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Occupancy, Refinancing, and Resale Restriction Agreement with Option to Purchase 2009-06858111 ' r *' RECORDED AT THE 7EOUIiST OF r, CHICAGO TITLE COMPANY SUBDIVISION DEPT. J RECORDING REQUESTED, PURSUANT' TO'.GOVERNMENT :CODE SECTION 27383 When Recorded Mail To: Poway Redevelopment Agency 3- r 13325 Civic Center Drive j Poway, CA 92064 Attn: Executive Director PS w 1041 = 4).= I_ DOC # 2009-0685811 11111111111111111111111111111111111111111111111111111111111111111111 IN DEC 11, 2009 8:00 AM OFFICIAL RECORDS 754 341 DIEGCI COUNT RECORDER'S DEFILE 52 DAVID L BUTLER, COUNTY RECORDER FEES 000 'SAYS PAGES: 35 OCCUPANCY, REFINANCING, AND RESALE RESTRICTION AGREEMENT WITH OPTION TO PURCHASE (Poway Redevelopment Agency — SHOP Program) LOW INCOME HOUSEHOLD Owner: Sean Cox and Venecia Cox Address of Home: 12823 Yukon Way, Poway, CA 92064 Affordable Housing Cost: $132,824 Median Income on Agreement Date: 74,900 This Occupancy, Refinancing, and Resale Restriction Agreement with Option to Purchase (the "Agreement ") is entered into as of this If +hday of DWkAtA 2009, by and between the Poway Redevelopment Agency (the "Agency ") and Sean Cox and Venecia Cox (the "Owner "). RECITALS A. The Agency desires to help low and moderate income first -time homebuyers purchase a home. B. To assist low and moderat6ricome households purchase a home, the Agency has developed a'second mortgage program (the "Supporting Home Ownership in Poway Program" or "SHOP Program ") designed to assist qualified low and moderate income buyers, by financing the difference between the' market rate purchase price of the home and the amount affordable to the qualified :buyer. C. The Agency is'financing the SHOP Program from the Agency's Low and Moderate Income Housing Fund. This Agreement implements the requirements of Health and Safety Code Section 33334.2 and 33334.3, which govern the use of Agency Low and Moderate 1552 \03 \583952 2 2753 Income Housing Funds. This Agreement also implements the affordable housing production requirements of Health and Safety Code Section 33413(6)(2): D. Owner intends to purchase the property located at 12823 Yukon Way, Poway, CA 92064, in the City of Poway and more particularly described in Exhibit A (the "Home "). As a condition to the Agency.'s Loan, the Owner must execute this Agreement. The, Owner agrees.to comply with this Agreement in consideration of the Agency loan to Owner which permits Owner to purchase the Home at an affordable housing cost to Owner. E. The purpose of this Agreement is to control the resale of the Home. This Agreement provides the Agency an option to purchase the Home at a restricted price „given in consideration of the economic benefits to the Owner resulting from purchase of the Home at an affordable level. This Agreement restricts the resale of the Home and specifies, among other requirements, that the Home may only be transferred to Low income Households (as defined below). This Agreement also requires that the Owner pay the Agency Excess Sales Proceeds (as defined below) in the event the Owner sells the Home in violation of this Agreement. F. The Affordable Housing Cost of the Home paid by the Owner is set forth on page of this Agreement (the "Affordable Housing Cost "). G. The Owner is receiving the following loans to purchase the Home: Name of Lender 1. Bank of America 2. City of Poway BEGIN 3. Amount $105,076 $ 21,106 Date Deed of Trust Recorded The purchase money loans listed above are, collectively, the "First Lender Loan." All lenders listed above shall collectively be.referred to as the "Fast Lender.” The First Lender Loan is secured by 2 deeds of trust executed by the Owner in favor of the First Lender and recorded in the County of San Diego concurrently with this Agreement (collectively, the "First Lender Deed of Trust "). H. The Agency will provide to the Owner a second mortgage loan on the Home in the amount ofTivo Hundred Seventy -One Thousand One Hundred Seventy-Six Dollars ($271,176) (the "Agency Loan "), using Agency Low and Moderate Income Housing Funds. I. The Agency Loan is evidenced by a promissory note in the amount of the Agency Loan (the "Agency Note "). "fhe Agency Note also evidences Owner's obligation to pay Excess 1552 \03 \583952.2 2754 Sales Proceeds and Excess Rents. This Agreement and the Agency Note shall be secured by a deed of trust on the Home (the "Agency Deed of Trust"). J. This Agreement and the Agency Decd of Trust shall be subordinate to the lien of the First Lender Deed of Trust. This Agreement will remain in lull effect as an encumbrance on the Home after any prepayment of the Agency Note by the Owner. The Deed ofTrust shall also remain as an encumbrance on the Home after any prepayment of the Agency Note by the Owner to secure compliance with the provisions of this Agreement and payment of Excess Sales Proceeds or Excess Rents (as defined below). NOW, THEREFORE, in consideration of the benefits received by the Owner and the Agency hereunder, the Owner and the Agency agree, as follows: DEFINITIONS AND EXHIBITS A. The following terms are specially defined for this Agreement and their definitions can be found in the sections indicated below: (1) "Affordable Housing Cost " — Recital F (2) "Agency" - First sentence of the Agreement on Page 1 (3) "Agency Deed of Trust" - Recital I (4) "Agency Loan" — Recital H (5) "Agency Note" — Recital I (6) "Agency Option" - Section 10 (7) "Agency Response Notice" - Section 8 (8) "Agreement" - First sentence of the Agreement on Page 1 (9) "Eligible Capital Improvements" - Section 1 IA(2) (10) "Eligible Buyer" - Section 12B (11) "Excess Sales Proceeds" - Section 13 (12) "Excess Rents" — Section 4 (13) "Fair Market Value" - Section I I (14) "First Lender" - Recital G 3 1552 \03 \583952.2 (15) (16) (17) (18) (19) (20) (21) (27) (23) (24) (25) (26) (27) (28) (29) (30) (31) (32) (33) (34) B, The (1) (2) 1552 \03 \553952.2 "First Lender Deed of Trust" - Recital G "First Lender loan" - Recital G "First Time l- lomebuyer Program " - Recital B "HCD" — Section 1 1 A(1) "Home" — Recital D "HUD" — Section 27 "Indexed Price" - Section 1 1 A "Inheriting Owner" — Section 6 "Income Qualified Household" — Section 12B "Marketing Period" - Section 12A "Maximum Restricted Resale Price" - Section 11 "Median Income" — Section 1 1 A 'LOW lnconne Household" — Section 12B "Owner" - First sentence ofthe Agreement on Page 1 "Affordable Housing Cost" — Recital F "Owner's Notice of Intent to Transfer" - Section 7 "Program Manual" — Section 2 "Proposed Buyer" — Section 12 "SHOP Program" — Recital B "'fransler" - Section 6 following exhibits are attached to this Agreement: Exhibit A: Legal Description of Home Exhibit B: Form of Owner Occupancy Certification 91 2755 2756 (3) Exhibit C: Form of,Owner s Notice of Intent =to Transfer (4) Exhibit D: Form 'of Owncr Acknowledgement of Agency Response Notice (5) Exhibit E: Form of Request for Agency Approval of Improvements to the Home (6) Exhibit F: Form of Owner Request for Agency Subordination to Refinance First Lender Loan 2. OWNER CERTIFICATIONS; OWNER OCCUPANCY REQUIREMENT The Owner certifies that (i) the financial and other information previously provided to qualify to purchase the Home is true and correct as of the date first written above, (ii) the Owner shall occupy the Home as the Owner's primary and sole place of residence (iii) the Owner is a first time homebuyer or displaced homemaker as described in the SHOP Program Manual (the "Program Manual ") for the Program; and (iv) the Owner will fully cooperate with the Agency in monitoring Owner's Compliance with this Agreement. OCCUPANCY OF l -IOME The Owner shall occupy the-Home as the Owner's sole place of residence within sixty (60) days of close of escrow on the purchase of the Home by the Owner. The Owner shall be considered as occupying the I -Ionic if the Owner is living in the unit for at least ten (10)'months out of each calendar year. On or before February I of each calendar year, the Owner shall provide an annual written certification to the Agency, in the form shown in the attached Exhibit B, that the Owner is occupying the Home as his or her primary and sole place of residence. 4. LEASING OF HOME The SHOP Program is available for the purchase of an Agency sponsored newly constructed Home, homes with rental units are not eligible for assistance under the SHOP Program. The Owner shall not lease the Home to another party. Any lease of the Home: is prohibited, and shall constitute a Default under this Agreement. The Agency may then exercise any of the remedies set forth in Section 15 below, including, without limitation, exercise of the Agency Purchase Option upon Default. In the event the Owner leases the Home or any part of the Home to a third party in violation of this Section 4, "Excess Rents" shall be due and payable to the Agency immediately upon receipt thereof by the Owner. Excess Rents shall mean all rents Owner receives from the third party. Such I,xcess Rents shall be considered a recourse debt of the Owner to the Agency, as evidenced by the Agency Note, which the Agency may collect by legal action against the Owner and /or by foreclosure under the Agency Deed of Trust. 1592 \03 \583952.2 275 -7 5. MAINTENANCE AND INSURANCE REQU112EMENTS A. The Owner shall maintain the Home, including landscaping, in good repair and in a neat, clean and orderly condition (and as to landscaping, in a healthy condition) and in accordance with all applicable laws, rules, ordinances, orders and regulations of all federal, state, county, municipal, and other governmental agencies and bodies having or claiming jurisdiction and all their respective departments. bureaus, and officials, and with all applicable covenants conditions and restrictions and homeowner's association rules. Owner will not commit waste or permit deterioration of the I-lonie, and shall make all repairs and replacements necessary to keep the Home in good condition and repair. Failure by the Owner to maintain the Home shall constitute a Default under this Agreement and the Agency may then exercise any of the remedies set forth in Section 15 below, including, without limitation, exercise of the Agency Purchase Option upon Default. B. The Owner shall maintain a standard all risk property insurance policy equal to the current replacement value of the Home adjusted annually to reflect changes to local building costs calculated on a per square foot basis (or by appraisal, ifrequested by the Agency), naming the Agency, the City and their employees, agents, officers, board members and /or council members as additional insureds. Additional insurance requirements are set forth in Section 6 of the Agency Deed of Trust. The policy shall be adjusted annually to reflect changes to local building costs calculated on a per square foot basis (or by appraisal, if requested by the Agency).The Agency has the right: but not the obligation, to inform Owner of the then - current replacement value of the Home. 6. RESTRICTIONS ON RESALE OR TRANSFER OF THE HOME A. Transfer. Any Transfer of the Home will be subject to the provisions of this Agreement including, without limitation, the Agency Option described in Section 10 below. Transfer means any sale. assignment or transfer, voluntary or involuntary, of any interest in the Home, including, but not limited to, a lee simple interest, ajoint tenancy interest, a life estate; a leasehold interest, an interest evidenced by a land contract by which possession of the Home is transferred and Owner retains title, or a deed of trust. Any Transfer without satisfaction of the provisions of this Agreement is prohibited and shall constitute, a Default under this Agreement and the Agency may lhen.exercise any of the remedies set forth in Section 15 below, including, without-limitation, exercise of the Agency Purchase Option upon Default. A Transfer shall not include a transfer: (i) to an existing spouse or domestic partner; (ii) by a Owner to a spouse or domestic partner where the spouse or domestic partner becomes the co -owner of the Home; (iii) between spouses as part of a marriage dissolution proceeding; (iv) to an existing spouse or domestic partner of Owner by devise or inheritance following the death of Owner; (v) by Owner into an inter vivos revocable trust in which Owner is the beneficiary; or (vi) refinance of the First Lender Loan meeting the requirements of Section 25 of the Agreement; provided, however, that Owner shall provide written notice of all such transfers to Agency; and Owner shall continue to occupy the Home as, his or her principal place of residence. (except where the transfer occurs pursuant to subsection (iii) or (iv) above, in which event the transferee shall owner- occupy the Home and affirmatively assume.Owner's obligations under this Agreement, the Agency Note, and the Agency Deed of Trust). All other Transfers shall require written notice to the Agency 6 1552\031583952 2 pursuant to, Section 7,below,and shall be to. Eligible Buyers. Consideration received by the Owner for such Transfer shall not exceed the Maximum Restricted Resale Price defined in Section I i, below. For purposes of this section, "domestic partner" shall mean two unmarried people, at least eighteen (18) years of age, who have lived together continuously for at least one (1) year and who are jointly responsible for basic living expenses incurred during their domestic partnership. Domestic partners may not be persons related to each other by blood or adoption such that their marriage would be barred in the state of California. For purposes of this section, an-individual shall be considered a'domestic partner of Owner upon presentation of an affidavit or other acceptable evidence by Owner to the Agency. B. Inheritance. In the event a Transfer occurs by devise or inheritance due to death of the Owner, the administrator of the Owner's estate, the trustee of Owner's trust, or the person inheriting the Home shall provide written notice to the Agency of the Owner's death within thirty (30) days of the date of death and the following procedures shall apply: (1) The. person inheriting the Home (the "Inheriting Owner ") shall provide the Agency with income and other information, to be verified by the Agency, so that the Agency may determine if the Inheriting Owner qualities as an Eligible Buyer. If the Inheriting..Owner fails to provide required documentation, he or she shall be deemed not to qualify as an Eligible Buyer. If the Inheriting Owner is a Low Income Household, he orshe shall succeed to the Owner's interest and obligations under this Agreement, the Agency Note, and the Agency Deed of Trust, new documents shall be executed between the Inheriting Owner and the Agency and recorded against the Home. The new resale restriction agreement and option to purchase between Inheriting Owner and Agency shall have a forty -five (45) -year term that shall commence upon the recordation of such new agreement. In addition, the new promissory note shall provide that the original purchase price in the new note is equal to-the original purchase price paid by the Owner and identified in Owner's note, should it become due from the Inheriting Owner, shall be calculated based on the original purchase price paid by the Owner. If the Inheriting Owner fails to quality as an Eligible Buyer, he or she shall be required to Transfer the Home to an Eligible Buyer at a price not exceeding the Maximum Restricted Resale Price, pursuant to the procedures set forth in Sections 7 through 1,3 below and the Agency may exercise the Agency Option pursuant to Section 10 below; provided, however that the Inheriting Owner may own and occupy the Home for up to twelve (12) months prior to providing an Owner's Notice of Intent to Sell to the Agency pursuant to Section 7 below, and provided further that the Inheriting Owner remains in compliance with the requirements of this Agreement and the Agency, Deed of Trust The Inheriting Owner shall not be required to occupy the Home during this twelve (12)- month_time period, but may rent the Home only upon approval from the Agency to low income tenants approved'by the Agency for an amount that does not exceed the Owner's Monthly cost of principal and interest on the First Lender Loan, and property insurance and property taxes associated with the Home. In.the event the Inheriting Owner rents the Home in accordance to this section, the lease shall also be approved by the Agency. (2) Failure ofan Inheriting Owner to follow the procedures and file the notices described in this Section 6 shall constitute a Default under this Agreement and the Agency may then exercise any of the remedies set forth in Section_ 15 below, including, without limitation, exercise of the�Agency Purchase Option upon Default. 7 1552t03\5839512 2758 2759 NOTICE OF INTENDED TRANSFER; PREPARATION, OF HOME FOR SALE A. In the event the Owner intends to 'Transfer or vacate the Home,, the Owner shall promptly -give the Agency written notice of such intent (the "Owner's Notice of Intent to Transfer "), in'the form shown in Exhibit C attached to this Agreement. The Owner shall give.the Agency the Owner's Notice of Intent to Transfer prior to notifying real estate brokers or lenders of Owner's intent to Transfer the Home and prior to listing of the Home on the Multiple Listing Service. The Owner's Notice of Intent.to Transfer shall be sent to the Agency by certified mail, return receipt requested at the,address provided in Section 32 of this Agreement: The Owner's Notice of Intent to Transfer shall include the information necessary for the Agency to determine the Maximum Restricted Resale Price of the Home, including the following information: (1) the address of the Home; (2) the date of purchase of the Home by the Owner; (3) the purchase price of the !-tome paid by the Owner at the time of his /her purchase; (4) a copy of the l -IUD -1 Settlement Statement or equivalent document from. the close of escrow on the Owner's purchase of the Home; (5) if Owner has made Eligible Capital Improvements to the Home that he /she wishes to include in the calculation of Indexed Price, a description of the improvements, the date the improvements were made, a copy of the letter granting prior Agency approval of the improvements, evidence of cost, ol'the' improvements, and an appraisal of the value added to the Home by the Eligible Capital Improvements; (6) the date on which Owner intends to vacate Home; (7) the date the Home will be placed on the market; and (8) the name and phone number of the person to contact to schedule inspection of the Home by the Agency. B. The Owner may not want to enter into a contract with a real estate broker to sell the Home until the Owner has received the Agency Response tesponse Notice pursuant to Section 8A below, as the services of a broker will not be required if the Agency exercises the Agency Option to purchase the Home pursuant to Sections 8A and 10 below and in such event no brokerage commission will be paid to a third party. C. Following delivery to the Agency of the Owner's Notice of Intent to Transfer, the Owner shall prepare the Home for sale, as follows: 1552\03\5839512 2760 (1) within thirty (30) days of delivery of the Owner's Notice of Intent to Transfer, the Owner shall obtain and deliver to the. Agency a current written report of inspection of the Home by a licensed'structural pest control operator; (2) within the sooner of (a) sixty (60) days from the date of delivery of the Owner's Notice of Intent to Transfer, or (b) prior to two (2) weeks, before close of escrow on the Transfer, the Owner shall perform or cause to be performed Section I pest control work in order to repair all damage noted in the pest report including damage caused by infestation or infection by wood - destroying pests (provided, however, that in the event Owner does not cause the work to be performed in accordance with this subsection the cost of such work shall be considered deferred maintenance.and reflected as a downward adjustment in the Maximum Restricted Resale Price pursuant to Section 11): (3) within thirty (30) days of the date of the Owner's Notice of Intent to Transfer, the Owner shall allow the Agency, or its designee, to inspecvthe Home to determine its physical condition, and, if requested by the Agency, following such inspection, the Owner shall obtain and deliver to the Agency a home inspection report prepared by a licensed home inspector. (4) if the Home is vacant, the Owner shall maintain utility connections until the close of escrow on the Transfer; (S) in the event of Agency purchase of the Home, the Owner shall permit a final walk - through of the Home by the Agency, or the Agency's designee, in the final three (3), days prior to close of escrow on the Transfer. 8. AGENCY RESPONSE TO OWNER'S NOTICE OF IN "FENDED TRANSFER The Agency shall respond in writing (the "Agency Response Notice ") to the Owner's Notice of Intentto 'transfer within sixty (60) days of: Agency receipt of a complete Owner's Notice of Intent to Transfer that includes all information required under Section 7, including Agency receipt of the pest control report and home inspection report (if any) required pursuant to Section 7C above. The Agency Response Notice shall inform the Owner of the Agency's election to proceed under one of the following two alternatives: A. Agency Exercise of Agency Purchase Option. The Agency Response Notice may notify the Owner that the Agency elects to exercise the Agency Option, or assign to another public agency or non_ profit organization or Eligible Buyer the Agency's right to purchase the Home, as granted in Section 10 below, and shall include the Agency's calculation of the Maximum Restricted Resale Price to be paid by the Agency (or its assignee) pursuant to Section 11 below and the Transaction Fee to be paid by the Owner pursuant to Section 10 below. B. Owner Sale at Restricted Sale Price to Eligible Buyer. Alternatively, the Agency Response Notice may notify the Owner that the Agency will not at this time exercise the Agency Option to purchase the Home and that the Owner may proceed to sell the Home to an Eligible Buyer at a price not to exceed the Maximum Restricted Resale Price, pursuant to the procedure 1552 \U3 \583952 2 set forth in Section 12 below. In this event; the Agency Response Notice shall include the 2761 following information: (1) the maximum qualifying income for an Eligible Buyer; (2) the certifcations'required of an Eligible Buyer; (3) the'Maximifm Restricted Resale Price the Owner may receive for the Home, calculated by the Agency pursuant to Section 11 below; (4) if available, a list of potentially qualified SHOP home buyers. 9. OWNER ACKNOWLEDGMENT OF AGENCY RESPONSE NOTICE No later than seven (7) days following the date of the Agency Response Notice, the Owner shall acknowledge in writing:to the Agency, in the form shown in Exhibit D attached to this Agreement, that he /she has received the Agency Response Notice and still intends to Transfer the Home. 10. AGENCY PURCHASE OPTION The Owner agrees that the Agency shall have the option to purchase the Home (the "Agency Option ") for the Maximum Restricted. Resale Price, calculated pursuant to Section 1 I of this Agreement. The.Agency may, instead of purchasing the Home itself, assign its right to purchase the Home pursuant to the Agency Option to another public agency, a nonprofit corporation, or to an Eligible Buyer. If the Agency assigns its purchase option, the assignee shall sign the Agency Response Notice and shall thereby be bound to purchase the Home pursuant to the terms of the Agency Option as set forth in this Agreement. The Owner may be required to pay the Agency a transaction fee equal to the Agency's reasonable costs associated with the exercise of the Option if the Agency (or its assignee) exercises the Agency Option and purchases the Home; provided, however that such transaction fee shall not exceed six percent (6 %) of the sales price of the home. The Agency Option may be exercised by the Agency or its assignee in the Agency Response Notice, as described in Section 8A above, to be sent by the Agency to the Owner within thirty (30) days of the Agency's receipt of.a complete Owners Notice of Intent to Transfer. If the Agency Response Notice notifies the Owner that the Agency or its assignee will exercise the Agency Option to purchase, the Agency or its assignee shall purchase the Home within ninety (90) days of the date ofthe Agency Response Notice and title shall be delivered by the Owner to the Agency by grant deed, Free and clear of any. mortgage or other liens, unless approved in writing by the Agency. In the event of exercise of the Agency Option and purchase of the Home by the Agency or its assignee, the Owner shall permit a final walk - through of the Home by the Agency or its assignee in the final three (3) days prior to close of escrow on the Transfer: 11. DETERMINATION OF MAXIMUM RI STRICTED RESALE PRICE FOR AGENCY PURCHASE OR RESTRICTED SALE If the Agency (or its assignee) exercises the Agency Option, or if the Owner sells to an Eligible Buyer, the maximum sales price (the "Maximum Restricted Resale Price ") that the Owner shall.receive from the Agency (or its assignee) or the Eligible Buyer for purchase of the Home shall be the LESSER of the Indexed Price or the Fair Market Value. 10 1552\03\583952.2 2762 A. Indexed Price. (1) The Indexed Price of the'flome means: (a) the Affordable Housing Cost of the Home at the time of purchase by the Owner increased by the percentage of increase in the San Diego Area Median Income from the date of the original purchase of the Home by the Owner to the date of receipt by the Agency of the Owner's Notice of Intent to Transfer, and, where applicable, adjusted pursuant to subsection (2) below to reflect the value of capital improvements or the cost of deferred maintenance: plus (b) the outstanding balance of the Agency Loan. "Median Income" shall refer to the median yearly income, adjusted for a household size of four, in San Diego County, as published by the California Department of Housing and Community Development ( "HCD "). In the event such income determination is no longer published by HCD, or has not been updated for a period of at least eighteen (18) months, the Agency may use or develop such other reasonable method as it may choose in order to determine the median yearly income in San Diego County. (2) Where applicable, the Indexed Price shall include an upward adjustment reflecting the value of any substantial structural or permanent fixed improvements which the Owner has made to the Home with the Agency's prior written approval after Owner's purchase of the Home. No such adjustment shall be made except for improvements: (a) made or installed by the Owner or Owner's contractor which conformed \yith applicable building codes at the.time of installation: (b) which extends the useful life or improves the functionality of the Home; (c) approved'in writing in advance by the Agency or its designee; and (d) whose initial costs exceed Two Thousand Dollars ($2,000). All approvals for such improvements shall be subject to Owner's receipt of a building permit. A form ter use in requesting Agency approval of a Home improvement is attached to this Agreement as Exhibit L. Improvements meeting the above requirements are referred to in this Agreement as "Eligible Capital Improvements:" The adjustment to the Indexed Price for such Eligible Capital Improvements shall be limited to appraised increases in value.to the Home as a result of the improvements (pursuant to an appraisal performed as described in Section 1 l B below), including any depreciation in value of the capital improvements since the time of installation, and not the cost of construction of the improvements to the Home. The Indexed Price shall include a downward adjustment, where applicable, in an amount necessary to repair any violations of applicable building, plumbing, electric, lire or housing codes or any other provisions of the Poway Building Code, as well as any other repairs needed to put the Home into a "sellable condition ". Items necessary to put a Home into sellable condition shall be determined by the Agency or its designee, and may include cleaning, painting and making needed structural, mechanical, electrical, plumbing and fixed appliance repairs and other deferred maintenance repairs. B. Fair Market Value. In certain circumstances it may be necessary to determine the fair market value-of the Home without taking account of the resale restrictions imposed by this Agreement (the "Fair Market Value "). These circumstances include: (1) where the parties wish to determine if the Indexed Price exceeds the Fair Market Value in order to determine the Maximum Restricted'Resale Price pursuant.to Section I I; (2) where the parties wish to determine the value of Eligible Capital Improvements in order to calculate the Indexed Price pursuant to Section I IA;.and (3) where the Owner wishes to refinance the First Lender Loan as described in Section 25 below, and it is necessary to determine the Maximum Restricted Resale 1552 \03 \583952 2 2763 Price in order to calculate the maximum principal'amount of the refinanced First Lender Loan. If it is necessary to determine the Fair Market Value of the.Home, it shall be determined by a certified MAI orother qualified real estate appraiser approved.in advance,by the Agency. If possible, the appraisal shall be based upon the sales prices of comparable properties'sold in the market area during'the preceding three (3) -month period. The cost of the appraisal shall be paid by the Owner, unless the appraisal is obtained from a new buyer. In the event that the Owner.has made capital improvements to the Home (which have been approved in advance by the,Agency pursuant to Section H A of this Agreement) which have increased the value of the Home or if damage or deferred maintenance has occurred while the Owner owned the Home which has decreased the value of the Home, the appraisal shall specifically ascribe a value to these adjustment factors and state what the fair market value of the Home would be without such adjustments by utilizing the procedures outlined in Section I 1 A above for calculating the Indexed Price. Nothing in this section shall preclude the Owner and the Agency from establishing the Fair Market Value of the Home by mutual agreement in lieu of an appraisal pursuant to this section. 12. SALE OF HOME BY OWNER IF AGENCY DOES NOT EXERCISE AGENCY OPTION TO PURCHASE In the event the Agency Response Notice notifies the Owner to proceed to sell the. Home to an Eligible Buyer at a price not exceeding the Maximum Restricted Resale Price, the Owner may proceed to sell the Home in compliance with the following requirements: A. Marketing. The Owner shall use bona fide good faith efforts to sell the Home to an Eligible Buyer in compliance with this Section 12, including listing the Home on the Multiple Listing Service, keeping the Home in an orderly condition, making the Home available to show to agents and prospective buyers, and providing buyers with Eligible Buyer requirements, including income qualifications and the Agency's form of disclosure statement summarizing the terms of the buyer's resale agreement A proposed buyer ( "Proposed Buyer ") who the Owner believes will qualify as an Eligible Buyer shall be referred to the Agency or its designee for an eligibility determination. B. Eligible Buyer. A Proposed Buyer shall qualify as an "Eligible Buyer" if he or she meets the following requirements, as determined by the Agency-or its designee: (1) Intent to Owner Occupy. The Proposed Buyer shall certify that he or she will occupy the Home as his or her sole place of residence throughout his or her ownership. (2) Agreement to Sign Resale Restriction Agreement and to Cooperate with Ate. The Proposed,Buyer shall agree to sign an occupancy, refinancing,, and resale restriction agreement with option to purchase restricting future resale of the Home and shall agree to cooperate, fully with the Agency in promptly providing all information requested by the Agency to assist the Agency in monitoring the Proposed Buyer's compliance with the occupancy, refinancing, and resale• restriction agreement with option to purchase. 12 1552 \03 \583952 2 2764 (3) Income Eligibility. The combined gross income for all household members of the Proposed Buyer, as determined by the Agency, does not exceed the qualifying limit for Low income households. as established and "amended from time to time pursuant to Section 8 of the United States (lousing Act of 1937 ( "Low Income Household "). (4) First Time Homebuyer. The Proposed Buyer shall be a first time homebuyer or a displaced homemaker as defined in the Program Guidelines. C. Maximum Restricted, Resale Price. The purchase price for the sale of the Home by the Owner to the Eligible Buyer shall not exceed the Maximum Restricted Resale Price calculated by the Agency pursuant to Section I 1 above, as set forth in the Agency Response Notice. D. Disclosure and Submittals. The Owner and the Proposed Buyer shall provide the following information and documents to the Agency: (1) The name, address and telephone number in writing of the Proposed Buyer. (2) A signed financial statement of the Proposed Buyer in a form acceptable to the Agency and any other supporting documentation requested by the Agency. The financial information shall be used by the Agency to determine the income, eligibility of the Proposed Buyer and the amount of any second mortgage assistance to be provided by the Agency. (3) The proposed sales contract and all other related documents which shall set forth all the terms of the sale of the Home. Said documents shall include at least the following terms: (a) the sales price: and (b) the price to be paid by the Proposed Buyer for the Owner's personal property, if any, for the services of the Owner, if any, and any credits, allowances or other consideration, if, any. (4) A sworn statement, from the Owner and the_ Proposed Buyer in a form acceptable to the Agency, that the sale shall be closed in accordance with the terms of the sales contract and other documents submitted to and approved by the Agency. The statement shall also provide that the Proposed Buyer 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 Buyer or any other party, money or other consideration, including personal property, in addition to what is set forth in the sales contract and documents submitted to the Agency. The sworn statement 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 Agency, the Agency shall have the right to foreclose on the Home or file an action at law or in equity as may be appropriate. In any event, any costs, liabilities or obligations incurred by the Owner and the Proposed Buyer for the return of any moneys paid or received in violation of this Agreement or for any of the Owner's and /or the Proposed Buyer's costs and legal expenses, shall be borne by the Owner and /or the Proposed Buyer and they shall hold the Agency and its designee harmless and reimburse the Agency's and its designee's expenses, legal 13 1552 \03 \583952 2 2765 fees and costs for any action they'reasonably take in good faith in enforcing the terms of this Agreement. (5) An executed buyer's occupancy, refinancing, and resale restriction agreement with option to purchase; deed of trust; promissory note; notice of affordability restrictions on transfer of property: and borrower's disclosure statement; from the Proposed Buyer in forms provided by the Agency. The recordation of the new deed of trust; buyer's occupancy, refinancing, and resale restriction agreement with option to purchase; an executed Notice of Affordability Restrictions on transfer of property; and any other documents then required by the Agency; shall be a condition of the Agency's approval of the proposed sale. (6) The name of the title company escrow holder for the sale of the Home, the escrow number, and name, address, and phone number of the escrow officer. (7) Upon the close of the proposed sale, certified copies of the recorded Agency deed of trust, buyer's resale agreement, notice of affordability restrictions on transfer of property and borrower's disclosure statement, a copy of the final sales contract, settlement statement, escrow instructions, and any other documents which the Agency may reasonably request. 13. TRANSFER IN VIOLATION OF AGREEMENT; PAYMENT TO AGENCY OF EXCESS SALES PROCEEDS If the Owner makes a Transfer in violation of this Agreement, the Owner shall pay the Excess Sales Proceeds to the Agency as set forth in this section. For purposes of this Agreement, "Excess Sales Proceeds" shall mean one hundred ten percent (110 %) of the amount by which the gross sales proceeds received by the Owner from the new buyer exceed the Maximum Restricted Resale Price for the Home (in the amount that was stated in.the Agency Response Notice). This amount shall be a debt of the Owner to the Agency, evidenced by this Agreement and the Agency Note, and secured by the Agency Deed of Trust. The Owner acknowledges that the Agency shall have no obligation to cause reconveyance of this Agreement or of the Agency Deed of Trust until the Excess SalesTroceeds are paid to the Agency. The Agency shall utilize the Excess Sales Proceeds for Agency affordable housing programs and to pay for administrative fees resulting from the "transfer in violation of this Agreement. The Owner and the Agency acknowledge that the formula for calculation of the amount of Excess Sales Proceeds due from the Owner to the Agency is intended to cause the Owner to receive the same net sales proceeds (following payment by Owner of a standard broker's commission) from sale of the Home at an unrestricted price to a third party as the Owner would receive from sale of the Home to the Agency or to an Eligible Buyer at the Maximum Restricted Resale Price. 14. REPAYMENT OF AGENCY NOTE Upon the Agency's exercise of the Agency Option pursuant to Section 10, the amount of Agency Loan shall be credited toward the purchase price. Upon Transfer to an Eligible Buyer, the, Eligible Buyer may assume the Agency Loan and the amount of Agency Loan shall be credited against the Eligible Buyer's purchase price so long as the Eligible Buyer executes a new 14 1552 \03 \583952 2 resale agreement (with a -new forty- live'(45) -year term), promissory note, Notice of Affordability Restrictions on Transfer ol' Property, and deed of trust in the then - current form of these documents to be provided by the Agency. Upon any other Transfer of the Home, the outstanding principal and interest due under the.Agency Note shall be repaid pursuant to the Agency Note and shall not be credited against the purchase price. Repayment of the Agency Note.shall not affect Owner's obligation to comply with this Agreement, which shall remain in full force and effect following any repayment.of the Agency Note. 15. DEFAULTS A. The following events shall constitute a Default by the Owner under this Agreement: (1) The Agency determines that the Owner has made a misrepresentation to obtain the benefits of'purchase of the Home or in connection with its'obligations under this Agreement; above. above. (2) The Owner fails to occupy the Home, as required pursuant to Section 3 (3) The Owner leases the Home to a third party, as prohibited by Section 4 (4) The Owner makes a Transfer in violation of this Agreement; (5) The Owner otherwise fails to comply with the requirements of this Agreement. the Agency Note, or the Agency Deed of Trust and such violation is not corrected to the satisfaction of the Agency within thirty (30) days alter the date of written notice by the Agency to the Owner of such violation; (6) A notice of default is issued under the First Lender Loan; or (7) A lien is recorded against the Home other than the lien of a bona fide , first mortgage loan or ajunior loan approved by the Agency in accordance with Section 25B. B. Upon a declaration of Default by the Agency under this Agreement, the Agency may: (1) Declare the Agency Loan and all Excess Sales Proceeds and /or Excess Rents immediately due and payable without further demand, declare a default under the Agency Note, and may invoke the power of sale under the Agency Deed of Trust; (2) Apply to a court of competent jurisdiction for such relief at law or in equity as may be appropriate; 15 1552 \03 \583952.2 2766 2767 (3) Declare a Default under the Agency Note and Agency Deed of Trust and pursue all Agency remedies under the Agency Deed'.of Trust; and (4) Exercise the Agency Purchase Option Upon Default as described in Section 18 below. 16. NOTICE OF DEFAULT AND FORECLOSURE A request for notice of default and any notice of sale under any deed of trust or mortgage with power of sale encumbering the Home shall be recorded by the Agency in the Office of the Recorder of the County of San Diego for the benefit of the Agency. The Agency may declare a Default under this Agreement upon receipt of any notice given to the Agency pursuant to Civil Code Section 2924b, and may exercise its rights as provided in Sections 15 and 18. In the event of default and foreclosure, the Agency shall have'the same right as the Owner to cure defaults and redeem the Home prior to the foreclosure sale. Nothing herein shall be construed as creating any obligation ofthe Agency to cure any such.default, nor shall this right to cure and redeem operate to extend any time limitations in the default provisions of the underlying deed of trust or mortgage. If the Agency failed to file the request for notice of default, the Agency's right to purchase the Home shall commence from the date a notice of default is given by the Agency to the Owner. 17. NOTICE AND CURE Upon Default or a violation of any of the provisions:of this Agreement, the Agency may give written notice to the Owner specifying the nature of the violation. If the violation is not corrected to the satisfaction-of Agency 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 Agency determines is.necessary to correct the violation, or if the Owner is in'default under any other mortgage loan on the Home, the Agency may declare a Default under this Agreement. The Agency shall notify the first Lender at the address provided by the First Lender to the Agency in the manner set Iorth in Section 32 of this Agreement, if the Agency has declared a default under this Agreement or under the Agency Note or the Agency Deed of Trust. 18. PURCHASE OPTION UPON DEPAULI' Notwithstanding, and in addition to, the remedies provided the Agency in Section 15, and the Agency Option provided to the Agency in Section 10, the Owner hereby grants to the Agency (or its assignee) the option to purchase the Home upon the declaration of a Default by the Agency pursuant to Section 15. This option to purchase is given in consideration of the economic benefits received by the Owner resulting li om purchase and ownership of the Home. 16 1552 \03 \583952 2 2768 "fhe Agency (or its - assignee) shall have thirty (30) days after a Default is declared to notify the Owner and the First Lender of its decision to exercise its option to purchase under this Section 18. Not later than ninety (90) days.alter the notice is given by the Agency to the Owner of the Agency's intent to exercise its option under this Section 18, the Agency shall purchase the Home for the Maximum Restricted Resale Price calculated in the manner set forth in Section 11. 19. NONLIAB1LI Y OF THE: AGENCY A. No Obligation tod3xercise Option. The Agency shall have no obligation to exercise any option granted it under this Agreement. In no event shall the Agency 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 10 and 18 nor shall the Agency 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. B. Nonliability for _NegliKcnee,.Loss, or Damage. Owner acknowledges, understands and agrees that the relationship between Owner and the Agency is solely that of an owner and an administrator of amAgency affordable housing program, and.that the Agency does not undertake Or assume any responsibility for or duty to Owner to select; review, inspect, supervise, pass judgment on, or inform Owner of the quality, adequacy or suitability of the Home or any other matter. The Agency owes no duty of care to protect Owner against negligent, faulty, inadequate or detective building or construction or any condition of the Home and Owner agrees that neither Owner, or Owner's heirs, successors or assigns shall ever claim, have or assert any right or action against the Agency for any loss, damage or other matter arising out of or resulting from any condition of the Home and will hold the Agency harmless from any.liability, loss or damage for these things. C. Indemnity. Owner agrees to defend, indemnify, and hold the Agency and the City of Poway, and their agents, employees, officers and board members harmless from all losses, damages, liabilities, claims, actions, judgments, costs, and reasonable attorneys fees that the Agency, City of Poway. or such persons may incur as a direct or indirect consequence of: (1) Owner's default, performance, or failure to perform any obligations as and when required by this Agreement or the Agency Deed of Trust; or (2) the failure at any time of any of Owner's representations to the Agency to be true and correct. 20. RESTRICTIONS ON FORECLOSURE PROCEEDS If a,creditor acquires title to the Home 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 Maximum Restricted Resale Price. The Owner shall instruct the holder of.such excess proceeds to pay such proceeds to the Agency (in addition to any other amounts due the Agency from the Owner pursuant to the Agency Note or this Agreement), in consideration of the benefits received by the Owner through purchase of the Home. 17 155M3\583952 2 2769 21. RES "FRICTION ON INSURANCE PROCEEDS If the Home is damaged or destroyed, the Owner has an obligation to rebuild or repair the Home pursuant'to Section 6 of the Deed of Trust. If the Owner does not rebuild or repair the Home pursuant to Section 6 of the Deed of "Crust, the Owner shall, subject to the rights of the First Lender, repay the Agency Loan and pay the Agency the portion of any insurance proceeds received by the Owner for such destruction or damage which is in excess of the Maximum Restricted Resale Price calculated pursuant to Section I 1 above. 22. TERM OF AGREEMENT All the provisions of this Agreement, including the benefits and burdens, run with the Home and 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 Agency and its successors, until the earlier of (i) forty -five (45) years from the date of this Agreement, or (ii) the date of Transfer of the dome to the Agency or another buyer in compliance with this Agreement (including execution by the buyer of a new copy of this Agreement), which Transfer shall cause the commencement ofa new torty -live (45) -year affordability restriction. 23. SUPERIORITY Ol' AGREEMENT The Owner covenants that he or she 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 Agency and their respective successors. 24. SUBORDINATION Notwithstanding any other provision hereof, the provisions of this Agreement shall be subordinate to the lien of the First Lender Loan and shall not impair the rights of the First Lender, or the First Lender's successor or assign, to exercise its remedies under the First Lender Deed of Trust in the event of default under this First Lender Deed of Crust by the Owner: Such remedies under the First Lender Deed of Trust include the right of foreclosure or acceptance of a deed or assignment in lieu of foreclosure. After such foreclosure or acceptance of a deed in, lieu of foreclosure, this Agreement shall be forever terminated and shall have no further effect as to the,Home or any transferee thereafter; provided, however, if the holder of such First Lender Deed of Trust acquired title to the Home pursuant to a deed or assignment in lieu of foreclosure and no notice of default was recorded against the Home by such holder in connection therewith, this Agreement and shall automatically terminate upon such acquisition of title, only if (i) the Agency has been given written notice of default under such First Lender Deed of Trust with a sixty (60) -day cure period (which requirement shall be satisfied by recordation of a notice of default under California Civil Code Section 2924), and (ii) the Agency shall not have cured the default within such sixty (60) -day period. Owner agrees to record any necessary documents to effect such termination, if applicable. Im 1552\03 \553952 2 25. REFINANCE OF FIRST LENDER LOAN; JUNIOR LOAN A. Refinance. The Owner covenants and agrees not to place any additional mortgage or deed of trust, including any line of credit, on the Home without obtaining prior written consent of the Agency. B. Permitted Encumbrance Amount. At no time shall the total principal amount of all debt secured by the Home exceed the "Permitted Encumbrance Amount ", which is defined as the greater of (i) ninety percent (90 %) of the Maximum Restricted Resale Price calculated pursuant to Section I I as of the date of the Owner's request to the Agency of approval of the Owner's refinance (the "Refinance Request Notice"),- or (ii) the outstanding balance of the existing First Lender Loan as of the date of the Refinance Request Notice. Mortgage,loans which include negative amortization and adjustable rate mortgages are prohibited. If escrow does not close on the refinance within one hundred twenty (120) days of the date of the Refinance Request Notice, the Agency shall have the right to recalculate the Permitted Encumbrance Amount. Owner shall not be in Default hereunder at the time of initial purchase of the Home by the Owner, if, at that time, the initial debt secured by the Home exceeds the Permitted Encumbrance Amount and Owner does not further encumber the Home until the Permitted Encumbrance Amount complies with this paragraph. C. Refinance of First Mortgage Loan. The Agency shall permit and approve a prepayment and.refinance ofthe existing First Lender Loan and shall provide for the subordination of this Agreement, the Agency Deed of Trust, and the Notice of Affordability Restrictions on Transfer of' Property to the refinanced Punt Lender Loan only if such refinance does not cause the total debt secured by the Home, including junior mortgage loans and equity lines of credit, to exceed'thc Permitted Encumbrance Amount. The Agency will not approve any mortgage loan which includes negative amortization, nor will the Agency approve any adjustable rate mortgages. D. Junior Loans and Equity Lines of Credit. Mortgage loans or equity lines of credit junior in lien priority to this Agreement, the Agency Deed of Trust and Notice of Affordability Restrictions on Transfer of Property are not permitted, except when expressly approved by the Agency in writing. "fhe Agency shall only approve junior mortgage loans or equity lines of credit which will not cause the total of all debt secured by the Home (calculated assuming a maximum permitted draw on any equity line of credit) to exceed the Permitted Encumbrance Amount. "fhe Agency will not approve any mortgage loan or equity line of credit which includes negative amortization, nor will the Agency approve any adjustable rate mortgages. E. Notwithstanding the provisions of this subsection D. mortgage loans from other public agencies designed to increase affordable homeownership, that are compatible with the SHOP Program and that do not cause the Owner's total housing costs to exceed a housing cost that is affordable to Low Income Households as determined by the Agency in accordance with Community Redevelopment Law (California health and Safety Code Sections 33000 et seq.), are permitted. 19 1552 \03 \533952 2 2770 F. Request.of Notice of Default. Any time an Owner enters into anew mortgage loan, including junior mortgage loans and equity lines of credit, the Owner shall cause to be recorded against-the Home a request for notice of default, providing fornotice of default under such loan to be delivered to the Agency. G. Purpose of Restrictions on Refinance and Junior Loans. The Agency and the Owner agree that the requirements of this Section 25 are necessary to ensure the continued affordability of the Home to pwner and to minimize the risk of loss of the Home by Owner through default and foreclosure of mortgage loans. Owner further acknowledges that violation of the provisions of this Section 25 shall constitute a Default under this Agreement, for which the Agency may exercise the Agency's option upon default pursuant to Section 10 above. A form for use by the Owner in requesting Agency subordination to a refinanced first mortgage loan is attached as Exhibit F to this Agreement. 1 -1. Eli ibg le Capital linprovements. In the event (i) the Owner refinances the First Lender Loan in accordance with subsection C, or (ii) the Owner borrows a junior loan or takes an equity line of credit in accordance with subsection D and the funds from such refinance, loan, or line of credit shall be used for Eligible Capital Improvements, Owner shall provide evidence to Agency, in a form acceptable-to Agency in its sole and absolute.discretion, that any amount of funds received by Owner for such Eligible Capital Improvements shall be and are used for the construction of such Eligible. Capital,Improvcments, which shall be subject to Agency's prior written approval. 26. NONDISCRIMINATION The Owner covenants by and for itself and its successors and assigns that there shall be no discrimination against or segregation of a person or of a group of persons on account of race, color, religion, creed, age, disability, sex, sexual orientation, marital status, ancestry or national origin in the sale, transfer, use, occupancy, tenure or enjoyment ofthe Home, nor shall the Owner or any person claiming under or through the Owner establish or permit any such practice or practices of discrimination or segregation with reference to the use, occupancy, or transfer of the Home. The foregoing covenant shall run with the land. 27. RIGHTS OP BENEFICIARIES UNDER DE1 DS 01, TRUSTS This Agreement shall not diminish or affect the rights of the Agency under the Agency Deed of Trust. Notwithstanding any other provision in this Agreement to the contrary, this Agreement shall not diminish or affect the rights of the United States Department of Housing and Urban Development ( "HUD ") or the Veterans Administration ( "VA ") under the First Lender Deed of Trust or any subsequent First Lender deeds of trust hereafter recorded against the Home in compliance with Section 25 above. Notwithstanding any other provisions in this Agreement to the contrary, all of the provisions of this Agreement shall terminate and have no further force in the event title is 20 1552 \03 \583952 2 2771 acquired by HUD or VA or another party upon foreclosure of a deed of trust insured by HUD or guaranteed by VA. 28. HUD FORBEARANCE RELIEF Notwithstanding other provisions of this Agreement, the Agency Option on Default pursuant to Section 18 above shall not be exercised by the Agency when a deed of trust insured by FIUD is secured by the Home, and: (i) the owner is undergoing, consideration by HUD for assignment forbearance relief, or (ii) the owner is undergoing consideration for relief under HUD's Temporary Mortgage Assistance Payment (TMAP) program. 29. INVALID PROVISIONS If any one 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. 30. CONTROLLING LAW The terms of this Agreement shall be interpreted under the laws of the State of California. The venue for any legal action pertaining to this Agreement shall be San Diego County, California. 31. NO WAIVER No delay or omission in the exercise of any right or-remedy of Agency upon any default by Owner shall impair such right or remedy or be construed as a waiver. The Agency's failure to insist in any one or more instance upon the strict observance of the terms of this Agreement shall not be considered a waiver of the Agency's right thereafter to enforce the provisions of the Agreement. The Agency shall not waive its rights to enforce any provision of this Agreement unless it does so in writing, signed by an authorized agent of the Agency. 32. NOTICES All notices required herein shall be sent by certified mail, return receipt requested, express delivery service with a delivery receipt, or personal delivery with a delivery receipt and shall be deemed to be effective as of the date received. the date delivery was refused, or the date returned as undeliverable as indicated on the return receipt as follows: To the Owner: Sean and Venecia Cox 12823 Yukon Way Poway, CA 92064 1552 \03 \583952 2 21 2772 To the Agency: Poway Redevelopment Agency 13325 Civic Center Drive Poway, CA 92064 Attn: Executive Director To the first Lender: Bank of America The parties may subsequently change addresses by providing written notice of the change in address to the other parties in accordance with this Section. 33. INTERPRETATION Of AGREEMENT The terms of this Agreement shall be interpreted so as to avoid speculation on the Home and to insure to the extent possible that its sales price and mortgage payment remain affordable to Low Income Households. 34. EXHIBITS Any exhibits referred to in this Agreement are incorporated in this Agreement by such reference. 35. MONITORING AND INSPECTION BY AGENCY A. The Agency (or its designee) may enter the Home for inspection following two (2) business days advance written notice. B. The Owner shall retain all records related to compliance with obligations under this Agreement for a period of not less than live (5) years, and shall make such records available to the Agency or its designee for inspection and copying upon five (5) business days advance written notice. C. The Agency shall monitor Owner's compliance with the requirements of this Agreement on an annual basis. Owner shall cooperate with Agency monitoring and provide required certilications and other information required by the Agency to determine compliance Within ten (10) days of receipt of a written request by the Agency. 36. COVENANTS RUNNING WITH THE LAND A. Owner hereby subjects the Home to the covenants and restrictions set forth in this Agreement. Owner hereby declares its express intent that the covenants and restrictions set forth herein shall be deemed covenants running with the land and shall pass to and be binding upon all parties having any interest in the Home throughout the term of this Agreement set forth in 22 1552 \03\583952 2 2773 Section 22. Each and every contract, deed, lease,or other +instrument - ,covering „conveying or otherwise,transferring the Home or any interest.the"rein, as,tlie case may be, shall. conclusively be held to have been executed„ delivered and accepted:subj'ecf,to this Agreement regardless of whether the other party or parties to such contract have actual knowledge of this Agreement. B. The Owner and-the Agency hereby declare their understanding and intent that: (i) the covenants and restrictions contained in this Agreement shall be construed as covenants running with the land pursuant to'California Civil Code Section 1468 and not as conditions which might.result in forlciture'of title by Owner: (ii) the burden of the covenants and restrictions set forth in this Agreement touch and concern the Home in that the Owner's legal interest in the Home maybe rendered less valuable thereby: and (iii) the benefit of the covenants and restrictions set forth in this Agreement touch and concern the land by enhancing and increasing the enjoyment and use of the Home by Eligible Buyers, the intended beneficiaries of such covenants and restrictions. C. All covenants and restrictions contained herein without regard to technical classification or designation shall be binding upon Owner for the,benetit of.the Agency and Eligible Buyers and such covenants and restrictions shall run in favor of such parties for the entire period during which such covenants and restrictions shall be in, force and effect, without regard to whether the Agency is an.owner of any land or interest'therein to which such covenants and restrictions relate. 37. ENFORCEMENT Notwithstanding any-other provision of the law, all covenants and, restrictions contained herein which implement Flealth:and Safety Code 33334.3 and /or 33413(c)(3), or successor provisions,, shall run with the land and shall be enforceable by the Agency and the City of Poway and any of the parties listed in health and Safety Code Section 33334.3(b)(7), -so long as such provision or successor provision remains in effect. 38. DATABASE Owner hereby acknowledges and agrees that Health and Safety Code Section 33418(c) requires that the hone be listed in a database that shall be made available to the public on the internet and which will include the street address, assessor's parcel number, and other information about the home. 39. OWNER'S ACKNOWLEDGEMENT OF RESALE RESTRICTION Owner hereby acknowledges and agrees that: A. Owner hereby subjects the Home to certain restrictions, and limits the price for which Owner may.dsell the Home, and the persons to whom Owner may sell the Home. The resale price limitation, and other provisions contained in this Agreement, restrict the full benefits of owning the Home. Owner may not enjoy the same economic or other benefits from owning the Home that Owner would enjoy if this Agreement did not exist. 23 1552\03 \583')52 2 2774 B. Absent the provisions of this Agreement „and.the Agency loan, the Home could not be made.available to Eligible Buyers at an affordable price, including Owner. C. Owner understands all of the provisions of this Agreement. In recognition of the acknowledgments and agreements stated in this Section 37, Owner accepts and agrees.to the provisions of this Agreement with the understanding that this Agreement will remain in full force and effect as to the Home following any Transfer of the Home throughout the term of this Agreement. D. OWNER UNDERSTANDS THAI' THE DETERMINATION OF THE MAXIMUM RESTRICTED RESALE PRICE OI' THE HOME TO AN ELIGIBLE BUYER CAN BE MADE ONLY AT THE TIME OF THE PROPOSED TRANSFER, TAKING INTO CONSIDERATION INCREASES IN MEDIAN INCOME AND OTHER FACTORS THAT CANNOT BE ACCURATELY PRI DIC'TED AND THAT THE SALES PRICE PERMITTED HEREUNDER MAY NOT INCREASE OR DECREASE IN THE SAME MANNER AS OTHER SIMILAR REAL PROPERTY WHICH IS NOT ENCUMBERED BY THIS AGREEMENT. OWNER FURTHER ACKNOWLEDGES "THAT AT ALL TIMES IN SETTING THE SALES PRICK OF'I'Hfi I -IOMI 'I'HTi PRIMARY OBJECTIVE'OF THE AGENCY AND THIS AGREEMI. -N "l- IS TO PROVIDE HOUSING TO ELIGIBLE BUYERS AT AFFORDABLE HOUSING COST. THE MAXIMUM RESTRICTED RESALE PRICE WILL ALMOST CERTAINLY BE LESS THAN OTHER SIMILAR PROPERTIES THAT HAVE NO RESTRICTIONS. Ili [Initialed by Owner(s)] IN WITNESS WHEREOF, the parties have eXCCLIted this Agreement on or as of the date first written above. AGENCY: Poway Redevelopment Agency By: n Title: 4: t- �`r� "N- (" ype Name and Title) 24 1 552 \03 \583952 2 OWNER: (Type Name) uz C'x (Type Name) 2775 2776 STATE OF CALIFORNIA COUNTY OF SAN DIEGO On MV O Y I , bey 2e me. lei _l�l 1—�S , Notary Public, personally appea're I M r 1 , proved to me on the basis of satisfactory evidence to be the personJss)'whose name(e � subscribed to the within instrument and acknowledged to me that r/ e4lh executed the same i Is erfthM authorized capacity(ies), and that by ehrrhhmr si gnat urc(s�ron the instrument the person(*or the entity upon behall'ol'which the person,(,s} acted. executed lhe'instrument. I certify UNDER PFNALI'Y OF PF,RJURY under the laws of the State of California that the foregoing paragraph is true and correct. WITNESS my hand and olfiicial seal. Notary Public STATE OF CALIFORNIA COUNTY OF SAN DIEGO On before in Notary Public, personally appeared proved to me on the basis of satisfactory evidence to be the person(s whose name( is re subscribe he within instrument and acknowledged to me th she /they executed the same er /their authorized capacity(ics), and that by i er/their signatures) on the instrument the person(s), on the entity upon behalf of which the person(s) acted, executed the instrument. I certify UNDER PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. WITNESS my hand and official seal. PATTY N. SMITH COMM. #17454W o NOTARY PUBLIC•CAUFORNIAQ Notary IL !A SAN DIEGO COUNTY fS My Commission Expires JUNE 13, 2011 1552 \03\583952.2 2777 STATE OF CALIFORNIA COUNTY OF SAN DIEGO ) O 1' � 25V before rn � V.Notary Public, personally reo �d� proved to me on the basis of satisfactory evidence to be the person(s) 'w e name(s re subscribed to. within instrument and acknowledged to me that he /s�tcy executed the same in hi sr heir authorized capacity(ies), and that by hi�their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. I certify UNDER PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. WITNESS my hand and official seal. 1552 \03\583952 2 EXI- 111311" A Legal'Description of the Home A -1 1552 \03 \583952 2 2778 Order No.: PS 1751021 -U12 LEGAL DESCRIPTION LOT 21 OF CITY OF POWAY TRACT NO. 06 -06 THE MEADOWS, IN THE CITY OF POWAY, COUNTY OF SAN DIEGO, STATE OF CALIFORNIA, ACCORDING TO MAP THEREOF NO. 15741 FILED IN THE OFFICE OF COUNTY RECORDER OF SAN DIEGO COUNTY MARCH -),2009. END OF LEGAL DESCRIPTION END OF LEGAL DESCRIPTION CLTA Preliminary Report Form - Modified (11- 17 -06) Page 3 2779 To: From: Address of Home: Date: EXHIBIT B Form of Owner Occupancy Certification, The Poway Redevelopment Agency ( "Agency ") [name of owner(s)] ( "Owner(s) ") ( "Home ") By signature below, I [insert name or names of Owner] hereby certify to the Poway Redevelopment Agency under penalty of perjury that 1 /we occupy the home located at _ [insert address] (the "Home ") as my /our primary and sole place of residence and that I /we have occupied the Home for U [insert number] months of the calendar year [insert previous calendar year]. Attached to this letter is a copy of [insert utility bill or driver's license] showing my place of residence. This Owner Occupancy Certification is signed on perj ury. By: By: Due Date: February 1 of each calendar year. _, 20, under penalty of Owner [type name[ Owner [type name] Attach copy of utility bill or driver's license showing address of Home. B -1 1552 \03 \563952 2 2780 EXHIBIT C Form of Owner's Notice of' Intent to 'transfer" To: The Poway Redevelopment Agency ( "Agency ") From: Address of Home: Date: [name of owner(s)J ( "Owner(s) ") ("Home") Please be notified pursuant to Section 7 of the Resale Restriction Agreement and Option to Purchase between Owner and Agency dated , that the Owner intends to transfer the Home listed above. A. The following information -is,provided to the Agency pursuant to Section 7 of the Resale Agreement: Address of Home: 2. Date Owner purchased Home: 3. Affordable Housing Cost paid by Owner when Home was purchased: 4. Date Owner intends to vacate Home: 5. Date Flonic will be placed on market: 6. Name and phone number ot'person for Agency to contact to schedule inspection: and (name) (phone number) B. As required by Section 7 of the Resale Agreement, the following documents are attached to this Notice: Copy of 1 -IUD -1 Settlement Statement from Owner's purchase of the property 2. IfOwner has made Eligible Capital Improvements to the Home that Owner wishes to include in the Agency's calculation of lndexed Price, check box below C -1 1552 \03 \583952 2 2781 Yes, I have made Eligible Capital Improvements pursuant to Section I 1 of the Resale Agreement. They are ]describe improvements] and were completed on ]insert date]. l attach the following documents to,this letter: a. copy of Agency letter granting prior approval of these improvements; b. evidence of cost of these improvements; appraisal showing value added to Home by the improvements. C. 1 have not yet listed the Home for sale with a multiple listing service, or contacted ,a real estate broker or financial institution. l agree to prepare the Home for sale by: obtaining a pest control report within thirty (30) days of the date of this notice, 2. repairing all damage noted in the pest report within the sooner of: (i) sixty (60) days from the date of this notice, or (ii) two (2) weeks prior to close of escrow or the transfer of the Home, allowing the Agency or its designee to inspect.the Home within thirty (30) days of this notice, 4. if requested by the Agency following the Agency's inspection, I will obtain a home inspection report from a licensed home inspector, maintaining. utility connections until the Home is transferred, permitting a walk through by the Agency prior to close of escrow or the transfer. contact Agency to obtain, if available, a list of potential SHOP home buyers. C_2 1552 \03 \583952 2 2782 This Owner's Notice of Intent to Transfer is: certified by Owner to be true and correct and is signed on C -3 1552M0 5839522 linsert date) under penalty of perjury. By: Owner By: Owner 2783 I XHIBl "f D Form of Owner. Acknowledgement of Agency Response Notice Name: Address of Home: Date: 1, (insert name) hereby acknowledge that I received the Agency Response Notice (as described in Section 8 of the Resale Agreement on (insert date). BY: D -1 1552 \03 \583952.2 2784 2785 l"XI-11BIT E Form of Request for Agency Apprdval of Improvements to the Home To: Poway Redevelopment Agency ( "Agency ") From: Home Address: Date: ( "Owner ") ( "Home ") I hereby-request Agency approval of the following capital improvements I intend to make to my Home: Description of I nprovements: Estimated Cost: Original Affordable Housing Cost: The Agency will respond in writing to this request. NOTE: Owner should retain copies of contracts, invoices, and receipts for all completed capital improvements. These documents will be necessary to establish the resale restricted price of the Home upon subsequent transfer. *Notice: Proposed Improvements must cost at least Two Thousand Dollars ($2,000) or one percent (1%) of the original purchase price (whichever is greater) and must be approved by the Agency in writing prior to construction. 1552 \03 \583952.2 I � EXHIBIT F 2786 Form of Owner Request for Agency Subordination to Refinanced First Lender Loan To: The Poway Redevelopment Agency ( "Agency ") From: ( "Owner ") Home Address: ( "Home ") Date: The Owner hereby requests the Agency to approve the Owner's refinance of the existing first mortgage on the Home. The Owner provides the following information which it certifies to be true and correct: I . Original Affordable Housing Cost of Flome: $ 2. Original Principal Balance of exiting First Lender Loan: $ 3. Interest Rate of Existing First Lender Loan: $ 4. Principal Amount of Proposed New First Lender Loan: $ 5. Interest Rate of Proposed New First bender Loan: $ 6. A copy of all loan documents related to the refinancing of the First Lender Loan. The Owner hereby certifies the above information is true and correct and this Owner Request is executed under penalty ol'peijury on ]insert date]. By: Owner By: Owner 1552 \03\583952 2