HomeMy WebLinkAboutStrand, Adam and Briana; 2001-08-09;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 Res~dence.
b. "Contingent Interest" shall mean the percentage of the Appreciation
Amount set out in Section 4.
c. "Fair Market Value" shall be determined by a real estate appraisal
made by an independent residential appraiser designated by the City. If possible, the appraisal
shall be based upon the sales prices of comparable properties sold in the market area during the
preceding three-month period. The cost of the appraisal shall be paid by the Borrower. Nothing
in this subparagraph shall preclude the Borrower and the City from establishing the Fair Market
Value of the Residence by mutual agreement in lieu ofan 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
ofa 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").
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* 4. Cont~ent Interest. The Borrower shall pay contingent interest equal to
______ percent c.::___ % ) ("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 :'\ \'<'t
Interest Percentage Amount is equal to the City/Seller Loan principal amount as a percentage o~'<'~x., ~~ ~<y-'v
the total purchase price of the Residence paid by the Borrower at the time of purchase, mult/p:Jie4.0v 0~0\
by seventy-five one hundredths (.75). Borrower acknowledges that this calculation of th~~'<' f-, \0x:-~«:J~ :JJ
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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. ·
5. Term. The Term ofthis 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 (I 0) 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. Aily 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 Contl!lgent Interest owed
under this Note shall immediately become due and payable (i) in the event of a default by the
Borrower under this Note, the Deed of Trust, or the First Mortgage, (ii) on the date Transfer is
made whether voluntarily, involuntarily, or by operation of law and whether by deed, contract of
sale, gift, devise, bequest or otherwise, (iii) in the event Borrower ceases to occupy the Residence
as his or her principal place 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 cos~c,
Such charges shall ~e paid by Bo_rrower wit~out prejudice to the right of the ~ity to collecf.~~~
other amounts provided to be patd under this Note or the Deed of Trust or, with respe~f-.'(~~ :-I..
payments, to declare a default. ~f. "'~<v O ~~~ r~-?:-f,> '?-"-~ 0~
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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. ·
19. No Assumption of Note. The Borrower acknowledges that this Note is
given in connection with the purchase of property (the "Residence") as part ofa 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: Truces; Insurance. Borrower snall maintain the Residence in
good repair and in a neat, clean and orderly condition. Borrower shall promptly pay all propeny
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 ofrefinance 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 pany, 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 ofFirst Mortgage cure periods, or if,
after the notice and cure period provided by the City to the Borrower pursuant to the notice an°'0-s
cure provisions of the Deed of Trust, the Borrower (i) fails to pay any money when due un~~H ~~t;,-'v
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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 ~urns 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: (I) the breach; (2) if the breach
is curable, the action required to cure such breach; (3) a date, not less than thirty (30) days from
the date the notice is effective, by which such breach, if curable, is to be cured and (4) if the
breach is curable, that failure to cure such breach on or before the date specified in the notice may
result in acceleration of the sums secured by the Deed of Trust and foreclosure by the City. The
notice will also infonn 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
caUed for in this Note in accordance with the tenns 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 tenns 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
oflirnitations 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.
l 9. No Waiver by the City. No waiver of any breach, default or failure of
condition under the tenns 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. -:-.. "-~Q ~
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20. Notices. All notices required in this Note shall be sent by certified W-ai~'\0° o~~~--t. V
return receipt requested, or express delivery service with a delivery receipt, or persona.99.~-\ f., -<..'<'6..f.~ '\\. 0~ 0~ G cf., 0~ R-4. R-~ , [)
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