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HomeMy WebLinkAboutDianati, Robert and Alami-Rad, Mahvash; 2001-09-17;and assigns forever; TO SECURE to the City the repayment of the sums evidenced by a promissory note executed by the B9rrow_~i to th_e City dated SEPTEMBER 14Fl.20~ in the amount of ' TWENTY -rHOUSAND . Dollars (Sf'* ) (the "Note"); ** $20,000.00 TO SECURE to the City the payment of all other sums, \\-ith 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 contained in the Note and this Deed of Trust; and . TO SECURE the perfonnance of any obligations of Borrower in any other agreements with respect to the financing of the Property or the Security the,fq.ilure of which would adversely affect Beneficiary, whether or not Beneficiary is a party to such agreements. BORROWER AND CITY COVENANT AND AGREE AS FOLLOWS: 1. Borrower's Estate. That the Borrower is lawfully seized of the estate h~reby conveyed and has the right to grant and convey the Security, that other than this Deed o(Trust, the Security is encumbered only by that deed of t11,1st executed by the Borrower in connection with a loan made to the Borrower by WELLS FAR:GO'·· ·*t~ or its successors and assigns · HOME MORTGAGE, INC. (the "First Lender"), dated __ . 9/17 20.Q.!, executed 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 Lender Deed of Trust"), ~ecuring a promissory note ~xecuted 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 $enerally the -title to the Security against all claims and demands, subject to any declarations, easements or restrictions .li~ted in a schedule of exceptions to coverage in any title ii;tsurance policy insuring the City's , iriterest in the Security. (As used in this Deed of Trust, the tenn "}:irst Lender" shall include all successors and assigns of the First Lender.) · 1 2. Reoavment of Loan. The Borrower will promptly repay, when due, the principal and interest required by the Note. Jhe Note contains the following provisions concerning repayment of the loan under certain conditions: No Assumption of Note. The Borrower acknowledges that this Note is givert. il f connection with the purchase of property (the "Residence") as part of a progran:i of the Agency to assist in the purchase of homes by lower income persons. . , ' Consequently, this Note is not assumable by transferees of the R'esidence, but is · due in full_upon Transfer. r _ First Lender Loan. The Borrower will observe and perform all of the covenants and agreements of the First Lender Note, First ½e:nder, Deed of Trust; and related First Lender loan documents. · · · : _; : 4. Owner-Occupancy Required: No Leasing Permitted. The Borrower shall occupy • the Propelity as his or her principal place of residence. The Borrower shall be considered as occupying the Property if the Borrower is living in the unit for at least ten (10) months out of ~'fi:h calendar year. The Borrower $hall provide an arlnuaJ written certification to the City that the 1010\02\104149. 01 2 *** RECORD CONCURRENTLY Borrower is occupying the Property as his or her principal place of residence. The Borrower shall not lease the Property to another pany. Any lease ofthe·Property shall be a default hereunder. _5. C-hanfe-s: Hens. The Borrower will pay all taxes, assessments and other charges, fines and impositions attributable to the Security which may attain a priority over this Deed of . Trust, by 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 over 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, conte~t. 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 standarcl fire and extended coverage insurance policy in at least an amount equal to the replacement cost of the Security, but in no event less than the amount necessary to prevent the Borrower from becoming a co-insurer under the terms of the policy. The insurance carrier providing this insurance shall be licensed to do business in the State of California and be chosen by the Borrower subject to approval by the City; provided, that such _ approval will not be withheld if the insurer is also approved by th~ 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. · AJI 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 fosurance policies or certificates of insurance, all renewal notices and all receipts of paid premiums. In the event ofloss, the Borrower wiU give prompt notice to the insurance carrier and the City or its designated agent. The City, or its designated agent, may make proof of loss ff rtbt made promptly by the Borrower. The City shall receive thirty days advance notice of cancellaJion of any insurance policies required under this section. Unless the City and the Borrower otherwise agree in writing, insurance proceeds, subject to the rights oftne Fir:sfLender, will be applied to restoration or repair of the Security damaged, provided such restoration or repair is economically feasible and the Security 9f this De.ed of Trust is not thereby impaire·d. If such restoration or r_epaif is not economically feasible or if the security of this Deed of Trust would be impaired, the insurance proceeds will be used, subject to the rights of the First Lender, to repay the Note and all sums secured by this Deed of Trust, with the excess, if any, paid to the Borrower. If the Security is abandoned by the Borrower, or if the Borrower fails to re.pond to the City, or its designated agent, within thirty {30) days from the date notice is mailed by either of them to the Borrower that the insurance carrier offers to settle a claim for insurance benefits, the City, or its designated agent, is authorized, subject to the rights of the First 1010\02\104149. 01 3 Lender, to collect and apply the insurance proceeds at the City's option either to restoration or repair of the Security or to repay the Note and all sums secured by this Deed of Trust. -If the Security is acquired by the City, all right, title and interest of the Borrower in•ar,id to any insuranc.e policy and in and to the proceeds thereof resulting from damage to the Security prior to the sale or acquisition will pass to the City to the e~"tent of the sums secured by this Deed of Trust immediately prior to such sale or acquisition subject to the rights of the First Lender. 7. Preservation and Maintenance of Securitv. The Borrower will keep the Security in good repair and will not commit waste or permit impairment or deterioration of the Security. 8. Protection of the City's Security. If the Borrower fails to perform the covenants and _agreements contained in this Deed of Trust, the First Lend~rNote, the First Lender Deed of Trust, or if any action or proceeding is commenced which materially affects the City's interest in the Security, including, but not limited to, default under the First Lender Deed of Trust, the First Lender Note or any other deed of trust encumbering the Property, e~nent domain, insolvedty, code enforcement, or arrangements or proceedings involving a bankrupt or decedent, then the · City, at the City's option, upon notice to the Borrower, may make such appearances, disburse such sums and take such action as it determines necessary to protect the City's interest, including but not limited to, disbursement of reasonable a.tfomey'.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 ten percent ( l 0%) or the highest rate permissible under applicable law. Nothing contained in this paragraph will require the City to incur any expense or tak_e any action hereunder. 9. Inspection. The City may make or cause to be made reasonable entries upon and inspections of the Security; provid7d that the City will give the Borrower reasonable notice of inspection. l 0. Forbearance by the City Not a Waiver. Any forbearance by the City in exertising 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"n6t be a waiver of the City's right to accelerate the maturity of the indebtedness secured by this Deed of Trust. i ; 11. Remf!dies Cumulative. All remedies provided in this Deed of :rrust 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 '.tbncurrently, 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 assigns of the City and the Borrower subject to the provisions of this Deed of Trust. 1010\02\104149.0l 4 13. Joint and Several Liabilitv. All covenants and agreements of the Borrower shall be joint and several. _14. N_ptice.-&cept for any notice required under applicable law to be given in anqther manner, all no_tices 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 Residence.· To the City: City of Carlsbad Housing and Redevelopment Department · 2965 Roosevelt Street, Suite B Carlsbad, CA 92008-2389 ·--,. ·-... Attn: Housing and Redevelopment Director The parties may subsequently change addresses.byprovidi.ng 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 of the provisions contained in this Deed of Trust or the Note shall for any reason be held to be invalid, illegal or unenforceable in any respect .• then such provision or provisions shall be deemed severable from the remaining provisions, and this Deed of Trust and the Note shall be construed as if such invalid, illegal or unenforceable provision had never been contained in this Deed of Trust or the Note. 17. Captions. The captions and headings in this Deed of Trust are for convenienCet· 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 s:ecured-by this Deed of Trust, the City, prior to acceleration, will send, in the mariner set fortli ill Section 14'ofthis Deed ofTrust, nofice to the Borrower specifyi~g: (I) the breach; (2) if the breach is curable, the action required to cure such breach; (3) a date, not le!:s than thirty (30) days from the date the notice is effective as ~et :forth in Section 14 ofthis Deed of Trust, by which such breach, if curable, is to be cured; and ( 4) if the breach is curable, that failure to cure such breach on or before the date specified in the notice may result in acceleration of the sums secured~ this Deed of Trust and sale of the Security.· Notice shall be effective as of the date shown on the delivery receipt as the date of delivery, the date delivery was refused or the date the · notice was returned as undeliverable. The notice will also inform the Borrower of the Borrower's 1010\02\1041~9.0l 5 right to reinstate after acceleration and the iight to bring a court action to assen 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 alf of the sums secured by this Deed of Trust to be immediately due and payable without fun~er 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 ofits security, enter upon the Security and take possession thereof ( or any part thereof) and of any of the Security, in its own name or in the name of the Trustee, and do any acts which it deems necessary or desirable to preserve the value or marketability of the Security, or part thereof or interest ther~in, increase the income therefrom or protect the security thereof. The entering upon and taking possession of the Security shall not cure or waive ru,1y breach hereunder or invalidate any act done in response to such breach and, notwithstanding the continuance in possession of the Security, the City shall be entitled to exercise every right provided for in this Deed of Trust, or by law upon occurrence of any uncured breach, including the right to exercise the power of sale; (c) commence an action to foreclose this Deed of Trust as a mortgage, appoint a receiver, or - specifically enforce any of the covenants hereof, (d) deliver to the Trustee a written declaration of default and demand for sale, pursuant to the provisions for notice of sale found at California Civil Code Sections 2924, et~-, as amended from t_i~e 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. Th~ City shall be entitled to collect all reasonable costs an·a expenses incurred in pursuing the remedies provided in this paragraph, including, but not limited to, reasonable attorney's fees. 19. Acceleration. Upon the occurrence of a default under the Note, this Deed of Trust, the First Lender Note, or the First Lender Deed of Trust, th_e City shall have the right to declare the full amount of the principal along with any interest under'the Note immediately due and payable. Arty failure by the City to pursue its legal and equitable remedies upon default shall not constitute a waiver of the City's right to declare a default and exercise all of its rights under the Note and this Deed of Trust. Nor shall acceptance by the City of any payment provided for in the Note constitute a waiver of the City's right to require prompt payment of any remaining principal and interest owed. 20. Borrower's Right to Reinstate. Notwithstanding the City's acceleration of the sums secured by this Deed of Trust, the Borrower will have the right to have any proceedings , begun by the City to enforce this Deed of Trust discontinued at any time prior to five (5) days before sale of the Secufity pursuant to the power of sale contained in this Deed of Trust or at any tim~ prior-to entry ofa 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 Borrower cures all b~eac~es of any other covenants or agreements of the Borrower contained in this Deed of Trust; (c)the Borrower pays all reasonable expenses incurred by City and the Trustee in enforcing the·covenants and agreements of the Borrower . contained in this Deed of Trust, and in enforcing the City's and the Trustee's remedies, including, · but not limited to, reasonable attorney's fees; and (d) the Borrower 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 of Trust shall continue 1010\02\104149.0l 6 I • \ \ ,.. ON£ HUNDRED EIGHTY.FIVE THOUSAND** ** $185,000.00 a. "Appreciation Amoun°t" shall mean the amount calculated by subtracting the total original purchase price of the Residence paid by the Borrower, which was ** Dollars($ ** ), from one of the following amounts, as applicable: (i) in the event of a sale of the Residence, the amount received by the Borrower as the sale price of the Residence, as certified by the Borrower pursuant to Section 13 below; or (ii) in the event of a prepayment of this Note, a Transfer other than sale of the Residence, or in the event of a default, the Fair Market Value of the Residence; or (iii) in the event a creditor acquires title to the Residence through a deed in lieu of foreclosure, a trustee's deed upon sale, or otherwise, the amount paid for the Residence at a creditor's sale of the Residence. 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 .. Jf possible, the appraisal shall ibe based upon the sales prices of comparable properties sold in the market area during the preceding three-month period. The cost of the appraisal shall be paid by the Borrower. Nothing in this subparagraph shall preclude the Borrower and the City from establishing the Fair Market Value of the Residence by mutual agreement in lieu of an appraisal. d. "First Mortgage" shall mean the promissory note and deed of trust evidencing and securing the firs~ ~ortgage 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 f prohibited. A transfer: (i) to an existing spo~se 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 device or inheritance following the death of the Borrower; (v) by the Borrower into an inter vivas tru.st in which the Borrower is the beneficiary; or (vi) by deed of trust or imposition .of 1! lien subordinate to the Deed of Trust, shall not be considered a Transfer for th_e purposes ot 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 belo~. · · 3. Security. This Note is secured by a second deed of trust dated the · same date as this Note (the "Deed of Trust"). I 101 0'D2\ 111700.3 2 I b. The total amount of the principal and any Contingent Interest owed under this Note shall immediately become due and payable (i) in the event of a default by the Borrower under this Note, the Deed of Trust, or the First Mortgage, (ii) on the date Transfer is . made whether voluntarily, involuntarily, or by operation of law and whether by deed, contract of sale, gift, devise, bequest or otherwise, (iii) in the event Borrower ceases to occupy the Residence as his or:her principal place 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 s~bsequent 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 D~ed of Trust, the .City shall forgive repayment of all Contingent Interest due hereund~r. 8. Late Payment Fees. If any payment due hereunder is not paid withi1' five (5) days from the date such becomes due:· Borrower shall pay a reasonable late or collection charge equal to five percent (5%) of the amount so unpaid. The City and Borrower agree that the actual damages and costs sustained by the City due to the failure to make timely payments would be extremely difficult to measure and that the charges specified in this paragraph represent a reasonable estimate by Borrower and the City of a fair average compensation for such damages and costs. Such charges shall be paid by Borrower without prejudice to the right of the . City to collect any other amounts provided to be paid under this Note or the Deed of Trust or, with respect to late payments, to'declare a default. 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)ime of prepayment. 10. No Assumption of Note. The Borrower acknowledges that this Note is given in connection with the purchase of property (the "Residence") as part of a program of the Agency to assist in the purchase of ho~es by lower income persons. Consequently, this . Note is not assumable by transferees of the Residence, but is due in full upon Transfer. ' I 1.. Maintenance: Taxes: Insurance. Borrower shall maintain the -Res.idence iff good repair and in a neat, clean and orderly condition. Borrower shall promptly pay alf pr_operty taxes-due on the Residence prior to any delinquency and shall comply with th.e ' insurance requirefoents 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 ;:ind refinance of the First Mortgage, and . the Deed of Trust shall be subordinated to the refinanced loan, provided thaf (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) I 1010\02\111700.3 4 I --I,. - 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 Bo;rrower shall submit to the City at least fifteen (15) days prior to the close of escrow, a copy ofithe sales contract and a written declaration, under penalty of perjury, from the Borrower and the p_foposed purchaser in a form acceptable to the City stating the gross sales price of the Residence. The certification shall also provi!ie that the proposed purchaser or any other party has not paid ancl will not pay to the Borrower, and the Borrower has not received and will ?ot re~eive from thr, ,ropose_d pur~h_aser or any ?ther party,_ money or other consideration, mclu~mg personal pfbperty, m addition to what 1s set forth m the sales contract. 14. Notice to City of Transfers. Borrower shall provide the City with written notice of any sale, assignment or transfer, voluntary or involuntary, of any interest· in the Residence, including, but not limited to, encumbrance of the Residence with a junior deed of trust or transfer of the Residence to a spouse or trust. Bo'rtower shall provide this notice to the City no l later.than fifteen (15) days before the sale, assignment, or transfer occurs, except where the transfer is by devise or inheritance after death of the Borrower in which event notice shall be provided within thirty (30) days of the date of 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 this Note; (ii) breaches any representation or covenant made in this Note in any material respect; or (iii) breaches any provision of the Qeed 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, t 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: {l) 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 brea:eh is curable, -that failure to cure such breach on or before the date specified in the notice may ~esult in acceleration of the sums secured by the Deed of Trust and foreclosure by the City. The notice will also inform the Borrower of the Borrower's right to reinstate after accelerntion and the right to bring a court action to assert the nonexistt;~ce 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 ' 1010\02\111700.3 5 The parties may subsequently change addresses by p·roviding written notice of the change in address to the other parties in accordance with this Section 20. 21. Joint and Several Obligations. This Note is the joint and several obligation of all makers, sureties, guarantors and endorsers, and shall be binding upon them anci their successors and assigns.· 22. Nonliability for Negligence, Loss, or Damage, Borrower acknowledges, understands and agrees that the relationship between Borrower and the City is solely that of borrower and lender, and that the City does not undertake or assume any responsibility for or duty to Borrower to select, review, inspect, supervise, pass judgment on, or inform Borrower of the quality, adequacy or suitability of the Residence or any other matter. The City owes no duty of care to protect Borrower against negligent, faulty, inadequate or defective building or . construction or any condition of the Residence and Borrower agrees that neither Borrower, or Borrower's heirs, successors or assigns shall ever cl;ijm, have or assert any right or action against the City for any loss, damage or other matter arising out'ofor resulting from any condition of the Residence and will hold the City harmless from any liability, loss or damage for these things. 23. Indemnity. Borrower agrees to defend, indemnify, and hold the City harmless from all losses, damages, liabilities, claims, actions, judgments, costs, and reasonable attorneys fees that the City may incur as a direct or indirect consequence of: a. the making of the loan to Borrower; b. Borrower's failure to perform any obligations as and when required by the Note or the Deed of Trust; of c. the failure at any time of any of Borrower's representations to the Seller or the City to be true and correct. 24. Termination of Restrictions. Any legal restrictions on conveyance of the t t Residence (as defined in 24 CFR 203.4l(a)(3)(u)) included in this Note shall terminate upon transfer of the Residence by foreclosure, deed in lieu of foreclosure, or assignment to the Secretary of the United States Department of Housing and Urban Development. 25__ Controlling Law. This Note shall be construed in accordance with and be gov~med 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 t'1e ·Borrower by the City all payments shall be · made to the assignee. · 27. Invalid Provisions. If any one or more of the provisions contained in this Note shall for any reason be held to be invalid, illegal or unenforceable in any respect, then such provision or provisions shall be deemed severable from the remaining provisions contained in this 10101£)2\111700.3 7 --\. - the Borro~er 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 proipptly 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·w.iiileep--the Secu.rity insured by a standard fire and extended coverage insurance policy in at least an amount equal to the replacement cost of the Security, but in no event less than the amount necessary to prevent the Borrower from becoming . a co-insurer under the terms of the policy. The insurance carrier providing this insurance shall be licensed to do business in the State of California and be chosen by the Borrower subject to approval by the City; provided, that such approval will not be withheld if the insurer is also approved by the First Lender, the Federal Home Loan Mortgage Corporation, Fannie Mae, Freddie Mac, the United States Department of Housing and Urban Development, the United States Department of Veterans Affairs, or successors thereto. All insurance policies and renewals thereof will be in a form acceptable to the City and will include a standard mortgagee clause with standard lender's endorsement in favor of the holder of the First Lender Note and the City as their interests may appear and in a fonn acceptable to the City. The City shall have the right to hold, or cause its designated agent to hold, the policies and f r· renewals thereof, and the Borrower shall promptly furnish to the City, or its designated agent, ~he original insurance policies or certificates of insurance, all renewal notices and all receipts of paid '. premiums. In the event of loss, the Borrower will give prompt notice to the insurance carrier and the City or its designated agent. The City, or its designated agent, may make proof of loss if not made promp_tly by t~e Borrower. The City shall receive thirty days advance notice of cancellation of aniinsurance policies-required under this section. · • Unless the City and the Borrower otherwise. agree in writing, insurance proceeds. subject to the rights of the First Lender, will be applied.to testotation or repair of the.Security damaged, provided such restoration or repair is economicaliy feasible and the Security of this Deed of Trust is not thereby impaired. If such restoration or repair is not economically feasible or if the security of this Deed of Trust would be impaired, the insurance proceeds will be used, subject to the rights of the First Lender, to repay the Note and all sums secured by this Deed of Trust, with the excess. if any, paid to the Borrower. If the Security is abandoned by the Borrower, or if the Borrower fails to respond to the City, or its designated agent, within thirty (30) days from the date notice is 3 mailed by either o-flhe~ fo hie Borrower that the insurance· carrier offers to settle a claim for insurance benefits, the City, or its designated agent, is authorized, subject to the rights of the First Lender, to collect and apply the insurance proceeds at the City's option either to restoration or repair of the Security or to repay the Note and all sums secured by this Deed of Trust. If the Security is acquired by the City, all right, title and interest of the Borrower in and to any insurance policy and in and to the proceeds thereof resulting from damage to the Security prior to the sale or acquisition will pass to the City to the extent of the sums secured by this Deed of Trust immediately prior to such sale or acquisition subject to therig~ts of the First Lender. 7. Preservation and Maintenance of Security. The Borrower will keep the Security in good repair and will not commit waste or permit impairment or deterioration of the Security. 8. Protection of the City's Security. If the Borrower fails to perform the coven!lnts and agreements contained in this Deed of Trust, the First Lender Note, the First Lender Deed ·or Trust, or if any action or proceeding is commenced ~hich materially· affects the City's interest in the Security, including, but not limited to, default urid~'r'1he..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 ttie City's interest, including but not limited to, disbursement of reasonable attorney's fees and entry upon the Security to make repairs. Any amounts disbursed by the City pursuant to,~his paragraph, with interest thereon, will become an indebtedness of the Borrower secured by this Deed ofTnist. 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 (l) ten percent (10%) per annum or (2) the highest interest rate permissible under applicable law. Nothing contained in this paragraph will require the City to incur any expense or take any action hereunder. t' 9. Inspection. The City may make or cause to be made reasonable entries upon and inspections of the Security; provided that the City will give the Borrower reasonable notice of inspection. 10. Forbearance by the City Not a Waiver. Any forbearance by the City in exercising any right or_remedy will no·t 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 maturjty qf the indebtedness secured by this Deed of Tru~. , 11. Remedies Cumulative. All remedies provided in this Deed of Tmst are distinct and cµmulative 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 (30) days from the-cf ate th~ io.tice is effective as set forth in. Section 14 of this Deed of Trust, by which such breach, if curable, is to be cured; and (4) if the breach is curable, that failure to cure such breach on or before the date specified in the notice may result in acceleration of the sums secured by this Deed of Trust and sale of the Security. Notice shall be effective as of the date shown on the delivery receipt as the date of delivery, the date delivery was refused or the date the notice was returned as undeliverable. The notice will also inform the Borrower of the Borrower's right to reinstate after acceleration and the right to bring a court action to assert the nonexistence of default or any other defense of the Borrower to acceleration and sale. If the breach is not curable or is not cured on or before the date specified in the notice, .the City, at the City's option, may: (a) declare all of the sums secured by this Deed of Trust to be i~~ediately 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 thereat) and of any of the Security, in its own name or in the name of the Trustee, and do al}y acts which it deems necessary or desirable to preserve the value or mark~tability of the Security, or part thereof or interest therein, increase the income therefrom or protecrthe. 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 i_n this Deed of Trust, or by law upon occurrence of any uncured breach, including the right to exercise the power of sale; (c) commence an action to foreclose this Deed of Trust as a mortgage, appoint a receiver, or specifically enforce any of the covenants hereof; (d) deliver to the Trustee a written declaration of default and demand for sale, pursuant to the provisions for notice of sale found at California Civil Code Sections 2924, et~-. as amended from time to time; or (e) exercise all other rights and remedies provided herein, in the instruments by which the Borrower acquires title to any Security, or in any other document or agreement now or hereafter evidencing, creating or securing all or any portion of the obligations secured hereby, or provided by law. The City shall be entitled to collect all reasonable costs and expenses incurred in pursuing the remedies provided in this paragraph, including, but not limited to, reasonable attorney's fees. 19. Acceleration. Upon the occurrence of a default under the Note, this Deed of ~-f f Trust, the First Lender Note, or the First Lender Deed of Trust, the City shall have the right to declare the full amount of the principal along with any interest under the Note immediately due , , and payable. Any failure by the City to pursue its legal and equitable remedies upon default shall not constitute a waiver of the City's right to declare a default and exercise all of its rights under . . the Note and this Deed or:rrust. Nor shall acceptance by the City of any payment provided for 'in· t_he Note constitute a waiver of the City's right to require prompt payment of any remaining principal and interest owed. · 20. Borrower's Right to Reinstate. Noiwithstanding the City's acceleration of the . sums secured by this Deed of Trust, the Borrower wiU have the right to have any proceedings . begun by the City to enforce this Deed of Trnst discontinued at any time prior to five (5) days before sale of the Security pursuant to the power of sale contained in this Deed of Trust or at any time prior to entry of a judgment enforcing this Deed of Trust if: (a) the Borrower pays City all sums, if any, which would be then due under this Deed of Trust as if acceleration under the Note 6 I to the Residence t~rough 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 Value" 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 sales prices of comparable properties sold in the ,narket area during the preceding three-month period. The cost of the appraisal shall be paid by the Borrower. Nothing in this subparagraph shall preclude the Borrower and the City from establishing the Fair Market Value of the Residence by mutual agreement in lieu of an appraisal, d. "First Mortgage" shall mean the promissory note and deed of trust evidencing and securing the first mortgage loan for the Residence. · e. "Residence" shall me~~-~'i{~·hou·sing 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 oblig9r 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 vivas tmst in which the Borrower is the beneficiary; or (vi) by deed of tmst 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 ofsuch transfer tl:i t' F the City pursuant to Section 14 below. 3. Security. This Note is secured by a second deed oftmst dated the same' date as this Note (the "Deed of Tmst"). · "!<* THIRTY TWO POINT FORTY THREE** ** 32. 43%** , , -4. Contingent Interest. The Borrower shall pay <;:ontingent interest equal to ** percent~%) ("Contingent Interest Percentage Amount") (seller to insert appropriate percentage which shall in no event ~·xteed (50%)) of the Appreciation Amount (the "Contingent Interest"). No interest other than Contingent Interest shall be due hereunder. The Contingent Interest shall be paid to the City at the time set forth in Section 7(a) below, unless forgiven by the City pursuant to Section 7(b) below. Borrower acknowledges that the Contingent Interest Percentage Amount is equal to the City/Seller Loan principal amount as a percentage of the total purchase price of the Residence paid by the Borrower at the time of purchase, multiplied by seventy-five one hundredths (.75). Borrower acknowledges that this calculation of the 04102199 2 I _,.. --\. -. 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 Tenn of this Note shall mean the period commencing on the date of this Note and expiring on the date thirty (30) years thereafter. 6. Owner-Occupancy Required: Representations Regarding Income. a. The Borrower is required to occupy the Residence as his or her principal place of residence, and failure by the Borrower to comply with0this requirement shall be a default under this Note. The Borrower shall be considered as occupying the Residence if the Borrower is living in the Residence for at least ten (10) months out of each calendar year. The Borrower shall provide an annual written certification to the City that the Borrower is occupying the Residence as his or her principal place of residence. The Borrower shall not lease the · Residence to another party. Any lease of the Residence shall be a default under this Note. · ·-.1•1 b. Borrower hereby certifies ihat·all income information previously submitted to the Seller and/or the City is true and correct. Misrepresentation by Borrower of income information provided to the Seller and/or the City shall be a default under this Note. 7. Repayment. a. The total amount of the principal and any Contingent Interest owed under this Note shall immediately become due and payable (i) in the event of a default by the Borrower under this Note, the Deed of Trust, or the First Mortgage, .(ii) on the date Transfer is made whether voluntarily, involuntarily, or by operation of law and whether by deed, contract of sale, gift, devise, bequest or otherwise, (iii) in the event Borrower ceases to occupy the Residence as his or her principal place of residence; or (iv) at the end of the Term of this Note as described above in Section 5. Failure to declare such amounts due shall not constitute a waiver on the part of the City to declare them due in the event of a subsequent Transfer. b. In the event, upon expiration of the Tenn, (i) no Transfer has t· f ~- 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 Jhe date it is-due, Borrower shall pay a reasonable late or collection charge equ_al to five percent (5%) of the afoount so unpaid. The City and Borrower agree that the actual damages and costs sustained by the City due to the failure to in'~ke timely payments would be extremely difficult to measure and that the charges specifieci 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. · 04/02199 3 a --\. - 9. Prepayments. The Borrower may prepay all or part of the balance due under this Note including principal and Contingent Interest. In the event the entire amount of principal due under this Note is prepaid, all Contingent Interest, calculated as of the date of prepayment, shall also be due at the time of prepayment. 10. No Assumption of Note. The Borrower acknowledges that this Note is given in connection with the purchase of property (the "Residence") as part of a program of the 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 foll upon Transfer. 11. Maintenance; Taxes; Insurance. Borrower shall maintain the Residence in good repair and in a neat, clean and orderly condition. Borrower shall promptly pay all property taxes due on the Residence prior to any delinquency and shall comply with the insurance requirements set forth in the Deed of Trust. 12. Refinance of First Mortgage Loan, .. The outstanding principal and interest on this Note shall not be due upon prepayment and refinance of the First Mortgage, and the Deed of Trust shall be subordinated to the refinanced loan, provided that (i) such refinancing is approved by the City, (ii) the amount refinanced does not exceed the outstanding principal balance of the First Mortgage at the time of refinance plus reasonable <;osts 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) pays prior to the close of escrow, a copy of the sales contract and a written declaration, under penalty of perjury, from the Borrower and the proposed purchaser in a form acceptable to the City stating the gross sales price of the Residence. The certification shall also provide that the proposed purchaser or any other party has not paid and will not pay to the Borrower, and the Borrower has not received and will not receive from the proposed purchaser or any other party, money or other consideration, including personal property, in addition to what is set forth in the sales contract. 14. Notice to City of Transfers. Borrower shall provide the City with written ; notice of any Transfer of the Residence or of any interest in the Residence (including, but not · limited to, encumbrance of the Residence with a junior deed of trnst 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-th~ Transfer occui:s,· except where the Transfer is by devise or inheritance after death of the . Borrower in-which event_ notice shall be provided within thirty (30) day_s of the date of Transfer. ) 5. Default. ' ' ' ... ·-. . \ '• a. The Borrower shall be in default under this Note if he or she is in • default under the First Mortgage following the expiratio~ 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 04/02/99 4 I ------------------------------~- I • --t.. - delivered with a delivery receipt obtained and shall be deemed to be effective as of the date showri on the delivery receipt as the date of delivery, the date delivery was refused, or the date the ·notice was returned as undeliverable as follows: To the Borrower: At the address of the Residence. To the City: City of Carlsbad Housing and Redevelopment Department Attention: Housing and Redevelopment Director 2965 Roosevelt Street, Suite B Carlsbad, CA 92008-2389 The parties may subsequently change address~;-by"'providing written notice of the change in address to the other parties in accordance with this Section 20. . 21. Joint and Several Obligations. This Note is the jqint and several obligation of all makers, sureties, guarantors and endorsers, and shall be binding upon them and their successors and assigns. 22. Nonliability for Negligence, Loss or Damage. Borrower acknowledges, understands and agrees that the relationship between Borrower and t):le City is solely that of borrower and lender, and that the City does not undertake or assume .. any responsibility for or duty to Borrower to select, review, inspect, supervise, pass judgment on, or inform Borrower of the quality, adequacy or suitability of the Residence or any other matter. The City owes no duty of care to protect Borrower against negligent, faulty, inadequate or defective building or construction or any condition of the Residence and Borrower agrees that neither Borrower, or Borrower's heirs, successors or assigns shall ever claim, have or assert any right or action against the City for any loss, damage or other matter arising out of or resulting from any condition of th~ r r Residence and will hold the City harmless from any liability, loss or damage for these things. 23. Indemnity. Borrower agrees to defend, indemnify, and hold the City harmless from all losses, damages, liabilities, claims, actions, judgments, costs, and reasonable attorneys fees :that the City rnay 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 ofany of Borrower's representations to. the Seller or the City to be true and correct. 04/02/99 6 I \