HomeMy WebLinkAboutMilliman, Ryan J.; 2001-10-02;and assigns forever;
TO SECURE to the City the repayment of the S\JmS evidenced by a promissory note
executed by the Birrower to the City dated.:.}-0 IO 2 ( :.3...., 20 .Q.l, in the amount of
TWENTY . THOU SAND Dollars (S20. Oo'OMhe "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 agn,e~cnts ofthe'Borrower contained in the Note and this Deed of Trust; and
TO SECURE the performance of any obligations of Borrower in any other 1greemcnts
with res'pect to the financing of the Propeny or the Security the failure of which would adversely
affect 8eneficiary, whether or not Beneficiary is a party to such agreements. . . .
BORROWER AND CITY COVENANT AND AGREE AS FOLLO~S:
. I. Borrower's Estate. That the Borrower is lawfully seized of the estate hereby
conveyed and has the right to want 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 byNATIONAL CITY** or its successors and assigns
(the "First Lender"), daced ** .. ·-. Tl;l20 ..Q,kxecuted by the Borrower in favor of First
Lender, and recorded in the County of San Diego on· ** 20 _, and assigned
Recorder's Serial No. ____ (the "First under Deed of Trust"), securing a promissory note
·executed by the BorTOwer in favor of the First Lender ("Fim Lender Note"). to ·assist in the
purchase of the Propeny. The Borrower agrees to warrant and defend generally the title to the
Security against all claims and demands, subject to any declarations, casements 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 incl~dc all
· successors and assigns of the First Lender.)
2. Repayment ofl:.oan. The Borrower will promptly repay, when due, t.he principal
and interest required by the Note. The Note contains the following provisions concerning
"~payment of the loan under cenain conditions:
No Assumption of Note. The Borrower acknowledges that this Note is given in
connection with the purchase of property (the "Residence") as pan of a program of
the Agency to assist in the purchase of homes by lower income persons.
Consequently, this Note is not assumable by transferees of the Residence, but is
due in full upon Transfer.
J. First Lender Loan. The Borrower will observe and perform all of the covenants
and agreements of the First Lender Note, First Lender Deed ofTrusi, and related First Lender
loan documents. ·
4. Owner.Ocr:upancy Required· No Leasing Pcnnitted. The Borrower shaU occupy
the Property as his or her principal place of residence. The Borrower shall be considered as .
occupying the Property if the ·Borrower is Jiving in the unit 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
~AND NO/ 100 2
**RECORDED CONCURRENTLY
Borrower is occupying the Property as his or her principal place of residence. The Borrower shall
i:ior lease the Property to another party. Any lease of the Property shall be a default hereunder.
5. Charges· Liens. The Borrower will pay au taxes, assessments 111d other charges,
fines and impositions attributable to the Securiiy which may attain a priority over this Deed of
Trust. by the Borrower making any payment, when due, direcily to the payee thereof.· The
Borrower will promptly furnish to the City all notic~ 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 over this Deed of Trust; provided, that the Borrower will not be required to
discharge the lien ofrhe 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 maimer acceptable to rhe City, or will, in good fa.ith. contest such lien by, or defend
enforcement of such lien in, legal proceedings which operate to prevent the enforcement oft.he
lien or forfeiture of the Security or any part thereof.
6. Hmrd Tnsura.nce. The Borrower will keep the Secunty insured by a standard fire
and extended coverage imurance 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 rhe Borrower from becoming
a co-insurer under the terms of the policy.
The insurance carrjer 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, FaMie Mae, ·Freddie Mac, the United States Department of
Housing and Urban Development. the United States Department ofVeter,uu Affairs, or
successors thereto. ·
All insurance poHcies 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 a.s their interests may appear and in a form acceptable to the
City. The Ciiy shall have the ,right to hold, ·or cause it.s designated agent 10 hold, the policies and
renewals thereof, and the Borrower shall promptly furnish to the City, or its designated agent, the
origintl insurance policies or certificates ofinsur111ce. aO renewal notices and all receipts of paid
premiums. In the event of loss, the Borrower will give prompt notice io the insurance carrier and
t~e City or its designated agent. The City, or its designBted agent, may make proof ofloss if not
made promptly by the Borrower. The City shall receive thirty days advance notice of cancc:llation
of 111y insurance policies required ~ndcr t~s section.
Unless the City and the Borrower otherwise agree in writing, insurance proceeds, subject
to the rights of the First Lender, wi11 be applied to restoration or repair of the Security damaged,
provided such restor2tion. or repair is economically feasible and the Security 9ftl}is Deed of Trust
is not thereby impaired. If such restoration or repm is not economically feasible or if the security
of this Deed of Trust would be impaired, the insurance procc.eds will be used, subject to the rights
of the First Lender, to repay the Note and ail sums secured by this Deed of Trust. with the excess,
if any, paid to the Borrower. Ift)le Security.is abandoned by the Borrower, or if the Borrower
fails to respond to the City, or iis d~ignated agent, within thirty (30) days from the daie notice is
mailed by either of them to the Borrower that the insufance carrier offers to settle a cla.im for
insurance benefits, the City, or its designated agent, is authorized, subject 10 the rights o(the First
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Lender, to collect and apply the insurance proce~ds at the City's option either to restora1ion 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, alf right, title and interest of the Borrower in and to
any insurance policy and in and to the proceeds diereofresulting rrom damage to the Security
prior to the sale or acquisition will pass to the City to the extent of the sums serured 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°kecp the Security in
good repair and will not commit waste or pennit impairment or deterioration of the Secu~ty.
s: Protection of the City's Securicy. If the Borrower fails to-pcrfom1 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,'ilefault under the First Lender Deed ofTrust, the First
Lender Note: or any other deed ofuust encumbering the Property, eminent domain, insolvency,
code enforcement, or arrangemenu 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 detennincs necessary to protect the City's interest, including
but not limited to, disbursement of reasohable attorney's fees and entry upon the Security to make
repairs.
Any amounts disburs~ by the City pursuant to this paragraph,. with interest thereon, will
become an indebtedness of the Borrower secured by this Deed ofTrust. Unless the Borrower and
City agree in writing to other tenns of payment, such amount will be payable upon notice from the
City to the Borrower rcqocsring payment thereo( and will bear interest from the date of
disbursement at the lesser often percent (J0'/4) orthe highest rate peimissible under applicable
law. Nothing contained in this parag,aph wiU 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.
I 0. Forbearance by the City Not a Waiver. Any forbearance by the City in exercising
any right or remedy will not be~ waiver of the exercise·of any such right or remedy. The
procurement ofinsurancc or the payment of taxes or other fiens 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 arc distinct and
cumulative to any other right or remedy under this Deed of Trust or any othc"r document, or
afforded by law or equity, and may be exercised concurrently, independently or successively.
12. Successors and Assigns Bound. ··.The covenants and agreements herein contained
shall bind, and the rights hereunder shall inure to, the respective successors and a.ssigns of the City
and the Borrower subj,ecr to the provisions of this Dc:cd of Trust.
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13. Joint and Several Liabi6ry. All ~venan1s an·d agreements of the Bonower shall be
joint and several.
14. Notice. E,ccept for any notice required undei applicable law to be givcri in another
manner, all notices required in this Deed ofTrud shall be sent by certified mail, return receipt
requested or express delivery service with a dcliv.cry receipt, or personally delivered with a
delivery receipt obtained, and shall be deemed to be effective as of the date shown on t~e delivery
receipt as the date of delivery, the date delivery was refused. or the date the notice was returned
u unddivcrablc as follows: ·
To the Owner:
At the address of the Residence.
To the City:
City of Carlsbad
Housing and Redevelopment Department
2965 Roosevdt Street, Suite B
Carlsb~d. CA 92008-2389
Attn: Housing and Redevelopment Director
The parties may subsequently change addresses by providing written notice of the change
in address to the other parties in ,ccordance with this section.
15. Controlling uiw. This Deed of Trust shall be construed in accordance with and be
governed by the laws of the State of California.
16. Invalid Provisions. If 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 dc:emed severable from the remaining provisions, and
this Deed of Trust and the Note shall be construed. as if such invalid, illc;.gal or unenforceable
provision had never been contained in this Deed of Trust or the Note.
17. ~-The captions and headings in this Deed of Trust are for convenience
only Md arc not to be used to interpret or define the provisions hereo(
18. Defaulr Remedies. Upon the Borrowei's breach of ar,y 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 fonh in Section 14 of this Deed of Trust, notice to the Bonower specifyi~g: (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 11s set forth iri 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 fuilurc 10 cure
such breach on or before the date specified in the notice may result in acceleration of the sums
secured by this Deed ofTrust_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 undelivenible. The notice will also inform the Borrower oftlle Borrowe(s
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right to reinstate after acceleration and the right to bring a coun action to assen the nonexistence
of default or any other defense o(the Borrower.to acceleration and sale. Tfthe breach is not
curable or is not cured on or before the date speci_fied in the notice, the City, at the City's option,
may: (a) declare all oft.lie sums secured by this Deed of Trust 10 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 it.s
security, enter upon the Security and take possession thereof (or any pan 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
ne~ssary or desirable to pre.serve 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 hereu·nder or invalidate
any act done in response to such breach and, notwithstandirig the continuance in possession of the
Sccu·rity, the City shall be entitled.to exercise every right provided for in this Deed of Trust, or by
law upon occurrence of 1111y uncured bruch, including the right to exercise the power of sale; (c)
commence an action to foreclose tJ:,is Deed of Trust as a mortg~ge, ~ppoint a. receiver, or
spccitica_lly enforce any of the covcnants'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, n ~-. 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 lo, reasonable attom.ey's fees. . .
19. Acce!era1ion. Upon the occurrence of a default u.;der the Note, this Deed of
Trust, the First Lender Note, or the Firsi 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 iegal and equitable remedies upon default shall
notconstitutc IL waiver of the City's right to declare a default and exercise all ofirs rights under
the Note and this De·ed 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. Borrowel's Right to Reinstate. Notwithstanding the City's acceleration of the
sums secured by this Peed of Trust, the Borrower will have the right to have any proceedings
begun by the City to enforce this Deed of Trust disconiinued at any time prior to five (S) d11ys
before sale of the Security pursuant to the power of sale contained in this Deed of Trust or 11 any
time prior 10 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 and no acceleration under the
Note has occurred; .(b) the 13orrower cures all breaches of any other covenants or agreem~nts of ·
the Borrower contained in this Deed ·of Trust; (c) the Borrower pays all reasonable eJCpenses
incurred by City and the Trustee in enforcing the covenants and agreements of the Borrower
contained in this Deed of Trust, and in csiforcing the City's and the Tnistee's remedies. including,
but not limited to, reasonable anorney's fees; and (d) the Borrower takes such action as City may
reasonably require to.assure that the lien of this Deed of Trust, City's interest in the Security and
the Borrower's obligation 10 pay the sums secured by this Deed of Trust shall continue
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unimpaired. Upon such payment and cure by the Borrower: this Deed of Trust and the
obligations secured hereby will remain in full fo_rce an_d effect is if no acceleration had occurred.
2 l. • Rcconycyancc. 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 De¥' 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
aJI costs of record at.ion, if any.
22. Substitute Trust=. The City, ·at the City's option, may from time to tim_c ·remove
the Trustee and appoint a successor trustee to any trustee appointed hereunder. Tht successor
trustee will succeed 10 all the titl~. power and duties conferred upon the Trustee herein and by
applicable law.
23. Subordination to First Mortgage. -Notwithstanding any other provision hereof,·
the provisions qfthis Deed ofTrusi 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 L~nder 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 assign:nent in lieu offoreclosure.
After such foreclosure or acceptance of a deed or a.ssignment in lieu of foreclosure, or upon
assignment of1he First Lender Deed of Trust to the Secretary of the United States Department of
Housing and urban Development (the ··secretary"), this Deed ofTrust shall be forever tenninated
.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 ofTru.st is as;igncd to the
Secretary, this Deed of Trust shall automatically terminate.upon such acquisition oft.itle, or
assignment to the Secretary provided that (i) the City has been given wrinen notice of default
under such First Lender Deed of Trust and (u1 the City shall not have cured or commenced to
cure the default within such 30-dAy period and given its finn commitment to complete the cure in
the form and substan~ acceptable to the First Lender. Borrower agrees to record any necessary
d_ocuments to effect such termination. if applicable.
24. Attorney's Fees: lfany action or proceeding_is brought to enforce this Deed ofTrust
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.
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. .
CARLSBAD HOMEBUYER ASSISTANCE PROGRAM
NOTICETO_ BORROWER:
11-IlS NOTE IS NOT ASSUMABLE
SECOND LIEN
. $ 20,000.00
PROMISSORY NOTE ~\-\Ai 11--11s
Secured by Deed ~T~tTO CERTl~RUE AND ·
oocuMENT \~ f r1E ORIGINAL-
. . . E'f-ACI cOP\~E coMPANY
SIGt~ ~J ~ ,. L, s;;~rlsbad,. C..filifomia
.., 1 v,e,f~E"~ 2001 81----
FOR VALUE RECEIVED, the undersigne_d RYAN J • }11.~~IV.AN
_________ (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, tile principal sum of$ 20 QQQ , plus Contingent Interest calculated
·pursuant to Section _4 below. ' ·
1. . Rburpose of Loan. Borrower is purchasing the Residence located
· 6012 -PASEO SALINE · h c· ·fc lb d Thi N 'd 1 d b . at . : . . ..... :-,~-'=-•· ·•· ' · . m t e 1ty o ar s a . s ote ev1 ences a oan ma e y the
City to the Borrower"(the "City Loan") pursuant to the Carlsbad Homebuyer Assistance Program
("CHAP"). The City Loan is in the amount determined by the City to be necessary for the
Borrower to afford to purchase the Residence making a reiisonable downpayment and using
conventional first mortgage financing for the balance of the purchase price not financed by the
City Loan, as amended. · ·
2. . Definitions. The terms set forth in this Section shall have the
following meanings in this Note.
a. "Appreciation Amou;t" shall mean the amo~nt calculated by
subtracting the total original purchase price of the Residence paid by the Borrower, which was ONE
HUNDREILANit SIXTY * . • 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 qy the Borrower pursuant to Section_ 13 below; or (ii) in the event of a
prepayment 9f this Note, a Transfer otber 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
Re~idcnce through a deed in lieu of foreclosure, a trustee's deed upon sale,. or otherwise,. the
amount paid for the Resioence at a creditor's sale of the Residence. ·
b. "Contingent Interest" s~all mean the percenta·ge of the Appreciat-ion
Amount set out in Section 4.
c. "Fair Market Value" shall be determined by a real estate appraisal
made by"an independent residential appraise( designated by the City .. Jf possible, the appraisal
shall be based upon the sales prices of comparable properties sold in the market area during_the .
preceding three-:mo"nth 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 ~e~idence 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 mortgag~ loan for the Residence.
e. · "Rcsidenceu shall mean the housing unit and land encumbered by
the deed of tnist executed in connection with this Note.
. .
. f "Transfer" shall mean any sale; assignment or transfer, voluntary or
involuntary, of any interest in the. Resi~ence, 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 inter~st
evidenced by a land contract by which possession ·of the Residence is transferre~ and the
Borrower retains title. Any Transfer without satisfaction of the provisions of this Note is
prohibited. A transfer: (i) to a.n existing spouse who is also an obligor under the Note; (ii) by a
Borrower to a spouse where the spouse becomes the· co-owner ofttie Residence; (iii) between
spouses as part ofa maniage dissolution proceeding; (iv) to an existing spouse or child of the
Borrower by device 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 (yi) 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 ofresidence and the Borrower shall provide written notice of such transfer to
the City-pursuant to _Section 14 helow. . .
3. Security. Th.is Note jnecured by a second deed of trust dated the
·same date as this Note (the ~Deed of Trust"). ·
O i:rrvE .THOUSAND ~ ~o /. 100
**$165,000.00
2.
**
·4. ' Contingent Interest. The Bo~ower shall pay contingent interest ·
equal to 12 •. 12% percent{.~-~-•~) of the Appreciation Amount (the "Contingent Interest"). No
interest other than Contingent Interest shall be due hereunder. The Contingent Interest shali be
paid to the City at the time set forth in Section 7(b) below,'Linless forgiven by the City pursuant to
Section 7(c) below. Borr·oy,·er acknowledges that the Contingent Jnterest percentage amount is
equal to the City/Seller•½oan principal amount as a percentage of the total purchase price of the
Home paid by'the Borrower at the time of purchase, multiplied by s·eventy-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 (25¾) discount to
Borrower to ac~ount for any capital improvements Borrower may make to the Residence.
5. • X'erm. The Tenn of this Note shall mean the p~riod commencing
on the date of this Note and expirii:ig ·on the date fifteen (15) years thereafter.
6. Residency, First Time H6mebuyer. · and Owner-Occupancy
Requirements: Represei:itations Regarding Requirements.
. a. The Borrow~r shall either have lived in the City for a minimum of
sixty (60) days or work in the City, and also be a first time homebuyer. Failure of the Borrower
to' comply with these requirements shall be a default under this Note. The Borrower shall provide
written certification to the City that he or.she meets these requirements.
b. The Borrower is required to occupy the Residence as hls or her
principal place ·of.residence, and failure by the Borrower to comply with tlus requirement shall be
a default under this Note.· The Borrower shall be considered as occ1,Jpying the Residence if the
·. Borrower is living in the Residence for at least !en (10) months out of each calendar year. The
Borrower shaU provide an annual written certification to the City that the Borrower is occupying
the Residence as his or her pnncjpal place of residence. The Borrower shall not lease the Haine
to another party. Any lease of the Residence shall be a default under this Note.
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c. Borrower hereby certifies that all income, residency or employment,
and first time homebuyer status information previously submitted ·to the City is true and correct.
Misrepresentation by Borrower of th.is information provided to the City shall be a default under
this Note.
7. Repayment,
a. Repayment of the principal amount of this Note shall be deferred
for the first five years from the date of this Note. At the end of five (5) years, the· Borrower shall ·
begin making monthly repayments of principal in the amount of **** · Dollars
($166. 6°9 based on a ten (IO) year principal repav1J1ent schedule and due and payable on thefirst
·day of each calendar month commencing ·11 /01 • 200,6.
**** ONE HUNDRED AND SIXTYSIX 'AND 67/100
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·b. . The total amount of the prindpaI 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 F'"trst Mortgage, (ii) on the date Transfer is
made whether voluntarily, involuntarily, or by operation of law and wqether by deed, contract of
sale, gift, devise, bequest or otherwise, (iii) in the event Borrower ceases to .occupy the Residence.
as his or her principal place of residence; or (iv) at the end of the Tenn of this Note as descnoed
above in Section 5. Failure to declare such amounts due shall not constirute a waiver on the part
of the City to declare t hem due _in the event of a subsequent Transfer.
c. 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.
S. Late Payment Fees. If any payment due· hereunder 1s not paid
within five (5) days from the date such becomes due, Borrower shall pay a reasonable late or
collection charge equal to :five percent (5%) of the amount so unpaid. The pty an.d Borrower
agree that the actual damages.and costs sustained by the City due to the failure to make timely
payments wou_ld 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 l!lte 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.
10. 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 Agency to assist in the purchase.of homes by lower income persons. Consequently, this
Note is not assumable by transferees of the Residence, but is due in full upon Transfer.
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 T!1Jst. ·
l 2. 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 refinancins
is approved by the Cicy, (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)
4
the refinance.does not result in higher monthly payments ori the First Mortgage Loan than were
due prior to the refinance.
13. .Certification of Purchase Price on Transfer. Upon any sale of the
Residence, the 'Borrower shall submit to the City at least fifteen (15) days prior to the close of ·
escrow; a copy of the sales contract and a written declaration, under penalty of perjury, from the
Borrower and the proposed purchaser in a form acceptable to the City stating the gross sales ,price
of the Residence. The certification shall also provide that the proposed purchaser or any other
party has not paid and will not pay to the Borrower, and the Borrower has not received and will
not receive from the proposed purchaser or any other party, money or other consideration,
including personal property, in addition to what is set forth in the sales· contract. ·
. 14. Notice to City of Transfers. Borrower shall provide the City with
written notice of any sale, assign.ment or transfer, voluntary or involuntary, of any interest in the
Residence, including, but not limited to, encumbrance of the Residence with a junio~ deed of trust
or tran~fer of the Residence to a spouse or trust . .Borrower shall -provide this notice to the City no
later than fifteen (I 5) days ·before the sale, assignment, or transfer occurs, except where the ·
transfer is by devise or inheritance after death of the Borrower in which event notice shall be
provided within thirty (30) days of the date of the transfer.
15. Default
a. The Borrower shall be in default under.this Note if he or she is in
'default under the First Mortgage following the expiration of First Mortgage cure periods, or if,
after the notice and cure period· provided by the City to the Borrower pursuant to the notice and
cure provisions of the Deed of Trust, the Borrower. (i) fails to pay any_ money when due under tlus
•. 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. · ·
h. 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 breach
is curabl.e, 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, otthe 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
5
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 lafer 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, sLI<::cessors
and ass~gns, 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 oftime 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 oflimitations as a defense to any demand on this Note cir agreement to pay the same, and
jointly and severally agree to pay all costs of collection whe~ 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. Nci Waiver by the City. No waiver of any breach, default o{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. ·
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 personaily
· delivered with a delivery receipt obtained and shall be deemed to be effective as of the date shown
on the delivery receipt as the date of delivery, the date delivery was refused, or the date the notice
was returned as undeliverable as follows: .
To the Borrower:
At the address of the Residence.
To th~ City:
City of Carlsbad
Housing and Redevelopment Department
2965 Roosevelt Street, Suite B
Carlsbad, CA 92008-2389 .
Attention: Housing and Redevelopinei:it Director
6
Th·e parties may subsequen.tly change addresses by p·roviding written notice of the change
in address to the other parties in accordance with th.is Section 20.
21. Joint and·Seyeral 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 betwe_en Borrower an'd 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 assen any rignt or action against
the City for any loss; damage or other matter arising out of or resulting from any condition o( the
Residence and will hold the City harmless from any liability, Ioss ·o~ 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; of
. c. the failure at any time of any of Borrower's representations to the
Seller or the City to be tnie and correct.
24. Tennination ofRestrictions. Any legal restrictions on conveyance.of the
Residence (as define.din 2,4 CFR 203.41 (a)(3)(~)) included in this Note shall terminate upon
transfer of the Residen·ce by foreclosure, deed· in lieu of foreclosure, or assignment to the
Secretary of the United States Departme~t of Housing and Urban Development.
25. Controlling Law. This Note shall be construed in acco.rdance with and be
governed by the laws of the State of California.
26. Assignment by City. The City may assign its right to receive the proceeds
under this Note to any person and upon notice to the Borrower by the City all payments shall be,
made to the assignee. ·
27. Invalid Provisions. If any one or more of the provisions contained in this
Note shB;ll 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
7
To have and to hold the Security together with acq~ittances to the Trustee. its successors
and assigns forever;
TO SECURE to the City the reP.ayme8~8;t}1e sums evidenced by a promissory note
executed by the Borrower to the City datei 1 06 • 2001. in the amount of
SIXTY-THOUSAND AND NO_ / 100 . . Dollars ($60' OO' ) (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 perfonnance 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:
l. Borrowers 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 NATIONAL CI TY or its successors and assigns
(the "First Lender"), dated ** 2001, executed by the Borrower in favor ofFirst
Lender, and recorded in the.County of San Diego on ** 2001,·and assigned
. Recorder1s 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 ofth·e First Lender.)
2. Repayment of Loan. 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 ofa program of the City to
assist in the purchase of homes by lower income persons. Consequently, this Note is not
assumabie 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
·1oan documents.
4. Owner-Occupancy Required. The Borrower shall occupy the Property as his or
her principal place of residence. The Borrower shall be considered as occupying the Property if
** RECORDED CONCURRNETLY
2
------------------------
------
the Borrower is living in the unit for at.least ten (10) month·s 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; Liens. 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 Insurance. 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 tenns 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 ofloss, 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 in_surance policies required under this section.
Unless the City and the Borrower otheiwise 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 r.epay 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 date notice is
3
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 aU 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 thereofresulting 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. Pr"cservation and Maintenance of Security. The Borrower will keep the Security in
good repair and will _not commit waste or pennit impainnent or deterioration of the Security.
8. Protection of the City's Security. If the Borrower fails to peifohn the covenants
and agreements contained in thls Deed of Trust, the First Lender Note,. the First Lender Deed of
Trust, or if any action or proceeding is commenced which materially. affects th·e 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 Citys 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 <?T take any action hereunder.
9. Inspection. The City may ma)ce 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 ofTrust 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
I 2. Successors and Assigns Bound. The covenants and agreements herein contained
shall bind, and the rights hereunder shall inure to, the respective successors and assigns of the City
and the Borrower subject· to the provisions of this Deed of Trust.
13. Joint and Several Liability. AJI 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. Controlling Law. This Deed of Trust shall be construed in accordance with and be
governed by the laws of the. State of California.
16. Invalid Provisions. If any one or more ofthe 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
provisio!l l~ad never been contained in this ~eed of Trust or the Note.
17. · !:&JlliQil.S. The captions and headings in thls 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 fo rth in Section 14 of this Deed of Trust, notice to the Borro\l_/er specifying: (1) the breach;
(2) if the breach is curable, the action r~quired 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 brea~h on or before the date specified in the notice may result in acceleration of the sums
secured by thjs 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 immedi.ately 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 ~l}Y 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, ~ ~-, 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 at~omey's fees.
19. Acceleration. Upon the occurrence ofa default under the Note, this Deed of
Trust, the First Lender Note, or the First Lender Deed ofTrust, tht: City shall have the right to
declare the ful( amount of the principal along with any interest under the Note i1:1mediately 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. No·r shall acceptance by the City of any payment provided for in
the Note constitut~ 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
slims, 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 i'ncurred
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 takes such action as City may
reasonably require to assure that the lien of this-Deed of Trust, City's interest in the Security and
the Borrower's obligation to pay the sums secured by this Deed ofTrust 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. Rec.onveyance. 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 io the Trustee. The Trustee will reconvey the Security without warranty and
without charge to the pers·on or persons legally entitled thereto. Such person or persons will pay
all costs of recordation, if any.
22. Substitute Tn:1stee. 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 otner p~ovision 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 Deyelopment (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 ·10· effect such termination, if applicable.
7
ONE
NOTICE TO BORROWER: Rancho Carrillo
THIS NOTE IS NOT ASSUMABLE
$ 60,000.00
. THIRD LIEN
PROlvflSSOR Y NOTE
Secured·by Deed of Trust
Ca,ctsbad, California
lHIS IS 10 CERTIFY THATANTl;_ScTOBER f 2001
UMENl IS A TRUE v -EX~~~ COPY OF THE ORIGINAL.
SIGNATURE COMPANY
FOR VALUE RECEIVED, the u~ders~ed R~ll~~.J..,JMl!I,. Atu?i,...~ --
__________ · (the "Borrower") promises. to pay to the City of Carlsbad, a municipal
corporation (the "City"), or order, at the Housing and Redevelopment Depa~ment, 2965 ·
Roos~velt Street, Suite B, Carlsbad, California 92008; or such other place as the City may
designate in ~ting, the principal sum of$ 60 • 000 · uO plus Contingent Interest
calculated pursuant to Section 4below.
1. 'Purpose of Loan. Borrow'cr is purchasing the Residence located at __ _
6012 PASEO SALINERq 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 downpayinent 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 qn 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 iri this Note. . · ·
a. "Appreciation Amount" shall mean the amounfcalculated by
s~btracting the total original purchase price of the Residence paid by the Borrower, which was
HUNDR~D AND SI XTY TH~USAND* Dollars($ ** ). from one of the following amounts, as
applicable: (i) in the ·e:vent of a sale of the Residence, the amount ~eceiv~d 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
*A.ND N0/100
**$165,000.00
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.
b. "Contingent Interest" shall mean the percentage of the Appreciation
Amount set out in Section 4.
c. ."Fair Market Yalue" shall be detennined by a real estate appraisal
made by an independent residential appraiser designated by the City. If possible. the appraisal
shall be based upon the sides 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 u·eu 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 conne~tion with this Note.
f. "Transfer" shall !l'lean 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 interestr 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 marri~ge dissolution proceeding; (iv) to an exfating 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 s·ection 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. C ntin ent Interest. The Borrower shall pay contingent interest equal to
36 • 39% percent~ o ("Contingent Interest Percentage Amount") {seller to insert
appropriate percentage which shall in no event exceed (501/o)] of the Appreciation Amount
(the "Contingent Interest"). No interest other than Contingent Interest shall l:ie 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 perc~ntage of
the total purchase price of the Residence paid by the Borrower at the time of purchase, multiplied
by seventy-five one hundredths (.7S). Borrower acknowledges that this calculation of the
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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 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 Borro~er 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 an~ther_paftY .. Ally le.ase 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/o: the City shall be a default under this Note.
7. Repayment.
a. The total amount of the principal and a!1y 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 oftaw and whether by d_eed, contract of
. sale, gift, devise, bequest or otherwise, (iii) in the event Borrower ceases to occupy the Residence
as his or her principal place of residence; or (iv) at the end of the Term of this Note as described
above in Section 5. Failure to declare such amounts due shall not constitute a waiver on the part
of the City to declare them due in the event of a subsequent Transfer.
b. In the event, upon expiration of the Term, (i) no Transfer has
occurred, (ii) Borrower has repaid all principal pursuant to subsection (a) above, '(iii) Borrower
continues to owner.:occupy the Residence, and (iv) Borrower is ·not in default hereunder or under
the Deed of Trust, the City shall forgive repayment of all Contingent Interest d.ue hereunder.
&. Late Payment Fees. If any payment due hereunder is not paiq 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 amoi.mt 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.
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9. Prepayments. The Borrower may prepay aU or part of the balance due
under this Note in~luding 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.
I 0. No Assumption ofNcite. The Borrower acknowledges that this Note•is
given in connection ~th 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 . Mai'ntenance: Taxes; Insurance. Borrower shall maintain the Residence in
good repair and in a neat, dean 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 T~st 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 ofTran·sfers. 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 th.is notice to the City no later than fifteen (15) days
before the Transfer occurs, except where the Transfer is by devise or. inheritance aft.er death of the
Borrower in which event notice shall be provided within thirty (30) day_s 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 exp·iration 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
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. ' I .
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 que, 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 breach
is curable, the action required to cure such breach: (3) a date, not less than thirty (JO) days fi-om
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
B6rrower to acceleration and sale.
16. . Acceleration. _Upon the occurrence of a default under tlus 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 a~y Contingent lnter~st under this Note immediately due and payable. Ariy ·
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 sh11,II acceptance by the City ofany payment pr'?vided ro·r herein constitute a
waiver of the City's right to require prompt payment ofany remaining princip·ar 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 .defe·nse 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 at_torneys' fees
in such aciio·n.
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 fi-om any fai lure of the· City to take action
with respect to such breach, default or·failure or from any p·revious waiver of any similar or
unrelated breach, default. or ~ailure.
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
5
delivered with a delivery receipt obtained and shall be deemed to be effective as of the date shown
on the delivery receipt as the date of delivery, the date delivery was refused, or the date the notice
was returned as undeliverable as follows:
To the Borrower:
"At the·address of the Residence.
To ·the City:
City of°Carlsbad
Housing and Redevelopment Department
Attention: Housing and Redevelopment Director
2965 Roosevelt Street, Suite B
Carlsbad, CA 92008-2389
The parties may subsequently cha·nge addresses by providing written notice of the change
in address to the other parties in accordance with this Section 20.
2 1. 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,
~nderstands 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 pr'otect Borrower' against negligent, faulty. inadequate or defective building or
construction or any condition of the Residence arid Borrower agrees that neither Borrower, or
Borrower's heirs, suc.cessors or assigns shall ever claim, have or assert· any right or action agai~st
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 ~annless 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.
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