HomeMy WebLinkAbout2000-06-27; City Council; 15805; Rancho Carrillo Village BLOAN AGREEMENT
BY AND BETWEEN
The City Of Carlsbad
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Continental Residential, Inc., a California corporation, formerly
known as L & W Investments, Inc., a California corporation, successor
by merger to Continental Ranch Inc., a Delaware corporation
Table of Contents
ARTICLE 1. DEFINITIONS AND EXHIBITS ............................................................................ 2
Section 1.1 Definitions .................................................................................................... 2
Section 1.2 Exhibits ........................................................................................................ 4
ARTICLE 2. LOAN PROVISIONS .............................................................................................. 5
Section 2.1 Loan ............................................................................................................. 5
Section 2.2 Interest. ......................................................................................................... 5
Section 2.3 Use of Loan Funds ....................................................................................... 5
Section 2.4 Security ........................................................................................................ 5
Section 2.5 Disbursement of Loan Proceeds .................................................................. 5
Section 2.6 Subordination ............................................................................................... ?
Section 2.7 Term and Repayment Schedule ................................................................... 7
Section 2.8 Assumption .................................................................................................. 8
Section 2.9 Approval of Additional Financing ............................................................... 8
ARTICLE 3. CONSTRUCTION OF THE DEVELOPMENT ..................................................... 8
Section 3.1 Schedule of Performance ............................................................................. 8
Section 3.2 Construction Pursuant to Plans and Laws .................................................... 8
Section 3.3 Equal Opportunity ........................................................................................ 9
Section 3.4 Mechanics Liens, Stop Notices, and Notices of Completion ....................... 9
ARTICLE 4. REQUIREMENTS DURING AND AFTER CONSTRUCTION ......................... 10
Section 4.1 Information ................................................................................................ 10
Section 4.2 Records ...................................................................................................... 10
Section 4.3 Inspections ................................................................................................. 10
Section 4.4 Insurance .................................................................................................... 10
Section 4.5 Hazardous Materials .................................................................................. 11
Section 4.6 Fees and Taxes ........................................................................................... 13
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Table of Contents
Section 4. 7 Nondiscrimination ...................................................................................... 13
Section 4.8 Notice of Litigation .................................................................................... 13
Section 4.9 Transfers .................................................................................................... 13
Section 4.10 Sale of Units ............................................................................................... 15
ARTICLE 5. DEFAULT ............................................................................................................. 15
Section 5 .1 Events of Default. ...................................................................................... 15
Section 5.2 Remedies .................................................................................................... 16
Section 5.3 Remedies Cumulative ................................................................................ 17
Section 5.4 Waiver of Terms and Conditions .............................................................. .17
ARTICLE 6. REPRESENTATIONS AND WARRANTIES OF DEVELOPER ....................... 18
Section 6.1 Representations and Warranties ................................................................. 18
ARTICLE 7. GENERAL PROVISIONS .................................................................................... 19
Section 7.1
Section 7.2
Section 7.3
. Section 7.4
Section 7.5
Section 7.6
Section 7.7
Section 7.8
Section 7.9
Relationship of Parties ............................................................................... 19
No Claims .................................................................................................. 19
Amendments .............................................................................................. 20
Indemnification .......................................................................................... 20
Non-Liability of City Officials, Employees and Agents ........................... 20
No Third Party Beneficiaries ..................................................................... 20
Discretion Retained By City ...................................................................... 20
Notices, Demands and Communications ................................................... 20
Applicable Law .......................................................................................... 21
Section 7.10 Parties Bound; Covenants Running with the Land .................................... 21
Section 7.11 Severability ................................................................................................ 21
Section 7.12 Force Majeure ............................................................................................ 21
Section 7.13 Approvals ................................................................................................... 22
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Table of Contents
Section 7.14 Title of Parts and Sections .................................... : .................................... 22
Section 7 .15 Entire Understanding of the Parties ........................................................... 22
Section 7 .16 Multiple Originals; Counterpart ................................................................. 22
Section 7 .17 Time of the Essence .................................................................................. .23
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LOAN AGREEMENT
This Loan Agreement (the "Agreement") is entered into as of March 1 , 2001,
by and between the City of Carlsbad, a municipal corporation (the "City"), and Continental
Residential, Inc., a California corporation, formerly known as L & W Investments, Inc., a
California corporation, successor by merger to Continental Ranch Inc., a Delaware corporation
(the "Developer"), with reference to the following facts:
A. Developer is the owner of certain real property in the City of Carlsbad, in the
County of San Diego, California ("Affordable Development Property") described in "Attachment
A," which is attached hereto and incorporated herein by this reference.
B. The Developer seeks to construct a total of 1,711 residential housing units in the
City, in a development known as Rancho Carrillo (the "Master Development"). Previously, the
Developer has received City approval to construct a total of 1,158 residential housing units. In
satisfaction of certain conditions of approval in connection with the City's approvals of the
Master Development, the City and the Developer executed an Affordable Housing Agreement
Imposing Restrictions on Real Property dated as of March 25, 1998 (the "Original Affordable
Housing Agreement") and recorded as Document No. 1998-0162920, and the First Amended
Affordable Housing Agreement Imposing Restrictions on Real Property dated as of December
21, 1999 (the "First Amendment") and recorded as Document No. 1999-0824043, The previous
approvals require the developer to construct a total of 116 affordable apartment units and 50
affordable second dwelling units.
C. Pursuant to the Second Amended and Restated Affordable Housing Agreement
Imposing Restrictions on Real Property dated as of January 20, 2000 (the "Second Amendment";
referred to collectively with the Original Agreement and the First Amendment as the "Affordable
Housing Agreement"), the Developer agreed to sell 90 of the housing units to be built on the
Affordable Development Property in the Master Development at affordable housing cost to lower
income households (the "Affordable Units"). Pursuant to the terms of this Loan Agreement, the
Developer further agrees to carry back second mortgage financing on the Affordable Units in an
amount equal to the difference between the market rate purchase price of the Affordable Unit and
the affordable price of such unit, and to assign such second mortgage financing to the City. The
Developer intends to construct the Affordable Units in a discrete townhome development on the
Affordable Development Property. The provision of these 90 Affordable Units will allow for the
Developer, or merchant builders who purchase land within the Master Development from
Developer, to construct a total of 1,711 residential units (which total includes 50 affordable
second dwelling units) within the Master Development.
D. Pursuant to City Council Resolution No. 99-259, the City agreed to provide
financial assistance to the Developer for the Affordable Units in the form of a $1,350,000
construction loan (the "City Loan"), which represents a direct City subsidy amount of$15,000
per Affordable Unit. As more fully set forth herein, upon sale of each Affordable Unit to an
eligible lower income household in compliance with the Affordable Housing Agreement, and
execution of second mortgage loan documents by the homebuyer to the City in compliance with
October 25, 2000 1 • .
the Affordable Housing Agreement, the City will credit the Master Developer with repayment of
$15,000 of the City Loan.
E The City intends to fund the City Loan with moneys from the City's Housing
Trust Fund created pursuant to City Ordinance No. NS-232.
NOW, THEREFORE, the Parties agree as follows:
ARTICLE 1. DEFINITIONS AND EXHIBITS
Section 1.1 Definitions.
The following capitalized terms shall have the following meanings in this Agreement:
(a) "Affordable Development" shall mean the Affordable Development
Property, the Affordable Units, and all landscaping, roads, parking spaces, and common area
appurtenant to such units.
(b) "Affordable Development Property" shall mean theproperty described in
"Exhibit A" on which the Affordable Development will be constructed.
(c) "Affordable Housing Agreement" shall mean the Affordable Housing
Agreement Imposing Restrictions on Real Property dated as of March 25, 1999 and recorded as
Document No. 1998-0162920 in the Official Records of San Diego County,(the "Original
Affordable Housing Agreement"), and the First Amended Affordable Housing Agreement
Imposing Restrictions on Real Property dated as of December 21, 1999 (the "First Amendment
"), and the Second Amended Affordable Housing Agreement Imposing Restrictions on Real
Property dated as of January 20, 2000 (the "Second Amendment ").
(d) "Affordable Unit" shall mean a Unit sold to an Eligible Purchaser in
compliance with the Affordable Housing Agreement.
( e) "Agreement" shall mean this Loan Agreement.
(t) "Bank" shall mean the maker of the Bank Loan.
(g) "Bank Loan" shall mean the construction loan obtained by the Developer
from a private institutional lender, to pay for costs of construction of the Affordable Units not
paid from the City Loan.
(h) "Borrower Disclosure Statement" shall mean the borrower disclosure
statement to be signed by Eligible Buyers purchasing Units.
(i) "City" shall mean the City of Carlsbad, a municipal corporation.
October 25, 2000 2
(j) "City Loan" shall mean the construction loan in the amount One Million
Three Hundred Fifty Thousand Dollars ($1,350,000) made by the City to the Developer pursuant
to this Agreement.
(k) "City/Homebuyer Second Mortgage Loan" shall mean the carryback
financing provided by the Developer to Eligible purchasers and assigned by the Developer to the
City. Each City/Homebuyer Second Mortgage Loan shall be evidenced by an Eligible Buyer
Note and secured by an Eligible Buyer Deed of Trust.
(1) "City Second Mortgage Loan Documents" shall mean an Eligible Buyer
Note secured by an Eligible Buyer Deed of Trust evidencing each City/Homebuyer Second
Mortgage Loan.
(m) "Default" shall have the meaning set forth in Section 5.1 below.
(n) "Developer Deed of Trust" shall mean the deed of trust to be placed on the
Affordable Development Property, in substantially the form shown in the attached "Exhibit C",
securing the Developer Note and naming the City as beneficiary.
(o) "Developer Note" shall mean the promissory note, in substantially the
form shown in the attached Exhibit B, in the principal amount of One Million Three Hundred
Fifty Thousand Dollars ($1,350,000), evidencing the City Loan.
(p) "Direct City Subsidy Amount" shall mean the $15,000 increment of the
City Loan attributable to each Affordable Unit.
(q)
Affordable Unit.
"Eligible Buyer" shall mean a Lower Income Household purchasing an
(r) "Eligible Buyer Deed of Trust" shall mean the deed of trust held by the
City to secure payment of an Eligible Buyer Note executed and delivered to the City by the
Eligible Buyer of an Affordable Unit, in the form attached hereto as "Exhibit E".
(s) "Eligible Buyer Note" shall mean the promissory note, in the form
attached hereto as "Exhibit D", executed and delivered to the City by an Eligible Buyer of a
Affordable Unit.
(t) "Hazardous Materials" shall have the meaning set forth in Section 4.5
below.
(u) "Hazardous Materials Claim" shall have the meaning set forth in Section
4.5 below.
(v) "Hazardous Materials Law" shall have the meaning set forth in Section 4.5
below.
October 25, 2000 3
(w) "Loan Documents" shall mean the following documents: (i) the Developer
Note; (ii) the Developer Deed of Trust; (iii) the Affordable Housing Agreement and (iv) this
Agreement.
(x) "Lower Income Household" shall mean a household with an annual
income, adjusted for actual household size, that is no greater than eighty percent (80%) of
Median Income.
(y) "Median Income" shall mean the median gross yearly income for
households in San Diego County, California, as adjusted for household size, as published
periodically by the United States Department of Housing and Urban Development ("HUD"). In
the event such income determinations are no longer published by HUD, or are not updated for a
period of at least eighteen (18) months, the City shall provide the Developer with other income
determinations which are reasonably similar with respect to method of calculation to those
previously published by HUD.
(z) "Parties" shall mean the City and the Developer.
(aa) "Primary Affordability Subsidy" shall mean the difference between the
appraised value of the property and the purchase price affordable to the particular Eligible Buyer.
(bb) "Property" shall mean the property on which the Developer shall construct
the Improvements, as more particularly described in the attached Exhibit A.
(cc) "Schedule of Performance" shall mean the schedule of performance set
forth in Section 4.6 of the Second Amended Affordable Housing Agreement.
(dd) "Term" shall mean the thirty-six (36) month term of the Loan,
commencing on the date ofrecordation of the Deed of Trust and continuing for thirty-six (36)
months thereafter.
(ee) "Transfer" shall have the meaning set forth in Section 4.9 below.
(ff) "Unit" shall mean a housing unit located within the Affordable
Development.
Section 1.2 Exhibits.
The following exhibits are attached to this Agreement and incorporated into this
Agreement by this reference:
EXHIBIT A:
EXHIBITB:
EXHIBITC:
EXHIBIT D:
October 25, 2000
Legal Description of the Affordable Development Property
Form of the Developer Note
Form of the Developer Deed of Trust
Form of Eligible Buyer Note
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EXHIBITE:
EXHIBITF:
Form of Eligible Buyer Deed of Trust
Form of Borrower Disclosure Statement
EXHIBITG: Development Budget
ARTICLE 2. LOAN PROVISIONS
Section 2.1 Loan.
The City shall loan to the Developer the Loan in the principal amount of One Million
Three Hundred Fifty Thousand Dollars ($1,350,000) for the purposes set forth in Section 2.3 of
this Agreement. The obligation of the Developer to repay the Loan shall be evidenced by the
Developer Note in substantially the form attached to this Agreement as "Exhibit B".
Section 2.2 Interest.
The Loan shall not bear interest; provided, however, if a Default is declared by the City,
the Loan shall bear interest, commencing on the date of declaration of the Default (subject to
applicable cure periods), at the default rate equal to the lesser often percent (10%), compounded
annually or the maximum rate permitted by law.
Section 2.3 Use of Loan Funds.
The Developer shall use the City Loan to pay for a portion of costs associated with
development of the Affordable Units, identified as City-funded costs in the budget attached
hereto as "Exhibit G". The Developer shall not use the City Loan funds for any other purpose
without the prior written consent of the City.
Section 2.4 Security.
The Developer shall secure its obligation to repay the City Loan, as evidenced by the
Developer Note, by signing and delivering to the City the Developer Deed of Trust in
substantially the form attached to this Agreement as "Exhibit C".
Section 2.5 Disbursement of Loan Proceeds.
(a) The City shall have no obligation to disburse any portion of the City Loan
unless the following conditions have been satisfied and continue to be satisfied:
(i) The Developer has signed and delivered to the City the Developer
Note in substantially the form attached to this Agreement as "Exhibit B" and the Developer Deed
of Trust in substantially the form attached to this Agreement as "Exhibit C".
October 25, 2000 5
(ii) The Developer Deed of Trust has been recorded against the
Affordable Development Property in the Office of the Recorder of the County of San Diego.
(iii) A title insurer reasonably acceptable to the City is unconditionally
and irrevocably committed to issuing a CLTA Lender's Policy of insurance insuring the priority
of the City Deed of Trust in the amount of the City Loan, subject only to such exceptions and
exclusions as may be reasonably acceptable to the City and containing such endorsements as the
City may reasonably require. The City agrees to accept the deed of trust securing the Bank Loan
as a prior exception to title.
(iv) The Developer has furnished the City with evidence of the
insurance coverage required pursuant to Section 4.4 below.
(v) The City has received a good standing certificate issued by the
California Secretary of State's office indicating that the Developer exists in good standing at the
time of the proposed disbursement, as well as a copy of a resolution of the Developer indicating
that Developer has duly authorized entry into and performance under this Agreement.
(vi) The Developer has certified in writing to the City that the City
Loan, together with the Bank Loan and any other financing obtained by the Developer, is
projected to be sufficient to pay all development costs of the Affordable Units.
(vii) The Developer (A) has received all general plan and zoning
approvals necessary to construct the Affordable Units, (B) has submitted to the City a proposed
final tract map for the Affordable Development which satisfies all tentative tract map conditions
and is reasonably acceptable to the City Engineer, together with all fees required therefor, and
(C) has submitted to the City all grading and improvement plans required for the Affordable
Development, in a form which is reasonably acceptable to the City Engineer, together with all
fees required therefore, and (D) has received from the City temporary or interim approval to
commence grading of the Affordable Development Property, and (E) has received approval of
building plans for the Affordable Development by the City Building and Safety Department,
pending pad certification for permit issuance.
(viii) If Developer obtains a bank loan, then the closing of the Bank
Loan shall be completed and the City, the Bank, and the Developer shall have executed an
Intercreditor Agreement as provided in Section 2.6 below. Prior to such closing, the City and the
Developer shall cooperate in good faith with the Bank and shall make changes to the terms and
conditions of this Agreement (including the exhibits hereto) as the Bank may require, and which
the Developer and the City Housing and Community Development Director determine are
reasonable.
(b) Upon satisfaction of the conditions set forth in this Section 2.5(a) the City
shall promptly, but in no event later than five (5) business days after receiving Developer's
written request and any required documentation, disburse the City Loan proceeds to Developer
from time to time, but in no event more often than monthly. Disbursement requests shall include
a certified statement from Developer: (i) reaffirming the accuracy as of the date of the
disbursement request of Developer's representations and warranties set forth in Article 6 below;
October 25, 2000 6
(ii) certifying that Borrower is not in default under the City Loan Documents or loan documents
for the Bank Loan; and (iii) setting forth the proposed uses of funds consistent with Section 2.3
and Exhibit G, the amount of funds needed, and, where applicable, a copy of the bill or invoice
covering a cost incurred or to be incurred. When a disbursement is requested to pay any
contractor in connection with the Affordable Development, the written request must be
accompanied by certification by Developer that the work for which disbursement is requested has
been completed (although the City reserves the right to inspect the Affordable Development and
make an independent evaluation), and lien releases and/or mechanics lien title insurance
endorsements reasonably acceptable to the City. City Loan proceeds utilized for hard
construction costs of on-site improvements shall be subject to a retention of ten percent (10%),
with retained proceeds to be released upon completion of the on-site improvements.
Section 2.6 Subordination.
The City shall execute such documents as may be necessary to subordinate the priority of the
City Deed of Trust to the lien of the deed of trust securing the Bank Loan, if Developer obtains a bank
loan. The subordination documents shall provide the City with reasonably adequate notice and cure
rights to enable the City to avoid foreclosure of a senior deed of trust.
Section 2. 7 Term and Repayment Schedule.
The Loan shall be repaid as follows:
(a) Upon sale of an Affordable Unit to an Eligible Buyer, the Developer shall carry
back second mortgage financing to the Eligible Buyer in an amount equal to the Primary Affordability
Subsidy for the Affordable Unit. The Developer shall assign its interest in such second mortgage
financing to the City, and shall require that the Eligible Buyer sign, at close of escrow on the purchase of
the Affordable Unit, the Borrower Disclosure Statement and the Eligible Buyer Note and the Eligible
Buyer Deed of Trust for the benefit of the City. Upon the execution of the Borrower Disclosure
Statement, the Eligible Buyer Note and the Eligible Buyer Deed of Trust, and the recordation of the
Eligible Buyer Deed of Trust against the Affordable Unit, the City shall credit the Developer with
repayment of Fifteen Thousand Dollars {$15,000) of the City Loan. The City and the Developer
acknowledge that the principal amount of the Eligible Buyer Note to the City shall be equal to the
Primary Affordability Subsidy, which includes the value to the Eligible Purchaser of the City's
inclusionary housing restrictions pursuant to the Affordable Housing Agreement and will therefore be
greater in principal amount than the Direct City Subsidy Amount of Fifteen Thousand Dollars ($15,000),
but nevertheless agree that only the Direct City Subsidy Amount of Fifteen Thousand Dollars ($15,000)
shall be credited toward repayment of the City Loan.
(b) Upon the sooner of the date of expiration of the Term, the date ofan unauthorized
Transfer of the Development, or Developer's Transfer of the last Affordable Unit still owned by the
Developer, all principal remaining unpaid or uncredited shall be due and payable.
( c) At the time of sale of an Affordable Unit to an Eligible Buyer, the City shall
execute a partial reconveyance of the Developer Deed of Trust to release the Affordable Unit being sold
from the lien of the Developer Deed of Trust. Upon the sale of all Affordable Units in compliance with
the Affordable Housing Agreement, the City shall entirely reconvey the Developer Deed of Trust.
October 25, 2000 7 •
( d) The Developer may pay the principal and any interest due the City under the
Developer Note prior to or in advance of the time for payment thereof as provided in the Developer
Note, without penalty. However, the provisions of this Agreement and the Affordable Housing
Agreement will be applicable to the Affordable Development even though Developer may have prepaid
the Developer Note, including the requirement that a minimum of ninety (90) of the Units shall be sold
to Eligible Buyers who execute City Second Mortgage Loan documents.
Section 2.8 Assumption.
Subject to Section 4.9 below, the Developer Note shall not be assumable by successors and
assigns of Developer without the prior written consent of the City, which consent shall not be withheld
unreasonably.
Section 2.9 Approval of Additional Financing.
The Developer shall not place any additional encumbrances on the Affordable Development
Property without the prior written consent of the City, which consent shall not be withheld unreasonably.
The City consents to encumbrances in connection with the Bank Loan, if Developer obtains a bank loan.
ARTICLE 3. CONSTRUCTION OF THE DEVELOPMENT
Section 3.1 Schedule of Performance.
The Developer shall develop the Affordable Development in compliance with the
Schedule of Performance.
Section 3.2 Construction Pursuant to Plans and Laws.
(a) The Developer shall construct the Affordable Development in
conformance with the construction drawings approved by the City in connection with approval of
the building permits for the Affordable Development.
(b) The Developer shall cause all work performed in connection with the
Affordable Development to be performed in compliance with (i) all applicable laws, ordinances,
rules and regulations of federal, state, county or municipal governments or agencies now in force
or that may be enacted hereafter, and (ii) all directions, rules and regulations of any fire marshal,
health officer, building inspector, or other officer of every governmental agency now having or
hereafter acquiring jurisdiction. The work shall proceed only after procurement of each permit,
license, or other authorization that may be required by any governmental agency having
jurisdiction, and the Developer shall be responsible to the City for the procurement and
maintenance thereof, as may be required of the Developer and all entities engaged in work on the
Affordable Development.
October 25, 2000 8
( c) All construction work and professional services shall be performed by
persons or entities licensed or otherwise authorized to perform the applicable construction work
or service in the State of California.
(d) The Developer shall be solely responsible for all aspects of the
Developer's conduct in connection with the Affordable Development, including (but not limited
to) the quality and suitability of the construction drawings, the supervision of construction work,
and the qualifications, financial condition, and performance of all architects, engineers,
contractors, subcontractors, suppliers, consultants, and property managers. Any review or
inspection undertaken by the City with reference to the Affordable Development is solely for the
purpose of determining whether the Developer is properly discharging its obligations to the City,
and should not be relied upon by the Developer or by any third parties as a warranty or
representation by the City as to the quality of the design or construction of the Affordable
Development.
Section 3.3 Equal Opportunity.
During the construction of the Affordable Development there shall be no discrimination
on the basis ofrace, color, creed, religion, age, disability, sex, sexual orientation, marital status,
national origin, or ancestry, in the hiring, firing, promoting, or demoting of any person engaged
in the construction work.
Section 3.4 Mechanics Liens, Stop Notices, and Notices of Completion.
(a) If any claim oflien is filed against the Affordable Development Property
or the Affordable Development or a stop notice affecting the City Loan is served on the City or
any other lender or other third party in connection with the Affordable Development, then the
Developer shall, within twenty (20) days after such filing or service, either pay and fully
discharge the lien or stop notice, effect the release of such lien or stop notice by delivering to the
City a surety bond in sufficient form and amount, or provide the City with other assurance
satisfactory to the City that the claim of lien or stop notice will be paid or discharged.
(b) If the Developer fails to discharge any lien, encumbrance, charge, or claim
in the manner required in Section 3.4(a), then in addition to any other right or remedy, the City
may (but shall be under no obligation to) discharge such lien, encumbrance, charge, or claim at
the Developer's expense. Alternately, the City may require the Developer to immediately deposit
with the City the amount necessary to satisfy such lien or claim and any costs, pending resolution
thereof. The City may use such deposit to satisfy any claim or lien that is adversely determined
against the Developer.
( c) The Developer shall file a valid notice of cessation or notice of completion
upon cessation of construction on the Affordable Development for a continuous period of thirty
(30) days or more, and take all other reasonable steps to forestall the assertion of claims or lien
against the Affordable Development. The City may (but has no obligation to) record any notices
of completion or cessation oflabor, or any other notice that the City deems necessary or
desirable to protect its interest in the Affordable Development.
October 25, 2000 9
ARTICLE 4. REQUIREMENTS DURING AND AFTER CONSTRUCTION
Section 4.1 Information.
The Developer shall promptly provide any information reasonably requested by the City
in connection with the Affordable Development.
Section 4.2 Records.
The Developer shall maintain complete, accurate, and current records pertaining to the
Affordable Development for a period of five (5) years after the creation of such records, and shall
permit any duly authorized representative of the City to inspect and copy records, including
records pertaining to income and household size of purchasers of the Affordable Units. Such
records shall include records regarding the occupancy and sales price of the Affordable Units, as
well as records that accurately and fully show the date, amount, purpose, and payee of all
expenditures drawn from Loan funds. Such records shall also include all invoices, receipts, and
other documents related to expenditures from the Loan funds. Records shall be maintained
accurately and shall be kept current.
Section 4.3 Inspections.
The Developer shall permit and facilitate, and shall require its contractors to permit and
facilitate, observation and inspection at the Affordable Development by the City and by public
authorities during reasonable business hours and upon reasonable advance notice for the
purposes of determining compliance with this Agreement.
Section 4.4 Insurance.
Throughout the period of Developer's ownership of any portion of the Affordable
Development, Developer shall maintain the following insurance policies:
(a) Worker's Compensation insurance, including Employer's Liability
coverage, with limits not less than One Million Dollars ($1,000,000) each accident, ifrequired by
law or if the Developer has employees.
(b) Comprehensive General Liability insurance with limits not less than Five
Million Dollars ($5,000,000) each occurrence combined single limit for Bodily Injury and
Property Damage, including coverages for Contractual Liability, Personal Injury, Broadform
Property Damage, Products and Completed Operations.
( c) Comprehensive Automobile Liability insurance with limits not less than
One Million Dollars ($1,000,000) each occurrence combined single limit for Bodily Injury and
Property Damage, including coverages for owned, non-owned and hired vehicles, as applicable.
However, if the Developer does not own or lease vehicles for purposes of this Agreement, then
no automobile insurance shall be required.
( d) Property insurance covering all Affordable Development real and personal
(non-expendable) property, in form appropriate for the nature of such property, covering all risks
October 25, 2000 10 •
of loss, including flood (if the Affordable Development Property is located within a flood zone),
for 100% of the replacement value, with deductible, if any, acceptable to the City, naming the
City as a Loss Payee, as its interests may appear.
( e) The Developer shall cause any general contractor or agent working on the
Affordable Development under direct contract with the Developer to maintain insurance of the
types and in at least the minimum amounts described in Sections 4.4(a), (b) and (c), and shall
require that such insurance meet all of the general requirements of Sections 4.4(f), (g), and (h).
Liability and Comprehensive Automobile Liability insurance to be maintained by such general
contractor and agents pursuant to this subsection shall name as additional insureds the City, its
officers, agents, employees, and members of the City Council. The Developer shall cause the
conditions in this Section 4.4(e) to continue to be satisfied at all times after the disbursement of
any City Loan funds and before sale of all Affordable Units in compliance with the Affordable
Housing Agreement.
( f) The required insurance shall be provided under an occurrence form, and
Developer shall maintain such coverage continuously until all Affordable Units are sold.
(g) Comprehensive General Liability, Comprehensive Automobile Liability
and Property insurance policies shall be endorsed to name as additional insured the City and its
officers, agents, and employees, as well members of the City Council.
(h) All policies and bonds shall be endorsed to provide thirty (30) days prior
written notice of cancellation, reduction in coverage, or intent not to renew to the address
established for notices to the City.
Section 4.5 Hazardous Materials.
(a) The Developer shall keep and maintain the Affordable Development in
compliance with, and shall not cause or permit the Affordable Development to be in violation of,
any federal, state or local laws, ordinances or regulations relating to industrial hygiene or to the
environmental conditions on, under or about the Affordable Development including, but not
limited to, soil and ground water conditions. The Developer shall not use, generate,
manufacture, store or dispose of on, under, or about the Affordable Development or transport to
or from the Affordable Development any flammable explosives, radioactive materials, hazardous
wastes, toxic substances or related materials, including without limitation, any substances
defined as or included in the definition of "hazardous substances, "hazardous wastes," "hazardous
materials," or "toxic substances" under any applicable federal or state laws or regulations
( collectively referred to hereinafter as "Hazardous Materials") except such of the foregoing as
may be customarily kept and used in and about single family residential property.
(b) The Developer shall immediately advise the City in writing if at any time
it receives written notice of (i) any and all enforcement, cleanup, removal or other governmental
or regulatory actions instituted, completed or threatened against the Developer or the Affordable
Development pursuant to any applicable federal, state or local laws, ordinances, or regulations
relating to any Hazardous Materials ("Hazardous Materials Law"); (ii) all claims made or
threatened by any third party against the Developer or the Affordable Development relating to
October 25, 2000 11 •
damage, contribution, cost recovery compensation, loss or injury resulting from any Hazardous
Materials (the matters set forth in clauses (i) and (ii) above are hereinafter referred to as
"Hazardous Materials Claims"); and (iii) the Developer's discovery of any occurrence or
condition on any real property adjoining or in the vicinity of the Affordable Development that
could cause the Affordable Development or any part thereof to be classified as "border-zone
property" under California Health and Safety Code Sections 25220 et seq. or any regulation
adopted in accordance therewith, or to be otherwise subject to any restrictions on the ownership,
occupancy, transferability or use of the Affordable Development Property under any Hazardous
Materials Law.
(c) The City shall have the right to join and participate in, as a party if it so
elects, any legal proceedings or actions initiated in connection with any Hazardous Materials
Claims and to have its reasonable attorneys' fees in connection therewith paid by the Developer.
The Developer shall indemnify, defend (with counsel reasonably chosen by the City, at the City's
option), and hold harmless the City and its officers, councilmembers, employees, and agents
from and against any loss, damage, cost, expense, or liability directly or indirectly arising out of
or attributable to the use, generation, storage, release, threatened release, discharge, disposal, or
presence of Hazardous Materials on, under, or about the Affordable Development, including
(without limitation): (i) all foreseeable consequential damages; (ii) the costs of any required or
necessary repair, cleanup, or detoxification of the Affordable Development and the preparation
and implementation of any closure, remedial, or other required plans; and (iii) all reasonable
costs and expenses incurred by the City in connection with clauses (i) and (ii), including (but not
limited to) reasonable attorneys' fees. This paragraph shall survive termination of this
Agreement.
( d) Without the City's prior written consent, which shall not be unreasonably
withheld, the Developer shall not take any remedial action in response to the presence of any
Hazardous Materials on, under or about the Affordable Development, nor enter into any
settlement agreement, consent decree, or other compromise in respect to any Hazardous Material
Claims, which remedial action, settlement, consent decree or compromise might, in the City's
reasonable judgment, impair the value of the City's security hereunder. However, the City's prior
consent shall not be necessary if the presence of Hazardous Materials on, under, or about the
Affordable Development either poses an immediate threat to the health, safety or welfare of any
individual, or is of such a nature that an immediate remedial response is necessary and it is not
reasonably possible to obtain the City's consent before taking such action, provided that in such
event the Developer shall notify the City as soon as practicable of any action so taken. The City
shall not withhold its consent, where consent is required hereunder, if either (i) a particular
remedial action is ordered by a court of competent jurisdiction, (ii) the Developer will or may be
subjected to civil or criminal sanctions or penalties if it fails to take a required action; or (iii) the
Developer establishes to the reasonable satisfaction of the City that there is no reasonable
alternative to such remedial action which would result in less impairment of the City's security
hereunder.
(e) The Developer acknowledges and agrees that (i) this Section 4.5 is
intended as the City's written request for information ( and the Developer's response) concerning
the environmental condition of the Affordable Development as required by California Code of
Civil Procedure Section 726.5, and (ii) each representation and warranty in this Agreement
October 25, 2000 12 •
(together with any indemnity obligation applicable to a breach of or such representation and
warranty) with respect to the environmental condition of the Affordable Development is intended
by the Parties to be an "environmental provision" for purposes of California Code of Civil
Procedure Section 736.
Section 4.6 Fees and Taxes.
During the period of ownership of the Affordable Development by the Developer, the
Developer shall be solely responsible for payment of all fees, assessments, taxes, charges, and
levies imposed by any public authority or utility company with respect to the Affordable
Development or portion thereof owned by the Developer, and shall pay such charges prior to
delinquency. However, the Developer shall not be required to pay and discharge any such charge
so long as (a) the legality thereof is being contested diligently and in good faith and by
appropriate proceedings, and (b) if requested by the City, the Developer deposits with the City
any funds or other forms of assurance that the City in good faith from time to time determines
appropriate to protect the City from the consequences of the contest being unsuccessful.
Section 4.7 Nondiscrimination.
The Developer covenants by and for itself and any person subject to legal contract by the
Developer 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, or enjoyment of any Affordable Unit, nor shall the Developer or any person
claiming under or through the Developer establish or permit any such practice or practices of
discrimination or segregation. The foregoing covenant shall run with the land.
Section 4.8 Notice of Litigation.
During the period of ownership of the Affordable Development by the Developer, the
Developer shall promptly notify the City in writing of any litigation affecting the Developer or
the Development and of any claims or disputes that involve a material risk of litigation.
Section 4.9 Transfers.
(a) The qualifications and identity of the Developer are of particular concern
to the City. It is because of those qualifications and identity that the City has entered into this
Agreement with the Developer. The City shall have no obligation to perform hereunder if any
voluntary or involuntary successor in interest of the Developer shall acquire any rights or powers
under this Agreement except as expressly set forth herein. The City may terminate this
Agreement upon the occurrence of a Transfer prohibited by subsection (b ). The City shall
approve a proposed Transfer if the Developer is transferring the entire Affordable Development
Property to the transferee and the City reasonably determines that the proposed transferee
possesses the qualifications, development experience and financial capability necessary and
adequate to fulfill the obligations undertaken in this Agreement and the Affordable Housing
Agreement by the Developer.
October 25, 2000 13 •
(b) No Transfer shall be permitted prior to repayment of the City Loan in full
or prior to sale of all Affordable Units in compliance with the Affordable Housing Agreement
without the prior written consent of the City, which the City shall grant or withhold in
accordance with the standard set forth in subsection (a) above. Pursuant to Section 2.8(b) above,
the City Loan shall automatically accelerate and be due in full upon any Transfer for which prior
written City approval has not been obtained.
( c) For purposes of this Agreement, "Transfer" shall mean, except as excluded
by the provisions of subsection (d), any sale, assignment, or transfer, whether voluntary or
involuntary, of (i) any rights and/or duties under this Agreement, and/or (ii) any interest in the
Development, including (but not limited to) a fee simple interest, a joint tenancy interest, a life
estate, a partnership interest, a leasehold interest, a security interest, or an interest evidenced by a
land contract by which possession of the Affordable Development is transferred and the
Developer retains title.
( d) The term "Transfer" shall exclude the following transfers that would
otherwise be Transfers under subsection (a):
(i) the assignment of this Agreement (and the transfer of the
Affordable Development) to a corporation controlled by the Developer, or to a partnership or
joint venture in which the Developer, or an entity controlled by the Developer, is a general
partner and is in control thereof;
(ii) the admission of additional new general or limited partners, or the
substitution or deletion of partners to any partnership or joint venture set forth in (i) above so
long as the Developer, or an entity controlled by the Developer, continues in control;
(iii) the granting of easements, licenses or permits to facilitate the
development of the Affordable Development;
(iv) the granting of any security interest in the Affordable Development
or other financing arrangement for the purposes of securing the Bank Loan or other financing or
the transfer of such security interests to another entity;
(v) the transfer or conveyance of all or any portion of the Affordable
Development by foreclosure of a mortgage or deed of trust or by transfer in-lieu-of foreclosure
thereof, and a subsequent transfer or conveyance of all or any portion of the Development to a
third party transferee.
(vi) the sale or transfer of individual Units in the Affordable
Development to homebuyers in compliance with the Affordable Housing Agreement.
( e) In the absence of specific written agreement by the City, or except to a
transferee otherwise authorized in this Agreement (whereupon the transferor-assignor shall be
relieved of its obligations hereunder), no Transfer (whether authorized or unauthorized) shall be
deemed to relieve the Developer or any other party of any obligations under this Agreement.
October 25, 2000 14 •
Section 4.10 Sale of Units.
All Units in the Affordable Development shall be sold to Eligible Buyers in compliance
with the Affordable Housing Agreement. The Developer shall grant preference in the sale of
Units to persons who have lived for sixty (60) days in the City of Carlsbad or who are employed
in the City of Carlsbad.
ARTICLE 5. DEFAULT
Section 5.1 Events of Default.
Each of the following shall constitute a "Default" by Developer under this Agreement:
(a) Failure to Make Payment. Failure to make prompt payments of the
principal on the Developer Note when due;
(b) Breach of Covenants. Failure by the Developer to duly perform, comply
with, or observe any of the conditions, terms, or covenants of any of the Loan Documents ( other
than a monetary default as described in paragraph ( a) above). If such a non-monetary event of
default occurs under the terms of the Loan Documents, unless automatic acceleration is provided
for hereunder, prior to exercising any remedies thereunder, the City shall give the Developer
written notice of such default and the Developer shall have thirty (30) days (unless an alternative
time period is specified hereunder, in which event such alternate cure period shall apply) to effect
a cure prior to exercise of remedies by the City.
( c) Insolvency. A court having jurisdiction shall have made or entered any
decree or order (i) adjudging the Developer to be bankrupt or insolvent, (ii) approving as
properly filed a petition seeking reorganization of the Developer or seeking any arrangement for
the Developer under the bankruptcy law or any other applicable debtor's relief law or statute of
the United States or any state or other jurisdiction, (iii) appointing a receiver, trustee, liquidator,
or assignee of the Developer in bankruptcy or insolvency or for any of their properties, or (iv)
directing the winding up or liquidation of the Developer, or the Developer shall have admitted in
writing its inability to pay its debts as they fall due or shall have voluntarily submitted to or filed
a petition seeking any decree or order of the nature described in clauses (i) to (iv), inclusive. The
occurrence of any of the events described in clauses (i) to (iv) with regard to Developer's
managing member shall also be a Default hereunder. The occurrence of any of the events of
Default in this Section 5.l(c) shall act to accelerate automatically, without the need for any
notice or action by the City, the indebtedness evidenced by the Developer Note.
( d) Assignment; Attachment. The Developer, by reason of a default under its
obligations to creditors, has assigned its assets for the benefit of its creditors or suffered a
sequestration or attachment of or execution on any substantial part of its property; provided that
Developer shall have sixty (60) days to cure any sequestration, attachment, or execution not
consented to by Developer. The occurrence of any of the events of Default in this Section 5.l(d)
shall act to accelerate automatically, without the need for any notice or action by the City, the
indebtedness evidenced by the Developer Note.
October 25, 2000 15
(e) Suspension; Termination. The Developer shall have voluntarily
suspended its business or, if Developer is a partnership, the partnership shall have been dissolved
or terminated.
(f) Liens on the Development. There shall be filed any claim oflien (other
than the deed(s) of trust and other security instruments in connection with the Bank Loan lien
approved in writing by the City) against the Affordable Development or any part thereof, or any
interest or right made appurtenant thereto, or the service of any notice to withhold proceeds of
the City Loan, and such claim of lien or notices to withhold is maintained for a period of forty-
five ( 45) days without discharge or satisfaction thereof or provision therefor satisfactory to the
City.
(g) Condemnation. The condemnation, seizure, or appropriation of all or, in
the opinion of the City, a substantial part of the Affordable Development.
(h) Defaults Under Other Loans. Any default declared by the lender under
any loan document related to the Bank Loan or other loan secured by the Affordable
Development Property, which default is not cured by the Developer following the expiration of
applicable notice and cure periods under the Bank Loan Documents or other loan document,
shall act to accelerate automatically, without the need for any notice or action by the City, the
indebtedness evidenced by the Developer Note.
(i) Breach of Representation. Any representation or warranty of Developer to
the City was materially incorrect when made.
Section 5 .2 Remedies.
The occurrence of any Default will either at the option of the City, or automatically where
so specified, relieve the City of any obligation to make or continue the City Loan and shall give
the City the right to proceed with any and all remedies set forth in this Agreement and the Loan
Documents, including but not limited to the following:
(a) Acceleration of Developer Note. The City shall have the right to cause all
indebtedness of the Developer to the City under this Agreement and the Developer Note to
become immediately due and payable, with interest accruing on the principal amount from the
date of acceleration to the date of repayment at an interest rate equal to the lesser of ten percent
(10%) or the maximum rate permitted by law. The Developer waives all right to presentment,
demand, protest or notice of protest or dishonor. The City may proceed to enforce payment of
the indebtedness and to exercise any or all rights afforded to the City as a creditor and secured
party under the law including the Uniform Commercial Code, including foreclosure under the
City Deed of Trust. The Developer shall be liable to pay the City on demand all expenses, costs
and fees (including, without limitation, attorney's fees and expenses) paid or incurred by the City
in connection with the collection of the City Loan and the preservation, maintenance, protection,
sale, or other disposition of the security given for the Loan.
(b) Specific Performance. The City shall have the right to mandamus or other
suit, action or proceeding at law or in equity to require the Developer to perform its obligations
October 25, 2000 16
and covenants under the Loan Documents or to enjoin acts on things which may be unlawful or
in violation of the provisions of the Loan Documents.
( c) Right to Cure at the Developer's Expense. The City shall have the right to
cure any monetary default by the Developer under a loan other than the City Loan. The
Developer shall reimburse the City for any funds advanced by the City to cure a monetary default
by Developer upon demand therefor, together with interest thereon at the rate of interest equal to
the rate of interest on the Bank Loan from the date of expenditure until the date of
reimbursement.
Section 5.3 Remedies Cumulative.
No right, power, or remedy given to the City by the terms of this Agreement or the Loan
Documents is intended to be exclusive of any other right, power, or remedy; and each and every
such right, power, or remedy shall be cumulative and in addition to every other right, power, or
remedy given to the City by the terms of any such instrument, or by any statute or otherwise
against the Developer and any other person. Neither the failure nor any delay on the part of the
City to exercise any such rights and remedies shall operate as a waiver thereof, nor shall any
single or partial exercise by the City of any such right or remedy preclude any other or further
exercise of such right or remedy, or any other right or remedy.
Section 5.4 Waiver of Terms and Conditions.
The City's Housing and Redevelopment Director may at his or her discretion waive in
writing any of the obligations of the Developer under this Agreement, without the Developer
completing an amendment to this Agreement. No waiver of any default or breach by Developer
hereunder shall be implied from any omission by the City to take action on account of such
default if such default persists or is repeated, and no express waiver shall affect any default other
than the default specified in the waiver, and such waiver shall be operative only for the time and
to the extent therein stated. Waivers of any covenant, term, or condition contained herein shall
not be construed as a waiver of any subsequent breach of the same covenant, term, or condition.
The consent or approval by the City to or of any act by the Developer requiring further consent
or approval shall not be deemed to waive or render unnecessary the consent or approval to or of
any subsequent similar act. The exercise of any right, power, or remedy shall in no event
constitute a cure or a waiver of any default under this Agreement or the Loan Documents, nor
shall it invalidate any act done pursuant to notice of default, or prejudice the City in the exercise
of any right, power, or remedy hereunder or under the Loan Documents, unless in the exercise of
any such right, power, or remedy all obligations of the Developer to City are paid and discharged
in full.
October 25, 2000 17
ARTICLE 6. REPRESENTATIONS AND WARRANTIES OF DEVELOPER
Section 6.1 Representations and Warranties.
Developer hereby represents and warrants to the City as follows:
(a) Organization. Developer is duly organized, validly existing and in good
standing under the laws of the State of California and has the power and authority to own its
property and carry on its business as now being conducted.
(b) Authority of Developer. Developer has full power and authority to
execute and deliver this Agreement and to make and accept the borrowings contemplated
hereunder, to execute and deliver the City Loan Documents and all other documents or
instruments executed and delivered, or to be executed and delivered, pursuant to this Agreement,
and to perform and observe the terms and provisions of all of the above.
(c) Authority of Persons Executing Documents. This Agreement and the
Loan Documents and all other documents or instruments executed and delivered, or to be
executed and delivered, pursuant to this Agreement have been executed and delivered by persons
who are duly authorized to execute and deliver the same for and on behalf of Developer, and all
actions required under Developer's organizational documents and applicable governing law for
the authorization, execution, delivery and performance of this Agreement and the Loan
Documents and all other documents or instruments executed and delivered, or to be executed and
delivered, pursuant to this Agreement, have been duly taken.
( d) Valid Binding Agreements. This Agreement and the Loan Documents and
all other documents or instruments which have been executed and delivered pursuant to or in
connection with this Agreement constitute or, if not yet executed or delivered, will when so
executed and delivered constitute, legal, valid and binding obligations of Developer enforceable
against it in accordance with their respective terms.
(e) No Breach of Law or Agreement. Neither the execution nor delivery of
this Agreement and the Loan Documents or of any other documents or instruments executed and
delivered, or to be executed or delivered, pursuant to this Agreement, nor the performance of any
provision, condition, covenant or other term hereof or thereof, will conflict with or result in a
breach of any statute, rule or regulation, or any judgment, decree or order of any court, board,
commission or agency whatsoever binding on Developer, or any provision of the organizational
documents of Developer, or will conflict with or constitute a breach of or a default under any
agreement to which Developer is a party, or will result in the creation or imposition of any lien
upon any assets or property of Developer, other than liens established pursuant hereto.
October 25, 2000 18
(f) Pending Proceedings. Developer is not in default under any law or
regulation or under any order of any court, board, commission or agency whatsoever, and there
are no claims, actions, suits or proceedings pending or, to the knowledge of Developer,
threatened against or affecting Developer or the Affordable Development, at law or in equity,
before or by any court, board, commission or agency whatsoever which might, if determined
adversely to Developer, materially affect Developer's ability to repay the City Loan or impair the
security to be given to the City pursuant hereto.
(g) Financial Statements. The financial statements of Developer and other
financial data and information furnished by Developer to the City fairly present the information
contained therein. As of the date ofthis Agreement, there has not been any adverse, material
change in the financial condition of Developer from that shown by such financial statements and
other data and information.
(h) Sufficient Funds. Developer holds sufficient funds and/or binding
commitments for sufficient funds to complete the construction of Affordable Development in
accordance with the plans and specifications approved by the City.
ARTICLE 7. GENERAL PROVISIONS
Section 7.1 Relationship of Parties.
Nothing contained in this Agreement shall be interpreted or understood by any of the
Parties, or by any third persons, as creating the relationship of employer and employee, principal
and agent, limited or general partnership, or joint venture between the City and the Developer or
its agents, employees or contractors, and the Developer shall at all times be deemed an
independent contractor and shall be wholly responsible for the manner in which it or its agents,
or both, perform the services required ofit by the terms of this Agreement. The Developer has
and retains the right to exercise full control of employment, direction, compensation, and
discharge of all persons assisting in the performance of services under the Agreement. In regards
to the construction of the Improvements and sale of the Units, the Developer shall be solely
responsible for all matters relating to payment of its employees, including compliance with
Social Security, withholding, and all other laws and regulations governing such matters, and
shall include requirements in each contract that contractors shall be solely responsible for similar
matters relating to their employees. The Developer shall be solely responsible for its own acts
and those of its agents and employees.
Section 7 .2 No Claims.
Nothing contained in this Agreement shall create or justify any claim against the City by
any person that the Developer may have employed or with whom the Developer may have
contracted relative to the purchase of materials, supplies or equipment, or the furnishing or the
performance of any work or services with respect to the construction or sale of the Affordable
Units, and the Developer shall include similar requirements in any contracts entered into for the
construction or sale of the Affordable Units.
October 25, 2000 19
Section 7 .3 Amendments.
No alteration or variation of the terms of this Agreement shall be valid unless made in
writing by the Parties.
Section 7.4 Indemnification.
Developer shall indemnify, defend, 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 "Indemnitees"), and any of them, from and against all loss, all risk of
loss and all damage (including expense and attorneys fees) 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 of obtained, allegedly caused by,
arising out of or relating in any manner to Developer's actions or defaults pursuant to this
Agreement, or construction of the Development and sale of any Units, and shall protect and
defend Indemnitees, and any of them with respect thereto. The provisions of this Section 7.4
shall survive the expiration of the Term or the termination of this Agreement.
Section 7.5 Non-Liability of City Officials. Employees and Agents.
No member, official, employee or agent of the City shall be personally liable to the
Developer in the event of any default or breach by the City or for any amount which may become
due to the Developer or its successor or on any obligation under the terms of this Agreement.
Section 7 .6 No Third Party Beneficiaries.
There shall be no third party beneficiaries to this Agreement.
Section 7. 7 Discretion Retained By City.
The City's execution of this Agreement in no way limits the discretion of the City in the
permit and approval process in connection with the Development.
Section 7 .8 Notices. Demands and Communications.
Formal notices, demands, and communications between the Parties shall be sufficiently
given if and shall not be deemed given unless dispatched by registered or certified mail, postage
prepaid, return receipt requested, or delivered by express delivery service, return receipt
requested, or delivered personally, to the principal office of the Parties as follows:
City:
City of Carlsbad
Housing and Community Development Department
2965 Roosevelt Street, Suite B
Carlsbad, CA 92008-2389
Attention: Housing and Redevelopment Director
October 25, 2000 20
Developer:
Continental Homes Inc.
Attn: David Lother, Vice President, Development
2237 Faraday, Suite 100
Carlsbad, CA 92008
Such written notices, demands and communications may be sent in the same manner to
such other addresses as the affected Party may from time to time designate by mail as provided
in this Section 7.8. Receipt shall be deemed to have occurred on the date shown on a written
receipt as the date of delivery or refusal of delivery (or attempted delivery if undeliverable).
Section 7.9 Applicable Law.
This Agreement shall be governed by California law.
Section 7 .10 Parties Bound; Covenants Running with the Land.
Except as otherwise limited herein, the provisions of this Agreement shall be binding
upon and inure to the benefit of the Parties and their heirs, executors, administrators, legal
representatives, successors, and assigns. This Agreement is intended to run with the land and
shall bind the Developer and its successors and assigns in the Affordable Development Property
and the Development for the entire Term, and the benefit hereof shall inure to the benefit of the
City and its successors and assigns.
Section 7.11 Severability.
If any term of this Agreement is held by a court of competent jurisdiction to be invalid,
void or unenforceable, the remainder of the provisions shall continue in full force and effect
unless the rights and obligations of the Parties have been materially altered or abridged by such
invalidation, voiding or unenforceability.
Section 7.12 Force Majeure.
In addition to specific provisions of this Agreement, performance by either Party shall not
be deemed to be in default where delays or defaults are due to war; insurrection; strikes; lock-
outs; riots; floods; earthquakes; fires; quarantine restrictions; freight embargoes; lack of
transportation; third party lawsuit; or court order; or any other similar causes beyond the control
or without the fault of the Party claiming an extension of time to perform (but not including any
inability by Developer to secure financing). An extension of time for any such cause shall be for
the period of the enforced delay and shall commence to run from the time of the commencement
of the cause. If, however, notice by the party claiming such extension is sent to the other party
more than thirty (30) days after the commencement of the cause, the period shall commence to
run only thirty (30) days prior to the giving of such notice.
October 25, 2000 21
Section 7 .13 Approvals.
Whenever this Agreement calls for City approval, consent, or waiver, the written
approval, consent, or waiver of the City's Housing and Redevelopment Director shall constitute
the approval, consent, or waiver of the City, without further authorization required from the City
Council. The City hereby authorizes the City's Housing and Redevelopment Director to deliver
such approvals or consents as are required by this Agreement, or to waive requirements under
this Agreement, on behalf of the City.
Section 7 .14 Title of Parts and Sections.
Any titles of the sections or subsections of this Agreement are inserted for convenience of
reference only and shall be disregarded in interpreting any part of the Agreement's provisions.
Section 7.15 Entire Understanding of the Parties.
This Agreement constitutes the entire understanding and agreement of the Parties with
respect to the Loan.
Section 7 .16 Multiple Originals: Counterpart.
This Agreement may be executed in multiple originals, each of which is deemed to be an
original, and may be signed in counterparts.
October 25, 2000 22
Section 7 .1 7 Time of the Essence.
Time is of the essence in this Agreement.
IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date first
above written.
DEVELOPER:
Continental Residential, Inc., a California
corporation, formerly known as L & W
Investments, Inc., a California corporation,
successor by merger to Continental Ranch Inc.,
a Delaware corporation L2£L
By:~~~
Name: l>AV!D A, /...cT ~
(print or type)
Its: V lCE Pl2ce$ •
By: ~~
Name: Lo.-r-.. Cc✓½;
(print or type)
Its: \) p
CITY:
CITY OF CARLSBAD, a municipal corporation
A~test:
B: ~ ~~
~M.WOOD ,
City Clerk
(Proper notarial acknowledgment of execution by Developer must be attached)
Chairman, president or vice-president and secretary, assistant secretary, CFO or assistant treasurer
must sign for corporations. Otherwise, the corporation must attach a resolution certified by the secretary
or assistant secretary under corporate seal empowering the officer(s) signing to bind the corporation.)
October 25, 2000 23
STATE OF CALIFORNIA )
)ss
COUNTY OF ~ O\~ )
On Qc.,-\-D~ "l 1 , 2000, before me, the undersigned, a Notary Public, personally appeared
DA\li ,J, A , l,p:t'ru>v , personally known to me ~er pro. ed te me Oft tho eesis of
satisfaGtef)' eviaofteo~ to be the personvr) whose name'8'.J isl.are-subscribed to the within
instrument, and acknowledged to me that he/shefthey executed the same in his/l½er/1:ftoir
authorized capacity(.i.esj, and that by his/Her/theit ::.ignature'-81 on the instrument the person(.81, or
the entity upon behalf of which the person(.87 acted, executed the instrument.
WITNESS my hand and official seal.
STATE OF CALIFORNIA )
)ss
COUNTY OF~ lli~)
On Oo\:J:bt.v 21 , 2000, before me, the undersigned, a Notary Public, personally appeared
~ ~~ , personally known to me ( et:-fJff'l. cd to me on the bt1:sis of ;c •:y= ce}to be the personW whose name(>J1is/a,e-subscribed to the within
instrument, and acknowledged to me that he/skelthoy executed the same in hi&/heu'tlreir
authorized capacity(ie&), and that by his/her/their signature(-a, on the instrument the personfaj, or
the entity upon behalf of which the person(g) acted, executed the instrument.
WITNESS my hand and official seal.
October 25, 2000 24
1············i -a Com~~i=1801 i Notary Pubric -CcITfomla f
'~ .... ,..~~DiegoCoun1y f ~~~~2!!3
EXHIBIT A
LEGAL DESCRIPTION OF THE AFFORDABLE DEVELOPMENT PROPERTY
1010\03\111527.3 A-1
ORDER NO.: 1194836-6
LEGAL DESCRIPTION
PARCEL 1:
AN UNDIVIDED FRACTIONAL INTEREST AS TENANT IN COMMON IN AND TO THE
BUILDING ENVELOPE IN WHICH THE LIVING UNIT DESCRIBED IN PARCEL lA BELOW IS
LOCATED EQUAL TO THE RECIPROCAL OF THE NUMBER OF LIVING UNITS WITHIN THAT
BUILDING ENVELOPE; BEING A PORTION OF LOT 1 OF CITY OF CARLSBAD TRACT 98-15
RANCHO CARRILLO VILLAGE "B", ACCORDING TO MAP THEREOF NO. 14002, FILED WITH
THE COUNTY RECORDER OF SAN DIEGO COUNTY, CALIFORNIA ON JULY 18, 2000.
EXCEPTING THEREFROM EACH LIVING UNIT LOCATED WITHIN SUCH BUILDING
ENVELOPE, AS SHOWN ON THE CONDOMINIUM PLAN DESCRIBED IN PARCEL lA BELOW;
RESERVING THEREFROM THE EXCLUSIVE RIGHT TO POSSESSION AND USE OF ANY
EXCLUSIVE USE AREA SHOWN ON THE CONDOMINIUM PLAN DESCRIBED IN PARCEL lA
BELOW.
FURTHER RESERVING THEREFROM ALL THE RIGHTS AND EASEMENTS SET FORTH IN THE
DECLARATION OF RESTRICTIONS FOR SERRANO AT RANCHO CARRILLO RECORDED
OCTOBER 5, 2000 AS FILE NO. 2000-0534957 OF OFFICIAL RECORDS (THE "DECLARATION")
AND THE MASTER DECLARATION OF RESTRICTIONS FOR RANCHO CARRILLO RECORDED
JUNE 17, 1998 AS FILE NO. 1998-0369115 OF OFFICIAL RECORDS (THE "MASTER
DECLARATION"), INCLUDING, BUT NOT LIMITED TO THE EASEMENTS FOR INGRESS,
EGRESS AND GENERAL UTILITY PURPOSES AND GRANTOR'S RIGHT AND EASEMENTS TO
CONSTRUCT AND MARKET RESIDENCES AND CONSTRUCT RELATED IMPROVEMENTS.
PARCEL lA:
LIVING UNIT NOS. 1 THROUGH 17, 28 THROUGH 41, 47 THROUGH 68 AND 74 THROUGH 78,
AS SHOWN UPON THE CONDOMINIUM PLAN RECORDED OCTOBER 5, 2000 AS DOCUMENT
NO. 2000-0534956 OF OFFICIAL RECORDS OF SAN DIEGO COUNTY, CALIFORNIA (THE
"CONDOMINIUM PLAN").
RESERVING FROM PARCEL lA ALL RIGHTS AND EASEMENTS FOR SET FORTH IN THE
DECLARATION AND THE MASTER DECLARATION.
PARCEL lB:
NON-EXCLUSIVE APPURTENANT EASEMENTS IN AND TO THE ASSOCIATION PROPERTY
NOW OR HEREAFTER OWNED BY THE ASSOCIATION AS SET FORTH IN THE DECLARATION.
"ASSOCIATION PROPERTY" IS DEFINED IN THE DECLARATION; "ASSOCIATION" IS DEFINED
AS SERRANO AT RANCHO CARRILLO ASSOCIATION, A CALIFORNIA NONPROFIT MUTUAL
BENEFIT CORPORATION.
PARCEL lC:
THE EXCLUSIVE RIGHT TO USE ANY EXCLUSIVE USE AREA SHOWN ON THE
CONDOMINIUM PLAN AS BEING APPURTENANT TO THE LIVING UNIT DESCRIBED IN
PARCEL lA ABOVE.
PARCEL 2:
AN UNDIVIDED FRACTIONAL INTEREST AS TENANT IN COMMON IN AND TO THE
BUILDING ENVELOPE IN WHICH THE LIVING UNIT DESCRIBED IN PARCEL 2A BELOW IS
LOCATED EQUAL TO THE RECIPROCAL OF THE NUMBER OF LIVING UNITS WITHIN THAT
BUILDING ENVELOPE; BEING A PORTION OF LOT 2 OF CITY OF CARLSBAD TRACT 98-15
RANCHO CARRILLO VILLAGE "B", ACCORDING TO MAP THEREOF NO. 14002, FILED WITH
THE COUNTY RECORDER OF SAN DIEGO COUNTY, CALIFORNIA ON nJLY 18, 2000.
EXCEPTING THEREFROM EACH LIVING UNIT LOCATED WITHIN SUCH BUILDING
ENVELOPE, AS SHOWN ON THE CONDOMINIUM PLANS DESCRIBED IN PARCEL 2A BELOW;
RESERVING THEREFROM THE EXCLUSIVE RIGHT TO POSSESSION AND USE OF ANY
EXCLUSIVE USE AREA SHOWN ON THE CONDOMINIUM PLANS DESCRIBED IN PARCEL 2A
BELOW.
FURTHER RESERVING THEREFROM ALL THE RIGHTS AND EASEMENTS SET FORTH IN THE
DECLARATION OF RESTRICTIONS FOR SERRANO AT RANCHO CARRILLO RECORDED
OCTOBER 5, 2000 AS FILE NO. 2000-0534957 OF OFFICIAL RECORDS {THE "DECLARATION")
AND THE MASTER DECLARATION OF RESTRICTIONS FOR RANCHO CARRILLO RECORDED
JUNE 17, 1998 AS FILE NO. 1998-0369115 OF OFFICIAL RECORDS (THE "MASTER
DECLARATION"), INCLUDING, BUT NOT LIMITED TO THE EASEMENTS FOR INGRESS,
EGRESS AND GENERAL UTILITY PURPOSES AND GRANTOR'S RIGHT AND EASEMENTS TO
CONSTRUCT AND MARKET RESIDENCES AND CONSTRUCT RELATED IMPROVEMENTS.
PARCEL2A:
LIVING UNIT NOS. 88 THROUGH 92 AND 98 THROUGH 124, AS SHOWN UPON THE SERRANO
CONDOMINIUM PLANS (LOT 2 OF CT 98-15) RECORDED /2. -<, , 2000 AS DOCUMENT NO.
2000-0"'!>2-S3 OF OFFICIAL RECORDS OF SAN DIEGO COUNTY, CALIFORNIA (THE
"CONDOMINIUM PLANS").
RESERVING FROM PARCEL 2A ALL RIGHTS AND EASEMENTS FOR SET FORTH IN THE
DECLARATION AND THE MASTER DECLARATION.
PARCEL2B:
NON-EXCLUSIVE APPURTENANT EASEMENTS IN AND TO THE ASSOCIATION PROPERTY
NOW OR HEREAFTER OWNED BY THE ASSOCIATION AS SET FORTH IN THE DECLARATION.
"ASSOCIATION PROPERTY" IS DEFINED IN THE DECLARATION; "ASSOCIATION" IS DEFINED
AS SERRANO AT RANCHO CARRILLO ASSOCIATION, A CALIFORNIA NONPROFIT MUTUAL
BENEFIT CORPORATION.
PARCEL2C:
THE EXCLUSIVE RIGHT TO USE ANY EXCLUSIVE USE AREA SHOWN ON THE
CONDOMINIUM PLAN AS BEING APPURTENANT TO THE LIVING UNIT DESCRIBED IN
PARCEL 2A ABOVE.
EXHIBITB
FORM OF THE DEVELOPER NOTE
1010\03\111527.3 B-1
PROMISSORY NOTE
$1,350,000 Carlsbad, California
March 1 ,2001
FOR VALUE RECEIVED, the undersigned Continental Residential, Inc., a California
corporation, formerly known as L & W Investments, Inc., a California corporation, successor by
merger to Continental Ranch Inc., a Delaware corporation (the "Developer"), hereby promises to
pay to the order of the City of Carlsbad, a municipal corporation (the "Holder"), a principal
amount equal to One Million Three Hundred Fifty Thousand Dollars ($1,350,000), or so much
thereof as is advanced by the Holder to the Developer pursuant to the Loan Agreement between
the Developer and the Holder dated as of March 1 , 200il (the "Agreement"). All
capitalized terms not otherwise defined in this Note shall have the meanings set forth in the
Agreement.
1. Interest; Repayment Terms. The indebtedness evidenced by this Note
shall not bear interest; provided, however, if a default occurs hereunder, the principal amount of
this Note shall bear interest commencing on the date of default at the default rate equal to the
lesser of (i) ten percent (10%) per annum, compounded annually, or (ii) the maximum interest
rate permitted by law. The Note shall be due and payable at the times and in the manner set forth
in Section 2.8 of the Agreement.
2. No Assumption. Except as provided in Section 4.9 of the Agreement,
this Note shall not be assumable by the successors and assigns of Developer without the prior
written consent of the City.
3. Terms of Payment.
a. All payments due under this Note shall be paid in currency of the
United States of America, which at the time of payment is lawful for the payment of public and
private debts.
b. All payments on this Note shall be paid to Holder at the Housing
and Community Development Department, City of Carlsbad, 2965 Roosevelt Street, Suite B,
Carlsbad, CA 92008, Attn: Housing and Redevelopment Director, or to such other place as the
Holder of this Note may from time to time designate.
c. All payments on this Note shall be without expense to the Holder,
and the Developer agrees to pay all costs and expenses, including re-conveyance fees and
reasonable attorney's fees of the Holder, incurred in connection with the payment of this Note
and the release of any security hereof.
4. Acceleration. Upon the occurrence of a Default (as defined
in the Loan Agreement), the City shall have the right to accelerate the debt evidenced by this
October 25, 2000
Note and declare all of the unpaid principal and interest, if any, immediately due and payable.
Upon the occurrence of a Default, the outstanding portion of the principal shall bear interest at
the rate of the lesser of (i) ten percent (10%) per annum, compounded annually, or (ii) the
maximum interest rate permitted by law. 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, the Deed of Trust, and the Loan Agreement. 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 balance owed.
5. No Offset. The Developer hereby waives any rights of offset it now
has or may hereafter have against the City, its successors and assigns, and agrees to make the
payments called for herein in accordance with the terms of this Note and the Loan Agreement.
6. Waiver; Attorneys' Fees. Developer, for itself, its heirs, legal
representatives, successors and assigns, respectively, waives diligence, presentment, protest, and
demand, and notice of protest, dishonor and non-payment of this Note, and expressly waives 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 waives
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 agrees to pay all costs of collection when incurred, including
reasonable attorneys' fees. If an action is instituted on this Note, the undersigned promises to
pay, in addition to the costs and disbursements allowed by law, such sum as a court may adjudge
reasonable as attorneys' fees in such action.
7. Security. This Note is secured by a Deed of Trust and Security
Agreement (the "Developer Deed of Trust"), of even date herewith, wherein the Developer is the
Trustor and the Holder is the Beneficiary, constituting a lien against the Affordable
Development.
8. Miscellaneous Provisions.
a. All notices to the Holder or the Developer shall be given in the
manner and at the addresses set forth in the Agreement, or to such addresses as the Holder and
the Developer may hereinafter designate.
b. This Note may not be changed orally, but only by an agreement in
writing signed by the party against whom enforcement of any waiver, change, modification or
discharge is sought.
c. This Note shall be governed by and construed in accordance with
the laws of the State of California.
d. The times for the performance of any obligations hereunder shall
be strictly construed, time being of the essence.
October 25, 2000 2
e. This document, together with the other Loan Documents, contains
the entire agreement between the parties as to the City Loan. It may not be modified except upon
written consent of the parties.
Developer:
Continental Residential, Inc.,
a California corporation, fonnerly known as L & W
Investments, Inc., a California corporation, successor by
merger to Continental Ranch Inc., a Delaware corporation
By: ~/1-~
Name
(print or type)
Title:
By:
Name
(print or
Title:
{Chairman, president or vice-president and secretary, assistant secretary, CFO or assistant treasurer
must sign for corporations. Otherwise, the corporation must attach a resolution certified by the
secretary or assistant secretary under corporate seal empowering the officer(s) signing to bind the
corporation.)
October 25, 2000 3
STATE OF CALIFORNIA )
) ss
COUNTY OF~:())~
On ()cl:t,\).(..,y Z..1,:Z,voo , before me, \t>V\\ (Ay..\cx-1 \'\t>-\1..,Vij , personally appeared
Oo. vi~ A . ~ .;_ LAY r'1 uyk, '> , personally known to me ( 0f l'ro~.·ea to m0 eB the basis
af satisfaotory evidence) to be the person(s) whose name(s) ~/are subscribed to the within
instrument and acknowledged to me that Refflftelthey executed the same in lttsi'hor/their
authorized capacity(ies), and that by 1:Hs4ler/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.
~(}pcfr3
October 25, 2000 4
EXHIBITC
FORM OF THE DEVELOPER DEED OF TRUST
1010\03\111527.3 C-1
RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:
City of Carlsbad
City Clerk's Office
1200 Carlsbad Village Drive
Carlsbad, CA 92008
Attention: City Clerk
No fee for recording pursuant to
Government Code Section 27383
(Space above for Recorder's Use)
DEED OF TRUST AND SECURITY AGREEMENT
TillS DEED OF TRUST AND SECURITY AGREEMENT ("Deed of Trust") is made as
of this 1st day of March , 20011, by and among Continental Residential, Inc.,
a California corporation, formerly known as L & W Investments, Inc., a California corporation,
successor by merger to Continental Ranch Inc., a Delaware corporation("Trustor"),
First American Title , a California Company ("Trustee"), and the
City of Carlsbad, a municipal corporation ("Beneficiary").
FOR GOOD AND VALUABLE CONSIDERATION, including the indebtedness herein
recited and the trust herein created, the receipt of which is hereby acknowledged, Trustor hereby
irrevocably grants, transfers, conveys and assigns to Trustee, IN TRUST, WITH POWER OF
SALE, for the benefit and security of Beneficiary, under and subject to the terms and conditions
hereinafter set forth, Trustor's fee interest in the property located in the City of Carlsbad, County
of San Diego, State of California, that is described in the attached Exhibit A, incorporated herein
by this reference (the "Property").
TOGETHER WITH all interest, estates or other claims, both in law and in equity which
Trustor now has or may hereafter acquire in the Property and the rents;
TOGETHER WITH all easements, rights-of-way and rights used in connection therewith
or as a means of access thereto, including (without limiting the generality of the foregoing) all
tenements, hereditaments and appurtenances thereof and thereto;
TOGETHER WITH any and all buildings and improvements of every kind and
description now or hereafter erected thereon, and all property of the Trustor now or hereafter
affixed to or placed upon the Property;
TOGETHER WITH all building materials and equipment now or hereafter delivered to
said property and intended to be installed therein;
TOGETHER WITH all estate, interest, right, title, other claim or demand, of
every nature, in and to such property, including the Property, both in law and in equity,
including, but not limited to, all deposits made with or other security given by Trustor to utility
companies, the proceeds from any or all of such property, including the Property, claims or
October 25, 2000
demands with respect to the proceeds of insurance in effect with respect thereto, which Trustor
now has or may hereafter acquire, any and all awards made for the taking by eminent domain or
by any proceeding or purchase in lieu thereof of the whole or any part of such property,
including without limitation, any awards resulting from a change of grade of streets and awards
for severance damages to the extent Beneficiary has an interest in such awards for taking as
provided in Paragraph 4.1 herein; and
TOGETHER WITH all of Trustor's interest in 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
therefor, whether or not the same are, or shall be attached to said building or buildings in any
manner.
TOGETHER WITH all ofTrustor's interest in all building materials, fixtures, equipment,
work in process and other personal property to be incorporated into the Property; all goods,
materials, supplies, fixtures, equipment, machinery, furniture and furnishings, signs and other
personal property now or hereafter appropriated for use on the Property, whether stored on the
Property or elsewhere, and used or to be used in connection with the Property; all rents, issues
and profits, and all inventory, accounts, accounts receivable, contract rights, general intangibles,
chattel paper, instruments, documents, notes drafts, letters of credit, insurance policies, insurance
and condemnation awards and proceeds, trade names, trademarks and service marks arising from
or related to the Property and any business conducted thereon by Trustor; all replacements,
additions, accessions and proceeds; and all books, records and files relating to any of the
foregoing.
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.
FOR THE PURPOSE OF SECURING:
(a) Payment of the indebtedness ofTrustor to Beneficiary as set forth in the Note
(defined in Article 1 below) until paid or canceled. Said principal and other payments shall be
due and payable as provided in the Note. Said Note and all its terms are incorporated herein by
reference, and this conveyance shall secure any and all extensions thereof, however evidenced;
and
(b) Payment of any sums advanced by Beneficiary to protect the Security pursuant to
the terms and provisions of this Deed of Trust following a breach ofTrustor's obligation to
advance said sums and the expiration of any applicable cure period, with interest thereon as
provided herein; and
October 25. 2000 2
(c) Performance of every obligation, covenant or agreement ofTrustor contained
herein and in the Loan Documents (defined in Section 1.3 below).
AND TO PROTECT THE SECURITY OF THIS DEED OF TRUST, TRUSTOR
COVENANTS AND AGREES:
ARTICLE 1
DEFINITIONS
In addition to the terms defined elsewhere in this Deed of Trust, the following terms shall
have the following meanings in this Deed of Trust:
Section 1.1 The term "Affordable Housing Agreement" means that certain Affordable
Housing Agreement Imposing Restrictions on Real Property between the City of Carlsbad and
Continental Ranch Inc., dated March 25, 1999 and recorded as Document No. 1998-0162920 in
the Official Records of San Diego County, and the First Amended and Restated Affordable
Housing Agreement Imposing Restrictions on Real Property dated December 21, 1999, and the
Second Amended and Restated Affordable Housing Agreement Imposing Restrictions on Real
Property dated January 20, 2000.
Section 1.2 The term "Loan Agreement" means that certain Loan Agreement between
Trustor and Beneficiary, dated March 1 , 2000 providing for the Beneficiary to loan to the
Trustor One Million Three Hundred Fifty Thousand Dollars ($1,350,000) for the construction of
improvements on the Property.
Section 1.3 The term "Loan Documents" means this Deed of Trust, the Note, the Loan
Agreement, and the Affordable Housing Agreement and any other debt, loan or security
instruments between Trustor and the Beneficiary relating to the Property.
Section 1.4 The term "Note" means the promissory note in the principal amount of
One Million Three Hundred Fifty Thousand Dollars ($1,350,000) of even date herewith executed
by the Trustor in favor of the Beneficiary, the payment of which is secured by this Deed of Trust.
(A copy of the Note is on file with the Beneficiary and terms and provisions of the Note are
incorporated herein by this reference.)
Section 1.5 The term "Principal" means all amounts (including interest) required to be
paid under the Note.
October 25, 2000 3
ARTICLE2
MAINTENANCE AND MODIFICATION OF THE PROPERTY
AND SECURITY
Section 2.1 Maintenance and Modification of the Property by Trustor.
The Trustor agrees that at all times prior to full payment of the sum owed under the Note,
the Trustor will, at the Trustor's own expense, maintain, preserve and keep the Security or cause
the Security to be maintained and preserved in good condition. The Trustor will from time to
time make or cause to be made all repairs, replacements and renewals deemed proper and
necessary by it. The Beneficiary shall have no responsibility in any of these matters or for the
making of improvements or additions to the Security.
Trustor agrees to pay fully and discharge ( or cause to be paid fully and discharged) all
claims for labor done and for material and services furnished in connection with the Security,
diligently to file or procure the filing of a valid notice of cessation upon the event of a cessation
of labor on the work or construction on the Security for a continuous period of thirty (30) days or
more, and to take all other reasonable steps to forestall the assertion of claims of lien against the
Security or any part thereof. Trustor irrevocably appoints, designates and authorizes Beneficiary
as its agent (said agency being coupled with an interest) with the authority, but without any
obligation, to file for record any notices of completion or cessation of labor or any other notice
that Beneficiary deems necessary or desirable to protect its interest in and to the Security or the
Loan Documents; provided, however, that Beneficiary shall exercise its rights as agent of Trustor
only in the event that Trustor shall fail to take, or shall fail to diligently continue to take, those
actions as hereinbefore provided.
Upon demand by Beneficiary, Trustor shall make or cause to be made such demands or
claims as Beneficiary shall specify upon laborers, materialmen, subcontractors or other persons
who have furnished or claim to have furnished labor, services or materials in connection with the
Security. Nothing herein contained shall require Trustor to pay any claims for labor, materials or
services which Trustor in good faith disputes and is diligently contesting provided that Trustor
shall, within thirty (30) days after the filing of any claim of lien, record in the Office of the
Recorder of San Diego County, a surety bond in an amount 1 and 1/2 times the amount of such
claim item to protect against a claim of lien.
Section 2.2 Granting of Easements.
Trustor may not grant easements, licenses, rights-of-way or other rights or privileges in
the nature of easements with respect to any property or rights included in the Security except
those required or desirable for installation and maintenance of public utilities including, without
limitation, water, gas, electricity, sewer, telephone and telegraph, or those required by law. As to
these exceptions, Beneficiary will grant and/or direct the Trustee to grant such easements .
October 25, 2000 4 •
ARTICLE3
TAXES AND INSURANCE; ADVANCES
Section 3.1 Taxes, Other Governmental Charges and Utility Charges.
Trustor shall pay, or cause to be paid, at least fifteen (15) days prior to the date of
delinquency, all taxes, assessments, charges and levies imposed by any public authority or utility
company which are or may become a lien affecting the Security or any part thereof; provided,
however, that Trustor shall not be required to pay and discharge any such tax, assessment, charge
or levy so long as (a) the legality thereof shall be promptly and actively contested in good faith
and by appropriate proceedings, and (b) Trustor maintains reserves adequate to pay any liabilities
contested pursuant to this Section 3.1. With respect to taxes, special assessments or other similar
governmental charges, Trustor shall pay such amount in full prior to the attachment of any lien
therefor on any part of the Security; provided, however, if such taxes, assessments or charges
may be paid in installments, Trustor may pay in such installments. Except as provided in clause
(b) of the first sentence of this paragraph, the provisions of this Section 3.1 shall not be construed
to require that Trustor maintain a reserve account, escrow account, impound account or other
similar account for the payment of future taxes, assessments, charges and levies.
In the event that Trustor shall fail to pay any of the foregoing items required by this
Section to be paid by Trustor, Beneficiary may (but shall be under no obligation to) pay the
same, after the Beneficiary has notified the Trustor of such failure to pay and the Trustor fails to
fully pay such items within seven (7) business days after receipt of such notice. Any amount so
advanced therefore by Beneficiary, together with interest thereon from the date of such advance
at the maximum rate permitted by law, shall become an additional obligation ofTrustor to the
Beneficiary and shall be secured hereby, and Trustor agrees to pay all such amounts.
Section 3.2 Provisions Respecting Insurance.
Trustor agrees to provide insurance conforming in all respects to that required under the
Loan Documents during the course of construction and following completion, and at all times
until all amounts secured by this Deed of Trust have been paid and all other obligations secured
hereunder fulfilled, and this Deed of Trust reconveyed.
All such insurance policies and coverages shall be maintained at Trustor's sole cost and
expense. Certificates of insurance for all of the above insurance policies, showing the same to be
in full force and effect, shall be delivered to the Beneficiary upon demand therefore at any time
prior to the Beneficiary's receipt of the entire Principal and all amounts secured by this Deed of
Trust.
Section 3.3 Advances.
In the event the Trustor shall fail to maintain the full insurance coverage required by this
Deed of Trust or shall fail to keep the Security in accordance with the Loan Documents, the
Beneficiary, after at least seven (7) days prior notice to Beneficiary, may (but shall be under no
obligation to) take out the required policies of insurance and pay the premiums on the same or
October 25, 2000 5
may make such repairs or replacements as are necessary and provide for payment thereof; and all
amounts so advanced therefore by the Beneficiary shall become an additional obligation of the
Trustor to the Beneficiary (together with interest as set forth below) and shall be secured hereby,
which amounts the Trustor agrees to pay on the demand of the Beneficiary, and if not so paid,
shall bear interest from the date of the advance at the lesser of (i) ten percent (10%) per annum or
(ii) the maximum rate permitted by law.
ARTICLE4
DAMAGE, DESTRUCTION OR CONDEMNATION
Section 4.1 Awards and Damages.
All judgments, awards of damages, settlements and compensation made in connection
with or in lieu of ( 1) taking of all or any part of or any interest in the Property by or under
assertion of the power of eminent domain, (2) any damage to or destruction of the Property or in
any part thereof by insured casualty, and (3) any other injury or damage to all or any part of the
Property ( collectively "Funds") are hereby assigned to and shall be paid to the Beneficiary by a
check made payable to the Beneficiary. The Beneficiary is authorized and empowered (but not
required) to collect and receive any Funds and is authorized to apply them in whole or in part
upon any indebtedness or obligation secured hereby, in such order and manner as the Beneficiary
shall determine at its sole option. The Beneficiary shall be entitled to settle and adjust all claims
under insurance policies provided under this Deed of Trust and may deduct and retain from the
proceeds of such insurance the amount of all expenses incurred by it in connection with any such
settlement or adjustment. All or any part of the amounts so collected and recovered by the
Beneficiary may be released to Trustor upon such conditions as the Beneficiary may impose for
its disposition. Application of all or any part of the Funds collected and received by the
Beneficiary or the release thereof shall not cure or waive any default under this Deed of Trust.
The rights of the Beneficiary under this Section 4.1 are subject to the rights of any senior
mortgage lender.
ARTICLES
AGREEMENTS AFFECTING THE PROPERTY; FURTHER
ASSURANCES; PAYMENT OF PRINCIPAL AND INTEREST
Section 5.1 Other Agreements Affecting Property.
The Trustor shall duly and punctually perform all terms, covenants, conditions and
agreements binding upon it under the Loan Documents and any other agreement of any nature
whatsoever now or hereafter involving or affecting the Security or any part thereof.
Section 5.2 Agreement to Pay Attorneys' Fees and Expenses.
In the event of any Event of Default (as defined below) hereunder, and if the Beneficiary
should employ attorneys or incur other expenses for the collection of amounts due or the
enforcement of performance or observance of an obligation or agreement on the part of the
Truster in this Deed of Trust, the Trustor agrees that it will, on demand therefore, pay to the
October 25, 2000 6 • .
Beneficiary the reasonable fees of such attorneys and such other reasonable expenses so incurred
by the Beneficiary; and any such amounts paid by the Beneficiary shall be added to the
indebtedness secured by the lien of this Deed of Trust, and shall bear interest from the date such
expenses are incurred at the lesser often percent (10%) per annum or the maximum rate
permitted by law.
Section 5.3 Payment of the Principal.
The Trustor shall pay to the Beneficiary the Principal and any other payments as set forth
in the Note in the amounts and by the times set out therein.
Section 5.4 Personal Property.
To the maximum extent permitted by law, the personal property subject to this Deed of
Trust shall be deemed to be fixtures and part of the real property and this Deed of Trust shall
constitute a fixtures filing under the California Commercial Code. As to any personal property
not deemed or permitted to be fixtures, this Deed of Trust shall constitute a security agreement
under the California Commercial Code.
Section 5.5 Financing Statement.
The Trustor shall execute and deliver to the Beneficiary such financing statements
pursuant to the appropriate statutes, and any other documents or instruments as are required to
convey to the Beneficiary a valid perfected security interest in the Security. The Trustor agrees
to perform all acts which the Beneficiary may reasonably request so as to enable the Beneficiary
to maintain such valid perfected security interest in the Security in order to secure the payment of
the Note in accordance with its terms. The Beneficiary is authorized to file a copy of any such
financing statement in any jurisdiction(s) as it shall deem appropriate from time to time in order
to protect the security interest established pursuant to this instrument.
Section 5.6 Operation of the Security.
The Trustor shall operate the Security (and, in case of a transfer of a portion of the
Security subject to this Deed of Trust, the transferee shall operate such portion of the Security) in
full compliance with the Loan Documents.
Section 5.7 Inspection of the Security.
At any and all reasonable times upon seventy-two (72) hours' notice to Trustor, the
Beneficiary and its duly authorized agents, attorneys, experts, engineers, accountants and
representatives, shall have the right, without payment of charges or fees, to inspect the Security.
Section 5.8 Nondiscrimination.
The Trustor herein covenants by and for itself, its heirs, executors, administrators, and
assigns, and all persons claiming under or through them, that there shall be no discrimination
October 25, 2000 7
against or segregation of, any person or group of persons on account of race, color, creed,
religion, age, sex, sexual orientation, marital status, national origin or ancestry in the sale,
transfer, use, occupancy, tenure or enjoyment of the Security, nor shall the Trustor itself or any
person claiming under or through it establish or permit any such practice or practices of
discrimination or segregation with reference to the selection, location, number, use or occupancy
of transferees or vendees in the Security. The foregoing covenants shall run with the land.
ARTICLE6
HAZARDOUS WASTE
Trustor shall keep and maintain the Property in compliance with, and shall not cause or
permit the Property to be in violation of any federal, state or local laws, ordinances or regulations
relating to industrial hygiene or to the environmental conditions on, under or about the Property
including, but not limited to, soil and ground water conditions. Trustor shall not use, generate,
manufacture, store or dispose of on, under, or about the Property or transport to or from the
Property any flammable explosives, radioactive materials, hazardous wastes, toxic substances or
related materials, including without limitation, any substances defined as or included in the
definition of "hazardous substances," hazardous wastes," "hazardous materials," or "toxic
substances" under any applicable federal or state laws or regulations (collectively referred to
hereinafter as "Hazardous Materials") except such of the foregoing as may be customarily kept
and used in and about multifamily residential property.
Trustor shall immediately advise Beneficiary in writing if at any time it receives written
notice of (i) any and all enforcement, cleanup, removal or other governmental or regulatory
actions instituted, completed or threatened against Trustor or the Property pursuant to any
applicable federal, state or local laws, ordinances, or regulations relating to any Hazardous
Materials, ("Hazardous Materials Law"); (ii) all claims made or threatened by any third party
against Trustor or the Property relating to damage, contribution, cost recovery compensation,
loss or injury resulting from any Hazardous Materials (the matters set forth in clauses (i) and (ii)
above hereinafter referred to as "Hazardous Materials Claims"); and (iii) Trustor's discovery of
any occurrence or condition on any real property adjoining or in the vicinity of the Property that
could cause the Property or any part thereof to be classified as "border-zone property" under the
provision of California Health and Safety Code, Sections 25220 et seq. or any regulation adopted
in accordance therewith, or to be otherwise subject to any restrictions on the ownership,
occupancy, transferability or use of the Property under any Hazardous Materials Law.
Beneficiary shall have the right to join and participate in, as a party if it so elects, any
legal proceedings or actions initiated in connection with any Hazardous Materials Claims and to
have its reasonable attorneys' fees in connection therewith paid by Trustor. Trustor shall
indemnify and hold harmless Beneficiary and its councilmembers, supervisors, directors,
officers, employees, agents, successors and assigns from and against any loss, damage, cost,
expense or liability directly or indirectly arising out of or attributable to the use, generation,
storage, release, threatened release, discharge, disposal, or presence of Hazardous Materials on,
under, or about the Property including without limitation: (a) all foreseeable consequential
damages; (b) the costs of any required or necessary repair, cleanup or detoxification of the
Property and the preparation and implementation of any closure, remedial or other required
October 25, 2000 8
plans; and ( c) all reasonable costs and expenses incurred by Beneficiary in connection with
clauses (a) and (b), including but not limited to reasonable attorneys' fees.
Without Beneficiary's prior written consent, which shall not be unreasonably withheld,
Trustor shall not take any remedial action in response to the presence of any Hazardous
Materials on, under or about the Property, nor enter into any settlement agreement, consent
decree, or other compromise in respect to any Hazardous Material Claims, which remedial
action, settlement, consent decree or compromise might, in Beneficiary's reasonable judgement,
impair the value of the Beneficiary's security hereunder; provided, however, that Beneficiary's
prior consent shall not be necessary in the event that the presence of Hazardous Materials on,
under, or about the Property either poses an immediate threat to the health, safety or welfare of
any individual or is of such a nature that an immediate remedial response is necessary and it is
not reasonably possible to obtain Beneficiary's consent before taking such action, provided that
in such event Trustor shall notify Beneficiary as soon as practicable of any action so taken.
Beneficiary agrees not to withhold its consent, where such consent is required hereunder, if
either (i) a particular remedial action is ordered by a court of competent jurisdiction, (ii) Trustor
will or may be subjected to civil or criminal sanctions or penalties if it fails to take a required
action; (iii) Trustor establishes to the reasonable satisfaction of Beneficiary that there is no
reasonable alternative to such remedial action which would result in less impairment of
Beneficiary's security hereunder; or (iv) the action has been agreed to by Beneficiary.
The Trustor hereby acknowledges and agrees that (i) this Article is intended as the
Beneficiary's written request for information ( and the Trustor's response) concerning the
environmental condition of the Property as required by California Code of Civil Procedure
Section 726.5, and (ii) each representation and warranty in this Deed of Trust or any of the other
Loan Documents (together with any indemnity applicable to a breach of any such representation
and warranty) with respect to the environmental condition of the property is intended by the
Beneficiary and the Trustor to be an "environmental provision" for purposes of California Code
of Civil Procedure Section 736.
In the event that any portion of the Property is determined to be "environmentally
impaired" (as that term is defined in California Code of Civil Procedure Section 726.5(e)(3)) or
to be an "affected parcel" (as that term is defined in California Code of Civil Procedure Section
726.5( e )(1 )), then, without otherwise limiting or in any way affecting the Beneficiary's or the
Trustee's rights and remedies under this Deed of Trust, the Beneficiary may elect to exercise its
rights under California Code of Civil Procedure Section 726.5(a) to (1) waive its lien on such
environmentally impaired or affected portion of the Property and (2) exercise (a) the rights and
remedies of an unsecured creditor, including reduction of its claim against the Trustor to
judgment, and (b) any other rights and remedies permitted by law. For purposes of determining
the Beneficiary's right to proceed as an unsecured creditor under California Code of Civil
Procedure Section 726.S(a), the Trustor shall be deemed to have willfully permitted or
acquiesced in a release or threatened release of hazardous materials, within the meaning of
California Code of Civil Procedure Section 726.S(d)(l), if the release or threatened release of
hazardous materials was knowingly or negligently caused or contributed to by any lessee,
occupant, or user of any portion of the Property and the Trustor knew or should have known of
the activity by such lessee, occupant, or user which caused or contributed to the release or
October 25. 2000 9
-
threatened release. All costs and expenses, including (but not limited to) reasonable attorneys'
fees, incurred by the Beneficiary in connection with any action commenced under this paragraph,
including any action required by California Code of Civil Procedure Section 726.S(b) to
determine the degree to which the Property is environmentally impaired, plus interest thereon at
the rate specified in the Note until paid, shall be added to the indebtedness secured by this Deed
of Trust and shall be due and payable to the Beneficiary upon its demand made at any time
following the conclusion of such action.
ARTICLE 7
EVENTS OF DEFAULT AND REMEDIES
Section 7.1 Events of Default.
The following shall constitute Events of Default following the expiration of any
applicable notice and cure periods: (1) failure to make any payment to be paid by Trustor under
the Loan Documents; (2) failure to observe or perform any ofTrustor's other covenants,
agreements or obligations under the Loan Documents, including, without limitation, the
provisions concerning discrimination; or (3) failure to make any payment or perform any of
Trustor's other covenants, agreements, or obligations under any other debt instruments or
regulatory agreement secured by the Property, which default shall not be cured within the times
and in the manner provided therein.
Section 7.2 Acceleration of Maturity.
If an Event of Default shall have occurred and be continuing, then at the option of the
Beneficiary, the amount of any payment related to the Event of Default and the unpaid Principal
of the Note shall immediately become due and payable, upon written notice by the Beneficiary to
the Trustor (or automatically where so specified in the Loan Documents), and no omission on the
part of the Beneficiary to exercise such option when entitled to do so shall be construed as a
waiver of such right.
Section 7.3 The Beneficiary's Right to Enter and Take Possession.
If an Event of Default shall have occurred and be continuing, the Beneficiary may:
(a) 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 Event of Default or Notice of Default (as defined below)
hereunder or invalidate any act done in response to such Default or pursuant to such Notice of
Default and, notwithstanding the continuance in possession of the Security, Beneficiary shall be
entitled to exercise every right provided for in this Deed of Trust, or by law upon occurrence of
any Event of Default, including the right to exercise the power of sale;
October 25, 2000 10
(b) Commence an action to foreclose this Deed of Trust as a mortgage, appoint a
receiver, or specifically enforce any of the covenants hereof;
( c) Deliver to Trustee a written declaration of default and demand for sale, and a written
notice of default and election to cause Trustor's interest in the Security to be sold ("Notice of
Default and Election to Sell"), which notice Trustee or Beneficiary shall cause to be duly filed
for record in the Official Records of San Diego County; or
( d) Exercise all other rights and remedies provided herein, in the instruments by which
the Trustor 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.
Section 7.4 Foreclosure By Power of Sale.
Should the Beneficiary elect to foreclose by exercise of the power of sale herein
contained, the Beneficiary shall give notice to the Trustee (the "Notice of Sale") and shall deposit
with Trustee this Deed of Trust which is secured hereby (and the deposit of which shall be
deemed to constitute evidence that the unpaid principal amount of the Note is immediately due
and payable), and such receipts and evidence of any expenditures made that are additionally
secured hereby as Trustee may require.
(a) Upon receipt of such notice from the Beneficiary, Trustee shall cause to be
recorded, published and delivered to Trustor such Notice of Default and Election to Sell as then
required by law and by this Deed of Trust. Trustee shall, without demand on Trustor, after lapse
of such time as may then be required by law and after recordation of such Notice of Default and
Election to Sell and after Notice of Sale having been given as required by law, sell the Security,
at the time and place of sale fixed by it in said Notice of Sale, whether as a whole or in separate
lots or parcels or items as Trustee shall deem expedient and in such order as it may determine
unless specified otherwise by the Trustor according to California Civil Code Section 2924g(b ), at
public auction to the highest bidder, for cash in lawful money of the United States payable at the
time of sale. Trustee shall deliver to such purchaser or purchasers thereof its good and sufficient
deed or deeds conveying the property so sold, but without any covenant or warranty, express or
implied. The recitals in such deed or any matters of facts shall be conclusive proof of the
truthfulness thereof. Any person, including, without limitation, Trustor, Trustee or Beneficiary,
may purchase at such sale, and Trustor hereby covenants to warrant and defend the title of such
purchaser or purchasers.
(b) After deducting all reasonable costs, fees and expenses of Trustee, including costs of
evidence of title in connection with such sale, Trustee shall apply the proceeds of sale to
payment of: (i) the unpaid Principal amount of the Note; (ii) all other amounts owed to
Beneficiary under the Loan Documents; (iii) all other sums then secured hereby; and (iv) the
remainder, if any, to Trustor.
October 25, 2000 11
( c) Trustee may postpone sale of all or any portion of the Property by public
announcement at such time and place of sale, and from time to time thereafter, and without
further notice make such sale at the time fixed by the last postponement, or may, in its discretion,
give a new Notice of Sale.
Section 7.5 Receiver.
If an Event of Default shall have occurred and be continuing, Beneficiary, as a matter of
right and without further notice to Trustor or anyone claiming under the Security, and without
regard to the then value of the Security or the interest ofTrustor therein, shall have the right to
apply to any court having jurisdiction to appoint a receiver or receivers of the Security (or a part
thereof), and Trustor hereby irrevocably consents to such appointment and waives further notice
of any application therefor. Any such receiver or receivers shall have all the usual powers and
duties of receivers in like or similar cases, and all the powers and duties of Beneficiary in case of
entry as provided herein, and shall continue as such and exercise all such powers until the date of
confirmation of sale of the Security, unless such receivership is sooner terminated.
Section 7.6 Remedies Cumulative.
No right, power or remedy conferred upon or reserved to the Beneficiary by this Deed of
Trust is intended to be exclusive of any other right, power or remedy, but each and every such
right, power and remedy shall be cumulative and concurrent and shall be in addition to any other
right, power and remedy given hereunder or now or hereafter existing at law or in equity.
Section 7.7 No Waiver.
(a) No delay or omission of the Beneficiary to exercise any right, power or remedy
accruing upon any Event of Default shall exhaust or impair any such right, power or remedy, or
shall be construed to be a waiver of any such Event of Default or acquiescence therein; and every
right, power and remedy given by this Deed of Trust to the Beneficiary may be exercised from
time to time and as often as may be deemed expeditious by the Beneficiary. No consent or
waiver, expressed or implied, by the Beneficiary to or any breach by the Trustor in the
performance of the obligations hereunder shall be deemed or construed to be a consent to or
waiver of obligations of the Truster hereunder. Failure on the part of the Beneficiary to
complain of any act or failure to act or to declare an Event of Default, irrespective of how long
such failure continues, shall not constitute a waiver by the Beneficiary of its right hereunder or
impair any rights, power or remedies consequent on any Event of Default by the Trustor.
(b) If the Beneficiary (i) grants forbearance or an extension of time for the payment of
any sums secured hereby, (ii) takes other or additional security or the payment of any sums
secured hereby, (iii) waives or does not exercise any right granted in the Loan Documents, (iv)
releases any part of the Security from the lien of this Deed of Trust, or otherwise changes any of
the terms, covenants, conditions or agreements in the Loan Documents, (v) consents to the
-granting of any easement or other right affecting the Security, or (vi) makes or consents to any
agreement subordinating the lien hereof, any such act or omission shall not release, discharge,
modify, change or affect the original liability under this Deed of Trust, or any other obligation of
October 25, 2000 12
the Trustor or any subsequent purchaser of the Security or any part thereof, or any maker, co-
signer, endorser, surety or guarantor (unless expressly released); nor shall any such act or
omission preclude the Beneficiary from exercising any right, power or privilege herein granted
or intended to be granted in any Event of Default then made or of any subsequent Event of
Default, nor, except as otherwise expressly provided in an instrument or instruments executed by
the Beneficiary shall the lien of this Deed of Trust be altered thereby.
Section 7.8 Suits to Protect the Security.
The Beneficiary shall have power to (a) institute and maintain such suits and proceedings
as it may deem expedient to prevent any impairment of the Security and the rights of the
Beneficiary as may be unlawful or any violation of this Deed of Trust, (b) preserve or protect its
interest (as described in this Deed of Trust) in the Security, and (c) restrain the enforcement of or
compliance with any legislation or other governmental enactment, rule or order that may be
unconstitutional or otherwise invalid, if the enforcement of or compliance with such enactment,
rule or order would impair the Security thereunder or be prejudicial to the interest of the
Beneficiary.
Section 7.9 Trustee May File Proofs of Claim.
In the case of any receivership, insolvency, bankruptcy, reorganization, arrangement,
adjustment, composition or other proceedings affecting the Trustor, its creditors or its property,
the Beneficiary, to the extent permitted by law, shall be entitled to file such proofs of claim and
other documents as may be necessary or advisable in order to have the claims of the Beneficiary
allowed in such proceedings and for any additional amount which may become due and payable
by the Trustor hereunder after such date.
Section 7.10 Waiver.
The Trustor waives presentment, demand for payment, notice of dishonor, notice of
protest and nonpayment, protest, notice of interest on interest and late charges, and diligence in
taking any action to collect any sums owing under the Note or in proceedings against the
Security, in connection with the delivery, acceptance, performance, default, endorsement or
guaranty of this Deed of Trust.
Section 8.1
ARTICLE 8
MISCELLANEOUS
Amendments.
This instrument cannot be waived, changed, discharged or terminated orally, but only by
an instrument in writing signed by Beneficiary and Trustor.
October 25, 2000 13
Section 8.2 Reconveyance by Trustee.
Upon written request of Beneficiary stating that all sums secured hereby have been paid
or forgiven, and upon surrender of this Deed of Trust to Trustee for cancellation and retention,
and upon payment by Trustor of Trustee's reasonable fees, Trustee shall reconvey the Security to
Trustor, or to the person or persons legally entitled thereto.
Section 8.3 Notices.
If at any time after the execution of this Deed of Trust it shall become necessary or
convenient for one of the parties hereto to serve any notice, demand or communication upon the
other party, such notice, demand or communication shall be in writing and shall be served
personally or by depositing the same in the registered United States mail, return receipt
requested, postage prepaid and ( 1) if intended for Beneficiary shall be addressed to:
City of Carlsbad
Housing and Community Development Department
2965 Roosevelt Street
Carlsbad, CA 92008-2389
Attn: Housing and Redevelopment Director
and (2) if intended for Trustor shall be addressed to:
Continental Ranch Inc.
Attn: David Lother, Vice President, Development
2237 Faraday, Suite 100
Carlsbad, CA 92008
Any notice, demand or communication shall be deemed given, received, made or communicated
on the date personal delivery is effected or, if mailed in the manner herein specified, on the
delivery date or date delivery is refused by the addressee, as shown on the return receipt. Either
party may change its address at any time by giving written notice of such change to Beneficiary
or Trustor as the case may be, in the manner provided herein, at least ten (10) days prior to the
date such change is desired to be effective.
Section 8.4 Successors and Joint Trustors.
Where an obligation is created herein binding upon Trustor, the obligation shall also
apply to and bind any transferee or successors in interest. Where the terms of the Deed of Trust
have the effect of creating an obligation of the Trustor and a transferee, such obligation shall be
deemed to be a joint and several obligation of the Trustor and such transferee. Where Trustor is
more than one entity or person, all obligations ofTrustor shall be deemed to be a joint and
several obligation of each and every entity and person comprising Trustor.
October 25, 2000 14
Section 8.5 Captions.
The captions or headings at the beginning of each Section hereof are for the convenience
of the parties and are not a part of this Deed of Trust.
Section 8.6 Invalidity of Certain Provisions.
Every provision of this Deed of Trust is intended to be severable. In the event any term
or provision hereof is declared to be illegal or invalid for any reason whatsoever by a court or
other body of competent jurisdiction, such illegality or invalidity shall not affect the balance of
the terms and provisions hereof, which terms and provisions shall remain binding and
enforceable. If the lien of this Deed of Trust is invalid or unenforceable as to any part of the
debt, or if the lien is invalid or unenforceable as to any part of the Security, the unsecured or
partially secured portion of the debt, and all payments made on the debt, whether voluntary or
under foreclosure or other enforcement action or procedure, shall be considered to have been
first paid or applied to the full payment of that portion of the debt which is not secured or
partially secured by the lien of this Deed of Trust.
Section 8.7 Governing Law.
This Deed of Trust shall be governed by and construed in accordance with the laws of the
State of California.
Section 8.8 Gender and Number.
In this Deed of Trust the singular shall include the plural and the masculine shall include
the feminine and neuter and vice versa, if the context so requires.
Section 8.9 Deed of Trust, Mortgage.
Any reference in this Deed of Trust to a mortgage shall also refer to a deed of trust and
any reference to a deed of trust shall also refer to a mortgage.
Section 8.10 Actions.
Trustor agrees to appear in and defend any action or proceeding purporting to affect the
Security.
Section 8.11 Substitution of Trustee.
Beneficiary may from time to time substitute a successor or successors to any Trustee
named herein or acting hereunder to execute this Trust. Upon such appointment, and without
conveyance to the successor trustee, the latter shall be vested with all title, powers, and duties
conferred upon any Trustee herein named or acting hereunder. Each such appointment and
substitution shall be made by written instrument executed by Beneficiary, containing reference to
this Deed of Trust and its place of record, which, when duly recorded in the proper office of the
October 25. 2000 15
county or counties in which the Property is situated, shall be conclusive proof of proper
appointment of the successor trustee.
Section 8.12 Statute of Limitations.
The pleading of any statute of limitations as a defense to any and all obligations secured
by this Deed of Trust is hereby waived to the full extent permissible by law.
Section 8.13 Acceptance by Trustee.
Trustee accepts this Trust when this Deed of Trust, duly executed and acknowledged, is
made public record as provided by law. Except as otherwise provided by law the Trustee is not
obligated to notify any party hereto of pending sale under this Deed of Trust or of any action or
proceeding in which Truster, Beneficiary, or Trustee shall be a party unless brought by Trustee.
IN WITNESS WHEREOF, Truster has executed this Deed of Trust as of the day and
year first above written.
TRUSTOR:
Continental Residential, Inc., a California corporation,
formerly known as L & W Investments, Inc., A California
corporation, successor by merger to Continental Ranch
Inc., a Delaware corporation
By:
Name
Title:
By:
Name
Title:
(print or type)
VI~ Pfl,~.
~ ~.,~
(print or type) r
(Proper notarial acknowledgment of execution by Trustor must be attached)
Chairman, president or vice-president and secretary, assistant secretary, CFO or assistant treasurer
must sign for corporations. Otherwise, the corporation must attach a resolution certified by the secretary
or assistant secretary under corporate seal empowering the officer(s) signing to bind the corporation.)
October 25, 2000 16
STATE OF CALIFORNIA
COUNTY OF ~ ~
)
) ss
)
On OcAo'ovr:: i 1 1 l,,bf7b , qefore me, \ ~ ~ 1 V\ m-~ , personally
appeared o,-,., \rJ A. \,O~ 1• \,~ u:v:-k ~' personally known toe ( Of Pf8"1Cfl to me Ott
t1'te attsis of stttisfae*Of)' elli'1enee) to be 'the person(s) whose name(s) iBiare subscribed to the
within instrument and acknowledged to me that heilshe/they executed the same in hl&lher/their
authorized capacity(ies), and that by 1:Hs41:&r/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.
~Cad½
October 25, 2000 17
EXHIBIT A
(Legal Description)
The land is situated in the State of California, City of Carlsbad, County of San Diego, and
is described as follows:
see attached
October 25, 2000 18
LEGAL DESCRIPTION
THE LAND REFERRED TO HEREIN IS SITUATED IN THE STATE OF CALIFORNIA, COUNfY
OF SAN DIEGO, AND IS DESCRIBED AS FOLLOWS:
PARCEL 1:
AN UNDIVIDED FRACTIONAL INTEREST AS TENANf 1N COMMON IN AND TO THE
BUJLDING ENVELOPE IN WHICH THE LIVING UNIT DESCRIBED IN PARCEL IA BELOW IS
LOCATED EQUAL TO THE RECIPROCAL OF THE NUMBER OF LNING UNITS WITHIN THAT
BUJLDING ENVELOPE; BEING A PORTION OF LOT 1 OF CITY OF CARLSBAD TRACT 98-15
RANCHO CARRILLO VILLAGE "B", ACCORDING TO MAP THEREOF NO. 14002, FILED WITH
THE COUNTY RECORDER OF SAN DIEGO COUNTY, CALIFORNIA ON JULY 18, 2000.
EXCEPTING THEREFROM EACH LIVING UNIT LOCATED WITHIN SUCH BUILDING
ENVELOPE, AS SHOWN ON THE CONDOMINIUM PLAN DESCRIBED IN PARCEL IA BELOW;
RESERVING THEREFROM THE EXCLUSIVE RIGHT TO POSSESSION AND USE OF ANY
EXCLUSIVE USE AREA SHOWN ON TIIE CONDOMINIUM PLAN DESCRIBED IN PARCEL IA
BELOW.
FURTHER RESERVING THEREFROM ALL THE RIGHTS AND EASEMENTS SET FORTH IN
THE DECLARATION OF RESTRICTIONS FOR SERRANO AT RANCHO CARRILLO RECORDED
OCTOBER 5, 2000 AS FILE NO. 2000-0534957 OF OFFICIAL RECORDS (TI{E "DECLARATION")
AND THE MASTER DECLARATION OF RESTRICTIONS FOR RANCHO CARRILLO RECORDED
JUNE 17, 1998 AS FILE NO. 1998-0369115 OF OFFICIAL RECORDS (THE "MASTER
DECLARATION"), INCLUDING, BUT NOT LIMITED TO THE EASEMENTS FOR INGRESS,
EGRESS AND GENERAL UTILITY PURPOSES AND GRANfOR 'S RIGI-IT AND EASEMENTS TO
CONSTRUCT AND MARKEf RESIDENCES AND CONSTRUCT RELATED IMPROVEMENTS.
PARCEL IA:
LIVING UNIT NOS. 1 THROUGH 17, 28 THROUGH 41, 47 THROUGH 68 AND 74 THROUGH 78,
AS SHOWN UPON THE CONOOMINilJM PLAN RECORDED OCTOBER 5, 2000 AS DOCUMENT
NO. 2000-0534956 AND RE-RECORDED FEBRUARY 16, 2001 AS FILE NO. 2001-0092231 BOTH
OF OFFICIAL RECORDS OF SAN DIEGO COUNTY, CALIFORNIA (THE "CONDOMINIUM
PLAN").
RESERVING FROM PARCEL IA ALL RIGI-ITS AND EASEMENTS FOR SET FORTH IN THE
DECLARATION AND THE MASTER DECLARATION.
PARCEL lB:
NON-EXCLUSIVE APPURTENAA1 EASEMENTS IN AND TO THE ASSOCIATION PROPERTY
NOW OR HEREAFTER OWNED BY THE ASSOCIATION AS SET FORTH IN THE
DECLARATION. "ASSOCIATION PROPERTY" IS DEFINED IN THE DECLARATION;
•'ASSOCIATION" IS DEFINED AS SERRANO AT RANCHO CARRILLO ASSOCIATION, A
CALIFORNIA NONPROFIT MUTUAL BENEFIT CORPORATION.
PARCEL lC:
A NON-EXCLUSIVE EASEMENT FOR VEHICULAR AND PEDESTRIAN ACCESS, INGRESS
AND EGRESS AND DRIVEWAY PURPOSES AND FOR TIIE USE OF PRIVATE STORM DRAINS
OVER, UNDER, ALONG, ACROSS AND TIIROUGH THAT PORTION OF LOT 207 OF
CARLSBAD TRACT 97-02 (RANCHO CARRILLO VILLAGES "A-D"), IN THE CITY OF
CARLSBAD, COUNTY OF SAN DIEGO, STATE OF CALIFORNIA, ACCORDING TO MAP
THEREOF NO. 13582, FILED IN THE OFFICE OF TIIE COU1'\1'fY RECORDER OF SAN DIEGO
COUNTY ON JUNE 10, 1998 AS FILE NO. 1998-0352224 OF OFFICIAL RECORDS, DESCRIBED
AS FOLLOWS:
BEGINNING AT TIIE NORTHEAST CORNER OF SAID LOT 207; THENCE ALONG THE
EASTERLY AND SOUTIIERLY PROPERTY LINES THEREOF, THE FOLLOWING COURSES:
SOUTH 22°16'38" WEST 53.04 FEET; THENCE SOUTH 24"20'16" WEST 50.74 FEET TO THE
TRUE POINT OF BEGIN"NING, ALSO BEING TIIE BEGINNING OF A NON-TANGENT 58.50
FOOT RADIUS CURVE CONCAVE NORTHWESTERLY, TO WHICH A RADIAL LINE BEARS
NORTII 87°54'36" EAST; THENCE SOUTHWESTERLY ALONG THE ARC OF SAID CURVE
THROUGH A CENTRAL ANGLE OF 35"27'52" A DISTANCE OF 36.21 FEET; THENCE SOUTH
33°23'24" WEST 230.96 FEET TO TI-IE BEGINNING OF A NON-TANGENT 22.50 FOOT RADIUS
CURVE CONCA VE EASTERLY, TO WHICH A RADIAL LINE BEARS NORTH 56°34'59'' WEST;
THENCE SOUTHERLY ALONG THE ARC OF SAID CURVE THROUGH A CENTRAL ANGLE OF
82°20' 15" A DISTANCE OF 32.33 FEET; THENCE SOUTH 48°55' 15" EAST 23.42 FEET TO THE
BEGINNING OF A TANGENT 100.00 FOOT RADIDS CURVE CONCAVE NORTIIEASTERLY;
THENCE SOUTHEASTERLY ALONG THE ARC OF SAID CURVE THROUGH A CENTRAL
ANGLE OF 02°22'29" A DISTANCE OF 4.14 FEET; THENCE SOUTH 51°17'44" EAST 54.80 FEET
TO THE BEGINNING OF A NON-TANGENT 100.00 FOOT RADIUS CURVE CONCAVE
SOUTHWESTERLY, TO WHICH A RADIAL LINE BEARS NORTH 38°42' 14" EAST; THENCE
SOUTHEASTERLY ALONG THE ARC OF SAID CURVE THROUGH A CENTRAL ANGLE OF
05°33'30" A DISTANCE OF 9.70 FEET; THENCE SOUTH 45°44'15" EAST 51.08 FEET TO THE
BEGINNING OF A NON-TANGENT 48.00 FOOT RADIUS CURVE CONCAVE
SOUTHWESTERLY, TO Wl-llCH A RADIAL LINE BEARS NORTII 06°17'12" WEST; THENCE
SOUTHEASTERLY ALONG THE ARC OF SAID CURVE THROUGH A CENTRAL ANGLE OF
72°39'49" A DISTANCE OF 60.87 FEET; THENCE SOUTH 23°37'23" EAST 50.00 FEET TO THE
BEGINNING OF A TANGENf 90.00 FOOT RADIUS CURVE CONCAVE NORTHEASTERLY;
THENCE SOUTHEASTERLY ALONG TIIE ARC OF SAID CURVE THROUGH A CENTRAL
ANGLE OF 11°57' 12'' A DISTANCE OF 18.78 FEET; THENCE sourn 54°25'25" WEST 10.00
FEET; THENCE SOUTH 53°07'09" WEST 58.01 FEEi' TO THE BEGINNING OF ANON-TANGENT
90.00 FOOT RADIDS CURVE CONCAVE SOUTHWESTERLY, TO WHICH A RADIAL LINE
BEARS NORTH 53°56'42" EAST; THENCE NORTHWESTERLY ALONG THE ARC OF SAID
CURVE THROUGH A CENTRAL ANGLE OF 12"25'56" A DISTANCE OF 19.53 FEET; THENCE
NORTH 48°29' 14" WEST 50.00 FEET TO THE BEGINNING OF A T ANGENf 48.00 FOOT RADIUS
CURVE CONCAVE NORTHEASTERLY; THENCE NORTHWESTERLY ALONG THE ARC OF
SAID CURVE THROUGH A CENTRAL ANGLE OF 45°55'59" A DISTANCE OF 38.48 FEET;
THENCE NORTH 45°44'15" WEST 58.34 FEET TO THE BEGINNING OF A TANGENT 100.00
FOOT RADIUS CURVE CONCAVE NORTHEASTERLY; THENCE NORTHWESTERLY ALONG
TI-IE ARC OF SAID CURVE THROUGH A CENTRAL A.""l"GLE OF 02°04'27" A DISTANCE OF 3.62
FEET; THENCE NORTH 43°39'48" WEST 51.89 FEET TO THE BEGINNING OF A TANGENT
100.00 FOOT RADIUS CURVE CONCAVE SOUTHWESTERLY; THENCE NORTHWESTERLY
ALONG THE ARC OF SAID CURVE THROUGH A CENTRAL ANGLE OF 05° 15'25" A DISTANCE
OF 9.18 FEET; THENCE NORTH 48°55'14" WEST 48.27 FEET TO THE BEGINNING OF A
• .
TANGENT 50.00 FOOT RADillS CURVE CONCAVE SOUTHWESTERLY; THENCE
NORTHWESTERLY ALONG THE ARC OF SAID CURVE THROUGH A CENTRAL ANGLE OF
07°13'51" A DISTANCE OF 6.31 FEET TO THE BEGJN11,ilNG OF A REVERSE 38.50 FOOT
RADIUS CURVE CONCAVE EASTERLY; THENCE NORTHERLY ALONG THE ARC OF SAID
CURVE THROUGH A CENTRAL ANGLE OF 118°28'45" A DISTANCE OF 79.61 FEET; THENCE
LEAVING SAID PROPERTY LINE OF LOT 207 SOlITH 27°40'20" EAST 7.00 FEET TO THE
BEGINNING OF A NON-TANGENT 31.50 FOOT RADIUS CURVE CONCAVE
SOlITHEASTERLY, TO WHICH A RADIAL LINE BEARS NORTH 27°40'20" WEST; THENCE
NORTHEASTERLY ALONG THE ARC OF SAID CURVE THROUGH A CENTRAL ANGLE OF
21°18'04" A DISTANCE OF 11.71 FEET TO THE BEGINNlNG OF A REVERSE 25.00 FOOT
RADillS CURVE CONCAVE NORTHWESTERLY; THENCE NORTHEASTERLY ALONG THE
ARC OF SAID CURVE THROUGH A CENTRAL ANGLE OF 50°15'17" A DISTANCE OF 21.93
FEET; THENCE NORTH 33°22'27" EAST 254.69 FEET; THENCE SOlITH 65°39'44" EAST 21.92
FEET TO THE TRUE POINT OF BEGINNING.
PARCEL lD:
THE EXCLUSIVE RIGlff TO USE ANY EXCLUSIVE USE AREA SHOWN ON THE
CONDOMINIUM PLAN AS BEING APPURTENANT TO THE LIVING UNIT DESCRIBED IN
PARCEL IA ABOVE.
PARCEL 2:
AN UNDIVIDED FRACTIONAL INTEREST AS TENANT IN COMMON IN AND TO THE
BUILDING ENVELOPE IN WHICH THE LIVING UNIT DESCRIBED IN PARCEL 2A BELOW IS
LOCATED EQUAL TO THE RECIPROCAL OF THE NUMBER OF LNING UNITS WITHIN THAT
BUILDING ENVELOPE; BEING A PORTION OF LOT 2 OF CITY OF CARLSBAD TRACT 98-15
RANCHO CARRILLO VILLAGE "B", ACCORDING TO MAP THEREOF NO. 14002, FILED WITH
THE COUNTY RECORDER OF SAN DIEGO COUNTY, CALIFORNIA ON JULY 18, 2000.
EXCEPTING THEREFROM EACH LIVING UNIT LOCATED WITHIN SUCH BUILDING
ENVELOPE, AS SHOWN ON THE ·CONDOMINIUM PLANS DESCRIBED IN PARCEL 2A
BELOW;
RESERVING THEREFROM THE EXCLUSIVE RIGHT TO POSSESSION AND USE OF ANY
EXCLUSIVE USE AREA SHOWN ON THE CONDOMINIUM PLANS DESCRIBED IN PARCEL 2A
BELOW.
FURTHER RESERVING THEREFROM ALL THE RIGHTS AND EASEMENTS SET FORTH IN
THE DECLARATION OF RESTRICTIONS FOR SERRANO AT RANCHO CARRILLO RECORDED
OCTOBER 5, 2000 AS FILE NO. 2000-0534957 OF OFFICIAL RECORDS (THE "DECLARATION")
AND THE MASTER DECLARATION OF RESTRICTIONS FOR RANCHO CARRILLO RECORDED
JUNE 17, 1998 AS FILE NO. 1998-0369115 OF OFFICIAL RECORDS (THE "MASTER
DECLARATION"), INCLUDING, BlIT NOT LIMITED TO THE EASEMENTS FOR INGRESS,
EGRESS AND GENERAL UTILITY PURPOSES AND GRANTOR'S RIGHT AND EASEME~TS TO
CONSTRUCT AND MARKET RESIDENCES AND CONSTRUCT RELATED IMPROVEMENTS.
PARCEL2A:
LNING lJNIT NOS. 88 THROUGH 92 AND 98 THROUGH 124, AS SHOWN UPON THE
SERRANO CONDOMINIUM PLANS (LOT 2 OF CT 98-15) RECORDED DECEMBER 6, 2000 AS
DOCUMENT NO. 2000-0663283 OF OFACIAL RECORDS OF SAN DIEGO COUNTY,
CALIFORNIA (THE "CONDOMINIUM PLANS").
RESERVING FROM PARCEL 2A ALL RIGHTS AND EASEMENTS FOR SET FORTH IN THE
DECLARATION AND THE MASTER DECLARATION.
PARCEL2B:
NON-EXCLUSIVE APPURTENA1''T EASEMENTS IN AND TO TI-IE ASSOCIATION PROPERTY
NOW OR HEREAFTER OWNED BY THE ASSOCIATION AS SET FORTI-I IN THE
DECLARATION. "ASSOCIATION PROPERTY" IS DEFINED IN THE DECLARATION;
"ASSOCIATION' IS DEFINED AS SERRANO AT RANCHO CARRILLO ASSOCIATION, A
CALIFORNIA NONPROFIT MUTUAL BENEFIT CORPORATION.
PARCEL2C:
A NON-EXCLUSIVE EASEMENT FOR VEHICULAR AND PEDESTRIAN ACCESS, INGRESS
AND EGRESS AND DRIVEWAY PURPOSES AND FOR TIIE USE OF PRIVATE STORM DRAINS
OVER, UNDER, ALONG, ACROSS AND THROUGH THAT PORTION OF LOT 207 OF
CARLSBAD TRACT 97-02 (RANCHO CARRILLO VILLAGES "A-D"), IN TI-IE CITY OF
CARLSBAD, COUNTY OF SAN D1EGO, STATE OF CALIFORNIA, ACCORDING TO MAP
TIIEREOF NO. 13582, FILED IN TI-IE OFFICE OF THE COUNTY RECORDER OF SAN DIEGO
COUNfY ON JUNE 10, 1998 AS FILE NO. 1998-0352224 OF OFFICIAL RECORDS, DESCRIBED
AS FOLLOWS:
BEGINNING AT THE NORTHEAST CORNER OF SAID LOT 207; THENCE ALONG THE
EASTERLY AND SOUTHERLY PROPERTY LINES THEREOF, THE FOLLOWING COURSES:
SOUTH 22°16'38" WEST 53.04 FEET; THENCE SOUTH 24°20' 16" WEST 50.74 FEET TO THE
TRUE POINT OF BEGINNING, ALSO BEING THE BEGINNING OF A NON-TANGEI\1T 58.50
FOOT RADIUS CURVE CONCAVE NORTHWESTERLY, TO WHICH A RADIAL LINE BEARS
NORTH 87°54'36" EAST; THENCE SOUTHWESTERLY ALONG THE ARC OF SAID CURVE
THROUGH A CEI\1TRAL ANGLE OF 35°27'52" A DISTANCE OF 36.21 FEET; THENCE SOUfH
33°23'24" WEST 230.96 FEET TO 1HE BEGINNING OF A NON-TANGENT 22.50 FOOT RADIUS
CURVE CONCA VE EASTERLY, TO WHICH A RADIAL LINE BEARS NORTH 56°34'59" WEST;
TIIENCE SOl.JTHERL Y ALONG THE ARC OF SAID CURVE THROUGH A CENTRAL ANGLE OF
82°20'15" A DISTANCE OF 32.33 FEET; THENCE SOUfH 48°55'15" EAST 23.42 FEET TO THE
BEGINNING OF A TANGENT 100.00 FOOT RADIUS CURVE CONCAVE NORTHEASTERLY;
THENCE SOUTHEASTERLY ALONG THE ARC OF SAID CURVE THROUGH A CENfRAL
ANGLE OF 02°22'29" A DISTANCE OF 4.14 FEET; THENCE SOUTH 51°17'44" EAST 54.80 FEET
TO THE BEGINNING OF A NON-TANGENT 100.00 FOOT RADIUS CURVE CONCAVE
SOUTHWESTERLY, TO WHICH A RADIAL LINE BEARS NORTH 38°42' 14" EAST; THENCE
SOUTHEASTERLY ALONG THE ARC OF SAID CURVE THROUGH A CENTRAL ANGLE OF
05°33'30" A DISTANCE OF 9.70 FEET; THENCE SOUTH 45°44'15" EAST 51.08 FEET TO THE
BEGINNING OF A NON-TANGENT 48.00 FOOT RADIUS CURVE CONCAVE
SOUTHWESIBRLY, TO WHICH A RADIAL LINE BEARS NORTH 06°17'12" WEST; TIIENCE
SOUTHEASTERLY ALONG THE ARC OF SAID CURVE THROUGH A CENTRAL ANGLE OF
72°39'49" A DISTANCE OF 60.87 FEET; TIIENCE SOUTH 23°37'23" EAST 50.00 FEET TO THE
BEGINNING OF A TANGENT 90.00 FOOT RADIUS CURVE CONCAVE NORTIIEASTERLY;
TIIENCE SOUfHEASTERL Y ALONG TIIE ARC OF SAID CURVE THROUGH A CENTRAL
ANGLE OF 11°57'12" A DISTANCE OF 18.78 FEET; THENCE SOUTII 54°25'25" WEST 10.00
FEET; THENCE SOUTH 53°07'09" WEST 58.01 FEET TO THE BEGINNING OF A NON-TANGENT
90.00 FOOT RADIUS CURVE CONCAVE SOUTHWESTERLY, TO WHICH A RADIAL LINE
BEARS NORW 53°56'42" EAST; THENCE NORTHWESTERLY ALONG TIIE ARC OF SAID
CURVE THROUGH A CENTRAL ANGLE OF 12°25'56" A DISTANCE OF 19.53 FEET; THENCE
NORTH 48°29' 14" WEST 50.00 FEET TO THE BEGIN1\TJNG OF A TANGENT 48.00 FOOT RADIUS
CURVE CONCAVE NORTIIEASTERL Y; TIIENCE NORTHWESTERLY ALONG THE ARC OF
SAID CURVE THROUGH A CENTRAL ANGLE OF 45°55'59" A DISTANCE OF 38.48 FEET;
THENCE NORTH 45°44'15" WEST 58.34 FEET TO THE BEGINNING OF A TA."lltlGENT 100.00
FOOT RADIUS CURVE CONCA VE NORTHEASTERLY; THENCE NORTHWESTERLY ALONG
THE ARC OF SAID CURVE THROUGH A CEJ\."TRAL ANGLE OF 02°04'27" A DISTANCE OF 3.62
FEET; THENCE NORTH 43°39'48" WEST 51.89 FEET TO THE BEGINNING OF A TANGENT
100.00 FOOT RADIUS CURVE CONCAVE SOUTHWESTERLY; THENCE NORTHWESTERLY
ALONG THE ARC OF SAID CURVE THROUGH A CENTRAL ANGLE OF 05° 15'25" A DISTANCE
OF 9.18 FEET; THE:'lCE NORTH 48°55' 14" WEST 48.27 FEET TO THE BEGINNING OF A
TANGENT 50.00 FOOT RADIUS CURVE CONCAVE SOUTHWESTERLY; THENCE
NORTHWESTERLY ALONG THE ARC OF SAID CURVE THROUGH A CENTRAL ANGLE OF
07°13'51" A DISTANCE OF 6.31 FEET TO THE BEGINNING OF A REVERSE 38.50 FOOT
RADIUS CURVE CONCAVE EASTERLY; THENCE NORTHERLY ALONG THE ARC OF SAID
CURVE THROUGH A CENTRAL ANGLE OF 118°28'45" A DISTANCE OF 79.61 FEET; THENCE
LEA YING SAID PROPERTY LINE OF LOT 207 SOUTH 27°40'20" EAST 7 .00 FEET TO THE
BEGINNING OF A NON-TANGENT 31.50 FOOT RADIUS CURVE CONCAVE
SOUTHEASTERLY, TO WHICH A RADIAL LINE BEARS NORTH 27°40'20" WEST; THENCE
NORTHEASTERLY ALONG THE ARC OF SAID CURVE THROUGH A CENTRAL ANGLE OF
21°18'04" A DISTANCE OF 11.71 FEET TO THE BEGINNING OF A REVERSE 25.00 FOOT
RADIUS CURVE CONCA VE NORTHWESTERLY; THENCE NORTHEASTERLY ALONG THE
ARC OF SAID CURVE THROUGH A CENTRAL ANGLE OF 50°15'17" A DISTANCE OF 21.93
FEET; THENCE NORTH 33°22'27" EAST 254.69 FEET; THENCE SOUTH 65°39'44" EASf 21.92
FEET TO THE TRUE POINT OF BEGINNING.
PARCEL 20:
THE EXCLUSNE RIGHT TO USE ANY EXCLUSNE USE AREA SHOWN ON THE
CONDOMThlUM PLAN AS BEING APPURTENANT TO TI-IE LIVING UNIT DESCRIBED IN
PARCEL 2A ABOVE_
EXHIBITD
FORM OF ELIGIBLE BUYER NOTE
1010\03\111527.3 -1-
PROMISSORY NOTE
CITY OF CARLSBAD
ADMINISTRATIVE COVER SHEET
(Remove Upon Completion)
BLANK LINES: CHECKLIST
1010\03\111697.6
04/02199
Amount of City Loan, p. 1, upper left
Date of Document, p. 1, upper right
Borrower's Name, p. 1, first paragraph
Amount of City Loan, p. 1, first paragraph
Street Address of Residence, p. 1, Section 1
Original Purchase Price of Residence, p. 1,
Section 2(a)
Contingent Interest Percent, p. 2, Section 4
Signatures, p. 7
NOTICE TO BORROWER:
THIS NOTE IS NOT ASSUMABLE
$ ______ _
PROMISSORY NOTE
Secured by Deed of Trust
Rancho Carrillo
Carlsbad, California
,200_ -----·
FOR VALUE RECEIVED, the undersigned _______ _
__________ (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$ __________ , plus Contingent Interest
calculated pursuant to Section 4below.
1. Purpose of Loan. Borrower is purchasing the Residence located at __ _
________ 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 Seller and the City dated March 25, 1998 and
recorded as Document No. 1998-0162920 in the Official Records of San Diego County, and the
First Amended and Restated Affordable Housing Agreement Imposing Restrictions on Real
Property dated December 14, 1998, and the Second Amended and Restated Affordable Housing
Agreement Imposing Restrictions on Real Property dated July 9,1999.
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
_____________ Dollars($ __ ~), 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 foreclosure, a trustee's deed upon sale, or
otherwise, the amount paid for the Residence at a creditor's sale of the Residence.
04/02/99 1
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 establi~hing 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 shall pay contingent interest equal to
______ percent(_%) ("Contingent Interest Percentage Amount") [seller 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 Residence paid by the Borrower at the time of
purchase, multiplied by seventy-five one hundredths (.75). Borrower acknowledges that this
calculation of the percentage of the Appreciation Amount due to the City as Contingent Interest
includes a twenty-five percent (25%) discount to Borrower to account for any capital
improvements Borrower may make to the Residence.
04/02/99 2
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
Residence 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 oflaw 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 ofresidence; 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 it is 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.
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.
04/02/99 3
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
City 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.
11. 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 Transfer of the Residence or 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 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.
15. Default.
a. The Borrower shall be in default under this Note ifhe 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 20 notice to the Borrower specifying: (1) the breach; (2) if the
04/02/99 4
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 attorneys' fees
in such action.
19. No Waiver by the City. 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.
04/02/99 5
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.
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; or
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 203.4l(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.
04/02/99 6
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.
Borrower
(Print Name)
Borrower
(Print Name)
04/02/99 7
EXHIBITE
FORM OF ELIGIBLE BUYER DEED OF TRUST
1010\03\111527.3 2
DEED OF TRUST AND SECURITY AGREEMENT
CITY OF CARLSBAD
ADMINISTRATIVE CHECKLIST
(Remove Upon Completion)
BLANK I.INES: CHECKIJST
Date of Document, p. 1, first paragraph
Borrower's Name, p. 1, first paragraph
Trustee's Name, p. 1, first paragraph
Date and Amount of Promissory Note, p. 2, second full paragi:aph
First Lender's Name, p. 2, Section 1
Date of First Lender's Deed of Trust, p. 2, Section 1
Recording Information for First Lender's Deed of Trust, p. 2, Section 1
Signatures, p. 9
Include Exhibit A, Property Description
Notary
RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:
City of Carlsbad
City Clerk's Office
1200 Carlsbad Village Drive
Carlsbad, CA 92008
Attention: City Clerk
No fee for recording pursuant to
Government Cade Section 27383
NOTE TO BORROWER:
(Space above for Recorder's Use)
THIS DEED OF TRUST CONTAINS
PROVISIONS PROHIBITING ASSUMPTIONS
DEED DE TRI ISI
AND SECT TRTTY AGREEMENT
THIS DEED OF TRUST AND SECURITY AGREEMENT ("Deed of Trust") made as of
this ____ day of ______ , 2000, among ______________ _
("Borrower") as trustor, and ___________________ ("Trustee"), and
the City of Carlsbad, a municipal corporation (the "City"), as beneficiary.
The Borrower, in consideration of the promises herein recited and the trust herein created,
irrevocably grants, transfers, conveys and assigns to the Trustee, in trust, with power of sale, the
property located in the City of Carlsbad, State of California, described in the attached Exhibit
~ (the "Property").
TOGETHER with all the improvements now or hereafter erecte~ 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";
1
To have and to hold the Security together with acquittances to the Trustee, its successors
and assigns forever;
TO SECURE to the City the repayment of the sums evidenced by a promissory note
executed by the Borrower to the City dated ______ , 2000, in the amount of
_________ Dollars($ ___ ~ (the "Note");
TO SECURE to the City 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 the Borrower herein contained; and
TO SECURE the performance of any obligations of Borrower in any other agreements
with respect to the financing of the Property or the Security the failure of which would adversely
affect Beneficiary, whether or not Beneficiary is a party to such agreements.
BORROWER AND CITY COVENANT AND AGREE AS FOLLOWS:
1. Borrower's Estate. That the Borrower 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 that deed of trust executed by the Borrower in connection
with a loan made to the Borrower by __________ or its successors and assigns
(the "First Lender"), dated _____ , 2000, executed by the Borrower in favor of First
Lender, and recorded in the County of San Diego on _____ ., 2000, and assigned
Recorder's Serial No. ____ (the "First Lender Deed of Trust"), securing a promissory note
executed by the Borrower in favor of the First Lender ("First Lender Note"), to assist in the
purchase of the Property. The Borrower 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. Repayment ofl,oan. The Borrower will promptly repay, when due, the principal
and interest required by the Note. The Note contains the following provisions concerning
repayment of the loan under certain conditions:
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 City 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 a Transfer as defined in the
Note.
3. First Lender Loan. The Borrower will observe and perform all of the covenants
and agreements of the First Lender Note, First Lender Deed of Trust, and related First Lender
loan documents.
4. Owner-Occupancy Required. The Borrower shall occupy the Property as his or
her principal place ofresidence. The Borrower shall be considered as occupying the Property if
2
the Borrower is living in the unit 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 Property as his or her principal place of residence.
5. Charges; T,ieos-The Borrower will pay all taxes, assessments and other charges,
fines and impositions attributable to the Security which may attain a priority senior to this Deed
of Trust, by the Borrower making any payment, when due, directly to the payee thereof. The
Borrower will promptly furnish to the City all notices of amounts due under this paragraph, and
in the event the Borrower makes payment directly, the Borrower will promptly discharge any
lien which has priority senior to this Deed of Trust; provided, that the Borrower will not be
required to discharge the lien of the First Lender Deed of Trust or any other lien described in this
paragraph so long as the Borrower 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.
6. Hazard Tnsmance. The Borrower will keep the Security insured by a standard fire
and extended coverage insurance policy in at least an amount equal to the replacement cost of the
Security, but in no event less than the amount necessary to prevent the Borrower from becoming
a co-insurer under the terms of the policy.
The insurance carrier providing this insurance shall be licensed to do business in the State
of California and be chosen by the Borrower subject to approval by the City; provided, that such
approval will not be withheld if the insurer is also approved by the First Lender, the Federal
Home Loan Mortgage Corporation, Fannie Mae, Freddie Mac, the United States Department of
Housing and Urban Development, the United States Department of Veterans Affairs, or
successors thereto.
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 the Borrower 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, the Borrower will give prompt
notice to the insurance carrier and the City or its designated agent. The City, or its designated
agent, may make proof ofloss if not made promptly by the Borrower. The City shall receive
thirty days advance notice of cancellation of any insurance policies required under this section.
Unless the City and the Borrower 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, subject to
the rights of the First Lender, to repay the Note and all sums secured by this Deed of Trust, with
the excess, if any, paid to the Borrower. If the Security is abandoned by the Borrower, or if the
Borrower fails to respond to the City, or its designated agent, within thirty (30) days from the
3
date notice is mailed by either of them to the Borrower that the insurance carrier offers to settle a
claim for insurance benefits, the City, or its designated agent, is authorized, subject to the rights
of the First Lender, to collect and apply the insurance proceeds at the City's option either to
restoration or repair of the Security or to repay the Note and all sums secured by this Deed of
Trust.
If the Security is acquired by the City, all right, title and interest of the Borrower 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 immediately prior to such sale or acquisition subject to the rights of the First Lender.
7. Preservation and Maintenance of Security_ The Borrower will keep the Security
in good repair and will not commit waste or permit impairment or deterioration of the Security.
8. Protection of the City's Security-lfthe Borrower fails to perform the covenants
and agreements contained in this Deed of Trust, the First Lender Note, the First Lender 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, the First
Lender Note or any other deed of trust encumbering the Property, 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 the Borrower, 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 the Borrower secured by this Deed of Trust. Unless the Borrower
and City agree in writing to other terms of payment, such amount will be payable upon notice
from the City to the Borrower requesting payment thereof, and will bear interest from the date of
disbursement at the lesser of (1) ten percent (10%) per annum or (2) the highest interest rate
permissible under applicable law. Nothing contained in this paragraph will require the City to
incur any expense or take any action hereunder.
9. Inspection_ The City may make or cause to be made reasonable entries upon and
inspections of the Security; provided that the City will give the Borrower reasonable notice of
inspection.
10. 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 accelerate the maturity of the indebtedness secured by this Deed of
Trust.
11. 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.
4
12. Successors and Assigns Rmmd. The covenants and agreements herein contained
shall bind, and the rights hereunder shall inure to, the respective successors and assigns of the
City and the Borrower subject to the provisions of this Deed of Trust.
13. Taint and Several T.iahility. All covenants and agreements of the Borrower shall
be joint and several.
14. Notice. Except for any notice required under applicable law to be given in
another manner, all notices required in this Deed of Trust 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 Owner:
At the address of the Borrower.
To the City:
City of Carlsbad
Housing and Redevelopment Department
Attn: 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.
15. Cantro))jng T,aw. This Deed of Trust shall be construed in accordance with and
be governed by the laws of the State of California.
16. Invalid Provisions. Tf any one or more of the provisions contained in this Deed of
Trust or the 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, and this Deed of Trust and the Note shall be construed as if such invalid, illegal or
unenforceable provision had never been contained in this Deed of Trust or the Note.
17. 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.
18. Default; Remedies. Upon the Borrower's breach of any covenant or agreement of
the Borrower 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 send, in the manner
set forth in Section 14 of this Deed of Trust, 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
5
(30) days from the date the notice is effective as set forth in Section 14 of this Deed of Trust, 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 this Deed of Trust and sale of the Security. Notice shall 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. 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. If the breach is not
curable or 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 the Trustee, and do any acts which it deems
necessary or desirable to preserve the value or marketability of the Security, 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 the 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 Borrower 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.
19. Acceleration. Upon the occurrence of a default under the Note, this Deed of
Trust, the First Lender Note, or the First Lender Deed of Trust, the City shall have the right to
declare the full amount of the principal along with any interest under the 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
the Note and this Deed of Trust. Nor shall acceptance by the City of any payment provided for
in the Note constitute a waiver of the City's right to require prompt payment of any remaining
principal and interest owed.
20. Borrower's Right to Reinstate_ Notwithstanding the City's acceleration of the
sums secured by this Deed of Trust, the Borrower 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) the Borrower pays City all
sums, if any, which would be then due under this Deed of Trust as if acceleration under the Note
6
has occurred; (b) the Borrower cures all breaches of any other covenants or agreements of the
Borrower contained in this Deed of Trust; ( c) the Borrower pays all reasonable expenses incurred
by City and the Trustee in enforcing the covenants and agreements of the Borrower contained in
this Deed of Trust, and in enforcing the City's and the Trustee's remedies, including, but not
limited to, reasonable attorney's fees; and ( d) the Borrower talces such action as City may
reasonably require to assure that the lien of this Deed of Trust, City's interest in the Security and
the Borrower's obligation to pay the sums secured by this Deed of Trust shall continue
unimpaired. Upon such payment and cure by the Borrower, this Deed of Trust and the
obligations secured hereby will remain in full force and effect as if no acceleration had occurred.
21. Reconveyance. Upon payment or forgiveness of all sums secured by this Deed of
Trust, the City will request the Trustee to reconvey the Security and will surrender this Deed of
Trust and the Note to the Trustee. The 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 ofrecordation, if any.
22. Substitute Tmstee. The City, at the City's option, may from time to time remove
the 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.
23. Subordination to First Mortgage. 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 the First Lender's successor or assign,
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 Borrower. 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 or assignment in lieu of foreclosure, or upon
assignment of the First Lender Deed of Trust to the Secretary of the United States Department of
Housing and Urban Development (the "Secretary"), 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, or if the First Lender's Deed of Trust is
assigned to the Secretary, this Deed of Trust shall automatically terminate upon such acquisition
of title, or assignment to the Secretary provided that (i) the City has been given written notice of
default under such First Lender Deed of Trust and (ii) the City shall not have cured or
commenced to cure the default within such 30-day period and given its firm commitment to
complete the cure in the form and substance acceptable to the First Lender. Borrower agrees to
record any necessary documents to effect such termination, if applicable.
7
24. Attorney's Fees_ If any action or proceeding is brought to enforce this Deed of Trust
or any provision of this Deed of Trust or the Note, the prevailing party shall be entitled to its
attorney's fees and the cost of such action or proceeding.
IN WITNESS WHEREOF, the Borrower has executed this Deed of Trust as of the date
first written above.
Borrower
(Print Name)
Borrower
(Print Name)
8
EXHIBIT A
Property Description
STATE OF CALIFORNIA )
)ss
COUNTY OF SAN DIEGO )
On ________ , 2000, 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 DIEGO )
On ________ , 2000, 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.
EXHIBITF
FORM OF BORROWER DISCLOSURE STATEMENT
1010\03\111527.3 3
BORROWER DISCLOSURE STATEMENT
SERRANO AT RANCHO CARRILLO
HOMEBUYER ASSISTANCE PROGRAM
The City of Carlsbad (the "City"), through its Inclusionary Housing Ordinance, has required
the developer of the Serrano at Rancho Carrillo condominium development to sell the homes in the
development to qualified households under terms that make the home affordable to you and the other
new homebuyers. The City has also provided financial assistance to the developer to assist in making
the Serrano at Rancho Carrillo homes affordable. Your new home is affordable to you because the
City and the developer are providing you with second mortgage financing through the Serrano at
Rancho Carrillo Homebuyer Assistance Program (the "Program") so that you will be able to buy
your home. The City offers the Program in order to enable low income households to own their own
homes in Carlsbad.
As a condition of the financing, the City will require you to sign a Promissory Note and a
Deed of Trust. The Deed of Trust will be recorded against your property.
This Disclosure Statement explains the major provisions of the Promissory Note and the
Deed of Trust to help you understand their requirements. You should, of course, read all of the City
loan documents yourself and become completely familiar with them.
A. PRIMARY RESIDENCE AND LEASING YOUR HOME
Under the terms of the Promissory Note and Deed of Trust, the home you buy with the
assistance of the City loan must be your main place of residence. This means you must live in the
home no less than 10 months out of each calendar year. Each year, you must certify in writing to the
City that you are living in your home as your main place ofresidence. In addition, you cannot lease
your home. If you fail to follow these provisions, you are considered to be in default, and the City
may declare its loan immediately due and payable.
B. NOTICES TO CITY
1. Notice of Intent to Sell, Assign or Transfer. If you decide to sell, assignor transfer
your home or any partial interest in your home, or if you record a mortgage or deed of trust against
your home, you must let the City know in writing at least fifteen (15) days prior to the sale,
assignment, transfer, or the recording of a mortgage or deed of trust.
2. Notice and Certification of Purchase Price. If you go to sell your home, at least
fifteen (15) days before the sale closes ( close of escrow), you must give the City a copy of the sales
contract and a written statement that declares, under penalty of perjury, the gross sales price of the
home. The written statement must be signed by both you (as seller) and the proposed buyer. The
written statement must also certify that the proposed buyer, or any other party, has not paid and will
not pay to you money or any other consideration that is not set out in the sales contract for the home.
The statement must also certify that you (as the seller) have not received and will not receive from
the proposed buyer, or anybody else, money or other consideration that is not included in the sales
- 1 -
contract.
3. Delivery of Required Notices. Any notice you must provide to the City under the
terms of the City loan documents must be sent by certified mail, return receipt requested, or express
delivery service with a delivery receipt, or personally delivered with a delivery receipt obtained.
C. INTEREST ON THE CITY LOAN: "CONTINGENT INTEREST"
The City loan charges "contingent interest". The contingent interest represents the benefit
you received from the City loan, and may generally be described as the percentage of the sales price
that the City loaned to you, with an adjustment or discount applied. The contingent interest on your
loan is due immediately if:
$ You default under the City loan or the First Mortgage, or
$ You sell or transfer title to your home, or
$ The end of the term of your loan is reached, with exceptions (see section E.
below)
The contingent interest on your City loan has three (3) parts:
(1) Appreciation Amount;
(2) Contingent interest percentage; and
(3) Automatic 25% discount to account for any improvements you may make to
the home.
An example is used to show each of the three (3) parts and how each would be calculated.
Example 1 Your loan from the City is $18,200. The original sales price you paid for your home
was $140,000. When you sell, the sales price is $173,600.
1. Appreciation Amount. The appreciation amount is generally the difference between
the original sales price you paid for the home and the price at which you sell it. For example:
Price of Home When You Sell:
Minus
Price of Home When You Bought:
Appreciation Amount:
$173,600
-$140.000
$33,600
The appreciation amount is calculated differently under certain circumstances. If you ( a) prepay your
City loan, or (b) transfer your home by means other than selling it, or ( c) are in default under the
terms of the City loan, the appreciation amount will be figured by using the Fair Market Value of the
home (instead of the price of the home when you sell, as above). Fair Market Value is the value of
the home as determined by an independent appraiser chosen by the City. If such an appraisal is
necessary, the cost of the appraisal will be paid by you. If a creditor takes title to your home, the
appreciation amount will be figured by using the amount paid for the home at the creditor's sale.
-2-
2. Contingent Interest Percentage. The contingent interest percentage is the percentage
of the sales price that the City loaned to you. This percentage is figured by dividing the amount of
the City loan by the purchase price you paid for the home. Continuing with the example:
City Loan Amount: $ 18,200
Divided By
Price of Home When You Bought: $140.000
Equals
Contingent Interest Percentage = 13%
3. Automatic Discount For Possible Capital Improvements. During the time that you
live in your home, you may make improvements to it that will increase its value. For example, you
may put in a new central heating system or update the bathroom. To recognize the possibility that
you have invested in improvements which have contributed to an increase in value beyond the
increase due to a rise in the general real estate market, the contingent interest on the City loan
provides for a 25% discount. This discount is given automatically, even if you have not made any
improvements. Continuing with the example, the discount for capital improvements reduces the
contingent interest owed the City as follows:
Appreciation Amount: $ 33,600
Multiplied By
Contingent Interest Percentage X .13
$4,368
$4,368
Multiplied By
Automatic Discount X . 25
Total Dollar Amount of Discount $ 1,092
Contingent Interest Amount $ 4,368
Minus
Discount Amount -1,092
Contingent Interest You Owe City $ 3,276
The automatic capital improvement discount shall be calculated by the City as set out in the
Promissory Note under Section 4. "Contingent Interest". The result is the same as with the
calculation above. A mathematical step has been eliminated.
Appreciation Amount:
Multiplied By
Contingent Interest Percentage
Automatic Discount Applied
Contingent Interest You Owe City
-3-
$ 33,600
X .13
$ 4,368
X .75
$ 3,276
D. PAYINGBACKYOURCITYLOAN
1. No Payments Required for 30 Years Unless You Sell, Transfer, or Default.
Your loan from the City is a "deferred" loan. This means that you do not have to make
payments on your loan for the entire 30 year term. If, however, at any time you sell, assign or
transfer the home or if you break the terms of the loan documents, both the principal and contingent
interest owed on the loan will be immediately due and payable. The refinancing of your first
mortgage loan does not trigger immediate payment of principal and contingent interest if the
refinancing meets the terms of the Promissory Note (as described in section F. below).
2. When You Sell Your Home.
When you sell, transfer, or assign your home or any interest in it, the principal and contingent
interest owing is immediately due and payable. The only times when this is not the case is when a
transfer is to an existing husband or wife who signed the Promissory Note, to a husband or wife who
then becomes a co-owner of the home, to a husband or wife as part of a marriage or a divorce, to an
inter vivos trust in which you are the beneficiary, or to a husband, wife, or child upon death of the
borrower.
Example 2 shows the repayment process for the City loan when the home is sold.
Example 2 You have lived in your home for 8 full years and now must sell it because you
received a promotion to a job in another state. You bought your home for $140,000.
The City provided you with a loan of $18,200 to help you buy your house. The sales
price of your home is$ 200,000.
(a) Amount of Principal Owed Upon Sale. Since the City Loan is a
deferred loan, and you have made no payments during the time you have held the loan, the full
amount of principal must be repaid to the City at the time of sale. In this example, the principal
amount due is $18,200.
(b) Amount of Contingent Interest Owed. To figure out the amount of
contingent interest you owe the City, we need to calculate the appreciation amount and the
contingent interest percentage, and then apply the automatic discount.
Calculating the Appreciation Amount
Sales Price of Your Home: $200,000.00
Minus Price You Originally Paid: -$140,000.00
Appreciation Amount $ 60,000.00
Calculating the Contingent Interest Percentage
Your City Loan divided by the
Price You Originally Paid:
Contingent Interest Percentage
-4-
$18,200 + $140,000 = 0.13
= 13%
Calculating Contingent Interest Owed (With Discount Applied)
Appreciation Amount:
Multiplied By
Contingent Interest Percentage
Multiplied By
Automatic Discount
Contingent Interest Owed City
$60,000.00
X .13
$ 7,800.00
X .75
$5,850.00
Total You Owe City Upon Sale of the Home
Principal Owed:
Plus Contingent Interest:
Total Owed
$18,200.00
+ $ 5,850.00
$24,050.00
E. POTENTIAL FORGIVENESS OF CONTINGENT INTEREST
Under the terms of the Promissory Note, the contingent interest on your loan is due at the end
of the 30-year loan term. However, you will not have to pay the contingent interest at the end of the
loan term if you meet all of the following conditions:
( 1) You live in your home and there has been no sale or transfer during the entire 30 year
term, and
(2) You have repaid all of the principal you owe the City, and
(3) You are not in default under the City loan.
F. REFINANCING FIRST MORTGAGE LOAN
The Promissory Note allows you to refinance your first mortgage loan without triggering
repayment of your City loan if the following conditions are met. The refinancing must be approved
by the City. The amount received from the refinancing can be no more than the remaining principal
amount of your first mortgage plus reasonable closing costs of the refinancing. The refinance cannot
result in higher monthly payments on the first mortgage loan than were due before the refinancing. If
these conditions are not met, principal and contingent interest on your City loan must be paid to the
City when you refinance.
G. DEF AULT PROVISIONS
When you accept City loan assistance, you agree to meet all of the conditions of all of the
City loan documents. If you violate any provisions of the documents, you are considered to be in
default under your City loan. Also, if you default under the first mortgage loan, you would also be
considered to be in default under the City loan. If you do not correct the violation, the City could
require you to immediately repay the principal and contingent interest owing on the City loan. The
- 5 -
City could also go to court and get a court order to enforce the provisions of the City loan
documents, which may result in a foreclosure on your home.
Please sign the enclosed copy of this Borrower Disclosure Statement in the space
provided below and return it to the City at __________ , Carlsbad, California.
I have read and understand the above Borrower Disclosure Statement.
By: By: --------------Signature of Borrower Signature of Borrower
Print Name of Borrower Print Name of Borrower
Dated: Dated: ----------------
- 6 -
1010\03\111527.3
EXHIBITG
DEVELOPMENT BUDGET
4
/
EXHIBIT G
SUMMARY OF PROJECT COSTS
1 CONTINENTAL HOMES -CALIFORNIA
OCTOBER 3, 2000
PROJECT NAME: Carrillo Village B2
IPROJE,CT COSTS
Land 4,712,000
Site Development Costs 2,149,000 *
Onsite Hard Costs 7,894,000 *
Consultants 755,160 *
Dev. Fees -Other 244,000 *
Dev. Fees @ Permit 1,871,000 *
Warranty Expense 1.00% 171,300
Contractors Fee 4.00% 685,200
Closing Costs 1.00% 171,300
Selling Expenses 5.00% 856,500
General & Admin. 7.00% 1,199,100
Taxes 1.50% 256,950
Financing 6.00% 1,027,800
Total Costs 21,993,310
Note: Project costs as a% of revenue are based on $17,130,000 in total revenue.
* For every dollar spent, by developer on these items, the City shall disburse a
dollar of the $1,350,000 until it is fully disbursed. The disbursements shall occur
monthly as described in Section 2.5.
B2MARKET1 .XLS 10/3/00 8:48 AM
. ' i • Jan-25-2000 04:Jlp11 Fr011-0.R. Jl4rton +817856825-
CONTINENTAL RESIDENTIAL, INC.
CONSENT OF SOLE DIRECTOR
January 1, 2000
T-236 P.002/005 F-589
The undersigned, being the sole director of Continental Residential, Inc., a California
corporation (the "Company''), does hereby adopt the following resolutions:
Authority of David A. Lother, Vice President
WHEREAS, effective April 20, 1998, David A. Lother was elected to, and
continues to serve in, the office of Vice President of the Company (the .. Vice
President''), to serve until the next annual meeting of the directors of the Company ·
and until his successor is duly elected and qualified or until his earlier death,
resignation or removal.
RESOLVED, that in connection with land development for the Company,
without the prio,r approval, and without the signature, of any other officer of the
Company, the Vice President is hereby authorized and empowered, in the name and
on behalf of the Company, to execute and deliver contracts, agreements and other
docwnents and instruments for the subdivisio~ development and/or improvement of
real property, including subcontractor agreements, maintenance contracts,
applications to the Department of Real Estate for approval of budgets, homeowner
association documents and various other documents, homeowner association
documents, entitlement submissions, security bonds, subdivision improvement
agreements, permit applications, easement deeds. agreements with adjacent property
owners, consulting contracts and simiJar or equivalent agreements, documents or
instruments.
Authority of Larry N. Cortes, Vice President
WHEREAS, effective April 20, 1998, Larry N. Cortes was elected to, and
continues to serve in, the office of Vice President of the Campany (the '"Vice
President"), to serve until the next annual meeting of the directors of the Company
and until his successor is duly elected and qualified or until his earlier death,
resignation or removal.
RESOLVED, that the Vice President is hereby authorized and empowered,
in the name and on behalf of the Company in the absence of the Company's Division
President, and (i) subject to written coq>0rate approval by any one of the following
officers of the Company: a) Donald R. Horton, b) Donald J. Tomnitz, c) Richard
Beckwitt, or d) Thomas F. Noon (the "Approving Officers"), to execute and deliver
contracts, agreements and other documents and instruments for the purchase ofreal
,Jan-25-2000 04:32pg From-0,R. --...ton +B17B56B25,..-T-236 P.003/005 F-589
,,
property, and any improvements or appurtenances constructed thereon or affixed
thereto. or any interest therein, including without limitation any right-of-way,
easement, leasehold orothcrtangibleor intangible property, right or interest, and any
personal property relating or incident thereto and, such instruments may include but
not be limited to waivers of conditions to close; and (ii) subject to the written
cmporate approval of any one of the Approving Officers, to execute and deliver
contracts, agreements, deeds, conveyances or other obligations of the Company,
. closing statements and other documents and instruments for the sale of improved or
unimproved real property, or any interest or right therein, owned, leased or otherwise
controlled by the Company.
RESOLVED FURTHER, that in connection with the accounting function
and land acquisition of and for the Company, without prior approval of the
Approving Officers and without the signature of any other officer of the Company,
the Vice President is hereby authorized and empowered, in the name and on behalf •
of the Company, (i) to execute and deliver financing documents, property tax
appeals, service contracts, and wire transfers and (ii) to perform environmental
review, title review, escrow document review and fee analysis, and to execute and
deliver contracts, agreements and other documents and instruments in connection
therewith.
Authority of Donald W. MacKay, Vice President
WHEREAS, effective April 20, I 998, Donald W. MacKay was elected to,
and continues to serve in, the office of Vice President of the Company (the "Vice
President''), to serve until the next annual meeting of the directors of the Company
and until his successor is duly elected and qualified or until his earlier death,
resignation or removal.
RESOLVED. that the Vice President is hereby authorized and empowered,
in the name and on behalf of the Company in the absence of the Company's Division
President, and (i) subject to written corporate approval by any one ofthe following
officers of the Company: a) Donald R. Horton, b) Donald 1. Tomnitz, c) Richard
Beckwitt, or d) Thomas F. Noon (the "Approving Officers''), to execute and deliver
contracts, agreements and other documents and instruments for the purchase of real
property, and any improvements or appurtenances constructed thereon or affixed
thereto, or any interest therein, including without limitation any right-of-way,
easement, leasehold or other tangible orintangible property, right or interest, and any
personal property relating or incident thereto and, (ii) subject to the written corporate
approval of any one of the Approving Officers, to execute and deliver contracts,
agreements, deeds, conveyances or other obligations of the Company, closing
2
, Jan-25-2000 04:32p11 Fro11-D,R . ._ton +817856825''-T-236 P.004/005 F-589
statements and other documents and instruments for the sale of improved or
unimproved real property, or any interest or right therein, owned, leased or otherwise
controlled by the Company.
RESOLVED FURTHER, that in connection with construction and sale of
homes for the Company, without the prior approval of the Approving Officers and
without the signature, of any other officer of the Company, the Vice President is
hereby authorized and empowered, in the name and on behalf of the Company, to
execute and deliver (i) any and all documents and instruments, including without
limitation home sales contracts, general or special warranty deeds, bills of sale and
other conveyance documents and closing statements, including without limitation
lien waivers, owner's affidavits, notices of completion and settlement statements,
necessary to contract for or close the sale of any one or more single-family residences
on behalf of the Company, and (ii) signing of contracts, advertising agreements,
applications to the Department of Real Estate for approval of budgets, homeownei: .
· association documents and various other documents, construction personnel
employment agreements and similar or equivalent agreements, documents or
instruments.
RESOLVED FURTHER. that in connection with litigation management
for the Company, without prior approval of the Approving Officers and without the
signature of any other officer of the Company, but only after consultation with the
Division President of the Company, the Vice President is hereby authorized and
empowered, in the name and on behalf of the Company, to execute and deliver
answers to discovery requests, verified pleadings and similar or equivalent
agreements, documents or instruments.
Authority of Thomas G. Newell, Vice Presiden.t
WHEREAS, effective May 26, 1998, Thomas G. Newell was elected to, and
continues to serve in, the office of Vice President of the Company (the ''Vice
President''), to serve until the next annual meeting oftbe directors of the Company
and until his successor is duly elected and qualified or until his earlier death,
resignation or removal.
RESOLVED, that in connection with sales and marketing of homes for the
Company, without the prior approval, and without the signature, of any other officer
of the Company, the Vice President is hereby authorized and empowered, in the
name and on behalf of the Company, to execute and deliver (i) any and all documents
and instruments, including without limitation home sales contracts, general or special
warranty deeds. bills of sale and other conveyance documents and closing statements,
inciuding without limitation lien waivers, owner's affidavits, notices of completion
and settlement statements, necessary to contract for or close the sale of any one or
3
, Jan-25-2000 04:33p11 Fra11-D,R. -·ton t81785682f T-236 P.005/005 F-589 .
•
more single-family residences on behalf of the Company, and (ii) signage contracts,
advertising agreements, applications to the Department of Real Estate for approval
of budgets, homeowner association documents and various other documents,
salesperson employment agreements and similar or equivalent agreements,
docwnents or instruments.
IN WITNESS WHEREOF, the undersigned has signed as of the date first above written.
U.\JKJ!SU!t.lMla\COIIUlcalo1IOll--COO.wpcl 4
CERTIFICATE OF ASSISTANT SECRET ARY
The undersigned hereby certifies as follows:
1. He is a duly elected, qualified and acting Assistant Secretary of Continental
Residential, Inc., a California corporation (the "Company"), is familiar with the facts herein certified
and is duly authorized to certify the same.
2. The following is a true, correct and complete copy ofresolutions related to the subject
matter as adopted by the Consent of Sole Director of the Company dated January 1, 2000 (the
"Resolutions"). The Resolutions have not been amended, rescinded or modified and remain in full
force and effect as of the date hereof.
Authority of David A. Lother, Vice President
WHEREAS, effective April 20, 1998, David A. Lother was elected to, and
continues to serve in, the office of Vice President of the Company (the "Vice
President''), to serve until the next annual meeting of the directors of the Company
and until his successor is duly elected and qualified or until his earlier death,
resignation or removal.
RESOLVED, that in connection with land development for the Company,
without the prior approval, and without the signature, of any other officer of the
Company, the Vice President is hereby authorized and empowered, in the name and
on behalf of the Company, to execute and deliver contracts, agreements and other
documents and instruments for the subdivision, development and/ or improvement of
real property, including subcontractor agreements, maintenance contracts,
applications to the Department of Real Estate for approval of budgets, homeowner
association documents and various other documents, homeowner association
documents, entitlement submissions, security bonds, subdivision improvement
agreements, permit applications, easement deeds, agreements with adjacent property
owners, consulting contracts and similar or equivalent agreements, documents or
instruments.
IN WITNESS WHEREOF, the undersigned has set his hand on the 26th day of
January, 2000.
~?~c0
Paul W. Buchschacher,
Assistant Secretary
U:VKESLER\Mi11IContRe1\00Ja11]6-COS/. wpd
r "'
Ci
February 23, 2001
?6 J s, 31(.q. Iv< rte .o<,,+-~ Joe S •
First American Insurance Company
411 Ivy Street
PICKED UP BY, (4 M&
TIME: le!; l'D
DATE: 3/, Jo 1 San Diego, CA 92101
Attention: Diane Livingston
Re: Serrano Affordable Housing Units-Carlsbad, California
Dear Ms. Livingston:
This letter constitutes the instructions of the City of Carlsbad, a municipal corporation
(the "City") in connection with financing to be provided by the City to Continental Residential,
Inc., a California corporation, formerly known as L & W Investments, Inc., a California
corporation, successor by merger to Continental Ranch Inc., a Delaware corporation, (the
"Borrower''}. Through this transaction, the City will provide a loan to the Borrower to finance the
construction by the Borrower of ninety homes (the "Improvements") on certain property located
in the City of Carlsbad and described in Exhibit A attached hereto (the "Land").
I. Loans Through This Transaction.
A. The City will make a One Million Three Hundred Fifty Thousand Dollars
($1,350,000) loan to the Borrower (the "$1,350,000 City Loan"), which will be evidenced by a
promissory note secured by a deed of trust on the Property.
II. Deposit of Documents in Connection with this Transaction.
A. The City will deposit the following documents with First American Title Insurance
Company in connection with this transaction: (the "Transaction Documents"):
Ill.
1. The deed of trust executed by the Borrower as truster to First American
Title Insurance Company as trustee for the benefit of the City, to secure a
note from the Borrower to the City in the principal amount of One Million
Three Hundred Fifty Thousand Dollars ($1,350,000) (the "City Deed of
Trust");
Conditions of Document Recordation.
You may complete this transaction only upon fulfillment of all of the following conditions:
A. You hold the documents referred to in Section II above, duly executed and
acknowledged where required, with all appropriate exhibits attached;
B. You have met all of the requirements of the Borrower pursuant to these
instructions;
2965 Roosevelt St., Ste. B • Carlsbad, CA 92h08-2389 • (760) 434-2810/2811 • FAX (760) 720-2037 i)
..
First American Insurance Company
February 23, 2001
Page2
C. You are prepared and unconditionally committed to deliver to the City a 1992
AL TA LP-10 Lender's Policy on the Property naming the City as insured in the amount of One
Million Three Hundred Fifty Thousand Dollars ($1,350,000), with the creditors rights
exclusion set forth in the Exclusions From Coverage deleted, and with the following CL TA
endorsements: modified 100, 116. The City Policy shall not be subject to mechanics liens
rights arising from any work that may have commenced on the Property prior to
recordation of the City Deed of Trust.
IV. Recording Requirements.
A. Please insert all dates where there are blanks in the Transaction Documents and
attached correct legal descriptions where appropriate.
B. The City Deed of Trust is to be recorded at no charge pursuant to California
Government Code Section 27383. If a recording fee is charged by the Recorder of the County
of San Diego, you are to pay the recording fee and be reimbursed through this Escrow.
C. Upon meeting the conditions of closing in Section 111 above, you are instructed to
immediately record in the Official Records of the County of San Diego the following documents
(collectively, the "Record Documents"), in the order set forth below:
1. City Deed of Trust;
D. Immediately upon recordation of the Record Documents, you are instructed to
notify, by telephone, Craig Ruiz at (760) 434-2817.
E. Related to this transaction, the Borrower is selling homes to individual buyers
(Individual Buyers). As part of the selling of the individual homes, the Borrower is carrying back
second mortgage financing to the Individual Buyer as established pursuant to the Affordable
Housing Agreement. The Borrower will assign its interest in such second mortgage financing to
the City. As part of this separate transaction, the Individual Buyer is required to sign, at close of
escrow on the purchase of individual home, the Borrower Disclosure Statement and the Eligible
Buyer Note and the Eligible Buyer Deed of Trust for the benefit of the City. First American Title
Insurance Company is hereby instructed to insert all dates, document numbers and to insert
First American Title Insurance Company as Trustee where there are blanks in the Borrower
Disclosure Statement, the Eligible Buyer Note and the Eligible Buyer Deed of Trust and
attached correct legal descriptions where appropriate.
V. Delivery of the Recorded Documents and Policies.
You are instructed to deliver the following documents, which, where applicable, are to
include recording information certified as correct by Fidelity National Title Insurance Company,
within seventy-two (72) hours of the close of escrow:
2
•
First American Insurance Company
February 23, 2001
Page 3
A.
Policy to:
Copies of all Escrow Documents, the two originals and one copy of the City
Craig Ruiz
VI.
VII.
Housing and Redevelopment Department
City of Carlsbad
2965 Roosevelt Street, Suite B
Carlsbad, California 920008
Costs, Fees, and Premiums.
All costs, fees, and premiums associated with this Escrow will be paid by the Borrower.
Internal Revenue Code Requirements.
You shall be responsible for complying with the requirements of Section 6045(e) of the
Internal Revenue Code of 1986, as amended, and Section 18802.10 of the California Revenue
and Taxation Code.
VIII. Amendment, Modification or Revocation.
These instructions may be revoked, amended or modified in writing by the City at any
time prior to the close of escrow. The City authorizes the Community Development Director of
the City to sign any revocation, supplement, amendment or modification to these instructions on
its behalf.
Please acknowledge your agreement to and acceptance of these instructions by signing
the enclosed copies of this letter and returning one copy to Craig Ruiz at the City
Thank you for your assistance.
Sincerely,
The undersigned acknowledges receipt of the above instructions and agrees to proceed in strict
accordance therewith.
FIDELITY NATIONAL TITLE INSURANCE COMPANY
By: ____________ _
Its: -------------
3