Church Street Associates - Affordable Housing Agreement
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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.
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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
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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.
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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
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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
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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
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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
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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
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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
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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.
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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
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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.
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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
($
($
) .
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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.
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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
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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.
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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
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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
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