HomeMy WebLinkAboutSDP 02-14; Farber Family LP; 2004-1066487; Affordable Housing Agreement/ReleaseDOC # 2004-1 066487
RECORDING REQUESTED BY:
City of Carlsbad '@
WHEN RECORDED MAIL TO:
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NOV 09,2004 459 PM
OFFICIAL RECORDS SAN DIEGO COUNTY RECORDER'S OFFICE GREGORY J. SMITH, COUNTY RECORDER FEES: 143.00 PAGES: 46
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City of Carlsbad
City Clerk's Office
Attn: City Clerk
1200 Carlsbad Village Drive
i;aCarlsbad, California 92008
(Space above for Recorder's Use)
AFFORDABLE HOUSING AGREEMENT
IMPOSING RESTRICTIONS ON REAL PROPERTY
This AFFORDABLE HOUSING AGREEMENT IMPOSING RESTRICTIONS ON
REAL, PROPERTY ("Agreement"), entered into as of the d3" day of 'kb rum- 2004,
by and betyeen the CITY OF CARLSBAD, a municipal corporation (hereinafter referred to as
the ("City"), and Farber Family Limited Partnership, a California limited partnership, (hereinafter
referred to as the ("Developer"), is made with reference to the following:
A. Developer is the owner of certain real property in the City of Carlsbad, in
the County of San Diego, California (hereinafter referred to as the ("subject property") descried
in Attachment "A", which is attached hereto and incorporated herein by this reference.
B. Developer wishes to construct eleven (1 1) residential housing units for
sale at prevailing market prices ("Market Units") and two (2) residential housing units for sale at
affordable prices ("Affordable Units"). The City has approved Site Development Permit SDP
02-14, Carlsbad Tentative Tract Map CT 02-13, Condominium Permit CP 02-08, and Coastal
Development Permit CDP 02-32 for the proposed development (Development). The City issued
these approvals subject to certain Conditions of Approval, including a condition requiring the
Developer to enter into an Affordable Housing Agreement in which Developer agrees to provide
two (2) dwelling units affordable to lower-income households.
C. Developer is required by the Conditions of Approval to enter into an
Affordable Housing Agreement as required and with the content specified by the City's
Inclusionary Housing Ordinance, Carlsbad Municipal Code ("CMC") Chapter 21.85. This
Agreement is that Affordable Housing Agreement pursuant to Section 21.85.140 of CMC
Chapter 21.85, and shall be executed and recorded prior to the approval of any final map,
including Master Tentative Map, for the Subject Property.
A0 \7) Lt70 1 REV. 02/05/03
D. Developer is seeking to meet the requirements of the Inclusionary Housing
Ordinance for the Development by providing the two (2) affordable units in an off-site combined
inclusionary housing project as permitted by Section 21.85.80 of CMC Chapter 21.85.
NOW, THEREFORE, it is mutually agreed by and between the undersigned parties as
follows:
1. Satisfaction of Affordable Housing Obligation and Conditions of Approval. In
order to satisfy the Conditions of Approval and requirements of the City's Inclusionary Housing
Ordinance, Carlsbad Municipal Code Chapter 21.85, Developer shall provide a total of two (2)
Affordable Units that shall be restricted and affordable to lower-income households. This
Agreement is an Affordable Housing Agreement pursuant to Section 21.85.140 of the Carlsbad
Municipal Code. Developer shall submit this Agreement to the City and the Agreement shall be
executed prior to the approval of the final map for the subject property.
2. Combined Inclusionary Housing Proiect. In order to satisfy the Conditions of
Approval and requirements of the City's Inclusionary Housing Ordinance, Carlsbad Municipal
Code Chapter 21.85, the Developer has elected to provide the two (2) Affordable Units in an off-
site Combined Inclusionary Housing Project located at 2362 Hosp Way #234 and 2362 Hosp
Way #334, which are more further described in Attachment B. The units shall be sold at a price
that is restricted and affordable to lower-income households according to the Affordable
Subsidized Purchase Prices attached hereto and incorporated herein as Attachment D.
3. Terms Governing Provision of Affordable Units.
3.1. Obligation to Provide Affordable Units.
3.1.1. Developer shall provide the two (2) Affordable Units in relation to
Market Units ("Market Units") on the Subject Property. The Affordable Multifamily Units shall
include one bedroom units in the numbers and with the square footage indicated in "Attachment
C" to this Agreement. The maximum allowable income level of buyers of the affordable units
shall be restricted to a maximum of 80% of the area median income.
3.2 Schedule for Developing Affordable Units.
3.2.1. Prior to the approval of any Final Map for the Development: (i)
this Agreement shall be duly executed and recorded; (ii) the developer of the Affordable Units
shall have received approval of a Redevelopment Permit for the Development.
3.2.2 Upon satisfjmg the applicable conditions stated in Sections 3.2.1,
all building permits for the Development can be released for a total of eleven (1 1) Market Units.
3.2.3. Prior to receiving the first Certificate of Occupancy for the final
Market Unit, Developer shall sell the two off-site combined units described in"Attachment B"to
low income households as described in Section 3.3 below. Once the sales transaction of the off-
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site Combined Units is completed, the first Certificate of Occupancy may be obtained for the
Market Units.
3.3 Terms for Sale of Affordable Units.
3.3.1. The Schedule of Maximum Eligible Buyer Incomes and Affordable
Subsidized Purchase Prices (the "Schedule") attached hereto and incorporated herein as
Attachment D sets forth the City's requirements for determining the maximum household income
of buyers of the Affordable Units ("Eligible Buyers") and the methodology for calculation of the
subsidized purchase prices of Affordable Units which will be affordable to each of the Eligible
Buyers (the "Affordable Purchase Prices"). The Schedule also includes initial estimates of
Eligible Buyer actual incomes and the corresponding Affordable Purchase Prices. The Final
Schedule shall be established prior to sale based on the San Diego County Area Median Income
and the cost factors applicable at the time. The Final Schedule shall be submitted by the
Developer and approved by the City's Housing and Redevelopment Director prior to the
marketing of the Affordable Units.
3.3.2. The Developer shall sell the Affordable Units only to Eligible
buyers whose household incomes have been verified by the Developer. The purchase price for an
Affordable Unit (the "Market Purchase Price") shall be the market price charged for a
comparable unit (and not to exceed fair market value), or if there is no comparable unit, then the
market Purchase Price shall be at the value established by an appraiser approved by the City;
provided, however, that the Developer shall carry back financing equal to the difference between
the Market Purchase Price and the Affordable Purchase Price for the particular Eligible Buyer
(the "Primary Affordability Subsidy"). The carryback financing shall be assigned by the
Developer to the City, and shall be evidenced by a promissory note from the Eligible Buyer to the
City, secured by a second mortgage deed of trust on the Affordable Unit (the "City Second
Mortgage"). The balance of the Market Purchase Price shall be paid by the Eligible Buyer to the
Developer in cash, utilizing downpayment monies and first mortgage proceeds.
3.4 Terms for Re-sale of Affordable Units. After the initial sale of the inclusionary for-
sale units at a price affordable to the target income level group, inclusionary for-sale units shall
remain affordable to subsequent low income eligible buyers pursuant to a resale restriction for a
minimum term of fifteen (15) years. Beginning fifteen years after the initial purchase of an
Affordable Unit, for-sale units may be sold at a market price to other than targeted households
provided that the sale shall result in the recapture by the City or its designee of a financial interest in
the units equal to the amount of subsidy necessary to make the unit affordable to the designated
income group and a proportionate share of any appreciation. Funds recaptured by the City shall be
used in assisting other eligible households with home purchases at affordable prices. To the extent
possible, projects using for-sale units to satis@ inclusionary requirements shall be designed to be
compatible with conventional mortgage financing programs including secondary market
requirements.
4. Citv Approval of Documents.
3
REV. 02/05/03
4.1. The following documents, in form and substance acceptable to the City,
shall be used in connection with the sale of Affordable Units. Documents to be prepared by the
Developer shall be submitted to the Housing and Redevelopment director for review and
approval no later than the start of construction of the Affordable Units.
4.1.1. A marketing plan establishing the process for seeking, selecting
and determining the eligibility of buyers of the Affordable Units shall be prepared by the
Developer.
4.1.2. An educational program informing Affordable Unit purchasers of
the obligations of home ownership and the specific features of this program shall be prepared by
the Developer.
4.1.3. Purchase and Sale Agreements for sale of the Affordable Units
shall be prepared by the Developer.
4.1.4. City Second Mortgage promissory note, deed of trust, and
borrower disclosure form shall be provided by the City, substantially in the form attached hereto
respectively as Exhibits I , a , and 3 respectively.
4.2 Any of the documents identified in this section 3.1 may be revised by
Developer from time to time with the prior written approval of the Housing and Redevelopment
Director.
5. Mortgage Credit Certificate Prowam. Buyers of the Affordable Units may qualify
for income tax credits pursuant to Mortgage Credit Certificate (MCC) Program, for a portion of
the annual interest paid on a first mortgage used to acquire the Affordable Unit. City shall
cooperate with Developer in obtaining and providing to prospective buyers Mortgage Credit
Certificates from allocations that it may receive.
6. Reporting; and Compliance Monitoring. A report verifylng compliance with the
requirements of this Agreement covering the initial sales of the Affordable Units shall be
provided to the City by the Developer and approved by the Housing and Redevelopment
Director. Developer shall provide the City with other reports as reasonably required by the City
to verify compliance with this Agreement.
7. Default. Failure of the Developer to cure any default in the Developer's
obligations under the terms of this Agreement within (90) days after the delivery of a notice of
default from the City (or where the default is of the nature which cannot be cured within such
ninety (90) period, the failure of the Developer to commence to cure such default within the
ninety (90) day period or the Developer's failure to proceed diligently to complete the cure of
such a default within a reasonable time period but in no event not greater than 180 days) will
constitute a failure to satisfy the Conditions of Approval with respect to the Subject Property and
the requirements of Chapter 21.85 of the Carlsbad Municipal Code and void the approval of the
Final Map and Site Development Plan; and the City may exercise any and all remedies available
4 REV. 02/05/03
to it with respect to the Developer's failure to satisfy the Conditions of Approval, including but
not limited to, the withholding of building permits for the Market Units within the Subject
Property until such cure is completed.
8. Appointment of Other Agencies. At its sole discretion, City may designate,
appoint or contract with any other public agency, for-profit or non-profit organization to perform
the City's obligations under this Agreement.
9. Release of Subiect Property From Agreement. The covenants and conditions
herein contained shall apply to and bind the Developers and its heirs, executors, administrators,
successors, transferees, and assignees of all the parties having or acquiring any right, title or
interest in or to any part of Subject Property and shall run with and burden the Subject Property
and shall run with and burden the Subject Property until terminated in accordance with the
provisions hereof. Prior to the issuance of building permits, the Developer shall expressly make
the conditions and covenants contained in this Agreement a part of any deed or other instrument
conveying any interest in the Subject Property. Notwithstanding anything to the contrary set
forth in the Agreement, individual purchasers of units pursuant to an approved public report in
compliance with the California Subdivided Lands Act, and mortgage lenders holding deeds of
trust on such individual units after sale to such purchasers, shall not be subject to the terms of
this Agreement; and the terms of this Agreement shall be of no further force or effect with
respect to such completed unit on the date of the recordation of a deed to the individual
purchaser. Upon issuance of certificates of occupancy for all of the Affordable Units, the entire
Subject Property, with the exception of the property subject to the approval Site Development
Plan SDP 02-14, shall be released from the burdens of this Agreement. The burdens of this
agreement shall remain in full force and effect and recorded against the property subject to the
approval Site Development Plan SDP 02-14 for the duration of this agreement.
10. Hold Harmless. Developer will indemnify and hold harmless (without limit as to
amount) City and its elected officials, officers, employees and agents in their official capacity
(hereinafter collectively referred to as "Indemnitees"), and any of them, from and against all loss,
all risk of loss and all damage (including expense) sustained or incurred because of or by reason
of any and all claims, demands, suits, actions, judgments and executions for damages of any and
every kind and by whomever and whenever made or obtained, allegedly caused by, arising out of
or relating in any manner to Developer's performance or non-performance pursuant to this
Agreement, and shall protect and defend Indemnitees, and any of them with respect thereto. The
provisions of this section shall survive expiration or other termination of this Agreement or any
release of part or all of the Property from the burdens of this Agreement; and the provisions of
this Section 9 shall remain in full force and effect
1 1. Insurance Requirements: Developer shall obtain, at its expense, comprehensive
general liability insurance for the development of the Subject Property naming Indemnitees as
additional named insureds with aggregate limits of not less than five million dollars ($5,000,000)
for bodily injury and death and property damage, including coverages for contractual liability and
products and completed operations, purchased by Developer or its successors or assigns from an
insurance company duly licensed to engage in the business of issuing such insurance in the State,
5 REV. 02/05/03
I
i
with a current Best's Key Rating of not less than A-:V, such insurance to be evidenced by an
endorsement which so provides and delivered to the Housing and Redevelopment Department
prior to the issuance of any building permit for the Subject Property..
12. Notices. All notices required pursuant to this Agreement shall be in writing and
may be given by personal delivery or by registered or certified mail, return receipt requested, to
the party to receive such notice at the addressed set forth below:
TO THE CITY OF CARLSBAD
CITY OF CARLSBAD
Housing and Redevelopment Department
Attn: Housing and Redevelopment Director
2965 Roosevelt Street, Suite B
Carlsbad, California 92008-2389
TO THE DEVELOPER:
FARBER FAMILY LP
Attn: Curtis Farber
2235 Encinitas Blvd, Suite 104
Encinitas CA 92024
Any party may change the address to which notices are to be sent by
notifymg the other parties of the new address in the manner set forth above.
13.
the parties and no modification hereof shall be binding unless reduced to writing and signed by
the parties hereto.
Integrated Agreement. This Agreement constitutes the entire Agreement between
14. Duration of Agreement. This Agreement shall terminate and become null and
void upon the earlier of: (a) the closing of the sale of the last of the Affordable Units to an
individual purchaser pursuant to a sale on an approved public report in compliance with the
California Subdivided Lands Act, or (b) upon the granting of a written release by the Community
Development Director. This Agreement, and any section, subsection, or covenant contained
herein, may be amended only upon the written consent of Developer and the Community
Development Director.
15. Recording of Agreement. The parties hereto shall cause this Agreement to be
recorded against the Subject Property in the Official Records of he County of San Diego.
16. Severability. In the event any limitation, condition, restriction, covenant, or
provision contained in this Agreement is to be held invalid, void or unenforceable by any court of
competent jurisdiction, the remaining portions of this Agreement shall nevertheless be and
remain in full force and effect.
6
REV. 02/05/03
IN WITNESS WHEREOF, the parties hereto have caused this agreement to be
executed as of the day and year first above written.
DEVELOPERS CITY
A City of Carlsbad, a Municipal corporation
By: By:
Community Development Director
By:
Proper notarial acknowledgment of execution by contractor must be attached. If a Corporation,
Agreement must be signed by one corporate officer from each of the following two groups.
*Group A.
Chairman, Secretary,
President, or
Vice-president
**Group B.
Assistant Secretary,
CFO or Assistant Treasurer
Otherwise, the corporation
corporate seal empowering the officer(s) signing to bind the corporation.
attach a resolution certified by the secretary or assistant secretary under
APPROVED AS TO FORM:
RONALD R. BALL, City Attopey
By:
7 REV. 02/05/03
CALIFORNIA
ALL-PURPOSE
ACKNOWLEDGEENT
STATE OF CALlFORNIA )
COUNTY OF Su.nWty 1
On 2)25/Y before me, LIi cde cn' IOU I
NAME. TITLE Of OFFICER - E.G.. 'JANE DOE, NOTARY PUBLIC' ' DATE
personally known to me (or proved to me on t'ne basis of satisfactory evidence) to be the person(s)
whose name(s) Isiare subscribed to the within instrument and acknowiedged to me that he/she/
they executed the same in his/her/their authorized capacity(ies), and 'that by his/her/their
signature(s) on the instrument the person(s), ~i the entity upon behalf of which the person(s) acted,
executed the instrument.
?I
WITNESS my hand and official sEal.
OPTIONAL ISTORMATION
TITLE OR TYPE OF DOCUMENT
DATE OF DOCUMENT
SlGNER(S) OTHER THAN NAMED ABOVE
NUMBER OF PAGES
ATTACHMENT A
LEGAL DESCRIPTION OF SUBJECT PROPERTY
THAT PORTION OF TRACT 2 OF LAGUNA MESA TRACT, IN THE CITY OF
CARLSBAD, COUNTY OF SAN DIEGO, STATE OF CALIFORNIA, ACCORDING TO MAP
THEREOF NO. 1719, FLED IN THE OFFICE OF THE COUNTY RECORDER OF SAN
DIEGO COUNTY, JUNE 20,1921.
8
ATTACHMENT B
LEGAL DESCRIPTION OF OFF-SITE COMBINED PROJECT
UNIT #234
PARCEL A:
AN UNDIVIDED 1/108TH INTEREST IN AND TO LOT 1 OF CARLSBAD TRACT NO. 81-
41, IN THE CITY OF CARLSBAD, COUNTY OF SAN DIEGO, STATE OF CALIFORNIA,
AS PER MAP THEREOF NO. 10725, FILED IN THE OFFICE OF THE COUNTY
RECORDER OF SAN DIEGO COUNTY, STATE OF CALIFORNIA.
EXCEPTING THEREFROM THE FOLLOWING:
(A) ALL UNITS AS SHOWN UPON THE GROVE PHASE I CONDOMINIUM PLAN
(HEREINAFTER “CONDOMINIUM PLAN”) RECORDED SEPTEMBER 21,1983,
AS FILE NO. 83-337701 AND RERECORDED DECEMBER 7,1983, AS FILE NO.
83-444150 BOTH OF OFFICAL RECORDS OF THE COUNTY RECORDER OF
THE COUNTY OF SAN DIEGO.
(B) THE EXCLUSIVE RIGHT TO POSSESSION OF ALL THOSE AREAS
DESIGNATED AS BALCONY, PATIO, STORAGE, COVERED PARKING SPACE
AND PARKING SPACE EXCLUSIVE USE AREAS AS SHOWN UPON THE
CONDOMINIUM PLAN ABOVE REFERRED TO.
PARCEL B:
UNIT LU 234 AS SHOWN UPON THE CONDOMINIUM PLAN REFERRED TO ABOVE.
PARCEL C:
EXCLUSIVE RIGHT TO USE, POSSESSION AND OCCUPANCY OF THOSE PORTIONS
OF PARCEL A DESCFUBED ABOVE DESIGNATED AS B 234, CPS-234, P-, S-234, AND
PS-234, AS APPURTENANT TO PARCELS A AND B ABOVE DESCRIBED.
PARCEL D:
A NON-EXCLUSIVE EASEMENT FOR INGRESS AND EGRESS, USE AND ENJOYMENT
OVER THE COMMON AREA OF LOTS 2 AND 3 OF CARLSBAD TRACT NO. 81-41, AS
PER MAP THEREOF NO. 10725, FILED IN THE OFFICE OF THE COUNTY RECORDER
9
OF THE COUNTY OF SAN DIEGO, STATE OF CALIFORNIA, ON SEPTEMBER 19,1983
WHICH EASEMENT IS APPURTENANT TO PARCELS A, B, AND C DESCRIBED
ABOVE. THIS EASEMENT SHALL BECOME EFFECTIVE AS TO EACH OF SAID LOTS,
RESPECTIVELY, UPON RECORDATION OF A DECLARATION OF ANNEXATION
DECLARING SUCH LOTS, RESPECTIVELY, TO BE SUBJECT TO THE DECLARATION
OF COVENANTS, CONDITIONS, AND RESTRICTIONS TO WHICH REFERENCE IS
HEREAFTER MADE OR A SEPARATE DECLARATION OF COVENANTS, CONDITIONS
AND RESTRICTIONS WHICH REQUIRES THE OWNERS OF SAID LOTS,
RESPECTIVELY, TO BE MEMBERS OF THE ASSOCIATION (AS DEFINED BELOW) ALL
AS MORE FULLY SET FORTH IN THE DECLARATION TO WHICH REFERENCE IS
HEREAFTER MADE. THE COMMON AREA REFERRED TO HEREIN AS TO EACH OF
SAID LOTS SHALL BE SHOWN AND DESCRIBED ON THE CONDOMINIUM PLAN OR
PLANS RECORDED IN THE OFFICE OF THE COUNTY RECORDER OF SAN DIEGO
COUNTY, STATE OF CALIFORNIA.
EXCEPTING THEREFROM ANY RESIDENTIAL BUILDINGS THEREON AND PORTION
THEREOF WHICH MAY BE DESIGNATED AS AN EXCLUSIVE USE AREA.
PARCEL E:
A NON-EXCLUSIVE EASEMENT FOR INGRESS AND EGRESS OVER, ALONG, ACROSS
AND THROUGH THAT REAL PROPERTY DESCRIBED AS FOLLOWS:
A STRIP OF LAND 7.50 FEET, LYING WITHIN SAID LOT 2, THE WESTERLY,
NORTHERLY AND EASTERLY BOUNDARY OF SAID STRIP OF LAND BEING
DESCRIBED AS FOLLOWS:
BEGINNING AT THE SOUTHWESTERLY CORNER OF SAID LOT 2; THENCE ALONG
THE BOUNDARY LINE OF SAID LOT NORTH 30” 32’ 30” EAST, 325.37 FEET; THENCE
SOUTH 64” 47’ 19” EAST, 56.45 FEET; THENCE SOUTH 25” 40’ 47” EAST 219.40
FEET; THENCE SOUTH 67” 11’ 43” EAST, 16.00 FEET; THENCE NORTH 57” 33’ 00”
EAST, 85.00 FEET.
ALSO THE SOUTHEASTERLY 75.00 FEET OF LOT 3.
SAID NON-EXCLUSIVE EASEMENT SHALL BE FOR THE BENEFIT OF THE
OWNERS OF LOT 1 OF CARLSBAD TRACT 81-41, AS PER MAP THEREOF NO.
10725, FILED IN THE OFFICE OF THE COUNTY RECORDER OF SAN DIEGO
COUNTY, STATE OF CALIFORNIA. THEIR SUCCESSORS IN INTEREST, HEIRS
AND ASSIGNS SAID EASEMENT SHALL BE APPURTENANT TO SAID LOT 1 AND
SHALL RUN WITH THE LAND IN ACCORDANCE WITH THE COVENANTS,
CONDITIONS AND RESTRICTIONS.
NOTE: SAID COVENANTS, CONDITIONS AND RESTRICTIONS WERE RECORDED
SEPTEMBER 21,1983, AS FILE NO. 83-337702 OF OFFICAL RECORDS,
10
UNIT #334
A CONDOMINIUM COMPRISED OF:
PARCEL A:
AN UNDIVIDED 1/108TH INTEREST IN AND TO LOT 1 OF CARLSBAD TRACT NO. 81-
41, IN THE CITY OF CARLSBAD, COUNTY OF SAN DIEGO, STATE OF CALIFORNIA,
ACCORDING TO MAP THEREOF NO. 10725, FILED IN THE OFFICE OF THE COUNTY
RECORDER OF SAN DIEGO COUNTY, SEPTEMBER 19,1983.
EXCEPTING THEREFROM THE FOLLOWING:
(A) ALL UNITS AS SHOWN UPON THE GROVE PHASE 1 CONDOMINIUM PLAN
(“CONDOMINIUM PLAN”) RECORDED SEPTEMBER 21, 1983, AS FILEPAGE
NO. 83-337701 OF OFFICIAL RECORDS OF THE COUNTY RECORDER OF
COUNTY OF SAN DIEGO AND RE-RECORDED DECEMBER 7, 1983, AS
FILEPAGE NO. 83-444150 OF OFFICIAL RECORDS.
(B) THE EXCLUSIVE RIGHT TO POSSESSION OF ALL THOSE AREAS
DESIGNATED AS BALCONY, PATIO, STORAGE, COVERED PARKING SPACE
AND PARKING SPACE EXCLUSIVE USE AREAS AS SHOWN UPON THE
CONDOMINIUM PLAN ABOVE REFERRED TO.
PARCEL B:
UNIT LU 334, AS SHOWN UPON THE CONDOMINIUM PLAN REFERRED TO ABOVE.
PARCEL C:
EXCLUSIVE RIGHT TO USE, POSSESSION AND OCCUPANCY OF THOSE PORTIONS
OF PARCEL A DESCRIBED ABOVE DESIGNATED ON SAID CONDOMINIUM PLAN AS
EXCLUSIVE USE AREAS AS APPURTENANT TO PARCELS A AND B ABOVE
DESCRIBED.
11
ATTACHMENT C
LOCATION, SIZE, AND BEDROOM COUNT
OF AFFORDABLE UNITS
TWO ONE-BEDROOM UNITS AT 2362 HOSP WAY, CARLSBAD, CALIFORNIA (UNITS
234 AND 334).
12
ATTACHMENT D
SCHEDULE OF MAXIMUM ELIGIBLE BUYER INCOMES
AND AFFORDABLE SUBSIDIZED PURCHASE PRICES
MAXIMUM INCOME IS $43,850.00 ANNUALLY.
SUBSIDIZED PURCHASE PRICE IS $120,000.00 PER UNIT
13
NOTICE TO BORROWER:
THIS NOTE IS NOT ASSUMABLE
EXHIBIT 1
PROMISSORY NOTE
Secured by Deed of Trust
Carlsbad, California
Y 200-
FOR VALUE RECEIVED, the undersigned
(the "Borrower") promises to pay to the City of Carlsbad, a
municipal corporation (the Tity"), or order, at the Housing and Redevelopment Department,
2965 Roosevelt Street, Suite B, Carlsbad, California 92008-2389, or such other place as the City
may designate in writing, the principal sum of Dollars ($ ),
plus Contingent Interest calculated pursuant to Section 3 below, plus any amounts due the City
as Excess Sales Proceeds pursuant to the Resale Restriction Agreement and Option to Purchase
(the "Resale Agreement") by and between Borrower and City of even date herewith.
1. Purpose of Loan. Borrower is purchasing the Residence located at
in the City of Carlsbad. This Note evidences a loan made by
(the "Seller") 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 CitylSeller Loan is in the amount determined by the City to be necessary for the
Borrower to afford to purchase the Residence making a reasonable downpayment and using
conventional first mortgage financing for the balance of the purchase price not financed by the
City/Seller Loan. The Seller made the City/Seller Loan to the Borrower and assigned the
City/Seller Loan to the City in fulfillment of certain inclusionary housing obligations pursuant to
an Affordable Housing Agreement between Standard Pacific Corporation, a Delaware
corporation (Seller's predecessor in interest) and the City dated Y ?
200-. Because the purchase price was set at an affordable price, the Borrower is required and
has agreed to execute a Resale Agreement which during the first fifteen (15) years of Borrower's
Ownership of the Residence, restricts the price of the Property upon resale and which requires
the Borrower to pay any Excess Sales Proceeds (as defined below) at resale to the City. This
Note evidences both (a) the obligation of Borrower to repay the City/Seller Loan, and (b) the
obligation of Borrower to pay any Excess Sales Proceeds to the City pursuant to the Resale
Agreement.
2. Definitions. The terms set forth in this section shall have the following meanings
in this Note.
a. "Appreciation Amount" shall mean the amount calculated by subtracting
the total original purchase price of the Residence paid by the Borrower, which was
1211 612003 1
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 15d or Section
17 of the Resale Agreement 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; or (iv) in the event of payment at the expiration of the thirty (30)
year tern the Fair Market Value of the Residence.
b. "Contingent Interest" shall mean the percentage of the Appreciation
Amount set out in Section 4.
C. "Excess Sales Proceeds" shall have the meaning set forth in Section 16 of
the Resale Agreement.
d. "Fair Market Value" shall be determined by a real estate appraisal made
by an independent residential appraiser designated by the City. If possible, the appraisal shall be
based upon the sales prices of comparable properties sold in the market area during the preceding
three (3)-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.
e. "First Mortgage" shall mean the promissory note and deed of trust
evidencing and securing the first mortgage loan for the Residence.
f. "Maximum Restricted Resale Price" shall have the same meaning as set
forth in Section 14 of the Resale Agreement.
g. "Resale Agreement" shall mean the Resale Restriction Agreement and
Option to Purchase executed by the Borrower and the City in connection with the City/Seller
Loan.
"Residencef' shall mean the housing unit and land encumbered by the deed
of trust executed in connection with this Note.
h.
1. "Transfer" shall mean any sale, assignment or transfer, voluntary or
involuntary, of any interest in the Residence, including, but not limited to, a fee simple interest, a
joint tenancy interest, tenancy in common interest, a life estate, a leasehold interest, or an interest
evidenced by a land contract by which possession of the Residence is transferred and the
Borrower retains title. Any Transfer without satisfaction of the provisions of this Note is
prohibited. A transfer: (i) to an existing spouse who is also an obligor under the Note; (ii) by a
Borrower to a spouse where the spouse becomes the co-owner of the Residence; (iii) between
spouses as part of a marriage dissolution proceeding; (iv) to an existing spouse or child of the
Borrower by devise or inheritance following the death of the Borrower; (v) by the Borrower into
an inter vivos trust in which the Borrower is the beneficiary; (vi) by deed of trust or imposition
of a lien subordinate to the Deed of Trust; or (vii) by refinance of the First Mortgage meeting the
1211 612003 2
requirements of Section 11, 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 (except where the transfer occurs pursuant to subsection (iii) or (iv)
above, in which event the transferee shall owner-occupy the Home and affirmatively assume
Owner's obligations under this Note and the City Deed of Trust, and the Resale Agreement) and
the Borrower shall provide written notice of such transfer to the City pursuant to Section 8 of the
Resale Agreement.
3. Security. This Note is secured by a second deed of trust dated the same date as
this Note (the "Deed of Trust").
4. Contingent Interest. The Borrower shall pay contingent interest equal to
percent ( %) [staff to insert appropriate percentage which shall in no
event exceed (50%)] of the Appreciation Amount (the "Contingent Interest"). No interest other
than Contingent Interest shall be due hereunder. The Contingent Interest shall be paid to the City
at the time set forth in Section 6 below. Borrower acknowledges that the Contingent Interest
percentage amount is equal to the City/Seller Loan principal amount as a percentage of the total
purchase price of the Residence paid by the Borrower at the time of purchase, multiplied by
seventy-five one hundredths (.75). Borrower acknowledges that this calculation of the
percentage of the Appreciation Amount due to the City as Contingent Interest includes a twenty-
five percent (25%) discount to Borrower to account for any capital improvements Borrower may
make to the Residence.
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. Repayment. The total amount of the principal and any Contingent Interest owed
under this Note (including Excess Sales Proceeds due to the City pursuant to the Resale
Agreement) shall immediately become due and payable (i) in the event of a default by the
Borrower under this Note, the Resale Agreement, 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.
7. Late Payment Fees. If any payment due hereunder is not paid within five (5) days
from the date such becomes due, Borrower shall pay a reasonable late or collection charge equal
to five percent (5%) of the amount so unpaid. The City and Borrower agree that the actual
damages and costs sustained by the City due to the failure to make timely payments would be
extremely difficult to measure and that the charges specified in this paragraph represent a
reasonable estimate by Borrower and the City of a fair average compensation for such damages
and costs. Such charges shall be paid by Borrower without prejudice to the right of the City to
collect any other amounts provided to be paid under this Note, the Resale Agreement or the Deed
of Trust or, with respect to late payments, to declare a default.
3 12/16/2003
8. 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. In the event of partial prepayment, the amount of
Contingent Interest due upon prepayment shall be determined at the time of any partial
prepayment based on the Fair Market Value of the Property. Partial prepayments shall be
allocated between payment of Contingent Interest and payment of principal in the same
proportion as the ratio of each to the total amount due (principal and interest) at the time of
prepayment. Following a prepayment, the percentage of Contingent Interest due the City shall
be recalculated to reflect the paydown in principal owed the City. The recalculated Contingent
Interest shall equal the outstanding principal amount of the Note divided by the original purchase
price of the Property paid by the Borrower. Notwithstanding any prepayment of amounts due
under this Note, the Resale Agreement shall continue in full force and effect for the period of
time set forth in Section 25 of the Resale Agreement.
9. No Assumption of Note. The Borrower acknowledges that this Note is given in
connection with the purchase of property (the "Residence") as part of a program of the City to
assist in the purchase of homes by lower income persons. Consequently, this Note is not
assumable by transferees of the Residence, but is due in full upon Transfer.
10. 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 and Resale Agreement.
11. 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 Resale
Agreement and Deed of Trust shall be subordinated to the refinanced loan, provided that (i) such
refinancing is approved by the City, (ii) the amount refinanced does not exceed the outstanding
principal balance of the First Mortgage at the time of refinance plus reasonable costs of
refinance, and (iii) the refinance does not result in higher monthly payments on the First
Mortgage Loan than were due prior to the refinance.
12. 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 or Resale Agreement 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, the Resale Agreement 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
12/16/2003 4
acceleration, will send, in the manner set forth in Section 17, notice to the Borrower specifying:
(1) the breach; (2) if the breach is curable, the action required to cure such breach; (3) a date, not
less than thirty (30) days from the date the notice is effective, by which such breach, if curable, is
to be cured and (4) if the breach is curable, that failure to cure such breach on or before the date
specified in the notice may result in acceleration of the sums secured by the Deed of Trust and
foreclosure by the City. The notice will also inform the Borrower of the Borrower's right to
reinstate after acceleration and the right to bring a court action to assert the nonexistence of
default or any other defense of the Borrower to acceleration and sale.
13. Acceleration. Upon the occurrence of a default under this Note, the Resale
Agreement, the Deed of Trust, or the First Mortgage, the City shall have the right to declare the
full amount of the principal along with any Contingent Interest under this Note immediately due
and payable. Any failure by the City to pursue its legal and equitable remedies upon default
shall not constitute a waiver of the City's right to declare a default and exercise all of its rights
under this Note, the Resale Agreement, 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.
14. 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.
15. Waiver; Attorney Fees and Costs. The Borrower and any endorsers or guarantors
of this Note, for themselves, their heirs, legal representatives, successors and assigns,
respectively, severally waive diligence, presentment, protest, and demand, and notice of protest,
dishonor and non-payment of this Note, and expressly waive any rights to be released by reason
of any extension of time or change in terms of payment, or change, alteration or release of any
security given for the payments hereof, and expressly waive the right to plead any and all statutes
of limitations as a defense to any demand on this Note or agreement to pay the same, and jointly
and severally agree to pay all costs of collection when incurred, including reasonable attorney
fees. If an action is instituted on this Note, the Borrower promises to pay, in addition to the costs
and disbursements allowed by law, such sum as a court may adjudge reasonable as attorneys'
fees in such action.
16. No Waiver by the City. No waiver of any breach, default or failure of condition
under the terms of this Note shall be implied from any failure of the City to take action with
respect to such breach, default or failure or from any previous waiver of any similar or unrelated
breach, default or failure.
17. Notices. All notices required in this Note shall be sent by certified mail, return
receipt requested, or express delivery service with a delivery receipt, or personally delivered with
a delivery receipt obtained and shall be deemed to be effective as of the date shown on the
delivery receipt as the date of delivery, the date delivery was refused, or the date the notice was
returned as undeliverable as follows:
To the Borrower:
5 1211 612003
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
Attention: Housing and Redevelopment Director
The parties may subsequently change addresses by providing written notice of the change
in address to the other parties in accordance with this section.
18. 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.
19. Nonliabilitv for Negligence, Loss, or Damage. Borrower acknowledges,
understands and agrees that the relationship between Borrower and the City is solely that of
borrower and lender, and that the City does not undertake or assume any responsibility for or
duty to Borrower to select, review, inspect, supervise, pass judgment on, or inform Borrower of
the quality, adequacy or suitability of the Residence or any other matter. The City owes no duty
of care to protect Borrower against negligent, faulty, inadequate or defective building or
construction or any condition of the Residence and Borrower agrees that neither Borrower, or
Borrower's heirs, successors or assigns shall ever claim, have or assert any right or action against
the City for any loss, damage or other matter arising out of or resulting from any condition of the
Residence and will hold the City harmless from any liability, loss or damage for these things.
20. Indemnity. Borrower agrees to defend, indemnify, and hold the City harmless
fiom 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, the Resale Agreement or the Deed of Trust; of
c.
the City to be true and correct.
the failure at any time of any of Borrower's representations to the Seller or
21. Termination of Restrictions. Any legal restrictions on conveyance of the
Residence (as defined in 24 CFR 203.41(a)(3)) 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.
6 12/16/2003
22. Controlling Law. This Note shall be construed in accordance with and be
governed by the laws of the State of California.
23. 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.
24. Invalid Provisions. If any one or more of the provisions contained in this Note
shall for any reason be held to be invalid, illegal or unenforceable in any respect, then such
provision or provisions shall be deemed severable from the remaining provisions contained in
this Note, and this Note shall be construed as if such invalid, illegal or unenforceable provision
had never been contained in this Note.
25. Entire Aaeement. This Note (along with the Resale Agreement and Deed of
Trust) sets forth the entire understanding and agreement of the City and the Borrower and any
amendment, alteration or interpretation of this Note must be in writing signed by both the City
and the Borrower.
BORROWER
(Print Name)
(Print Name)
7 12/16/2003
PROMISSORY NOTE
CITY OF CARLSBAD
ADMINISTRATIVE COVER SHEET
(Remove Upon Completion)
BLANK LINES: CHECKLIST
Amount of City/Seller Loan, p. 1, upper left
Date of Document, p. 1, upper right
Borrower's Name, p. 1, first paragraph
Amount of City/Seller Loan, p. 1, first paragraph
Street Address of Residence, p. 1, Section 1
Name of Seller, p. 1, Section 1
Date of Affordable Housing Agreement, p. 1, Section 1
Original Purchase Price of Residence, p. 2, Section 2(a)
Contingent Interest Percent, p. 3, Section 4
Signatures, p. 7
101 0\15\172081.3
RECORDING REQUESTED BY: EXHIBIT 2
City of Carlsbad
WHEN RECORDED MAIL TO:
City of Carlsbad
City Clerk's Office
Attn: Cityclerk
1200 Carlsbad Village Drive
Carlsbad, California 92008
(Space above for Recorder's Use)
NOTE TO BORROWER:
THIS DEED OF TRUST CONTAINS
PROVISIONS PROHIBITING ASSUMPTIONS
DEED OF TRUST
AND SECURITY AGREEMENT
THIS DEED OF TRUST AND SECURITY AGREEMENT ("Deed of Trust") made as of
("Trustee"), and
this day of ,200-, among
("Borrower") as trustor, and
the City of Carlsbad, a municipal corporation (the "City"), as beneficiary.
The Borrower, in consideration of the promises herein recited and the trust herein
created, irrevocably grants, transfers, conveys and assigns to the Trustee, in trust, with power of
sale, the property located in the City of Carlsbad, State of California, described in the attached
Exhibit A (the "Property").
TOGETHER with all the improvements now or hereafter erected on the property, and all
easements, rights, appurtenances, and all fixtures now or hereafter attached to the property, all of
which, including replacements and additions thereto, shall be deemed to be and remain a part of
the property covered by this Deed of Trust; and
TOGETHER with all articles of personal property or fixtures now or hereafter attached to
or used in and about the building or buildings now erected or hereafter to be erected on the
Property which are necessary to the complete and comfortable use and occupancy of such
building or buildings for the purposes for which they were or are to be erected, including all
other goods and chattels and personal property as are ever used or furnished in operating a
building, or the activities conducted therein, similar to the one herein described and referred to,
and all renewals or replacements thereof or articles in substitution therefore, whether or not the
same are, or shall be attached to said building or buildings in any manner; and all of the
foregoing, together with the Property, is herein referred to as the "Security";
1 2/16/2003
To have and to hold the Security together with acquittances to the Trustee, its successors
and assigns forever;
TO SECURE to the City the repayment of the sums evidenced by a promissory note in
Dollars ($ ) executed by the Borrower to the City the amount of
as of the date of this Deed of Trust (the "Note");
TO SECURE to the City the payment of all other sums, with interest thereon, advanced
in accordance herewith to protect the security of this Deed of Trust; and the performance of the
covenants and agreements of the Borrower herein contained; and
TO SECURE to the City the performance of the covenants and agreements of Borrower
contained in that certain Resale Restriction Agreement and Option to Purchase executed by and
between the Borrower and the City of even date herewith (the "Resale Agreement") and to secure
the payment of Excess Sales Proceeds (as defined in the Resale Agreement) that may become
due by Borrower to City;
TO SECURE the performance of any obligations of Borrower in any other agreements
with respect to the financing of the Property or the Security the failure of which would adversely
affect Beneficiary, whether or not Beneficiary is a party to such agreements.
BORROWER AND CITY COVENANT AND AGREE AS FOLLOWS:
1. Borrower's Estate. That the Borrower is lawfully seized of the estate hereby
conveyed and has the right to grant and convey the Security, that other than this Deed of Trust,
the Security is encumbered only by: (a) that deed of trust executed by the Borrower in
connection with a loan made to the Borrower by or its successors
and assigns (the "First Lender"), dated ,200-, executed by the Borrower in favor
of First Lender, and recorded in the County of San Diego on , 200-, and
assigned Recorderk 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; and (b) the Resale Agreement. The Borrower agrees to
warrant and defend generally the title to the Security against all claims and demands, subject to
any declarations, easements or restrictions listed in a schedule of exceptions to coverage in any
title insurance policy insuring the City's interest in the Security. (As used in this Deed of Trust,
the term "First Lender" shall include all successors and assigns of the First Lender.)
2. Repayment of Loan. The Borrower will promptly repay, when due, the principal,
interest and other sums required by the Note and Resale Agreement, including all principal and
interest on the City/Seller Loan (as defined in the Note) and the Excess Sales Proceeds due under
the Resale Agreement. The Note contains the following provisions concerning repayment of the
loan under certain conditions:
No Assumption of Note. The Borrower acknowledges that this Note is
given in connection with the purchase of property (the "Residence") as
part of a program of the City to assist in the purchase of homes by lower
1211 612003 2
income persons. Consequently, this Note is not assumable by transferees
of the Residence, but is due in full upon Transfer.
3. First Lender Loan. The Borrower will observe and perform all of the covenants
and agreements of the First Lender Note, First Lender Deed of Trust, and related First Lender
loan documents.
4. Resale Agreement. The Borrower will observe and perform all of the covenants
and agreements of the Resale Agreement.
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 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, 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. Insurance. The Borrower will keep the Security insured with a standard fire and
extended coverage insurance policy in at least an amount equal to the replacement cost of the
Security, but in no event less than the amount necessary to prevent the Borrower from becoming
a co-insurer under the terms of the policy.
The insurance carrier providing this insurance shall be licensed to do business in the State
of California and be chosen by the Borrower subject to approval by the City; provided, that such
approval will not be withheld if the insurer is also approved by the First Lender, the Federal
Home Loan Mortgage Corporation, Fannie Mae, Freddie Mac, the United States Department of
Housing and Urban Development, the United States Department of Veterans Affairs, or
successors thereto.
All insurance policies and renewals thereof will be in a form acceptable to the City and
will include a standard mortgagee clause with standard lender's endorsement in favor of the
holder of the First Lender Note and the City as their interests may appear and in a form
acceptable to the City. The City shall have the right to hold, or cause its designated agent to
hold, the policies and renewals thereof, and the Borrower shall promptly fiunish to the City, or
its designated agent, the original insurance policies or certificates of insurance, all renewal
notices and all receipts of paid premiums. In the event of loss, the Borrower will give prompt
notice to the insurance carrier and the City or its designated agent. The City, or its designated
agent, may make proof of loss if not made promptly by the Borrower. The City shall receive
thirty (30) days advance notice of cancellation of any insurance policies required under this
section.
3 12/16/2003
Unless the City and the Borrower otherwise agree in writing, insurance proceeds, subject
to the rights of the First Lender, will be applied to restoration or repair of the Security damaged,
provided such restoration or repair is economically feasible and the Security of this Deed of
Trust is not thereby impaired. If such restoration or repair is not economically feasible or if the
security of this Deed of Trust would be impaired, the insurance proceeds will be used, subject to
the rights of the First Lender, to repay the Note and all sums secured by this Deed of Trust, with
the excess, if any, paid to the Borrower. If the Security is abandoned by the Borrower, or if the
Borrower fails to respond to the City, or its designated agent, within thirty (30) days from the
date notice is mailed by either of them to the Borrower that the insurance carrier offers to settle a
claim for insurance benefits, the City, or its designated agent, is authorized, subject to the rights
of the First Lender, to collect and apply the insurance proceeds at the City's option either to
restoration or repair of the Security or to repay the Note and all sums secured by this Deed of
Trust.
If the Security is acquired by the City, all right, title and interest of the Borrower in and to
any insurance policy and in and to the proceeds thereof resulting from damage to the Security
prior to the sale or acquisition will pass to the City to the extent of the sums secured by this Deed
of Trust immediately prior to such sale or acquisition subject to the rights of the First Lender.
7. Preservation and Maintenance of Security. The Borrower will keep the Security
in good repair and will not commit waste or permit impairment or deterioration of the Security.
If there arises a condition in contravention of this section, and if the Borrower has not cured such
condition within thirty (30) days after receiving a City notice of such a condition, then in
addition to any other rights available to the City, the City shall have the right (but not the
obligation) to perform all acts necessary to cure such condition, and to establish or enforce a lien
or other encumbrance against the Security to recover its cost of curing.
8. Protection of the City's Security. If the Borrower fails to perform the covenants
and agreements contained in this Deed of Trust, the Resale Agreement, the First Lender Note,
the First Lender Deed of Trust, or if any action or proceeding is commenced which materially
affects the City's interest in the Security, including, but not limited to, default under the First
Lender Deed of Trust, the First Lender Note or any other deed of trust encumbering the Property,
eminent domain, insolvency, code enforcement, or arrangements or proceedings involving a
bankrupt or decedent, then the City, at the City's option, upon notice to the Borrower, may make
such appearances, disburse such sums and take such action as it determines necessary to protect
the City's interest, including but not limited to, disbursement of reasonable attorney's fees and
entry upon the Security to make repairs.
Any amounts disbursed by the City pursuant to this paragraph, with interest thereon, will
become an indebtedness of the Borrower secured by this Deed of Trust. Unless the Borrower
and City agree in writing to other terms of payment, such amount will be payable upon notice
from the City to the Borrower requesting payment thereof, and will bear interest from the date of
disbursement at the lesser of ten percent (10%) or the highest rate permissible under applicable
law. Nothing contained in this paragraph will require the City to incur any expense or take any
action hereunder.
4 la1 612003
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 bv 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, 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. 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. Hazardous Substances. Borrower shall not cause or permit the presence, use,
disposal, storage, or release of any Hazardous Substances on or in the Property. Borrower shall
not do, nor allow anyone else to do, anything affecting the Property that is in violation of any
Environmental Law. The preceding two sentences shall not apply to the presence, use, or storage
on the Property of small quantities of Hazardous Substances that are generally recognized to be
appropriate to normal residential uses and to maintenance of the Property.
"Hazardous Substances" shall mean those substances defined as toxic or hazardous
substances or hazardous waste under any Environmental Law, and the following substances:
gasoline, kerosene, other flammable or toxic petroleum products, toxic pesticides and herbicides,
volatile solvents, materials containing asbestos or formaldehyde, and radioactive materials.
"Environmental Law" shall mean all federal and state of California laws that relate to
health, safety or environmental protection.
Borrower shall promptly give City written notice of any investigation, claim, demand,
lawsuit or other action by any governmental or regulatory agency or private party involving the
Property and any Hazardous Substance or Environmental Law of which Borrower has actual
knowledge. If Borrower learns, or is notified by any governmental or regulatory authority, that
any removal or other remediation of any Hazardous Substance affecting the Property is
necessary, Borrower shall promptly take all necessary remedial actions in accordance with
Environmental Law.
12. Remedies Cumulative. All remedies provided in this Deed of Trust are distinct
and cumulative to any other right or remedy under this Deed of Trust or any other document, or
afforded by law or equity, and may be exercised concurrently, independently or successively.
13. 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.
14.
be joint and several.
Joint and Several Liabilitv. All covenants and agreements of the Borrower shall
5 1211 612003
15. 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 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 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 of the provisions contained in this Deed of
Trust, Resale Agreement 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, the Resale Agreement and the Note shall be
construed as if such invalid, illegal or unenforceable provision had never been contained in this
Deed of Trust, Resale Agreement or the Note.
17 Captions. The captions and headings in ths Deed of Trust are for convenience
only and are not to be used to interpret or define the provisions hereof.
18 Nonliabilitv for Negligence, Loss, or Damage. Borrower acknowledges,
understands and agrees that the relationship between Borrower and the City is solely that of an
Borrower and the administrators of City inclusionary housing program, 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
Security 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
Security and Borrower agrees that neither Borrower, or Borrower's heirs, successors or assigns
shall ever claim, have or assert any right or action against the City for any loss, damage or other
matter arising out of or resulting from any condition of the Security and will hold City harmless
from any liability, loss or damage for these things.
12/16/2003 6
19. 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. Borrower's failure to perform any obligations as and when required by the
Note, Resale Restriction Agreement, and this Deed of Trust; or
b. the failure at any time of any of Borrower's representations or warranties
to be true and correct.
20. Default; Remedies. Upon the Borrower's breach of any covenant or agreement of
the Borrower in the Note, Resale Agreement or this Deed of Trust, including, but not limited to,
the covenants to pay, when due, any sums secured by this Deed of Trust, the City, prior to
acceleration, will send, in the manner set forth in Section 14 of this Deed of Trust, notice to the
Borrower specifying: (1) the breach; (2) if the breach is curable, the action required to cure such
breach; (3) a date, not less than thirty (30) days from the date the notice is effective as set forth in
Section 14 of this Deed of Trust, by which such breach, if curable, is to be cured; and (4) if the
breach is curable, that failure to cure such breach on or before the date specified in the notice
may result in acceleration of the sums secured by this Deed of Trust and sale of the Security.
Notice shall be effective as of the date shown on the delivery receipt as the date of delivery, the
date delivery was refhed or the date the notice was returned as undeliverable. The notice will
also inform the Borrower of the Borrower's right to reinstate after acceleration and the right to
bring a court action to assert the nonexistence of default or any other defense of the Borrower to
acceleration and sale. If the breach is not curable or is not cured on or before the date specified
in the notice, the City, at the City's option, may: (a) declare all of the sums secured by this Deed
of Trust to be immediately due and payable without hrther demand and may invoke the power
of sale and any other remedies permitted by California law; (b) either in person or by agent, with
or without bringing any action or proceeding, or by a receiver appointed by a court, and without
regard to the adequacy of its security, enter upon the Security and take possession thereof (or any
part thereof) and of any of the Security, in its own name or in the name of the Trustee, and do
any acts which it deems necessary or desirable to preserve the value or marketability of the
Security, or part thereof or interest therein, increase the income therefrom or protect the security
thereof. The entering upon and taking possession of the Security shall not cure or waive any
breach hereunder or invalidate any act done in response to such breach and, notwithstanding the
continuance in possession of the Security, the City shall be entitled to exercise every right
provided for in this Deed of Trust, or by law upon occurrence of any uncured breach, including
the right to exercise the power of sale; (c) commence an action to foreclose this Deed of Trust as
a mortgage, appoint a receiver, or specifically enforce any of the covenants hereof; (d) deliver to
the Trustee a written declaration of default and demand for sale, pursuant to the provisions for
notice of sale found at California Civil Code Sections 2924, et seq., as amended from time to
time; or (e) exercise all other rights and remedies provided herein, in the instruments by which
the Borrower acquires title to any Security, or in any other document or agreement now or
hereafter evidencing, creating or securing all or any portion of the obligations secured hereby, or
provided by law.
7 1211 612003
,
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.
21 Acceleration. Upon the occurrence of a default under the Note, the Resale
Agreement, this Deed of Trust, the First Lender Note, or the First Lender Deed of Trust, the City
shall have the right to declare the full amount of the principal along with any interest under the
Note immediately due and payable. Any failure by the City to pursue its legal and equitable
remedies upon default shall not constitute a waiver of the City's right to declare a default and
exercise all of its rights under the Note, the Resale Agreement, 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.
22. Borrower's Riht to Reinstate. Notwithstanding the City's acceleration of the
sums secured by this Deed of Trust, the Borrower will have the right to have any proceedings
begun by the City to enforce this Deed of Trust discontinued at any time prior to five (5) days
before sale of the Security pursuant to the power of sale contained in this Deed of Trust or at any
time prior to entry of a judgment enforcing this Deed of Trust if: (a) the Borrower pays City all
sums, if any, which would be then due under this Deed of Trust and no acceleration under the
Note has occurred; (b) the Borrower cures all breaches of any other covenants or agreements of
the Borrower contained in the Note, Resale Agreement or 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 the Note, Resale Agreement or 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 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.
23. Reconveyance. Upon payment of all sums secured by this Deed of Trust, the City
will request the Trustee to reconvey the Security and will surrender this Deed of Trust and the
Note to the Trustee. The Trustee will reconvey the Security without warranty and without
charge to the person or persons legally entitled thereto. Such person or persons will pay all costs
of recordation, if any.
24. Substitute Trustee. 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.
25. Subordination to First Lender Mortgage. Notwithstanding any other provision
hereof, the provisions of this Deed of Trust shall be subordinate to the lien of the First Lender
Deed of Trust and shall not impair the rights of the First Lender, or the First Lender's successor
or assign, to exercise its remedies under the First Lender Deed of Trust in the event of default
under the First Lender Deed of Trust by the Borrower. Such remedies under the First Lender
Deed of Trust include the right of foreclosure or acceptance of a deed or assignment in lieu of
8 1211 612003
foreclosure. After such foreclosure or acceptance of a deed or assignment in lieu of foreclosure,
or upon assignment of the First Lender Deed of Trust to the Secretary of the United States
Department of Housing and Urban Development (the "Secretary"), this Deed of Trust shall be
forever terminated and shall have no hrther 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 Lenderk 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 thirty (30)-day period and given its firm commitment
to complete the cure in the form and substance acceptable to the First Lender. Borrower agrees
to record any necessary documents to effect such termination, if applicable.
26. Attorney's Fees. If any action or proceeding is brought to enforce this Deed of
Trust or any provision of this Deed of Trust or the Note, the prevailing party shall be entitled to
its attorney's fees and the cost of such action or proceeding.
IN WITNESS WHEREOF, the Borrower has executed this Deed Of Trust as of the date
first written above.
Borrower
(Print Name)
Borrower
(Print Name)
9 1211 612003
STATE OF CALIFORNIA )
COUNTY OF SAN DIEGO )
) ss.
On , 200-, before me, , personally
appeared , personally known to me (or proved to me on the
basis of satisfactory evidence) to be the person(s) whose name(s) idare subscribed to the within
instrument and acknowledged to me that he/she/they executed the same in his/her/their
authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s) or
the entity upon behalf of which the person(s) acted, executed the instrument.
WITNESS my hand and official seal.
STATE OF CALIFORNIA )
COUNTY OF SAN DIEGO )
) ss.
On , 200-, before me, , personally
appeared , personally known to me (or proved to me on the
basis of satisfactory evidence) to be the person(s) whose name(s) idare subscribed to the within
instrument and acknowledged to me that he/she/they executed the same in his/her/their
authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s) or
the entity upon behalf of which the person(s) acted, executed the instrument.
WITNESS my hand and official seal.
EXHIBIT A
Property Description
101 0\15\172083.3 A- 1
DEED OF TRUST AND SECURITY AGREEMENT
CITY OF CARLSBAD
ADMINISTRATIVE CHECKLIST
(Remove Upon Completion)
BLANK LINES: CHECKLIST
Date of Document, p. 1, first paragraph
Borrower's Name, p. 1, first paragraph
Trustee's Name, p. 1, first paragraph
Amount of Promissory Note, p. 2, second full paragraph
First Lender's Name, p. 2, Section 1
Date of First Lender's Deed of Trust, p. 2, Section 1
Recording Information for First Lender's Deed of Trust, p. 2, Section 1
Signatures, p. 9
Notary
Include Exhibit A, Property Description
1010\15\172083.3
EXHIBIT 3
Buyer's Disclosure Statement
HOMEBUYER PROGRAM
CITY OF CARLSBAD
(2004)
The City of Carlsbad (the "City") is assuming the loan made to you by
so that you will be able to buy your home in the
Development. The City is providing this financing in order to enable lower-income
households to own their own homes in the City.
In exchange for providing you with second mortgage loan, the City will require
you to sign a Promissory Note, Deed of Trust and a Resale Restriction Agreement and
Option to Purchase (the "Resale Restriction Agreement"). The Deed of Trust and the
Resale Restriction Agreement will be recorded against your Dropertv. These
documents are enforceable by the City.
In general, the Promissory Note, Deed of Trust and the Resale Restriction
Agreement set forth conditions that you must meet, including but not limited to the
following:
The Resale Restriction Agreement requires you to live in your home as your
principal place of residence, and prohibits you from renting-out your home.
The Resale Restriction Agreement places controls on the sale of your home. In
addition, you must follow certain steps and procedures when you decide to sell
your home.
There is a limit to the price at which you can sell the home during the first fifteen
(1 5) years that you own your home.
You will have to pay the City a share in your home's appreciation upon the sale of
your home.
The City has an option to purchase your home at a restricted price when you put
the home up for sale.
The second mortgage loan (the "City Loan") is due and payable upon any default
under the Promissory Note, Resale Restriction Agreement, or Deed of Trust, upon
any transfer of the home, and at the end of the thirty (30) year term.
The purpose of the Resale Agreement is to ensure that the goal of the City
financing -- to help lower income households own their own homes -- continues to be
met by keeping your house affordable to other lower-income households should you
choose to sell or move. The City has helped you to buy a home; it wants to help others as
well.
12/16/2003
This Disclosure Statement explains the major provisions of the Promissory Note and
Resale Restriction Agreement so that you will understand their requirements. You
should, of course, read the entire Promissory Note, the Resale Restriction
Agreement, and the Deed of Trust and become completely familiar with them.'
A. REQUIREMENTS IN EFFECT FOR 30-YEAR TERM
The requirements that are in the Resale Restriction Agreement apply until the
earlier of (i) thirty (30) years fiom the date of the Resale Restriction Agreement, or (ii)
the date you sell or transfer your home in accordance with the Resale Restriction
Agreement and the Deed of Trust. At the end of the thirty (30) year term, you must repay
the City Loan with contingent interest as defined in Section J.
B. PRIMARY RESIDENCE AND LEASING YOUR HOME
Your house at must be your main place of residence. This means
you must live in your home for at least ten (10) months out of each calendar year. Each
year during the thirty (30)-year term described in A. above, you must tell the City in
writing that you are meeting this requirement. You are not allowed to lease or rent the
house to anyone. If you violate these requirements you will also be in default under the
Resale Restriction Agreement and the City may require you to sell the home to the City
in the manner described in the Resale Restriction Agreement. You will also be in default
under the City promissory note and the City may require you to repay the City Loan. The
Deed of Trust and Resale Restriction Agreement will remain in effect even if you are
required to repay the City Loan.
C. MAINTAINING YOUR HOME/ PROPERTY INSURANCE
By signing the Resale Restriction Agreement, you agree to keep your home and
landscaping in good repair and in neat, clean, and orderly condition and to prevent
deterioration of the home. You also agree to keep a standard fire and extended coverage
homeowner's insurance policy, with the City named as an additional insured. The
insurance policy shall be in an amount equal to the replacement value of the home.
Every five (5) years (or every year, if provided by the policy), the replacement value will
be reviewed and adjusted as needed.
D. NOTICE TO CITY OF YOUR INTENT TO SELL YOUR HOME
When you decide to sell your home, you must let the City know in writing before
you contact a real estate broker or lender and before you list the home in the Multiple
Listing Service. This notice is called the "Owner's Notice of Intent to Transfer." The
Owner's Notice of Intent to Transfer (see Exhibit C of the Resale Agreement for a form
of this notice) must be sent in a particular way and must include specific information (for
Numerical examples are included in this Disclosure Statement to help you better understand the concepts, 1
terms, and provisions of the Buyer's Resale Restriction Agreement and Promissory Note. Please be aware
that these are simply to show how things work and that they are not intended to represent your specific
situation. If you follow along with a calculator, you may not get exactly the same answers. Any differences
are probably due to how your calculator "rounds-off" numbers.
12/16/2003 2
example, it must include a pest report) as detailed in Section 8 and Exhibit C (Notice of
Intended Transfer; Preparation of Home for Sale) and Section 33 (Notices) of the Resale
Restriction Agreement. If you fail to send the City this notice, you will be in default
under the Resale Restriction Agreement and the sale of your home may be delayed.
E. PREPARATION OF HOME FOR SALE
You are responsible for putting the home in good condition for its sale. Once you
have sent the Owner's Notice of Intent to Transfer, you must take the steps to prepare the
home for sale as described in Section 8 and Exhibit C (Notice of Intended Transfer) and
Section 9 (Owner Preparation of Home For Sale) of the Resale Restriction Agreement.
F. CITY HAS OPTION TO PURCHASE
In exchange for the opportunity given to you to buy your home at an affordable,
below-market price, you agree that the City has an option to buy your home at a restricted
price if you sell your home during the term of the Resale Restriction Agreement. In other
words, the City has the first opportunity to buy your house before anyone else. The City
may also give its option to purchase your house to another public agency, a nonprofit
organization, or a person or family meeting income and other requirements.
After you send in the Owner's Notice of Intent to Transfer the City will then let
you know in a notice called the "City Response Notice" whether or not it will use its
option to purchase. See Section 10 (City Response to Owner's Notice of Intended
Transfer) and Section 11 and Exhibit D (Owner Acknowledgment of City Response
Notice) of the Resale Restriction Agreement for details on what you must do once you
receive the City Response Notice.
If the City decides to use its option to purchase (or assigns this right) and the City
or a City designee will buy the home at a restricted sales price (which is described in
greater detail in Section G below). The City will let you know that it wants to buy your
home and will inform you of the restricted sales price amount in the City Response
Notice. The purchase by the City shall take place within ninety (90) days of the date the
City Response Notice is sent to you.
When your home is bought by the City or a City designee under the City's option
to purchase, you will pay to the City a transaction fee equal to six percent (6%) of the
sales price. This fee takes the place of the fee for a broker's services. The City will be
performing those services when it purchases the home or assigns its option to another
buyer who will purchase the Home
G. SALES PRICE OF HOME IS RESTRICTED: MAXIMUM SALES PRICE
The City has helped make the cost of buying a home affordable to you. The City
also wants to make sure that others like you get the same chance. Therefore, the Resale
Restriction Agreement limits the sales price of your home if the City exercises its option to
purchase your home or if you send in the Owner's Notice of Intent to Transfer within the
first fifteen (15) years of the Resale Restriction Agreement. The Maximum Restricted
3 1211 612003
.
Resale Price that you can receive is the lower of the result of the Restricted Resale Price
formula in Section G.l below and the Fair Market Value as described in Section G.2.
1. RESTRICTED RESALE PRICE
(a) Original Sales Price of Home (price at which you bought it)
(b) increased by the percentage increase of the Area Median Income for
the County of San Diego for a household size of four (4) persons from
the date of your original purchase (the recording date of the Grant
Deed for the property) to the date of receipt by the City of the
Owner's Notice of Intent to Transfer
It is also important to understand that if the home has suffered from any damage or
deferred maintenance while you own it, any decrease in value of your house will be
subtracted in the calculation of the Restricted Future Sales Price, as will the amounts
necessary to put the house in a "sellable condition."
Example 1 shows how the Indexed Price formula works.
EXAMPLE 1 You sell your house at the end of eight years. The original sales price of your home
was $289,000. The median income for a family of four in San Diego County when
the home was bought was $61,100. Median income increases by 24% over the eight
years.
(a) Original Price of Home $289,000
(b) Median Income Increases by 24% over
eight years
multiply (a) by 24%, then add
result ($69,360) to (a)
RESTRICTED RESALE PRICE
$69,360
$358,360
$358,360
2. FAIR MARKET VALUE
Under the Resale Restriction Agreement, the Fair Market Value can be
determined in one of two ways. First, it can be established by a real estate appraiser
approved in advance by the City. If possible, the appraisal will be based on sales prices
of homes similar to yours that are sold in your market area during the preceding three (3)-
month period. The appraisal will not take into account the fact that the resale price of
your home is restricted by the Resale Restriction Agreement. The value of any damage
or deferred maintenance that occurred while you owned the house that decreased its value
shall be included as a separate value in the appraisal. In this case, the appraisal will state
what the Fair Market Value of the home would be without the damage or deferred
maintenance, The value of the deferred maintenance, if any, will have a direct impact on
the Restricted Future Sales Price.
4 1211 612003
You must pay the cost of the appraisal used to determine Fair Market Value,
unless a new buyer has obtained an appraisal that you may utilize. The City is not
responsible for paying for any portion of an appraisal used for any purpose under the
Resale Restriction Agreement.
The Resale Restriction Agreement also allows you and the City to set the Fair
Market Value of your home by mutual agreement instead of relying on an appraiser.
Both you and the City would have to agree to this particular method (instead of hiring an
appraiser) and to the final Fair Market Value amount. If you and the City fail to agree on
the Fair Market Value, either one can require use of the appraisal method.
Example 2 shows how the Restricted Resale Price and the Fair Market Value of the home
are compared to determine the Maximum Restricted Resale Price at which you can offer
your house for sale.
EXAMPLE 2 The assumptions are the same as in Example 1. You sell your house at the end of
eight years. The original sales price of your home was $289,000. The median
income for a family of four in San Diego County when the home was bought was
$61,000. Median income increases by 24% over the eight years. The Fair Market
Value of your home is determined by appraisal, the cost of which is paid by you.
The appraisal determines the Fair Market Value at $375,000.
INDEXED is less FAIR MARKET MAXIMUM RESTRICTED
PRICE than VALUE then RESALE PRICE
$358,360 < $375,000 $358,360
Since the Fair Market Value of the home is greater than the Indexed Price of the
house, the Maximum Restricted Resale Price which you can receive from the sale of
your home is $358,360.
H. SELLING YOUR HOME WITHIN THE FIRST FIFTEEN (15) YEARS
Under the terms of the Resale Restriction Agreement, when you go to sell your
home within the first fifteen (15) years of the thirty (30) term, there are two (2) different
ways that the sale can take place:
0 The City chooses to use its option to purchase your house at the restricted
sales price or assigns the option to a third party who purchases the house
at the restricted sales price.
You sell the home at a restricted sales price to someone who meets
specific income requirements like you had to meet. This buyer is called an
"Eligible Purchaser" in the Resale Restriction Agreement.
0
The City's option to purchase your home is described in Section F above. The sale to the
Eligible Purchaser and what will occur if you sell your home in violation of the Resale
Restriction Agreement during the first fifteen (15) years that you own your home are
described below.
5 12/16/2003
1. SALE TO AN "ELIGIBLE PURCHASER" AT THE RESTRICTED
SALES PRICE
If you have sent in your Notice of Intent to Transfer during the first fifteen (15)
years that you own your home and the City notifies you in the City Response Notice that
it will not execute its option to purchase your home, you will have to find an Eligible
Purchaser to buy the home at the restricted sales price which the City will provide in the
City Response Notice. An Eligible Purchaser is a household who will live in the home,
and whose income meets the requirements set by the City. The City will provide you
with the current income limits when you sell your home. See Section 10 (City Response
to Owner's Notice of Intended Transfer) and Section 15 (Sale By Owner if City Does Not
Exercise Option To Purchase During Initial Term) of the Resale Restriction Agreement.
Once you find a potential Eligible Purchaser, you will refer the proposed buyer to
the City so that the City or its designee can determine if in fact he or she meets the
requirements of an Eligible Purchaser. You and the proposed buyer must give specific
information and documents to the City as described in Section 15 (Sale of Home Bv
Owner If City Does Not Exercise City Option to Purchase During Initial Term) of the
Resale Restriction Agreement.
When the sale of your home to the Eligible Purchaser is completed, you must
submit to the City the information and documents listed in Section 15.D(7) of the Resale
Restriction Agreement.
2. SALE IN VIOLATION OF THE RESALE AGREEMENT;
PAYMENT OF "EXCESS SALES PROCEEDS" TO CITY
If you sell your home in violation of the Resale Restriction Agreement for more
than the Restricted Sales Price during the first fifteen (1 5) years that you own your home
or after sending in the Owner's Notice of Intent to Transfer during the first fifteen (15)
years that you own your home, you will have to pay to the City the "Excess Sales
Proceeds" as a remedy for your violation.
The term Excess Sales Proceeds is defined in Section 16 of the Resale Restriction
Agreement (Payment To Citv Of Excess Sales Proceeds) as ninety-four percent (94%) of
the amount by which the gross sales proceeds you receive from the buyer exceed the
Maximum Restricted Resale Price for the home as set out in the First City Response
Notice. Another way to put it is the following:
6 1 2/16/2003
c
Gross Amount of Money the New Buyer Paid for the House
MINUS
Maximum Restricted Resale Price
(from First City Response Notice)
THE REMAINDER MULTIPLIED BY
Ninety-Four Percent (94%)
Equals the Payment to the City of Excess Sales Proceeds
The reason that the City gets "94%" rather than the full (or "100%") amount is so
that the real estate broker that assists in the sale of your home can be paid his or her
commission, even though you will have violated this Resale Restriction Agreement. The
Excess Sales Proceeds formula is intended to ensure that you receive the same net
amount of sales proceeds from an unrestricted sale (in violation of the Resale Restriction
Agreement) that you would have received if the City had purchased your home at the
Maximum Restricted Resale Price. This provision is intended to eliminate any incentive
for homeowners to violate the Resale Restriction Agreement when the home is sold.
The amount of Excess Sales Proceeds that you pay to the City is used by the City
for other affordable housing programs it runs. You were given the chance to buy your
home at a price that was affordable to you. When you pay the Excess Sales Proceeds
because of a sale in violation of the Resale Restriction Agreement, those funds are going
to help other lower income families who, like you, would not be able to obtain affordable
housing without assistance.
Example 3 shows how the Excess Sales Proceeds are calculated.
EXAMPLE 3 You sell your house at the end of eight years. You originally paid $289,000 for your
home. The First City Response Notice sets the Maximum Restricted Resale Price at
$358,360. The house is appraised at $375,000. You sell the home in violation of the
Resale Restriction Agreement to a third party for $375,000. You must pay the City
Excess Sales Proceeds as calculated below:
Total Amount
Paid For House
MINUS
$375,000
Maximum Restricted Resale Price (from
First City Response Notice) - $358.360
$16,640
MULTIPLIED BY x .94
Ninety-Four Percent (94%)
Amount of Excess Sales
Proceeds You Pay to City
$15,642
(in addition to original loan
amount)
7 12/16/2003
c
I. SELLING YOUR HOME AFTER THE FIRST 15 YEARS THAT YOU
OWN YOUR HOME
If you mail your Owner's Notice of Intent to Transfer to the City after the first
fifteen (15) years that you own your home but within the thirty (30)-year term of the
Resale Restriction Agreement, there are still two (2) ways the sale of your home can take
place:
0 The City can use its option to purchase your home at a restricted sales
price or assign its option to purchase to a third party.
0 You sell the home at an unrestricted price to a third party.
The City's option to purchase your home is described in Section F above. If the City does
not exercise its option to purchase your home, the City Response Notice will tell you that
you may sell the home on the market for a price that is greater than or equal to your
home's fair market value. Fifteen (15) days before you close escrow on the sale of you
home, you will have to send in to the City a copy of the sales contract and a declaration
certifying the sales price of your home to the third party. At the close of escrow of the
sale of you will have to send in additional information verifying the purchase price paid
for your home by the third party.
J. REPAYMENT OF CITY ASSISTANCE
Your loan from the City is a "deferred'' loan. This means that you do not have to
pay it back until the end of the thirty (30) year term as long as you own the home and you
do not violate any of the terms of the Promissory Note, Deed of Trust, and the Resale
Restriction Agreement. As soon as you sell the home, though, or if you break the terms
of the loan documents or Resale Agreement, the loan will be due and you will have to
pay it back. The City Loan cames "contingent interest" or "shared equity" which is
described in the next section.
1. CONTINGENT INTEREST
As mentioned earlier, the City wants to help lower income persons and families
who would not be able to buy homes in the City without City funds. City resources,
however, are limited. You benefited from City financial help; it is only fair that you
repay the City in proportion to that benefit. That is why the City has included
"contingent interest" (also known as "shared equity") in your loan repayment. In general,
contingent interest is a percentage of the difference between the original purchase price
of your home and the price at which you sell it. This difference is called the
"appreciation amount."
The contingent interest you pay represents the benefit you received from the City
Loan less a 25% credit for any capital improvements that you may have made to your
home. More specifically, the Contingent Interest is 75% of the percentage which is
1211 612003 8
c
figured by dividing the amount of the City Loan by the original purchase price that you
paid for your home. For example, if the City provided 21 % of the original purchase price
of your home, when you sell the home, 75% of 21% (or 10%) of the appreciation amount
is owed to the City as contingent interest.
Example 4 sets this out with numbers.
EXAMPLE 4 You sell your home.after living in it for 18 years. Your loan from the City is $60,000.
The original purchase price you paid for the home when you bought it was $289,000.
You sell the home for $375,000.
Contingent Interest: 75% of 21% = 75% = 16%
This means that the City will receive 16% of the appreciation on your home, which is the
difference between the original purchase price of your home and the price at which you sell it. If we use
the Fair Market Value from Example 2 as the actual sales price, the following would result:
Resale Price $375,000
Original Purchase Price -$289,000
Total Appreciation Amount $86,000
City Share of Appreciation
(16% of $86,000)
$- 13,760
Share of Appreciation That You Keep $72,240
Under these assumptions, if you sell your home in 18 years, the total you would owe the City is
the following:
City Loan Amount
City Share of Appreciation $60,000 + $13,760
TOTAL AMOUNT YOU OWE CITY $73,760
In cases where you transfer your home to an Eligible Purchaser, the appreciation
is the difference between the original purchase price and the Maximum Restricted Resale
Price. In cases where you transfer your home to a third party by sale, the appreciation
amount is the difference between the original purchase price and the unrestricted price for
which you sell your home. In cases where you transfer your home to a third party is by
means other than sale (with the exception of a creditor taking title), the appreciation is the
difference between the original purchase price and the Fair Market Value of the home at
the time of transfer.
2. PREPAYMENT OF CITY LOAN
You have the right to prepay part or all of the City Loan. If you prepay all of the
loan, contingent interest will be due the City based on the Fair Market Value of your
home at the time of prepayment. Fair Market Value shall be determined by an appraisal
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c
(conducted as set forth in Section G.2 above entitled Fair Market Value). In the case of
prepayment, you will be responsible for paying the cost of the appraisal. If you prepay
only a part of the City loan, the payment that you make will be applied to both the
amount of principal and the amount of Contingent Interest you owe the City based on the
following calculations:
Amount of Prepayment
Applied to Principal
Amount of Prepayment
Applied to Interest
Principal Amount of City Loan
(Total Principal + Interest Due at
Time of Prepayment)
City Contingent Interest
Divided By Divided By
(Total Principal + Interest Due at
Time of Prepayment)
In addition, your Contingent Interest percentage will change because you paid off
a portion of the original City Loan amount (the principal).
Example 5 shows how this would work.
EXAMPLE 5 You have a City Loan in the amount of $60,000 (the principal). The original purchase
price of your home was $289,000. Contingent Interest is 16%. You decide to prepay
$10,000 of the loan 20 years after you have purchased the home. At the time of
prepayment, the fair market value of the home is $375,000.
Fair Market Value $375,000
Original Purchase Price -$289,000
Total Appreciation Amount
(established by new appraisal)
$86,000
City Share of Appreciation (Contingent
Interest = 16%)
$13,760
Your $10,000 prepayment is applied to principal and Contingent Interest in the following manner:
Amount of Prepayment
Applied to Principal
Amount of Prepayment
Applied to Interest
$60,000 f ($60,000 + $13,760) $13,760 + ($60,000 + $13,760)
60,000 + 73,760 13,760 + 73,760
.8 1 or 8 1 YO of the prepayment
of $10,000 is applied to principal
.19 or 19% of the prepayment of $10,000 is
applied to interest
or or
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$1,900 $8,100
Principal Amount Left Owing:
New Contingent Interest:
(for future loan repayment)
$60,000 - $8,100 = $51,900
75% of New Principal + Original Purchase Price
Amount
75% of $51,900 + $289,000
New Contingent Interest = 75% of 18% =13.5%
(for future loan repayment)
K. DEFAULT PROVISIONS
When you accept the City Loan, you agree to meet all of the conditions of all of
the City documents, including the Promissory Note, Resale Restriction Agreement, and
Deed of Trust. If you violate any provisions of the documents, you are considered to be
in default under your City Loan. Also, if you default under any other loan on the home,
such as the first mortgage, you would also be considered to be in default under the City
Loan. If you do not correct the violation, the City could require you to repay the City
Loan and/or exercise its option and buy your home. The City and could also go to court
and get a court order to enforce the provisions of the City documents, which may result in
a foreclosure on your home.
L. REFINANCE OF YOUR FIRST MORTGAGE
The Resale Restriction Agreement allows you to refinance your First Lender Loan
but places restrictions on the amount received by you from the refinancing. As a
requirement of refinancing, First Lenders usually require that the City subordinate its
documents to them. The City will only subordinate the Resale Restriction Agreement
and City Deed of Trust if the loan amount of such refinancing does not exceed the then
outstanding balance of principal and interest (plus refinancing and closing costs) of the
existing First Lender Loan and if the refinance does not result in higher monthly
payments on the first mortgage than were do prior to the refinancing. If you refinance
your First Lender Loan for an amount that is greater than the outstanding principal and
interest plus refinancing and closing costs, you will be in default under the Resale
Restriction Agreement and the Deed of Trust.
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Please sign this Buyer's Disclosure Statement in the space provided below, and
keep a signed copy for your records, and return the original to the City at the following
address:
City of Carlsbad
Housing and Community Development Dept.
2965 Roosevelt Street, Suite B
Carlsbad, CA 92008-2389
Attn: Homebuyer Program
I have read and understand the above Buyer's Disclosure Statement.
By:
Signature of Buyer
Dated:
Print Name of Buyer
By:
Signature of Buyer
Print Name of Buyer
Dated:
12 12/16/2003