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Church Street Associates - Affordable Housing Agreement <;7' 1"',< } L' '- ! DOCUMENT: 13463708 Titles: 1/ Pages: 41 RECORDING REQUESTED BY CITY OF GILF PURSUANT TO GOVERNMENT CODE SECTIOl' I 11I111111I111 UIIII RETURN TO: City of Gilroy 7351 Rosanna Street Gilroy, CA 95020 Attn: Community Development Depar :0:1211211346371218:0: Fees. * No Fees Taxes. . Cop i es. . AMT PAID BRENDA DAVIS SANTA CLARA COUNTY RECORDER Recorded at the request of Fidel ity National Title Ins RDE fI 009 9/27/1996 2:25 PM AGREEMENT FOR THE PROVISION OF AFFORDABLE HOUSING IN GILROY, CALIFORNIA THIS PROPERTY IS SUBJECT TO COVENANTS, CONDITIONS AND RESTRICTIONS DESIGNED TO ASSURE AFFORDABLE HOUSING FOR LOWER INCOME HOUSEHOLDS. IN ORDER TO ASSURE THE AFFORDABILITY OF HOUSING UNITS ON THIS PROPERTY, THESE COVENANTS, CONDITIONS AND RESTRICTIONS REGULATE THE BELOW MARKET VALUE RENTAL AND/OR SALE OF SPECIFIED UNITS ON SAID PROPERTY AND RESTRICT THE OCCUPANCY THEREOF. THESE RESTRICTIONS ARE BINDING UPON PURCHASERS, ENCUMBRANCERS, AND ALL PERSONS HAVING AN OWNERSHIP INTEREST IN THE PROPERTY, AND THEIR SUCCESSORS AND ASSIGNS. THESE COVENANTS, CONDITIONS, AND RESTRICTIONS SHOULD BE CAREFULLY READ AND FULLY UNDERSTOOD BEFORE PURCHASING, ACQUIRING OR ENCUMBERING THE SUBJECT PROPERTY, AS THE RENTAL OR SALE OF UNITS IN VIOLATION OF THE PROVISIONS HEREIN MAY CAUSE LEGAL ACTION TO BE TAKEN BY THE CITY OF GILROY TO ENFORCE THE PROVISIONS AGAINST THE VIOLATOR AND SUBJECT THE VIOLATOR TO THE PAYMENT OF DAMAGES, ATTORNEYS FEES AND COSTS OF SUCH ENFORCEMENT. TRANSFERS OR ENCUMBRANCES IN VIOLATION OF THE PROVISIONS OF THIS AGREEMENT MAY BE VOID OR VOIDABLE AND A LIEN MAY BE CREATED IN FAVOR OF THE CITY OF GILROY. This Agreement is entered into this 26th day of September, 1996, by and between the CITY OF GILROY, a municipal corporation ("City") and Church Street Associates, a general partnership ("Developer"). RECITALS A. Developer is the sole owner and developer of the property located in the City of Gilroy, California, being Assessor's Parcel Numbers 790-47-01, 790-47-02 and 790-47-03 (collectively, the "Property"), more particularly described in Exhibit "A," attached hereto and incorporated herein by reference. B. city has determined that it would be desirable to stimulate the development of new residences for lower and very low income households. \KKS\319271.03 61-092604706002 -1- C. The project to be developed by Developer on the Property ("Project") consists of 62 ownership housing units, which is in excess of the 52 units allowed under the base density of the City's Zoning Ordinance. D. In order to further its plan to assist in developing housing for low and lower income households, the City has assisted in the development of the Property for Lower Income Households (as defined in the Resale Agreement attached hereto as Exhibit "B") . E. In addition the Gilroy City Council has adopted Ordinance No. 95-18 establishing a density bonus program ("Density Bonus Program") in conformance with California state law pertaining to the provision of density bonuses for lower and very low income households in return for the provision of affordable housing ("Density Bonus Ordinance"). The Density Bonus Program has also been utilized in order to further assist in the development of the Property for Lower Income Households. F. The assistance of City .allows the Affordable Units (defined below) to be sold below fair market value to persons who would not otherwise be able to afford them, thereby providing substantial economic benefit to Developer and the ultimate owners of the Affordable Units. G. It is the intention of the City and Developer to set forth the covenants, conditions, and restrictions applicable to the Project, by reason of the assistance of City in the development of the Project, the increased density allowed as the result of participation in the Density Bonus Program, and the increased value of the proj ect and Affordable Units resulting therefrom, by this separate document. NOW, THEREFORE, in consideration of City's assistance in the development of the Project and the issuance of permits and approvals by the City allowing the Developer to develop its Property at a density in excess of Zoning Ordinance limitations, and to satisfy its obligations to provide affordable housing for Lower Income Households and in consideration of the mutual covenants and conditions contained herein and other valuable consideration, the parties hereto agree as follows: 1. Provision of Affordable Units. Developer hereby agrees to provide twenty (20) housing units within the Project which are affordable to Lower Income Households in accordance with the city's Density Bonus Ordinance, incorporated herein and made a part hereof by this reference, and the Resale Restriction Agreement and Option to Purchase attached hereto and incorporated herein by reference as Exhibit "B" (the "Resale Agreement") as to each Affordable Unit (defined below). Each Affordable Unit shall be restricted from the date of recordation of this Agreement in the Official Records (defined below) until the date which is thirty (30) years following recordation of the Resale Agreement for such Affordable Unit. The parcels upon which the twenty housing units are to be built for \KKS\319271.03 61-092604706002 -2- Lower Income Households are more particularly described in Exhibit "C", attached hereto and incorporated herein by reference (the "Affordable Parcels"). The Affordable Parcels, together with all improvements now or hereafter located on the Affordable Parcels, are collectively referred to in this Agreement as the "Affordable Units". 2. Satisfaction of Condition. City hereby agrees that execution, recordation, and performance of this Agreement and the Resale Agreements shall constitute performance of the conditions of approval for the Project which relate to the execution of an agreement with the City required by the Density Bonus Ordinance. 3. Recordation. Developer agrees to execute this Agreement, and cause the same to be acknowledged, and deliver said document to the City in such form as to permit its recordation in the Office of the Recorder of the County of Santa Clara, California (the "Official Records"). No building permits shall be issued for any portion of the proj ect prior to deli very and recordation of this Agreement. At recordation of this Agreement, the Property shall be subj ect to no liens or encumbrances other than those approved in writing by City prior to recordation of this Agreement. All costs in connection with the recordation of this Agreement shall be borne by Developer. Developer shall also cause a Resale Agreement to be executed, acknowledged and delivered to the City by the purchaser of each Affordable Unit in such form as to permit its recordation in the Official Records at the time of the close of escrow for such Affordable Unit. In addition, at the time of the recordation of a Resale Agreement for an Affordable Unit, Developer shall cause the Note and Deed of Trust described in the Resale Agreement to be executed and delivered to the City, with the Deed of Trust acknowledged in recordable form, by the purchaser of such Affordable Unit. The principal amount of the Note for an Affordable Unit shall be the amount by which the Fair Market Value of the Affordable Unit, determined in the manner described in section 8 of the Resale Agreement, exceeds the sum of (i) the amount of the First Lender's Loan (defined in the Resale Agreement) plus (ii) the down payment credited to the Owner for such Affordable Unit. The Note shall be in the form attached hereto as Exhibi t "D" and the Deed and Trust shall be in the form attached hereto as Exhibit "E". Developer represents and warrants to City that California Housing Finance Agency ("CHFA") will be the First Lender for the Affordable Units, and acknowledges that City has agreed to the form of the Resale Agreement, Note and Deed of Trust attached hereto as Exhibits "B", "D", and "E" in reliance upon this source of funding. At the close of escrow for an Affordable Unit, title to the Affordable Unit shall be transferred by way of a grant deed in the form attached hereto as Exhibit "F". At the close of escrow for the Affordable Unit, the Deed of Trust shall be insured by a title insurance company acceptable to City, subj ect only to the First Lender's Loan and such other exceptions to title as are approved in writing by City prior to the close of escrow. All costs and expenses of escrow shall be borne by the Developer and/or purchaser of the Affordable Unit, and shall be at no cost to City. \KKS\319271.03 61-092604706002 -3- Developer has advised City that the First Lender may elect to structure the First Lender's Loan as two separate loans encumbering the Property, not to exceed the loan that such lender would make for the Affordable Unit had a single loan structure been utilized. Ci ty agrees that if this should occur, the First Lender's Loan shall include both of the loans funded concurrently by the First Lender. 4. Limited Construction. Nothing contained herein shall be deemed compliance with, or waiver of, any provision of law or condition of approval, except as is expressly stated in Section 2 above. 5. Binding Agreement. The terms, conditions, and covenants of this Agreement shall apply to, and shall bind, the heirs, successors, executors, administrators, assigns, and grantees of both parties and shall be covenants running with the land. Developer shall cause all of the terms, covenants and conditions of this Agreement to be made a part of any deed, contract or other instrument hereafter executed conveying all or any portion of the Property. Notwi thstanding the foregoing, each and every deed, contract, or other instrument hereafter executed conveying the Property or any portion thereof shall conclusively be held to have been executed, delivered and accepted subject to the terms, conditions, and covenants of the Agreement, regardless of whether set forth in such deed, contract or other instrument. 6. Amendment and Termination. This Agreement shall be amended only by a written instrument executed by the parties hereto. The terms, conditions, and covenants of this Agreement shall remain in full force and effect as to an Affordable Unit commencing on the date of recordation of this Agreement in the Official Records until the date which is thirty (30) years following recordation of the Resale Agreement for the Affordable Unit. 7. Indemnification of City. The Developer shall indemnify, hold harmless and defend the City, and its officers, officials, appointees, employees and agents thereof from and against any and all claims, suits, damages, costs, fees, demands, causes of action, losses, liabilities and expenses, including without limitation attorneys' fees, arising from any cause whatsoever (a) in connec- tion with this Agreement and the administration hereof, or (b) resul ting from or arising out of (i) the design, construction, occupancy or ownership of the proj ect or any portion thereof or (ii) any statement or representation provided to the City, or to prospective or actual tenants, purchasers or other transferees of all or any portion of the Property with respect to Developer's performance hereunder. 8. Burden and Benefit. The City and the Developer hereby declare their intent and understanding that the benefit and burden \KKS\319271.03 61-092604706002 -4- of the covenants, conditions and restrictions set forth herein touch and concern the land by enhancing and increasing the enjoyment and use of the Project by Lower Income Households, the intended beneficiaries of such terms, conditions and covenants; by furthering the public purpose for which the city adopted the Density Bonus Ordinance; and by allowing development of the Property at densities in excess of the base density of the city's Zoning Ordinance. 9. Compliance. The City, or its designee, shall have the right to monitor compliance with this Agreement. Moni toring may include, but is not limited to, the provisions outlined in the Resale Agreement. Developer shall pay the City a fee of One Thousand Two Hundred Dollars ($1,200) before the close of escrow for the First Affordable Unit sold. Additionally, Developer shall pay for all out-of-pocket costs incurred as a result of administration of this Agreement, on a monthly basis commencing one month following the date this Agreement is recorded in the Official Records. 10. Default. Upon a violation of any of the provisions of this Agreement by Developer, the City may give written notice to the Developer specifying the nature of the violation. If the violation is not corrected to the satisfaction of the City within a reasonable period of time, not longer than thirty (30) days after the date the notice is mailed, or within such further time as the City may allow in City's sole discretion, the City may declare a default under this Agreement. Upon the declaration of a default, the City shall have the right to apply to a court of competent jurisdiction for specific performance of this Agreement, for an injunction prohibiting a proposed transfer in violation of this Agreement, for a declaration that any transfer and violation of this Agreement is void, or for any and all other relief at law or in equity as may be appropriate. In addition, upon such declaration of default, Developer grants to City and the City shall have the purchase option described in Sections 6, 7 and 15 of the Resale Agreement as to the Affordable Units, the terms and conditions of which are incorporated herein by reference. 11. Waivers. Waiver of any breach of any term, covenant or condition of this Agreement shall not be deemed to be a waiver of such provision or of any subsequent breach of the same or any other term, condition or covenant of this Agreement. 12. Equal Housing Opportunity. Developer warrants, repre- sents and covenants that Developer will comply with all Federal, State, . and local laws pertaining to equal housing opportunity, and that Developer will not discriminate against Project residents, or applicants for residency, on the basis of their receipt of governmental housing assistance. 13. Severability. If any provision contained in this Agreement shall for any reason be held to be invalid, illegal or unenforceable in any respect, then such provision shall be deemed \KKS\319271.03 61-092604706002 -5- 13. Severability. If any provision contained in this Agreement shall for any reason be held to be invalid, illegal or unenforceable in any respect, then such provision shall be deemed severable from the remaining provisions, and this Agreement shall be construed as if such invalid, illegal or unenforceable provision had never been contained herein. 14. Legal Costs. Developer agrees to pay the City for all court costs and attorneys' fees incurred by City in the event legal action is undertaken to enforce this Agreement, whether the same proceeds to judgment or not. 15. Notices. All notices shall be given personally or shall be sent by first class United States mail, postage prepaid, addressed as shown on the signature page of this Agreement. Notices shall be deemed given on the earlier of the date delivered or the second day following the date on which the same has been mailed in the manner required by the prior sentence. Either party may, by notice given in the manner required by this Section 15, designate any different address to which subsequent notices shall be sent. 16. Governing Law. This Agreement shall be governed by the laws of the State of California. 17. Captions. The captions and paragraph headings of this Agreement are for convenience of reference only, and shall not be used in the interpretation of any provision of this Agreement. 18. Property Ownership. Developer represents and warrants to the City that Developer is the sole owner of the Property and has full right and authority to enter into this Agreement and bind the Property hereto, this Agreement has been duly and validly authorized, executed and delivered by Developer, and those individuals signing this Agreement on behalf of Developer constitute all of the general partners of Developer. IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written. APPROVED AS TO FORM: BY:AN~ Acting City Attorney 7/1 ~Hle: JAY 73/tk ~A ~;ll-i5 C,.. r' A P/I-fINIS r~/.l:-r6te 7351 Rosanna Street Gilroy, CA 95020 \KKS\319271.03 61-092604706002 -6- Church Street Associates, a general partnership By: South County Housing Corporation, a California non- profit public benefit corporation, its general partner By: ~~ t/eehr Its: e>t:tZ(VTCVE PI1lee:C.70~ 651 W. Sixth Street Gilroy, CA 95020 Attn: Dennis Lalor \KKS\319271.03 61-092604706002 -7- STATE OF CALIFORNIA } ". COUNTY OF SANTA CLARA On t-26-96 , before me, Patricia K. Ben so~ personally appeared Marie W. Juncker, Executive Director [] personally known to me -OR- ~ proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. ( ct ~ ~ ~ ~: : : ~~: : ~ 1 r ~ MIl.. .t j_~.. I I ~ _ ~ ~,~~~'-~ J \KKS\319271.03 61-092604706002 -8- CAPACITY CLAIMED BY SIGNER Though statute does not require the Notary to fill in the data below, doing so may prove invaluable to persons relying on the document. o INDIVIDUAL ~ CORPORATE OFFICERS(S) F,Y'2f"llri"E' nirE'C'rnr Title(s) o PARTNER(S) 0 LIMITED o GENERAL o ATTORNEY-IN-FACT o TRUSTEE (S) o GUARDIAN/CONSERVATOR o OTHER: SIGNER IS REPRESENTING: Name of Person{s) or Entity(ies} South County Housing Corporation STATE OF CALIFORNIA } ss. COUNTY OF Santa Clara On 9-26-96 , before me, Patricia K. ~en~so~ personally appeared Jay Baksa, City Adminlstrator t3 personally known to me -OR- [] proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. ~.~,~;. t. - ~;.;.;; ~ 'I I .' COIM__' I . .....,...... - ClIIf... J INMCLAMCOUNIV'" ~ ~ ~ ~~~~.~~'~1~ 1 \KKS\319271.03 61-092604706002 -9- CAPACITY CLAIMED BY SIGNER Though statute does not require the Notary to fill in the data below, doing so may prove invaluable to persons relying on the document. o INDIVIDUAL o CORPORATE OFFICERS(S} Title(s) o PARTNER(S) 0 LIMITED o GENERAL o ATTORNEY-IN-FACT o TRUSTEE (S) o GUARDIAN/CONSERVATOR ill OTHER: City hdminictrator SIGNER IS REPRESENTING: Name of Person(s) or Entity(ies) City of Gilroy EXHIBIT A PROJECT LEGAL DESCRIPTION All that certain real property located in the City of Gilroy, County of Santa Clara, State of California, more particularly described as follows: All of lots 1 through 60 i clusive as shown on that c~tain Subdivision Map recorded on q Q. , 1996 in Book (0 ~ of Maps at pages\~, in the Off'cia~ Records of Santa Clara County, California. \KKS\319271.03 61-092604706002 -1- R~CORDING REQUESTED PURSUANT TO GOVERNMENT CODE SECTION 27383 When Recorded Mail To: City of Gilroy Community Development Department 7351 Rosanna Street Gilroy, CA 95020 RESALE RESTRICTION AGREEMENT AND OPTION TO PURCHASE Owner: Residence: This Resale Restriction Agreement and Option to Purchase (the "Agreement") is entered into as of this day of , 19 , by and between the City of Gilroy (the "city") and ("owner"). RECITALS A. The city has determined that it would be desirable to stimulate the development of new residences for low and moderate income households; and B. In order to further its plan to assist in developing housing for low and moderate income households, the City has assisted in the development of certain homes for first time homebuyers in the Alderwood development, the residential development of which the Residence (defined below) is a part (the "Development"); and C. In addition, the City has enacted Ordinance No. 95-18 establishing a density bonus program ("Density Bonus Program") in conformance with California law pertaining to the provision of density bonuses in return for the provision of affordable housing for lower and very low income households. The Density Bonus 4601OQ.PSO 09/25/96 -1- EXHIBIT B Program has also been utilized in order to further assist in the development of housing for Lower Income Households (defined below) in the Development; and D. The assistance of City allows the residences to be sold below fair market value to persons who would not otherwise be able to afford them; and E. The assisted units consist of twenty (20) homes for households with incomes at or below sixty-one and seven tenths percent (61.7%) of median income for Santa Clara County, California ("Lower Income Households"); and F. The City wishes to establish resale controls to protect its financial interest in the residences and to provide for the continued availability of the residences to low and moderate income households; and G. In order to protect its financial interest and program of assisting housing for low and moderate income households, the city has required the Owner to execute a note ("Note") and deed of trust in its favor (the "Deed of Trust") in addition to this Agreement; and H. The Deed of Trust shall be in a second lien position subordinate to the lien of the deed of trust executed by Owner in favor of California Housing Finance Agency as beneficiary (the "First Lender"), securing a loan made by the First Lender to the Owner (the "First Lender's Loan"). I. The purpose of this Agreement is to place resale controls on the Residence, provide eligibility requirements for subsequent purchasers, and reserve to the city an option to purchase the Residence. NOW, THEREFORE, in consideration of the benefits received by the Owner, the Owner and the City agree, as follows: 1. DEFINITIONS The following terms are specially defined for this Agreement and their definitions can be found in the sections indicated below: A. "Agreement" - First sentence of this Agreement on Page 1. B. "City" - First sentence of the Agreement on page 1. 4601OQ.PSO 09/25/96 -2- C. "Deed of Trust" - Recital G. D. "Eligible Purchaser" - section 12B. E. "Eligible Transfer" - section 12A. F. "Fair Market Value" - section B. G. "First Lender" - Recital H. H. "First Lender's Loan" - Recital H. I. "HCD" - section 12B. J. "Increased Base Price" - section 13A. K. "Note" - Recital G. L. "option" - Section 7. M. "Owner" - First sentence of the Agreement on Page 1. N. "Purchase Price" - section 2. O. "Residence" - section 2. P. "Sales Price" - section 13. Q. "Sellable Condition" - section 13B. R. "Tr'ansfer" - section 5. 2. DESCRIPTION OF PROPERTY This Agreement concerns the real property commonly known as , in the City of Gilroy, Santa Clara County, California 95020, which is more fully described in Exhibit A (the "Residence"), which is attached to, and incorporated in, this Agreement. The Purchase Price ( $ ) and has been Lender's Loan of city in the amount of payment of of the Residence purchased by the ($ is Owner with the First ), the Note from the ), and a down ($ ($ ) . 4601OQ.PSO 09/25/96 -3- 3. OWNER CERTIFICATIONS The Owner certifies that (a) the financial and other information previously provided in order to qualify to purchase the Residence is true and correct as of the date of this Agreement (b) the Owner is a first time home owner, and (c) the Owner shall occupy the Residence as the Owner's principal place of residence. The Owner shall be considered as occupying the Residence if the Owner is living in the unit for at least (10) months out of each calendar year. The City may grant a temporary waiver of this occupancy requirement for good cause in its sole discretion. 4. LEASING OF RESIDENCE The Owner shall not lease the Residence for more than two (2) months in any calendar year, determined cumulatively, without the written consent of the City and shall not lease the Residence without providing the City with a copy of the lease. Any lease in violation of this Agreement shall constitute a default under this Agreement. 5. SALE RESTRICTIONS Any Transfer of the Residence will be subject to the provisions of this Agreement. "Transfer" means 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, a life estate, a leasehold interest of more than two (2) months in any calendar year determined cumulatively without the City'S written consent, or an interest evidenced by a land contract by which possession of the Residence is transferred and the Owner retains title. Transfers by gift, devise, or inheritance to an existing spouse, surviving joint tenant, or a spouse as part of a dissolution proceeding, or in connection with marriage shall not be considered a Transfer for the purpose of this Agreement. 6. NOTICE OF INTENDED TRANSFER In the event the Owner intends to Transfer or vacate the Residence, the Owner shall promptly notify the City in writing of such intent. The written notice shall be given in accordance with Section 23 of this Agreement at least ninety (90) days prior to the actual date of the Transfer or vacation of the Residence. Following receipt of such notice, the city may notify prospective eligible purchasers of the Residence that the Residence is available for purchase, or the City may purchase the Residence. 4601OQ.PSO 09/25/96 -4- 7. CITY PURCHASE OPTION Owner agrees that the City shall have the option to purchase the Residence pursuant to section 6 or section 15 for an amount equal to the lower of (a) the fair market value of the Residence as calculated by the process set forth in section 8, (b) the offered sales price in the case of a Transfer described in Section 6, or (c) the Sales Price as calculated in the manner set forth in section 13 of this Agreement (the "Option"). The City however may only exercise its option at the price set forth in Subsection (c) during the first four (4) years after execution of this Agreement, if the First Lender's Loan continues to encumber the Residence. If the City decides to exercise its option in the case of a Transfer or vacation described in section 6, it shall within thirty (30) days after receipt of the notice specified in section 6 above, notify the Owner in accordance with section 23 below that it chooses to exercise the option. If the City exercises the Option, it shall purchase the Residence within ninety (90) days after the date it receives the notice specified in section 6 above. The City may, instead of purchasing the Residence itself, assign its right to purchase the Residence to a person who meets the criteria established by the city, or to a governmental agency, or to a nonprofit organization which is devoted to developing low and moderate income housing. 8. FAIR MARKET VALUE If it is necessary to determine the fair market value of the Residence, it shall be determined by an independent residential appraiser selected by the Owner, from a list of appraisers provided by the City. Each appraiser on the City's list shall have been previously approved by the Federal National Mortgage Association or the Federal Housing Administration and placed on their list of approved single family housing appraisers. If possible, the appraisal shall be based upon the sales prices of comparable properties sold in the market area during the preceding three-month period. The cost of the appraisal shall be shared equally by the City and the Owner. Nothing in this section shall preclude the Owner and the city from establishing the fair market value of the Residence by mutual agreement in lieu of an appraisal pursuant to this section. 9. REPAYMENT OF CITY NOTE UPON TRANSFER BY OWNER Upon any Transfer of the Residence, subject to the provisions of Section 10, the Owner shall pay to the City all principal and interest owed under the Note. If the City exercises its Option, the outstanding amount of principal and interest owed under the Note shall be paid to the City in the 4601OQ.PSO 09/25/96 -5- form of a credit against the purchase price to be paid by the City to the Owner. 10. ASSUMPTION OF DEBT UNDER THE NOTE At the Owner's request, the City will allow the assumption of the principal and interest due under the Note if the Owner Transfers the Residence to a person who meets the eligibility criteria set forth in section 12B in a transaction that meets the requirements of sections 12 and 13. However, the City will allow the assumption of the principal and interest owed under the Note only after the execution, in recordable form, and delivery to the City of an assumption agreement containing terms and conditions acceptable to the City ("Assumption Agreement") by the Eligible Purchaser pursuant to section 12. Any assumption allowed by the City to the Owner pursuant to this section shall apply only to the Owner and only for the particular Transfer transaction relating to such Eligible Purchaser, and shall not automatically apply to any subsequent owner. 11. TRANSFER BY OWNER In the event the Owner notifies the City of a Transfer or vacation as required by section 6 and the City does not exercise its option to purchase pursuant to section 7 above, the Owner may sell the Residence to a person of the Owner's choosing on the terms set forth in this section. A. TRANSFER TO INELIGIBLE PURCHASERS: If the Owner transfers the Residence in a transaction that does not meet the Eligible Transfer requirements of Section 12 below ("Ineligible Transfer"), the Owner shall pay to the City all principal and interest owed under the Note and may thereafter sell the Residence for any price, unrestricted by the provisions of this Agreement. B. TRANSFER TO ELIGIBLE PURCHASER: If the Owner transfers the Residence in a transaction that meets the Eligible Transfer requirements of section 12, at a sales price that does not exceed the Sales Price as defined in Section 13, the amounts due under the Note may be assumed pursuant to section 10 and this Agreement shall continue in full force and effect. 12. ELIGIBLE TRANSFER A transfer of the Residence that meets the requirements set forth in this Section 12 shall qualify as an approved Transfer to an Eligible Purchaser ("Eligible Transfer"): 4601OQ.PSO 09/25/96 -6- A. DISCLOSURES AND SUBMITTALS: The Owner and the proposed purchaser shall provide the following information and documents to the City: i. The name, address and telephone number in writing of the proposed purchaser. ii. A signed financial statement of the proposed purchaser in a form acceptable to the City and any other supporting documentation requested by the city. The financial information shall be used by the City to determine the income eligibility of the proposed purchaser. iii. The proposed sales contract and all other documents relating to the Transfer, which shall set forth all of the terms of the Transfer of the Residence. Said documents shall include the following terms: (a) The sales price; and (b) The price to be paid by the proposed purchaser for the Owner's personal property, if any, and for the services of the Owner, if any. iv. A written certification, from the Owner and the proposed purchaser in a form acceptable to the City that the sale shall be closed in accordance with the terms of the sales contract and other documents submitted to and approved by the City. The certification shall also provide that the proposed purchaser or any other party has not paid and will not pay to the Owner, and the Owner has not received and will not receive from the proposed purchaser or any other party, money or other consideration, including personal property, in excess to what is set forth in the sales contract and documents submitted to the City and the Sales Price as calculated in section 13. The written certification shall also include a provision that in the event a Transfer is made in violation of the terms of this Agreement or false or misleading statements are made in any documents or certification submitted to the City, the city shall have the right to foreclose on the Residence, file an action at law or in equity to make the parties terminate and/or rescind the sale contract and/or declare the sale void, notwithstanding the fact that the sale may have closed and become final as between the Owner and the proposed purchaser. In any event, any costs, liabilities or obligations incurred by the Owner and the proposed purchaser for the return of any moneys paid or received in violation hereunder or for any costs and legal expenses, shall be borne by Owner and/or the proposed purchaser and they shall hold the City and its designee and their successors harmless and 4601OQ.PSO 09/25/96 -7- reimburse their expenses, legal fees and costs for any action they reasonably take in good faith in enforcing the terms of this Agreement. v. An executed Assumption Agreement; the recordation of the Assumption Agreement shall be a condition of the City's approval, or its designee, of the proposed Transfer. vi. Upon the close of the proposed Transfer, the recorded Assumption Agreement, a copy of the final sales contract, settlement statement, escrow instructions, and any other document which the city may reasonably request. B. ELIGIBILITY OF PURCHASER: A proposed purchaser who meets the following requirements shall be an Eligible Purchaser: i. Each purchaser shall be a "First Time Homebuyer", defined as: a) a homebuyer who has not had an ownership interest in residential real estate during the three year period immediately prior to this Agreement; or b) a "displaced homemaker" who has not worked full-time in the labor force for a number of years but has, during such years, worked primarily without remuneration to care for the home and family, and is unemployed or underemployed and is experiencing difficulty in obtaining or upgrading employment; or c) a single parent who is unmarried or legally separated from a spouse, and has one or more minor children for whom the individual has custody or joint custody or is pregnant; or d) a current owner-occupant of a home that does not meet local codes and cannot be brought into compliance with codes for less than the cost of construction of a new home; or e) an owner of a manufactured home that is not permanently affixed to a permanent foundation in accordance with local code. ii. Each proposed purchaser shall certify that he or she will occupy the Residence as his or her principal residence. iii. The combined maximum income for all household members of the purchaser shall not exceed lower income limits adjusted for family size, for a family in Santa Clara County, California as published by the California Department of Housing and Community Development ("HCD") from time to time. In the event such income determination is no longer published, or has not been updated for a period of at least eighteen (18) months, the City may use or develop such other reasonable method as it may choose in order to determine the income for lower income households in Santa Clara County, California adjusted for family size. 4601OQ.PSO 09/25/96 -8- C. ADMINISTRATIVE FEE: The proposed purchaser shall pay a reasonable transfer fee to the City or City's designee and reimburse the City or City's designee for costs to cover the costs of administering its rights and obligations under this Agreement. All recording fees and other closing costs in connection with the Transfer shall be paid by the proposed purchaser or the Owner, and shall be at no cost to the City. 13. DETERMINATION OF SALES PRICE The maximum sales price (the "Sales Price") that the Owner shall receive for any type of Eligible Transfer of the Residence shall be the Increased Base Price, as adjusted by section 13B, plus the amount of the Note and the accrued interest under the Note. A. INCREASED BASE PRICE: The Increased Base Price of the Residence means the sum of (i) the original principal amount of the First Lender's Loan to the Owner in the amount of ($ ) and (ii) the original amount of the Owner's down payment in the amount of ($ ), increased by the percentage of increase in the Consumer Price Index (All Items) ("CPI") applicable to Santa Clara County as published by Federal Bureau of Labor statistics from time to time. The increase in the CPI shall be computed from the date of the original purchase of the Residence by the Owner to the date of receipt of notice to sell by the City or its assignee required by section 6. B. ADJUSTED INCREASED BASE PRICE: The Increased Base Price shall also be increased by the amount of any reasonable real estate sales commission actually incurred and by the value of any substantial structural or permanent fixed improvements which cannot be removed without substantial damage to the Residence or substantial or total loss of value of said improvements. No such adjustment for improvements shall be made except for those: i) made or installed by or under the direction of the Owner; ii) approved in advance by the City or its designee; and iii) whose initial costs were Two Thousand Dollars ($2,000) or more. The value of such improvements by which the Sales Price shall be adjusted shall be the appraised market value of the improvements when considered as additions or fixtures to the Residence (i.e., the amount by which said improvements enhance the market value of the Residence at the time of sale.) The adjustment to the Increased Base Price for such improvements shall be limited to increase in value, not the cost of the improvements to the Residence. The Increased Base Price shall be decreased by an amount necessary to repair any damages and to put the Residence into a Sellable Condition. Items necessary to put 4601OQ.PSO 09/25/96 -9- a Residence into Sellable Condition shall be determined by the city, and may include, without limitation, pest control work, cleaning, painting and making needed structural, mechanical, electrical, plumbing, fixed appliance repairs and other deferred maintenance repairs. 14. DEFAULTS AND REMEDIES Upon a violation of any of the provisions of this Agreement by the Owner or the proposed purchaser, the City may give written notice to the Owner specifying the nature of the violation. If the violation is not corrected to the satisfaction of the City within a reasonable period of time, but in no event longer than thirty (30) days after the date the notice is mailed, or within such further time as the City allows in its sole discretion, City may declare a default under this Agreement. Upon the declaration of a default or if the Owner or the proposed purchaser makes, or has made, any misrepresentation in connection with receiving any benefits under this Agreement, the City may declare all sums due under the Note, and/or apply to a court of competent jurisdiction for any such other relief at law or in equity as may be appropriate. 15. PURCHASE OPTION UPON DEFAULT A. PURCHASE OPTION: Notwithstanding, and in addition to, the remedies provided to the City in section 14, the Owner hereby grants to the City, the option to purchase the Residence on all of the terms and conditions set forth in section 7 above, except that the notice of exercise of the Option may be given by city at any time after the date which is thirty (30) days after the City has given the Owner and the First Lender notice of the declaration of a default, and City shall purchase the Residence within 90 days after the date of city's exercise of such option. Said option to purchase is given in consideration of the economic benefits received by the Owner resulting from ownership of the Residence made possible by the assistance of the City in developing the Residence. B. EXERCISE OF OPTION: The option to purchase pursuant to this Section 15 may be exercised upon a default under this Agreement, the Note, Deed of Trust or upon default under any other purchase or financing of the document executed in relationship to the Residence or the First Lender's Loan. Any default under the Note, Deed of Trust, or any other purchase or financing document executed in connection with the Residence or the First Lender's Loan shall constitute a default under this Agreement. 4601OQ.PSO 09/25/96 -10- 16. NONLIABILITY OF THE CITY In no event shall the City become in any way liable or obligated to the Owner or any successor-in-interest to the Owner by reason of its option to purchase under sections 7 and 15 nor shall the City be in any way obligated or liable to the Owner or any successor-in-interest to the Owner for any failure to exercise its option to purchase. 17. RESTRICTIONS ON FORECLOSURE PROCEEDS If a creditor acquires title to the Residence through a deed in lieu of foreclosure, a trustee's deed upon sale, or otherwise, the Owner shall not be entitled to the proceeds of sale to the extent that such proceeds otherwise payable to the Owner when added to the proceeds paid or credited to the creditor exceed the amount the Owner would have received by a sale in accordance with section 13. Such excess proceeds shall be promptly paid to the City. The Owner shall instruct the holder of such excess proceeds to pay such proceeds to the city as repayment for, and in consideration of, the financial assistance provided in the development of the Residence. 18. BINDING ON SUCCESSOR AND ASSIGNS This Agreement shall bind, and the benefit hereof shall inure to, the Owner, his or her heirs, legal representatives, executors, successors in interest and assigns, and to the City and its successors until the earlier of: (a) thirty (30) years from the recordation of this Agreement; or (b) the date the Sales Price is paid to the Owner by the City, or (c) the date the City is paid the amounts due it under section 11.A. in the circumstances described in section 11.A. Subject to the terms of this section 18, voluntary prepayment of the Note shall not affect this Agreement. 19. SUPERIORITY OF AGREEMENT The Owner covenants that the Owner has not, and will not, execute any other agreement with provisions contradictory to or in opposition to the provisions hereof, and that, in any event, this Agreement is controlling as to the rights and obligations between and among the Owner, the City and their respective successors. 4601OQ.PSO 09/25/96 -11- 20. RIGHTS OF BENEFICIARIES UNDER DEEDS OF TRUSTS This Agreement shall not diminish or affect the rights of the City under the Note and the Deed of Trust executed by the Owner in favor of the city in connection with the purchase by the Owner of the Residence. City and Owner acknowledge and agree that this Agreement is subject and subordinate in all respects to the liens, terms, covenants and conditions of the First Lender's Deed of Trust and to all advances heretofore made or which may hereafter be made pursuant to the First Lender's Deed of Trust including all sums advanced for the purpose of (a) protecting or further securing the lien of the First Lender's Deed of Trust, curing defaults by the Owner under the First Lender's Deed of Trust or for any other purpose expressly permitted by the First Lender's Deed of Trust or (b) constructing, removing, repairing, furnishing, fixturing or equipping the Residence. As between the First Lender and the City the terms and provisions of the First Lender's Deed of Trust are paramount and controlling, and they supersede any other terms and provisions hereof in conflict therewith. In the event of a foreclosure of the First Lender's Deed of Trust, any provisions herein or any provisions in any other collateral agreement restricting the use of the Residence to low or moderate income households or otherwise restricting the Owner's ability to sell the Residence shall have no further force or effect on subsequent owners or purchasers of the Residence. Any person, including successors or assigns (other than the Owner or a related entity of the Owner), receiving title to the Residence through a foreclosure of the First Lender's Deed of Trust shall receive title to the Residence free and clear from such restrictions. Further, if the First Lender acquires title to the Property pursuant to a deed in lieu of foreclosure, the lien of this Agreement shall automatically terminate upon the First Lender's acquisition of title, provided that (i) the City has been given sixty (60) day written notice of a default under the First Lender's Deed of Trust and (ii) the City shall not have cured the default under the First Lender's Deed of Trust, or diligently pursued curing the default within the 60-day period provided in such notice sent to the City. This agreement shall not diminish or affect the rights of The united States Department of Housing and Urban Development ("HUD"), the Federal National Mortgage Associates ("FNMA"), or the Veterans Administration ("VA"), as and if applicable, under the First Lender's Deed of Trust. Notwithstanding any provision in this Agreement to the contrary, all of the provisions of this Agreement shall terminate and have no further force and effect 4601OQ.PSO 09/25/96 -12- upon the occurrence of one of the following events: (i) title is acquired by HUD, VA, FNMA, or another party upon foreclosure of a deed of trust insured by HUD or guaranteed by VA; (ii) sUbject to the notice and cure provisions of this section, title is acquired by HUD, VA, FNMA, or another party by a deed in lieu of foreclosure of a deed of trust insured by HUD or guaranteed by VA; or (iii) a deed of trust insured by HUD is assigned to HUD. 21. INVALID PROVISIONS If anyone or more of the provisions contained in this Agreement 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 Agreement, and this Agreement shall be construed as if such invalid, illegal or unenforceable provision had never been contained herein. 22. CONTROLLING LAW The terms of this Agreement shall be interpreted under the laws of the State of California. 23. NOTICES All notices required herein shall be sent by certified mail, return receipt requested or express delivery service with a delivery receipt and shall be deemed to be effective as of the date received or the date delivery was refused as indicated on the return receipt as follows: To the Owner: At the address of the Residence. To the City: City of Gilroy community Development Department 7351 Rosanna Street Gilroy, CA 95020 The parties may subsequently change addresses by providing written notice of the change in address to the other parties in accordance with this section 23 in writing. 4601OQ.PSO 09/25/96 -13- 24. INTERPRETATION OF AGREEMENT The terms of this Agreement shall be interpreted so as to avoid speculation on the Residence and to insure to the extent possible that its sales price and mortgage payment remain affordable to persons and households of low and moderate income. 25. EXHIBITS Any exhibits referred to in this Agreement are incorporated by such reference. IN WITNESS on or as of the the parties have executed this Agreement . ten above. ./ tion - - . C, I .;, T1tl -....:f-rv osanna Street Gilroy, CA 95020 By: crv ~ ~ ~ APPROVED AS TO FORM: By: Linda A. Callon city Attorney OWNER: By: Title: (Type Name) 4601OQ.P50 09/25/96 -14- EXHIBIT A Residence Description 4601OQ.PSO 09/25/96 A-l EXHIBIT "C" LEGAL DESCRIPTION OF AFFORDABLE UNITS All that certain real property located in the City of Gilroy, County of Santa Clara, State of California, more particularly described as follows: All of lots 15, 16, 17, 33, 34, 35, 36, 37, 38, 39, 40, 47, 48, 49, 50, 51, 52, 53, 54 and 55 ~ shown on that certain Subdivision Map recorded on vt/a-r , 1996 in Book ~ of Maps at pagesl~, in the Of~icia~cords of Santa Clara County, California. \KKS\319271.03 61-092604706002 -1- NOTICE TO BORROWER: THIS DOCUMENT CONTAINS PROVISIONS RESTRICTING TRANSFERS AND ASSUMPTIONS PROMISSORY NOTE Secured by a Deed of Trust Gilroy, California , 19 $ In return for valuable consideration I have received I, (the "Borrower"), promise to pay to the City of Gilroy ("City"), or order, at 7351 Rosanna Street, Gilroy, California 95020, Attn: Community Development Department, or such other place as the City may designate in writing, the Principal specified in section 2 below, plus Interest specified in section 3 below, in lawful money of the united States of America without deduction, set off, or counter claim. 1. Assumption of Note is Restricted. I acknowledge that this Note is given in connection with the purchase of my home located at ("Residence") to comply with requirements of a city program which assists in the development of homes for low and moderate income persons. consequently, I understand this Note is not automatically assumable, but is subject to section 711.5 of the California civil Code which allows the City to accelerate all amounts due under this Note upon Transfer of the Residence which does not comply with the provisions of the Resale Restriction Agreement and option to Purchase executed between the Borrower and the City, and dated the same date as this Note (the "Resale Agreement") . 2. princioal. The Principal due under this Note is Dollars ($ ). 3. Interest. In addition to the payment of Principal, I agree to pay the following Interest to the city: (a) Annual Interest of percent ( %) on the amount of Principal outstanding, and (b) Contingent Deferred Interest as defined in section 8 below if I transfer the Residence in a transaction that 46010P.PSO 09/25/96 -1- EXHIBIT 0 does not meet the Eligible Transfer requirements of the Resale Agreement. Any Annual Interest not paid by [INSERT MONTH AND DAY OF CLOSING] each year shall be added to Principal and also accrue interest at the same rate. No Annual Interest shall accrue after thirty (30) years from the date of this Note. Annual Interest may be deferred each year at the option of the Borrower so long as the Borrower (a) is not in default under this Note, the Deed of Trust, or the Resale Agreement, and (b) has not made or is not obligated to make payments on a loan secured by a deed of trust in an inferior lien position to the Deed of Trust. Notwithstanding the foregoing, interest accruing under this Note shall be subject to the provisions of section 6 of this Note below. [The interest rate to be charged for Annual Interest shall not exceed one percent (1%) less than the interest rate on the CHFA loan.] 4. Security. This Note is secured by a Deed of Trust dated the same date as this Note. 5. Repayment. I agree to pay the total amount of the unpaid Principal and Interest owed under this Note immediately upon: (a) the date a Transfer is made; (b) the date I move from the Residence; (c) the date I commit an event of default under this Note, the Resale Agreement, the Deed of Trust, or any provision of a document related to a Superior Lender's loan; (d) the date of the discovery of any misrepresentation in any document executed by me in connection with this Note, the Resale Agreement, or the Deed of Trust; (e) upon prepayment or refinancing of a Superior Lender's Loan without the City's written consent. 6. Prepayments. I understand I may prepay all or part of Principal and/or Interest due under this Note at any time without any prepayment charge. Each payment made under this Note shall be credited first on Interest due, and the remainder on the principal. Interest shall cease upon the amounts so credited on the Principal. If, from any circumstances whatsoever, fulfillment of any provision hereof shall be prohibited by law at the time performance of such provision is due, the obligation to be fulfilled shall be reduced to the maximum not so prohibited, and if from any circumstance, the City should ever receive as 46010P.PSO 09/25/96 -2- Interest an amount that would exceed the highest lawful rate, such amount as would be excessive interest shall be applied to the reduction of the unpaid Principal and not the payment of Interest. The provisions of this paragraph shall control every other provision of this Note. 7. Cancellation of Note. So long as the Borrower is not in violation of any provision of this Note, the Resale Agreement, or the Deed of Trust, all Principal and accrued Interest remaining at the end of the thirtieth (30th) year after the date of this Note shall automatically be forgiven. At that time this Note shall be cancelled. Unless sooner paid or cancelled pursuant to this Note, all outstanding Principal and Interest shall be due thirty (30) years after the date of this Note. 8. Definitions. I agree that the terms set forth in this section shall have the following meanings in this Note. (a) "Contingent Deferred Interest" shall be defined as the city's Share of any Excess Amount. The "City's Share" is defined as fifty percent (50%) of the percentage derived by dividing the original principal amount of this Note by the original purchase price of the Residence. "Excess Amount" is defined as the amount received or credited to the Borrower from the sale of the Residence minus (l) the sum of the amount necessary to payoff the First Lender's Loan plus (2) the amount necessary to repay the sums due under this Note, (3) plus the amount of the down payment originally credited to the Borrower, (4) plus the amount necessary to pay for reasonable and customary costs of the sales transaction. (b) "Deed of Trust" shall mean the deed of trust executed to secure payment under this Note. (c) "Interest" shall mean Annual Interest plus contingent Deferred Interest. (d) "Note" shall mean this Promissory Note. (e) "Residence" shall mean the housing unit and land which are encumbered by the Deed of Trust. (f) "Superior Lender's Loan" shall mean a loan secured by a deed of trust in a superior lien position to the Deed of Trust. (g) "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, 46010P.PSO 09/25/96 -3- a joint tenancy interest, a life estate, a leasehold interest of more than two (2) months in any calendar year determined cumulatively without the City's written consent, or an interest evidenced by a land contract by which possession of the Residence is transferred and Owner retains title. Transfers by gift, devise, or inheritance to an existing spouse, surviving joint tenant, or a spouse as part of a dissolution proceeding, or in connection with marriage shall not be considered a Transfer for the purposes of this Note. 9. Acceleration. Any default by Borrower under the Superior Lender's Loan, the Deed of Trust or the Resale Agreement shall constitute a default under this Note. Upon the occurrence of a default under a Superior Lender's Loan, the Deed of Trust, the Resale Agreement, or this Note, the City shall have the right to declare the full amount of the Principal along with any accrued 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 or the Deed of Trust; nor shall acceptance by the City of any payment provided for under this Note constitute a waiver of the City'S right to require prompt payment of any remaining Principal and Interest owed. 10. No Offset. I hereby waive any rights of offset I have or may hereafter have against the City, and agree to pay to the City all sums in accordance with the terms of this Note. 11. Waiver: Attornevs' Fees. I and any of my endorsers or guarantors of this Note, for ourselves, our heirs, legal representatives, successors and assigns, waive 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 payment under this Note, 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, and jointly and severally agree to pay all costs of collection or enforcement when incurred, including reasonable attorneys' fees. If an action is instituted to enforce the terms of this Note, I promise to pay, in addition to the costs and disbursements allowed by law, such sum as the court may determine to be reasonable as attorneys' fees in such action. 12. Severability. I agree that if any prov1s1on of this Note shall be invalid, illegal or unenforceable, the validity, 46010P.PSO 09/25/96 -4- legality and enforceability of the remaining provisions hereof shall not in any way be affected or impaired thereby. 13. Joint and Several Obliqations. This Note is the joint and several obligation of all of us signing below and our sureties, guarantors and endorsers, and shall be binding upon all of us and our heirs, executors, administrators, successors and assigns. BORROWER 46010P.PSO 09/25/96 -5- RECORDING .REQUESTED BY ORDIER " APN WHEN RECORDED MAIL TO rcity of Gilroy I N_e 7351 Rosanna Street SIr Gilroy, CA 95020 eet ~d~Attn: Community Developme t City Departmen t ~. Zip L ---l SPACE ABOVE THIS UNE ~OR RECORDER'S USE Deed of Trust and Assignment of Rents This Deed of Trust, made this day of , between , herein called TRUSTOR, whose address is (number and street) (city) (state) (zip) OLD REPUBLIC TITLE COMPANY, a California corporation, herein called TRUSTEE, and City of Gilroy, a municipal corporation , herein called BENEFICIARY, Witnesseth: That Trustor IRREVOCABLY GRANTS, TRANSFERS AND ASSIGNS to TRUSTEE IN TRUST, WITH POWER OF SALE, that property in Gilroy, Santa Clara County, California, described as: See Adden~um attached hereto. In the event the herein described property or any part thereol, or any Interest therein is sold, agreed to be sold, conveyed or alienated by the Trustor, or by the operation 01 law or otherwise, all obligations secured by this instrument, irrespective 01 the maturity dates expressed therein, at the option 01 the holder hereol and without demand or notice shall immediately become due and payable. Together With the rents, issues and profits thereof, SUBJEcr, HOWEVER, to the right, power and authority hereinafter given to and conferred upon Beneficiary to collect and apply such rents, issues and profits. for the Purpose of Securing: 1. Performance of each agreement of Trustor herein contained. 2. Payment of the indebtedness evidenced by one promissory note of even date herewith, and any extension or renC\lVlll thereof, in the principai sum of S executed by Trustor in favor of Beneficiary or order. 3. Payment of such further sums as the then record owner of said property hereafter may borrow from Beneficiary, when evidenced by another n~te (c:r notes) reciting it is so secured. 4. PerfOJ:IUaI1ce of each agreement of Trustor in the Resale Restr~ction Ayrearent ann Oot-inn :to Purcliase by andretween Trustor and Beneficiary To Protect the Securlt)' of This DeecfOf Trust, Trustor Agrees: ~ narF> N:rr, -+fl (1) To keep said property in good condition and repair; not to remove or cmtbol~ b'anlml'g tll~YeD~ ~D:fplete or restore promptly and in good and workmanlike manner any building which may be constructed, damaged or destroyed thereon and to pay when due all claims for labor performed and materials furnished therefor; to comply with all laws affecting said property or requiring any alterations or improvements to be made thereon; not to commit or permit waste thereof; not to commit, suffer or permit any act upon said property in violation of law; to cultivate, irrigate, fertilize, fumigate, prune and do all other acts which from the character or use of said property may be reasonably necessary, the specific enumerations herein not excluding the general. FTGIS-l60 8/94. 0Md of Trut! and Malgnment of Renta. Page , of 3 (=) To provide. maintain and delIver to 3end;c:a:~.. fire insurance satlsfac:or, :ll and ....Ith :oss payable to BenefiCIary. T:le amount collected under any fire or other insurance polIcy may be applied by Beneficiary upon any Indebtedness sec:.;red hereby and in such order as Beneficiary may determine, or at optIOn of Beneficiary the entire amount so collected or any part thereof may be released to Trustor. Such appiication or rei ease shall not cure or waive any default or notice of default hereunder or invalidate any ac: done pursuant to such notice. (3) To appear In and defend any action or proceeding purporting to affect :he secunty hereof or the nghts or ;JOwe:-s of Seneficiary or Trustee: and to pay all costs and e.xpenses. including cost of e'.idence of tille and attorney's fees in a reasonable sum. in any such action or proceeding in which Beneficiary or Trustee may appear. and in any suit brought by Beneficiary to foreclose :hls Deed. (4) To pay: at least ten days before delinquency all taxes and assessments affecting said property, Including assessments on appurtenant water stock; when due, all incumbrances. charges and liens. wIth interest. on said property or any part thereof, which appear to be prior or superior hereto; all costs, fees and expenses of this Trust. Should Trustor fail to make any payment or to do any act as herein provided. then Beneficiary or Trustee. but without obligation so to do and without notice to or demand upon Trustor and without releasing Trustor from any obligation hereof, may: make or do the same in such manner and to such extent as either may deem necessary to protec: the security hereof, Beneficiary or Trustee being authorized to enter upon said property for such purposes; appear in and defend any action or proceeding purporting to affect the security hereof or the rights or powers of Beneficiary or Trustee; pay, purchase, contest or compromise any incumbrance. charge or lien which in the judgment of either appears to be prior or superior hereto; and, in e.xercising any such powers, pay necessary e.xpenses, employ counsel and pay his reasonable fees. (5) To pay immediately and without demand all sums so expended by Beneficiary or Trustee, with interest from date of expenditure at the amount allowed by law in effect at the date hereof, and to pay for any statement provided for by law in effect at the date hereof regarding the obligation secured hereby any amount demanded by the Beneficiary not to exceed the maximum allowed by law at the time when said statement is demanded. (6) That any award of damages in connection with any condemnation for public use of or injury to said property or any part thereof is hereby assigned and shall be paid to Beneficiary who may apply or release such moneys received by him in the same manner and with the same effect as above provided for disposition of proceeds of fire or other insurance. (7) That by accepting payment of any sum secured hereby after its due date, Beneficiary does not waive his right either to require prompt payment when due of all other sums so secured or to declare default for failure so to pay. (8) That at any time or from time to time, without liability therefor and without notice, upon written request of Beneficiary and presentation of this Deed and said note for endorsement, and without affecting the personal liability of any person for payment of the indebtedness secured hereby, Trustee may: reconvey any part of said property; consent to the making of any map or plat thereof; join in granting any easement thereon; or join in any extension agreement or any agreement subordinating the lien or charge hereof. (9) That upon written request of Beneficiary stating that all sums secured hereby have been paid, and upon surrender of this Deed and said note to Trustee for cancellation and retention and upon payment of its fees, Trustee shall reconvey, without warranty, the property then held hereunder. The recitals in such reconveyance of any matters or facts shall be conclusive proof of the truthfulness thereof. The grantee in such reconveyance may be described as "the person or persons legally entitled thereto". Five years after issuance of such full reconveyance, Trustee may destroy said note and this Deed (unless directed in such request to retain them). (10) That as additional security, Trustor hereby gives to and confers upon Beneficiary the right, power and authority, during the continuance of these Trusts, to collect the rents. issues and profits of said property, reserving onto Trustor the right, prior to any default by Trustor in payment of any indebtedness secured hereby or in performance of any agreement hereunder, to collect and retain such rents, issues and profits as they become due and payable. Upon any such default, Beneficiary may at any time without notice, either in person, by agent, or by a receiver to be appointed by a court, and without regard to the adequacy of any security for the indebtedness hereby secured, enter upon and take possession of said property or any part thereof, in his own name sue for or othetwise collect such rents, issues and profits, including those past due and unpaid, and apply the same, less costs and e.xpenses of operation and collection, including reasonable attorney's fees, upon any indebtedness secured hereby, and in such order as Beneficiary may determine. The entering upon and taking possession of said property, the collection of such rents, issues and profits and the application thereof as aforesaid, shall not cure or waive any default or notice of default hereunder or invalidate any act done pursuant to such notice. (11) That upon default by Trustor in payment of any indebtedness secured hereby or in performance of any agreement hereunder, Beneficiary may declare all sums secured hereby immediately due and payable by delivery to Trustee of written declaration of default and demand for sale and of written notice of default and of election to cause to be sold said property, which notice Trustee shall cause to be filed for record. Beneficiary also shall deposit with Trustee this Deed, said note and all documents evidencing expenditures secured hereby. After the lapse of such time as may then be required by law following the recordation of said notice of default, and notice of sale having been given as then required by law, Trustee, without demand on Trustor, shall sell said property at the time and place fIXed by it in said notice of sale, either as a whole or in separate parcels, and in such order as it may determine, at public auction to the highest bidder for cash in lawful money of the United States, payable at time of sale. Trustee may postpone sale of all or any portion of said property by public announcement at such time and place of sale, and from time to time thereafter may postpone such sale by public announcement at the time fIXed by the preceding postponement. Trustee shall deliver to such purchaser its deed conveying the property so sold, but without any covenant or warranty, express or implied. The recitals in such deed of any matters or facts shall be conclusive proof of the truthfulness thereof. Any person. including Trustor, Trustee, or Beneficiary as hereinafter defined, may purchase at such sale. After deducting all costs, fees and e.xpenses of Trustee and of this Trust, including cost of evidence of title in connection with sale, Trustee shall apply the proceeds of sale to payment of: all sums expended under the terms hereof, not then repaid, with accrued interest at the amount allowed by law in effect at the date hereof; all other sums then secured hereby; and the remainder. if any. to the person or persons legally entitled thereto. (12) Beneficiary, or any successor in ownership of any indebtedness secured hereby, may from time to time, by instrument in writing, substitute a successor or successors to any Trustee named herein or acting hereunder. which instrument, executed by the Beneficiary and duly acknowledged and recorded in the office of the recorder of the county or counties where said property is situated, shall be conclusive proof of proper substitution of such successor Trustee or Trustees, who shall, without conveyance from the Trustee predecessor, succeed to all its title, estate, rights, powers and duties. Said instrument must contain the name of the original Trustor, Trustee and Beneficiary hereunder, the book and page where this Deed is recorded and the name and address of the new Trustee. FTGIS-lel 3/94. Deed of Trust and ASSignment ot Rents. Page 2 of 3 (13) That this Deed applies to, inures to the benefit of, and binds all panics hereto. their heirs, legatees. devisees, administrators, c;<ecutors. successors and assigns. The term Beneficiary shall mean the owner and holder, including pledgees, of the note secured hereby, whether or not named as Beneficiary herein. In this Deed, whenever the context so requires. the masculine gender includes the feminine and/or neuter, and the singular number includes the plural. (14) That Trustee accepts this Trust when this Deed, duly executed and acknowledged. is made a public record as provided by taw. Trustee is not obligated to notify any party hereto of pending sale under any other Deed of Trust or of any action or proceeding in which Trustor. Beneficiary or Trustee shall be a party unless brought by Trustee. The undersigned Trustor requests that a copy of any Notice of Default and of any Notice of Sale hereunder be mailed to him at his address hereinbefore set fonh. STATE OF CALIFORNIA COUNTY OF On before me, the undersigned, a Notary Public in and for said State, personally appeared personally known to me (or proved to me on the basis of satisfactory evidence:) to be the pc:rson(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/shelthey executed the same in hislher/their authorized capacity(ies), and that by hislher/their signature(s) on the instrument the pc:rson(s), or the entity upon behalf of which the pc:rson(s) acted, executed the instrument. WITNESS my hand and official seal. Signature Name (typed or printed) FTGIS-l62 3194. Deed of TNst and Aaalgnment of Rents. Page 3 of 3 (This area for official notarial seal) ADDENDUM TO DEED OF TRUST AND ASSIGNMENT OF RENTS THIS ADDENDUM DEED OF TRUST AND ASSIGNMENT OF RENTS is made this day of , 19 , among the trustor, -("Borrower"), and ("Trustee"), and the City of Gilroy (the "City") as Beneficiary. BORROWER AND THE CITY OF GILROY COVENANT AND AGREE AS FOLLOWS: 1. Assumability of Loan. Borrower affirms that the assumability of the Note is restricted by the following provision in the Note: I acknowledge that this Note is given in connection with the purchase of my home located at ("Residence") to comply with requirements of a City program which assists in the development of homes for low and moderate income persons. consequently, I understand this Note is not automatically assumable, but is subject to section 711.5 of the California civil Code which allows the City to accelerate all amounts due under this Note upon Transfer of the Residence which does not comply with the provisions of the Resale Restriction Agreement and option to Purchase executed between the Borrower and the City, and dated the same date as this Note (the "Resale Agreement"). 2. Hazard Insurance. Borrower shall keep the Security insured by a standard fire and extended coverage insurance policy in at least such amounts and for such periods as the City may require. Such insurance shall be in an amount not less than the greater of (1) the sum of the loan amount under the Note and the Superior Lender Loan; or (2) the replacement cost of the Security; or (3) the amount necessary to prevent Borrower from becoming a co-insurer under the terms of the policy. All policies required by this section shall provide the city thirty (30) days written notice of cancellation. The insurance carrier providing insurance for the Security shall be licensed to do business in the State of California and be chosen by Borrower subject to approval by the City; the city shall not withhold approval if the insurer is also approved by the Superior Lender. -1- All insurance policies and their renewals and endorsements shall be in a form acceptable to the City and shall include a standard mortgagee clause with standard lender's endorsement in favor of the Superior Lender and the City. The City shall have the right to hold, or cause its designated agent to hold, the policies and renewals, and Borrower shall promptly furnish to the City, the original insurance policies or certificates of insurance, all renewal notices and all receipts of paid premiums. In the event of loss, Borrower will give prompt written notice to the insurance carrier and the City. The City may make proof of loss if not made promptly by Borrower. Unless the City and Borrower otherwise agree in writing, insurance proceeds, subject to the rights of the Superior 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 would be impaired, the insurance proceeds will be used to pay the amounts outstanding under the Note, with the excess, if any, paid to Borrower. If the Security is abandoned by Borrower, or if Borrower fails to respond to the City within thirty (30) days from the date notice is mailed by either of them to Borrower that the insurance carrier offers to settle a claim for insurance benefits, the City is authorized to collect and apply the insurance proceeds at the City'S option either to restoration or repair of the Security or to pay the amounts outstanding under the Note. If the Security is acquired by the City, all right, title and interest of Borrower in and to any insurance policy and in and to any proceeds under such policy resulting from damage to the Security prior to the sale or acquisition will pass to the City subject to the rights of the Superior Lender to the extent such sums do not exceed the amounts outstanding under the Note. 3. 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, stored and used in their intended manner, that are generally recognized to be appropriate to normal residential uses and to maintenance of residential property. 46010S.P50 09/25/96 -2- "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 and local laws that relate to health, safety or environmental protection. Borrower shall promptly give the 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 Substances 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 Substances affecting the Property is necessary, Borrower shall promptly take all necessary remedial actions in accordance with Environmental Law. 4. Superioritv of Superior Lender Documents. Notwithstanding any provision herein, this Deed of Trust shall not diminish or affect the rights of the Superior Lender, or its successors or assigns, under the deed of trust executed by Borrower in favor of superior Lender as security for the Superior Lender's loan. Notwithstanding any provision in this Deed of Trust to the contrary, all of the provisions of this Deed of Trust shall terminate and have no further force and effect upon the occurrence of one of the following events: A) Title is acquired by the Superior Lender or another party upon foreclosure of a deed of trust by the Superior Lender. B) Title is acquired by the Superior Lender or another party by a deed in lieu of foreclosure of the Superior Lender's deed of trust provided that (i) the city has been given written notice of a default under the Superior Lender's deed of trust and (ii) the City shall not have cured the default under the Superior Lender's deed of trust or diligently pursued curing the default within the 60-day period provided in such notice sent to the City. 46010S.PSO 09/25/96 -3- C) The Superior Lender's deed of trust is insured by HUD and assigned to HOD. IN WITNESS WHEREOF, Borrower has executed this Addendum to Deed Of Trust as of the date first written above. Borrower Borrower Borrower's Address 46010S.PSO 09/25/96 -4- EXHIBIT A Property Description 46010S.PSO 09/25/96 A-l When Recorded Mail Tc: MAIL TAX STATEMENT TO: same as above GR;;'NT DEED WITH RESALE CONTROLS FOR A VALUABLE CONSIDERATION, receipt of which is hereby acknowledged; South County Housing Corporation, ("Grantor") does hereby GRANT to ("Grantee"), the real property in the City of Gilroy, County of Santa Clara, State of california, described in Exhibit "A", attached hereto and made a part hereof ("Property"). 1. The intent of this Grant Deed is for the Grantor to convey the above described Property pursuant to its program which assists the provision of housing affordable to persons and families of low or moderate-income. This conveyance is subject to a Resale Restriction Agreement And Option To Purchase ("Resale Agreement") executed in favor of the City of Gilroy, recorded the same day as this Grant Deed and whose requirements are incorporated and made a part of this Grant Deed. The purpose of that document is to restrict subsequent sales and transfers of the Property to persons within certain income categories, and to provide the City with the option to purchase the property under certain circumstances. 2. The Grantee hereby covenants and agrees, for itself and its successors and assigns, that the Grantee shall devote the Property only to the uses specified in the Resale Agreement and in this Grant Deed, and that any subsequent transfer, sale, or lease of the Property is subject to the conditions and restrictions of the Resale Agreement. 3. The Grantee hereby further covenants and agrees, for itself and its successors and assigns, that without the prior written approval of the Grantor and City of Gilroy, the Grantee shall use the Property and the improvements on the Property ("Improvements") only for residential uses. 4. The Grantee covenants and agrees that there shall be no discrimination against or segregation of, any person or group of persons on account of race, color, creed, religion, sex, sexual 460] OKPSO 09/23/96 -1- EXHIBIT F orientation, marital status, national origin or ancestry in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the Property and Improvements, nor shall the Grantee itself or any person claiming under or through the Grantee establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees or vendees in the Property and the Improvements. 5. The covenants contained in Sections 2 and 3 shall remain in effect for the term of the Resale Agreement. The covenants against discrimination contained in section 4 shall remain in perpetuity. The covenants contained in Sections 2, 3 and 4 may only be modified or eliminated with the written consent of the Grantor and City of Gilroy. 6. The covenants and agreements contained in.this Grant Deed shall, without regard to technical classification or designation, legal or otherwise, to the fullest extent permitted by law and equity, be binding on the Grantees' successors and assigns and run for the benefit and in favor of and enforceable by the Grantor and the City of Gilroy, and their successors and assigns for the entire period during which such covenants shall be in force and effect, without regard to whether the Grantor or City of Gilroy is, was, or remains an owner of any land or interest therein to which such covenants relate. In the event of any breach of any of such covenants, the Grantor and the City of Gilroy, and their successors and assigns shall have the right to exercise all of the rights and remedies, and to maintain any actions at law or suits in equity or other property proceedings to enforce the curing of such breach. The covenants contained in this Grant Deed shall be for the benefit of and shall be enforceable only by the Grantor and the City of Gilroy, and their successors and assigns. IN WITNESS h~EREOF, the parties hereto have executed this Grant Deed this day of , 19 GRANTOR: By: By: 46010K.PSO 09/23/96 -2-