Loading...
HomeMy WebLinkAboutHayward, Louis G.; 1999-06-17;NOTICE TO BORROWER: CHERRY TREE WALK THIS NOTE IS NOT ASSUMABLE PROMISSORY NOTE Secured by Deed of Trust $17.900.00 Carlsbad, California June 17. 1999 FOR VALUE RECEIVED, the undersigned Louis G. Havward. (the "Borrower") promises to pay to the City of Carlsbad, a municipal corporation (the "City"), or order, at the Housing and Redevelopment Department, 2965 Roosevelt Street, Suite B, Carlsbad, California 92008, or such other place as the City may designate in writing, the principal sum of $17.900.00 plus Contingent Interest calculated pursuant to Section 3 below. 1. Purpose of Loan. Borrower is purchasing the Residence located at 1321 Verbena Court, in the City of Carlsbad. This Note evidences a loan made by the Seller of the Residence (the "Seller") to the Borrower, utilizing subsidy funds provided by the City and the Seller, and assigned by the Seller to the City (the "City/Seller Loan"). The City/Seller Loan is in the amount determined by the City to be necessary for the Borrower to afford to purchase the Residence making a reasonable downpayment and using conventional first mortgage financing for the balance of the purchase price not financed by the City/Seller Loan. The Seller made the City/Seller Loan to the Borrower and assigned the City/Seller Loan to the City in fulfillment of certain inclusionary housing obligations pursuant to City Ordinance No. NS-232 and an Affordable Housing Agreement between the Sambi Seaside Heights, L.L.C. (Seller's predecessor in interest) and the City dated November 11, 1996, as amended. 2, Definitions. The terms set forth in this Section shall have the following meanings in this Note. a. "Appreciation Amount" shall mean the amount calculated by subtracting the total original purchase price of the Residence paid by the Borrower, which was One Hundred Sixty Three Thousand. Eight Hundred Thirty Seven Dollars ($163.837.001 from one of the following amounts, as applicable: (i) in the event of a sale of the Residence, the amount received by the Borrower as the sale price of the Residence, as certified by the Borrower pursuant to Section 13 below; or (ii) in the event of a prepayment of this Note, a Transfer other than sale of the Residence, or in the event of a default, the Fair Market Value of the Residence; or (iii) in the event a creditor acquires title to the Residence through a deed in lieu of foreclose, a trustee's deed upon sale, or otherwise, the amount paid for the Residence atResidence- ^y - ./-/ // _ ,„ z.^ 1010\D3\111697.6 04/02/99 b. "Contingent Interest" shall mean the percentage of the Appreciation Amount set out in Section 4. c. "Fair Market Value" shall be determined by a real estate appraisal made by an independent residential appraiser designated 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-month period. The cost of the appraisal shall be paid by the Borrower. Nothing in this subparagraph shall preclude the Borrower and the City from establishing the Fair Market Value of the Residence by mutual agreement in lieu of an appraisal. d. "First Mortgage" shall mean the promissory note and deed of trust evidencing and securing the first mortgage loan for the Residence. e. "Residence" shall mean the housing unit and land encumbered by the deed of trust executed in connection with this Note. f. "Transfer" shall mean any sale, assignment or transfer, voluntary or involuntary, of any interest in the Residence, including, but not limited to, a fee simple interest, a joint tenancy interest, tenancy in common interest, a life estate, a leasehold interest, or an interest evidenced by a land contract by which possession of the Residence is transferred and the Borrower retains title. Any Transfer without satisfaction of the provisions of this Note is prohibited. A transfer: (i) to an existing spouse who is also an obligor under the Note; (ii) by a Borrower to a spouse where the spouse becomes the co-owner of the Residence; (iii) between spouses as part of a marriage dissolution proceeding; (iv) to an existing spouse or child of the Borrower by devise or inheritance following the death of the Borrower; (v) by the Borrower into an inter vivos trust in which the Borrower is the beneficiary; or (vi) by deed of trust or imposition of a lien subordinate to the Deed of Trust, shall not .be considered a Transfer for the purposes of this Note; provided, however, that the Borrower shall continue to occupy the Residence as his or her principal place of residence and the Borrower shall provide written notice of such transfer to the City pursuant to Section 14 below. 3. Security. This Note is secured by a second deed of trust dated the same date as this Note (the "Deed of Trust"). 4. Contingent Interest. The Borrower shajl pay contingent interest equal to eleven point one percent (11.1 %) [staff to insert appropriate percentage which shall in no event exceed (50%)] of the Appreciation Amount (the "Contingent Interest"). No interest other than Contingent Interest shall be due hereunder. The Contingent Interest shall be paid to the City at the time set forth in Section 7(a) below, unless forgiven by the City pursuant to Section 7(b) below. Borrower acknowledges that the Contingent Interest percentage amount is equal to the City/Seller Loan principal amount as a percentage of the total purchase price of the Home paid by the Borrower at the time of purchase, multiplied by seventy-five one hundredths (.75). acknowledges that this calculation of the percentage of the Appreciation Amount duj as Contingent Interest includes a twenty-five percent (25%) discount to Borro^r^ttraccount for any capital improvements Borrower may make to the Residence, * 1010V03M11697.6 04/02/99 5. Term. The Term of this Note shall mean the period commencing on the date of this Note and expiring on the date thirty (30) years thereafter. 6. Owner-Occupancy Required: Representations Regarding Income. a. The Borrower is required to occupy the Residence as his or her principal place of residence, and failure by the Borrower to comply with this requirement shall be a default under this Note. The Borrower shall be considered as occupying the Residence if the Borrower is living in the Residence for at least ten (10) months out of each calendar year. The Borrower shall provide an annual written certification to the City that the Borrower is occupying the Residence as his or her principal place of residence. The Borrower shall not lease the Home to another party. Any lease of the Residence shall be a default under this Note. b. Borrower hereby certifies that all income information previously submitted to the Seller and/or the City is true and correct. Misrepresentation by Borrower of income information provided to the Seller and/or the City shall be a default under this Note. 7. Repayment. a. The total amount of the principal and any Contingent Interest owed under this Note shall immediately become due and payable (i) in the event of a default by the Borrower under this Note, the Deed of Trust, or the First Mortgage, (ii) on the date Transfer is made whether voluntarily, involuntarily, or by operation of law and whether by deed, contract of sale, gift, devise, bequest or otherwise, (iii) in the event Borrower ceases to occupy the Residence as his or her principal place of residence; or (iv) at the end of the Term of this Note as described above in Section 5. Failure to declare such amounts due shall not constitute a waiver on the part of the City to declare them due in the event of a subsequent Transfer. b. In the event, upon expiration of the Term, (i) no Transfer has occurred, (ii) Borrower has repaid all principal pursuant to subsection (a) above, (iii) Borrower continues to owner-occupy the Residence, and (iv) Borrower is not in default hereunder or under the Deed of Trust, the City shall forgive repayment of all Contingent Interest due hereunder. 8. Late Payment Fees. If any payment due hereunder is not paid within five (5) days from the date such becomes due, Borrower shall pay a reasonable late or collection charge equal to five percent (5%) of the amount so unpaid. The City and Borrower agree that the actual damages and costs sustained by the City due to the failure to make timely payments would be extremely difficult to measure and that the charges specified in this paragraph represent a reasonable estimate by Borrower and the City of a fair average compensation for such damages and costs. Such charges shall be paid by Borrower without prejudice to the right of the City to collect any other amounts provided to be paid under this Note or the Deed of Trust or with respect to late payments, to declare a default. 'f rO® ^ 1010V03VI11697.6 04/02/99 9. Prepayments. The Borrower may prepay all or part of the balance due under this Note including principal and Contingent Interest. In the event the entire amount of principal due under this Note is prepaid, all Contingent Interest, calculated as of the date of prepayment, shall also be due at the time of prepayment. 10. No Assumption of Note. The Borrower acknowledges that this Note is given in connection with the purchase of property (the "Residence") as part of a program of the Agency to assist in the purchase of homes by lower income persons. Consequently, this Note is not assumable by transferees of the Residence, but is due in full upon Transfer. 1 1 . Maintenance: Taxes: Insurance. Borrower shall maintain the Residence in good repair and in a neat, clean and orderly condition. Borrower shall promptly pay all property taxes due on the Residence prior to any delinquency and shall comply with the insurance requirements set forth in the Deed of Trust. 12. Refinance of First Mortgage Loan. The outstanding principal and interest on this Note shall not be due upon prepayment and refinance of the First Mortgage, and the Deed of Trust shall be subordinated to the refinanced loan, provided that (i) such refinancing is approved by the City, (ii) the amount refinanced does not exceed the outstanding principal balance of the First Mortgage at the time of refinance plus reasonable costs of refinance, and (iii) the refinance does not result in higher monthly payments on the First Mortgage Loan than were due prior to the refinance. 13. Certification of Purchase Price on Transfer. Upon any sale of the Residence, the Borrower shall submit to the City at least fifteen (15) days prior to the close of escrow, a copy of the sales contract and a written declaration, under penalty of perjury, from the Borrower and the proposed purchaser in a form acceptable to the City stating the gross sales price of the Residence. The certification shall also provide that the proposed purchaser or any other party has not paid and will not pay to the Borrower, and the Borrower 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. 14. Notice to City of Transfers. Borrower shall provide the City with written notice of any sale, assignment or transfer, voluntary or involuntary, of any interest in the Residence, including, but not limited to, encumbrance of the Residence with a junior deed of trust or transfer of the Residence to a spouse or trust. Borrower shall provide this notice to the City no later than fifteen (15) days before the sale, assignment, or transfer occurs, except where the transfer is by devise or inheritance after death of the Borrower in which event notice shall be provided within thirty (30) days of the date of transfer. 101 OV03M 11697.6 04/02/99 15. Default. a. The Borrower shall be in default under this Note if he or she is in default under the First Mortgage following the expiration of First Mortgage cure periods, or if, after the notice and cure period provided by the City to the Borrower pursuant to the notice and cure provisions of the Deed of Trust, the Borrower (i) fails to pay any money when due under this Note; (ii) breaches any representation or covenant made in this Note in any material respect; or (iii) breaches any provision of the Deed of Trust. b. Upon the Borrower's breach of any covenant or agreement of the Borrower in this Note or the Deed of Trust, including, but not limited to, the covenants to pay, when due, any sums secured by the Deed of Trust, the City, prior to acceleration, will send, in the manner set forth in Section 19, notice to the Borrower specifying: (1) the breach; (2) if the breach is curable, the action required to cure such breach; (3) a date, not less than thirty (30) days from the date the notice is effective, by which such breach, if curable, is to be cured and (4) if the breach is curable, that failure to cure such breach on or before the date specified in the notice may result in acceleration of the sums secured by the Deed of Trust and foreclosure by the City. The notice will also inform the Borrower of the Borrower'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 the Borrower to acceleration and sale. 16. Acceleration. .Upon the occurrence of a default under this Note, the Deed of Trust, or the First Mortgage, the City shall have the right to declare the full amount of the principal along with any Contingent Interest under this Note immediately due and payable. Any failure by the City to pursue its legal and equitable remedies upon default shall not constitute a waiver of the City's right to declare a default and exercise all of its rights under this Note and the Deed of Trust. Nor shall acceptance by the City of any payment provided for herein constitute a waiver of the City's right to require prompt payment of any remaining principal and interest owed. 17. No Offset. The Borrower hereby waives any rights of offset it now has or may later have against the City, its successors and assigns, and agrees to make the payments called for in this Note in accordance with the terms of this Note. 18. Waiver: Attorney Fees and Costs. The Borrower and any endorsers or guarantors of this Note, for themselves, their heirs, legal representatives, successors and assigns, respectively, severally waive diligence, presentment, protest, and demand, and notice of protest, dishonor and non-payment of this Note, and expressly waive any rights to be released by reason of any extension of time or change in terms of payment, or change, alteration or release of any security given for the payments hereof, and expressly waive the right to plead any and all statutes of limitations as a defense to any demand on this Note or agreement to pay the same, and jointly and severally agree to pay all costs of collection when incurred, including reasonable attorney fees. If an action is instituted on this Note, the Borrower promises to pay, in addition to the costs and disbursements allowed by law, such sum as a court may adjudge reasonable as in such action. 1010V)3\111697.6 04/02/99 19. No Waiver bv the Citv. No waiver of any breach, default or failure of condition under the terms of this Note shall be implied from any failure of the City to take action with respect to such breach, default or failure or from any previous waiver of any similar or unrelated breach, default or failure. 20. Notices. All notices required in this Note shall be sent by certified mail, return receipt requested, or express delivery service with a delivery receipt, or personally delivered with a delivery receipt obtained and shall be deemed to be effective as of the date shown on the delivery receipt as the date of delivery, the date delivery was refused, or the date the notice was returned as undeliverable as follows: To the Borrower: At the address of the Residence. To the City: City of Carlsbad Housing and Redevelopment Department Attention: Housing and Redevelopment Director 2965 Roosevelt Street, Suite B Carlsbad, CA 92008-2389 The parties may subsequently change addresses by providing written notice of the change in address to the other parties in accordance with this Section 20. 21. Joint and Several Obligations. This Note is the joint and several obligation of all makers, sureties, guarantors and endorsers, and shall be binding upon them and their successors and assigns. 22. Nonliability for Negligence. Loss, or Damage. Borrower acknowledges, understands and agrees that the relationship between Borrower and the City is solely that of borrower and lender, and that the City does not undertake or assume any responsibility for or duty to Borrower to select, review, inspect, supervise, pass judgment on, or inform Borrower of the quality, adequacy or suitability of the Residence or any other matter. The City owes no duty of care to protect Borrower against negligent, faulty, inadequate or defective building or construction or any condition of the Residence and Borrower agrees that neither Borrower, or Borrower'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 Residence and will hold the City harmless from any liability, loss or damage for these things. 1010\D3\111697.6 04/02/99 23. Indemnity. Borrower 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: a. the making of the loan to Borrower; b. Borrower's failure to perform any obligations as and when required by the Note or the Deed of Trust; of c. the failure at any time of any of Borrower's representations to the Seller or the City to be true and correct. 24. Termination of Restrictions. Any legal restrictions on conveyance of the Residence (as defined in 24 CFR 203.41(a)(3)(u)) included in this Note shall terminate upon transfer of the Residence by foreclosure, deed in lieu of foreclosure, or assignment to the Secretary of the United States Department of Housing and Urban Development. 25. Controlling Law. This Note shall be construed in accordance with and be governed by the laws of the State of California. 26. Assignment by City. The City may assign its right to receive the proceeds under this Note to any person and upon notice to the Borrower by the City all payments shall be made to the assignee. 27. Invalid Provisions. If any one or more of the provisions contained in this . Note 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 Note, and this Note shall be construed as if such invalid, illegal or unenforceable provision had never been contained in this Note. 28. Entire Agreement. This Note (along with the Deed of Trust) sets forth the entire understanding and agreement of the City and the Borrower and any amendment, alteration or interpretation of this Note must be in writing signed by both the City and the Borrower. Louis G. 1010\03\111697.6 04/02/99