneys fees
that City and Agency may incur as a direct or indirect consequence of:
A. Owner's failure to perform any obligations as and when required by the Resale
Agreement and this Deed of Trust; or
B. the failure at any time of any of Owner's representations or warranties to be true
and correct.
20. Acceleration; Remedies. Upon Owner's breach of any covenant or agreement of Owner
in this Deed of Trust, including, but not limited to, the covenants to pay, when due, any sums
secured by this Deed of Trust, the City, prior to acceleration, will mail by express delivery,
return receipt requested notice to Owner specifying; (1) the breach; (2) the action required to
cure such breach; (3) a date, not less than thirty (30) days from the date the notice is received by
Owner as shown on the return receipt, by which such breach is to be cured; and (4) that failure to
cure such breach on or before the date specified in the notice may result in acceleration of the
sums secured by this Deed of Trust and sale of the Security. The notice will also inform Owner
of Owner's right to reinstate after acceleration and the right to bring a court action to assert the
nonexistence of default or any other defense of Owner to acceleration and sale. If the breach is
not cured on or before the date specified in the notice, the City, at the City's option, may:
(a) declare all of the sums secured by this Deed of Trust to be immediately due and payable
without further demand and may invoke the power of sale and any other remedies permitted by
California law. (b) either in person or by agent, with or without bringing any action or
proceeding, or by a receiver appointed by a court, and without regard to the adequacy of its
security, enter upon the Security and take possession thereof (or any part thereof) and of any of
the Security, in its own name or in the name of Trustee, and do any acts which it deems
necessary or desirable to preserve the value or marketability of the Property, or part thereof or
interest therein, increase the income therefrom or protect the security thereof. The entering upon
and taking possession of the Security shall not cure or waive any breach hereunder or invalidate
any act done in response to such breach and, notwithstanding the continuance in possession of
the Security, the City shall be entitled to exercise every right provided for in this Deed of Trust,
or by law upon occurrence of any uncured breach, including the right to exercise the power of
sale; (c) commence an action to foreclose this Deed of Trust as a mortgage, appoint a receiver, or
specifically enforce any of the covenants hereof; (d) deliver to Trustee a written declaration of
default and demand for sale, pursuant to the provisions for notice of sale found at California
Civil Code Sections 2924, et seq., as amended from time to time; or (e) exercise all other rights
and remedies provided herein, in the instruments by which the Owner acquires title to any
Security, or in any other document or agreement now or hereafter evidencing, creating or
securing all or any portion of the obligations secured hereby, or provided by law.
The City shall be entitled to collect all reasonable costs and expenses incurred in pursuing
the remedies provided in this paragraph, including, but not limited to, reasonable attorney's fees.
21. Owner's Right to Reinstate. Notwithstanding the City's acceleration of the sums secured
by this Deed of Trust, Owner will have the right to have any proceedings begun by the City to
enforce this Deed of Trust discontinued at any time prior to five (5) days before sale of the
Security pursuant to the power of sale contained in this Deed of Trust or at any time prior to
entry of a judgment enforcing this Deed of Trust if. (a) Owner pays City all sums which would
be then due under this Deed of Trust and no acceleration under this Deed of Trust or the Resale
Agreement has occurred; (b) Owner cures all breaches of any other covenants or agreements of
Owner contained in the Resale Agreement or this Deed of Trust; (c) Owner pays all reasonable
expenses incurred by City and Trustee in enforcing the covenants and agreements of Owner
contained in the Resale Agreement or this Deed of Trust, and in enforcing the City's and
Trustee's remedies, including, but not limited to, reasonable attorney's fees; and (d) Owner takes
such action as City.may reasonably require to assure that the lien of this Deed of Trust, City's
interest in the Security and Owner's obligation to pay the sums secured by this Deed of Trust
shall continue unimpaired. Upon such payment and cure by Owner, this Deed of Trust and the
obligations secured hereby will remain in full force and effect as if no acceleration had occurred.
22. Due on Transfer of the Property. Upon a Transfer (as defined in the Resale Agreement)
of the Property or any interest in it, the City shall require immediate payment in full of all sums
secured by this Deed of Trust.
23. Reconveyance. Upon payment of all sums secured by this Deed of Trust, the City will
request Trustee to reconvey the Security and will surrender this Deed of Trust and the Resale
Agreement to Trustee. Trustee will reconvey the Security without warranty and without charge
to the person or persons legally entitled thereto. Such person or persons will pay all costs of
recordation, if any.
24. Substitute Trustee. The City, at the City's option, may from time to time remove Trustee
and appoint a successor trustee to any Trustee appointed hereunder. The successor trustee will
succeed to all the title, power and duties conferred upon the Trustee herein and by applicable
law.
25. Superiority of First Lender Documents. Notwithstanding any provision herein, this Deed
of Trust shall not diminish or affect the rights of the First Lender under the First Lender Deed of
Trust or any subsequent First Lender deeds of trust hereafter recorded against the Security in
compliance with the requirements of Section 24 of the Resale Agreement. City agrees to
promptly upon request execute and deliver any documents reasonably requested to subordinate
this Deed of Trust to any subsequent First Lender Deed of Trust permitted by Section 24 of the
Resale Agreement.
Notwithstanding any other provision hereof, the provisions of this Deed of Trust shall be
subordinate to the lien of the First Lender Deed of Trust and shall not impair the rights of the
First Lender, or such lender's assignee or successor in interest, to exercise its remedies under the
First Lender Deed of Trust in the event of default under the First Lender Deed of Trust by the
Owner. Such remedies under the First 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 Deed of Trust shall be forever terminated and shall have no
further effect as to the Property or any transferee thereafter; provided, however, if the holder of
such First Lender Deed of Trust acquired title to the Property pursuant to a deed or assignment in
lieu of foreclosure, this Deed of Trust shall automatically terminate upon such acquisition of title
by First Lender, provided that (i) the City has been given written notice of default under such
First Lender Deed of Trust with a sixty (60)-day cure period and (ii) the City shall not have cured
or commenced to cure the default within such sixty (60)-day period or commenced to cure and
given its firm commitment to complete the cure in form and substance acceptable to the First
Lender; or (iii) the City shall not have exercised its option to purchase the Property pursuant to
Section 17 of the Resale Agreement and then proceeded diligently to cure the default within such
sixty (60)-day period.
26. Request for Notice. Owner requests that copies of the notice of default and notice of sale
be sent to Owner at the address set forth in Section 13 above.
IN WITNESS WHEREOF, Owner has executed this Deed Of Trust as of the date first
written above.
STATE OF CALIFORNIA )
) ss
COUNTY OF SAN LUIS OBISPO )
On 2005, before me, personally appeared
, 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 hand and official seal.
STATE OF CALIFORNIA )
) ss
COUNTY OF SAN LUIS OBISPO )
On 2005, before me, personally appeared
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 hand and official seal.
END OF DOCLMW