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2002-393088Recording requested by First American Title 002039 2002-0393088 MAY 09, 2002 B:O0 AM FREE RECORDING REQUESTED PURSUANT TO GOV. CODE SECTION 27383 Recording Requested By And When Recorded Mail To: City of Encinitas Community Development 505 S. Vulcan Avenue Encinitas, CA 92024 EFICItL ~ ~1 I)I£EI CaJ~ E~'8 I]FFIIE ~ J. I~IlTH, ~ RECt]RgI~ FEES: 0.(X) Order No. 1274020-8 z~ Escrow No, 01-2003CM APN256-122~06(~,/~) SECOND DEED OF TRUST ,.2,.¢-~-/a~. ,~,~ d'~ THIS DEED OF TRUST IS SUBORDINATE AND SECOND TO DEED OF TRUST IN THE AMOUNT OF $115,000.00 IN FAVOR OF SAN DIEGO HABITAT FOR HUMANITY, INC. RECORDING CONCURRENTLY HEREWITH THIS SECOND DEED OF TRUST is made this 30th day of November, 2001, among the Trustor, JERONIMO & VALENTINA CRUZ (herein "Borrower"), and FIRST AMERICAN TITLE COMPANY (herein "Trustee"), and the Beneficiary, CITY OF ENCINITAS.~ (herein "CITY"), whose address is 505 S. Vulcan Avenue, Encinitas, California 92024. BORROWER, in consideration of the indebtedness herein recited and the trust herein created, irrevocably grants and conveys to Trustee, in trust, with power of sale, the following described property located in the County of San Diego, State of California: see Exhibit "A" attached hereto and incorporated herein by this reference which has the address of 880 CLARK AVENUE, Encinitas, California 92024 herein "Property Address"); TOGETHER with all the improvements now and hereafter erected on the Property, and all easements, rights, appurtenances and rents (subject, however, to the rights and authorities given herein to CITY to collect and apply such rents), all of which shall be deemed to be and remain part of the property covered by this Deed of Trust; and all of the foregoing, together with said property (or the leasehold estate if this Deed of Trust is on a leasehold) are hereinafter referred to as the "Property"; TO SECURE to CITY the repayment of the indebtedness evidenced by Borrower's Promissory Note dated November 3O , 2001, and Note Rider, and extensions and renewals thereof (herein collectively referred to as the "Note"), in the principal sum of One Hundred Five Thousand U.S. Dollars ($105,000) with interest thereon, fully deferred with the O02O40 total indebtedness, if not sooner paid, due and payable upon default by Borrower, a Prohibited Transfer as defined in the Deed of Trust. This Note will be forgiven on the date which is thirty (30) years after the recordation date hereof, if Borrower has not defaulted or made a Prohibited Transfer of the Property, or any portion thereof; CITY has received the payment of all other sums, with interest thereon, advanced in accordance herewith to protect the security of this Deed of Trust; and CITY has received the full performance of the covenants and agreements of Borrower herein contained. Borrower covenants that Borrower is lawfully seized of the estate hereby conveyed and has the right to grant and convey the Property, and that the Property is unencumbered except for encumbrances of record. Borrower covenants that Borrower warrants and will defend generally the title to the Property against all claims and demands, subject to encumbrances of record. UNIFORM COVENANTS Borrower and CITY covenant and agrees as follows: 1. Payment of Principal and Interest Borrower shall promptly pay when due the principal and interest indebtedness evidenced by the Note. 2. Payment of Taxes and Insurance. To protect the security of the Deed of Trust, Trustor agrees to pay, at least ten (10) days before delinquency, all taxes and assessments affecting said property, including assessments on appurtenant water stock; when due, all encumbrances, charges and liens, with interest, on said property or any part thereof, which appear to be prior or superior hereto; and 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, without obligation to do so 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 protect 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 encumbrance, charge or lien which in the judgment of either appears to be prior or superior hereto; and, in exercising any such powers, pay necessary expenses, employ counsel and pay his reasonable fees. 3. Application of Payments. Unless applicable law provides otherwise, all payments received by CITY under the Note shall be applied by CITY first in payment of amounts advanced by CITY to CITY by Borrower, then to interest payable on the Note, and then to the principal of the Note. 4. Prior Mortgages and 'Deeds of Trust; Charges, Liens. Borrower shall perform all of Borrower's obligations under any mortgage, deed of trust or other security buyerdecd.doc Page 2 of 12 00 04 . agreement with a lien which has priority over this Deed of Trust, including Borrower's covenants to make payments when due. Borrower shall pay or cause to be paid all taxes, assessments and other charges, fines and impositions attributable to the Property which may attain a priority over this Deed of Trust, and leasehold payments, if any. 5. Hazard Insurance. Borrower shall keep the improvement(s) now existing or hereinafter erected on the Property insured against loss by fire, hazards included within the terms "extended coverage", and such other hazards as CITY may require and in such amounts and for such periods as CITY may require. The insurance carrier providing the insurance shall be chosen by Borrower subject to approval by CITY, provided that such approval will not be unreasonably withheld. All insurance policies and renewals thereof shall be in a form acceptable to CITY and shall include a standard mortgage clause in favor of and in a form acceptable to CITY. CITY has the right to hold the policies and renewals thereof, subject to the terms of any mortgage, deed of trust or other security agreement with a lien which has priority over this Deed of Trust. In the event of loss, Borrower shall give prompt notice to the insurance carrier and CITY. CITY may make proof of loss if not made promptly by Borrower. If Property is abandoned by Borrower, or if Borrower fails to respond to CITY within thirty (30) days from the date notice is mailed by CITY to Borrower that the insurance carrier offers to settle a claim for insurance benefits, CITY is authorized to collect and apply the insurance proceeds at CITY's option either to restoration or repair of the Property or to the sums secured by this Deed of Trust. 6. Preservation and Maintenance of Property. Borrower will keep the Property in good repair and shall not commit waste or permit impairment or deterioration of the Property. Borrower shall perform all of Borrower's obligations under the declaration of covenants, conditions and restrictions. 7. Protection of CITY Security. If Borrower fails to perform the covenants and agreements contained in this Deed of Trust, or if any action or proceeding is commenced which materially affects CITY's interest in the Property, the CITY, at CITY's option, upon notice to Borrower, may make such appearances, disburse such sums including reasonable attorneys' fees, and take such action as is necessary to protect CITY's interest. Any amounts disbursed by CITY pursuant to this paragraph, with interest thereon, at the Note rate, will become additional indebtedness of Borrower secured by this Deed of Trust. Unless Borrower and CITY agree to other terms of payment, such amounts will be payable upon notice from CITY to Borrower requesting payment thereof. Nothing contained in this paragraph will require CITY to incur any expense or take any action hereunder. 8. Inspection. CITY may make or cause to be made reasonable entries buyerdeed.doc Page 3 of 12 042 upon and inspections of the Property, provided that CITY will give the Borrower notice prior to any such inspection, specifying reasonable cause therefor related to CITY's interest in the property. 9. Condemnation. The proceeds of any award of claim for damages, direct or consequential, in connection with any condemnation or other taking of the Property, or part thereof, or for conveyance in lieu of condemnation, are hereby assigned and shall be paid to CITY subject to the terms of any mortgage, deed of trust or other security agreement with a lien which has priority over this Deed of Trust. 10. Borrower Not Released; Forbearance by CITY Not a Waiver. Extension of the time for payment or modification of amortization of the sums secured by this Deed of Trust granted by CITY to any successor in interest of Borrower shall not operate to release, in any manner, the liability of the original Borrower and Borrower's successors in interest. CITY shall not be required to commence proceedings against such successor or refuse to extend time for payment or otherwise modify amortization of the sums secured by this Deed of Trust by reason of any demand made by the original Borrower and Borrower's successors in interest. Any forbearance by CITY in exercising any right or remedy hereunder, or otherwise afforded by applicable 'law, shall not be a waiver of or preclude the exercise of any such right or remedy. 11. Successors and Assigns Bound, Joint and Several Liability; Co- Signors. The covenants and agreements herein contained shall bind, and the rights hereunder shall inure to, the respective successors and assigns of CITY and Borrower, subject to the provisions of paragraph 17 hereof. All covenants and agreements of Borrower shall be joint and several. 12. Notice. Except for any notice required under applicable law to be given in another manner: (a) any notice to Borrower provided for in this Deed of Trust.shall be given by delivering it or by mailing such notice by certified mail, addressed to Borrower at the Property address or such other address as Borrower may designate by notice to CITY as provided herein; and, (b) any notice to CITY will be given by certified mail, return receipt requested, to CITY's address stated herein or to such other address as CITY may designate by notice to Borrower as provided herein. Any Notice provided for in this Deed of Trust shall be deemed to have been given to Borrower or CITY when given in the manner designated herein. 13. Governing Law, Severability. The state and local laws applicable to this Deed of Trust shall be the laws of the jurisdiction in which the Property is located. The foregoing sentence shall not limit the applicability of federal law to this Deed of Trust. In the buyerdeed.do¢ Page 4 of 12 0_2043 event that any provision or clause of this Deed of Trust or the Note conflicts with applicable law, such conflict shall not affect other provisions of this Deed of Trust or the Note which can be given effect without the conflicting provision and, to this end, the provisions of this Deed of Trust and the Note are declared to be severable. As used herein, "costs", "expenses" and "attorneys' fees" include all sums to the extent not prohibited by applicable law or limited herein. 14. Borrower's Copy. Borrower shall be furnished a conformed copy of the Note and this Deed of Trust at the time of execution or after recordation hereof. 15. Notice to CITY. Borrower agrees that it will give the CITY notice of any prospective transfer, sale, or conveyance not less than forty five (45) days before the proposed sale, transfer, or conveyance by personal delivery of a notice at the address set forth for the CITY on Page I of this Deed of Trust. Time is of the essence. 16. Lease of Property Prohibited. During the term of the affordability restrictions as set forth in Paragraph 17(e) of this Deed of Trust, the Borrower shall not rent or sublet the Property, or any part thereof, to any person and/or entity. Leasing of the Property shall be deemed a prohibited transfer of the Property, within the meaning of Paragraph 18, and shall trigger the right of the CITY to foreclose and/or exercise its First Right of Refusal. 17. Transfer, Conveyance of Property Restricted for Thirty (30) Years. The sale, transfer and/or conveyance of the Property is restricted as follows: If Borrower sells, transfers or conveys the Property less than thirty (30) years after the date of recordation of the Deed of Trust securing this Note Rider, then said sale, conveyance and/or transfer shall be subject to the following: (a) Within twenty (20) years after the date of recordation of the Deed of Trust, the resale restrictions in the First mortgage documents by Habitat shall be enforced. (b) Between the dates of the expiration of the Habitat documents and thirty (30) years after the date of recordation of the Deed of Trust, The Property may only be sold, transferred or conveyed to a subsequent purchaser whose income is less than eighty percent (80%) of the median income as defined by HUD from time to time for the San Diego metropolitan area, as adjusted for family size and as verified and approved by CITY. (i) Except as provided in Paragraph 2(d) hereof, the Property must be used only as the principal residence of the subsequent purchaser during the time of ownership. (ii) The sale price to the subsequent purchaser must be at a price that is "affordable to the subsequent purchaser(s)". "Affordable to the subsequent purchaser(s)" is achieved if the monthly payments for buyerdeed.do¢ Page 5 of 12 0 044 principal, interest, property taxes, insurance and a utility allowance do not exceed thirty percent (30%) of the gross income of a family with an income that is eighty percent (80%) of the median income for the area, for a family of five. In the event that a Transferor is unable to find, despite diligent efforts to do so, an Eligible Person or Family to purchase a Housing Unit, the Transferor may sell the Housing Unit to a person other than an Eligible Person or Family by first offering to sell the Housing Unit to the CITY for a purchase price equal to highest purchase price at which an Eligible Person or Family could qualify to purchase the Housing Unit at an Affordable Housing Cost. The CITY shall accept or reject the offer to sell the Housing Unit to the CITY within thirty (30) days of the date of receipt of the offer to sell. In the event that the CITY declines to purchase the Housing Unit, the Transferor may proceed to market and sell the Housing Unit to any purchaser without regard to the resale conditions set forth in this Agreement; provided that upon or prior to the close of escrow the Transferor shall pay to the CITY the greater of: 1) the amount of the Second Deed of Trust, or 2) "Equity Sharing Amount", hereinafter defined. The "Equity Sharing Amount" means an amount equal to the appreciation in the value of the Property determined by the difference between the Sales Price and the Affordable Housing Price (as defined below). The "Affordable Housing Price" is the purchase price that could be paid by an Eligible Person or Family at an Affordable Housing Cost. The "Sales Price" is the price to be paid by the buyer of the Property (the "Buyer") to the Transferor for Transferor's interest in the Property, exclusive of escrow fees, title insurance costs, broker's commissions, loan fees or any other closing or transaction costs. Upon a showing of hardship by the Transferor to the CITY in writing, the CITY may waive any one or combination of the following: the resale restrictions, the Transferor's obligation to sell to the CITY, the Transferor's obligation to pay the CITY the Equity Sharing Amount and/or the Transferor's obligation to pay the CITY the amount of the Second Deed of Trust. (c) The affordability requirement shall remain in effect for a total of thirty (30) years, measured from the date of recordation of this Deed of Trust. This requirement shall remain in full force and effect against all subsequent purchasers during the restricted term. This restriction shall also apply to sales of buyerdeed.doc Page 6 of 12 the Property from the subsequent purchaser to other purchaser(s) during the restricted term. (d) If the Borrower fails, refuses or is unable to convey, sell, or transfer the Property to a person or persons meeting the requirements of paragraphs 16, 17a through 17c, inclusive, before the end of the affordability term as defined in paragraph 17e, then such transfer shall be deemed a Prohibited Transfer as defined in Paragraph 18 hereof. These provisions of paragraph 17 shall bind the heirs, successors and assigns of the Borrower. 18. Prohibited Transfer. If Borrower sells, agrees to sell, conveys, rents and/or transfers the Property in violation of the terms of Paragraphs 16 and 17 hereof, then CITY may, at its option, in addition to any and all other remedies available to it, require immediate payment in full of all sums secured by the Deed of Trust. In the instance of a prohibited transfer, the Transferor shall pay to the CITY the greater of: 1) the amount of the Deed of Trust, including any interest, as described in the Note, or 2) "Equity Sharing Amount", as defined above. As an alternative, CITY may, at its option, purchase the Property for a purchase price equal to the highest purchase price at which an Eligible Person or Family could qualify to purchase the Housing Unit at an Affordable Housing Cost. However, these options shall not be exercised by CITY if such exercise is prohibited by federal law as of the date of the Deed of Trust or if the CITY has executed a separate written waiver of these options. If CITY exercises any of these options, CiTY shall give Borrower Notice of Acceleration or, in the alternative, Notice of Exercise of First Right of Refusal Option. The notice shall provide a period of not less than thirty (30) days from the date that the notice is delivered or mailed within which Borrower must pay all sums secured by the Deed of Trust or must enter into an escrow to convey the Property to CITY, depending upon the option exercised by CITY. If Borrower fails to pay these sums or enter into an escrow prior to the expiration of this period, CITY may invoke any remedies permitted by the Deed of Trust without further notice or demand on Borrower. The escrow contemplated by this Paragraph 18 must close not more than ninety (90) days after CITY receives notice of such sale, agreementto sell, conveyance, rental or transfer of the Property in violation hereof. NON-UNIFORM COVENANTS Borrower and CITY further covenant and agree as follows: '19. Acceleration, Remedies. Upon Borrower's breach Of any covenant or agreement of Borrower in this Deed of Trust, including the covenants to pay when due any sums secured by this Deed of Trust, and those contained in paragraphs 16, 17 and 18 hereof, CITY, prior to acceleration, shall give notice to Borrower as provided in paragraph 12 hereof buyerdeed.doc Page 7 of 12 002046 specifying: (a) the breach; (b) the action required to cure such breach; (c) a date, not less than ten (10) days from the date the notice is mailed to Borrower, by which such breach must be cured; and, (d) that failure to cure such breach on or before the date specified in the notice may result in acceleration of the sums secured by this Deed of Trust and sale of the Property. The notice shall further inform Borrower of the right to reinstate after acceleration and the right to bring a court action to assert the nonexistence of a default or any other defense of Borrower to acceleration and sale. If the breach is not cured on or before the date specified in the notice, CITY, at CITY's option, may declare all of the sums secured by this Deed of Trust to be immediately due and payable without further demand and may invoke the power of sale and any other remedies permitted by applicable law. CITY shall be entitled to collect all reasonable costs and expenses incurred in pursuing the remedies provided in this paragraph 19, including, but not limited to, reasonable attorneys' fees. If CITY invokes power of sale, CITY shall execute or cause Trustee to execute a written notice of the occurrence of an event of default and of CITY's election to cause the Property to be sold and shall cause such notice to be recorded in each county in which the Property or some part thereof is located. CITY or Trustee shall mail copies of such notice in the manner prescribed by applicable law. Trustee shall give public notice of sale to the persons and in the manner prescribed by law. After the lapse of such time as may be required by applicable law, Trustee, without demand on Borrower, shall sell the Property at public auction to the highest bidder at the time and place and under the terms designated in the notice of sale in one or more parcels and in such order as Trustee may determine. Trustee may postpone sale of all or any parcel of the Property by public announcement at the time and place of any previously scheduled sale. CITY or CITY's designee may purchase the Property at any sale. Trustee shall deliver to the purchaser Trustee's deed conveying the Property so sold without any covenant or warranty, expressed or implied. The recitals in the Trustee's deed shall be prima facie evidence of the truth of the statements made therein. Trustee shall apply the proceeds of the sale in the following order: (1) to all reasonable costs and expenses of the sale, including, but not limited to, reasonable Trustee's and attorneys' fees and costs of title evidence; (2) to all sums secured by this Deed of Trust; and, (3) the excess, if any, to the person or persons legally entitled thereto. Page 8 of 12 002047 20. Borrower's Right to Reinstate. Notwithstanding CITY's acceleration of the sums secured by this Deed of Trust due to Borrower's breach, Borrower shall have the right to have any proceedings begun by CITY to enforce this Deed of Trust discontinued at any time prior to five (5) days before the sale of the.Property pursuant to the power of sale contained in this Deed of Trust or at any time prior to entry of a judgment enforcing this Deed of Trust if: (a) Borrower pays CITY all sums which would be then due under this Deed of Trust and the Note had no acceleration occurred; (b) Borrower cures all breaches of any other covenants or agreements of Borrower contained in this Deed of Trust; (c) Borrower pays all reasonable expenses incurred by CITY and Trustee in enforcing the covenants and agreements of Borrower continued in this Deed of Trust and in enforcing Trustee's remedies as provided in paragraph 19 hereof, including, but not limited to, reasonable attorneys' fees; and, (d) Borrower takes such action as CITY may reasonably require to assure that the lien of this Deed of Trust, CITY's interest in the Property and Borrower's obligation to pay the sums secured by this Deed of Trust shall continue unimpaired. Upon such payment and cure by Borrower, this Deed of Trust and the obligations secured hereby shall remain in full force and effect as if no acceleration had occurred. 21. Assignment of Rents; Appointment of Receiver; CITY in Possession. As additional security hereunder, Borrower hereby assigns to CITY the rents of the Property, provided that Borrower shall, prior to acceleration under paragraph 19 hereof or abandonment of the Property, have the right to collect and retain such rents as they become due and payable. Upon acceleration under paragraph 19 hereof or abandonment of the Property, CITY, in person, by agent or by judicially appointed receiver shall be entitled to enter upon, take possession of and manage the Property and to collect the rents of the Property including those past due. All rents collected by CITY or the receiver shall be applied first to payment of the cost of management of the Property and collection or rents, including, but not limited to, receiver's fees, premiums on receiver's bonds and reasonable attorneys' fees, and then to the sums secured by this Deed of Trust. CITY and the receiver shall be liable to account only for those rents actually received. 22. Reconveyance. Upon payment of all sums secured by this Deed of Trust, CITY shall request Trustee to reconvey the Property and will surrender this Deed of Trust and all Notes evidencing indebtedness secured by this Deed of Trust to Trustee. Trustee shall reconvey the Property without warranty and without charge to the person or buyerdeed.doc Page 9 of 12 002048 persons legally entitled thereto. Such person or persons shall pay all costs of recordation, if any. 23. Substitute Trustee. CITY, at CITY's option, may from time to time appoint a successor trustee to any Trustee appointment hereunder by an instrument executed and acknowledged by CITY and recorded in the office of the Recorder of the county where the Property is located. The instrument shall contain the name of the original lender, Trustee and Borrower, the book and page where this instrument is recorded, and the name and address of the successor trustee. The successor trustee shall, without conveyance of the Property, succeed to all the titlel power and duties conferred upon the Trustee herein and by applicable law. This procedure for substitution of trustee shall govern to the exclusion of all other provisions for substitution. 24. Request for Notices. Borrower requests that copies of the notice of sale be sent to Borrower's address which is the Property Address. 25. Statement of Obligation. CITY may charge a fee not to exceed Sixty Dollars ($60.00) for furnishing the statement of obligation as provided by Section 2943 of the Civil Code of California. 26. Covenants, Conditions and Restrictions. The Property is subject to Covenants, Conditions and Restrictions [Affordability Restrictions] ("Restrictions") between CITY and Borrower, which are not attached hereto but are incorporated by reference. Borrower acknowledges receipt of said Restrictions and agrees, for himself, his.,heirs, successors and assigns to be bound by the same. 27. Warranties of Borrower. Borrower warrants to CITY as follows: (a) That Borrower% household annual gross income does not exceed sixty percent (60%) of the median income for the San Diego metropolitan area, as adjusted for family size, as said median income is determined by HUD, on the latter of: (1) the date of initial occupancy of the Property; or, (2) the date of the recordation of this Deed of Trust. (b) For so long as Borrower owns the Property, Borrower will reside in the Property as Borrower's principal place of residence and will not to sublet, lease or rent out the Property during the term of this Deed of Trust. 28. Subordinate to Senior Deed of Trust This Deed of Trust is subordinate to a deed of trust or mortgage on the Property made by or held by San Diego Habitat for Humanity. REQUEST FOR NOTICE OF DEFAULT buycrdeed.doc Page 10 of 12 002049 AND FORECLOSURE UNDER SUPERIOR MORTGAGES OR DEEDS OF TRUST CITY will request that copies of notices of foreclosure from the holder of any lien which has priority over this Deed of Trust be sent to CITY's address, as set forth on page 1 of this Deed of Trust, as provided by Section 2924b of the Civil Code of California. IN WITNESS WHEREOF, Borrower has executed this Deed of Trust. Date: JERONIMO CRUZ Date: .? VALENTINA CRUZ buyerdeed.doc Page 11 of 12 LEGAL DESCRIPTION ORDER NO. 1274020-8 002050 THE LAND REFERRED TO HEREIN I:S SITUATED IN THE STATE OF CALIFORNIA, COUNTY OF SAN DIEGO, AND IS DESCRIBED AS FOLLOWS: THAT PORTION OF LOT 1 IN BLOCK 1 OF AVOCADO ACRES, IN THE CITY OF ENCINITAS, COUNTY OF SAN DIEGO, STATE OF CALIFORNIA, ACCORDING TO MAP THEREOF NO. 1791, FILED IN THE OFFICE OF THE COUNTY RECORDER OF SAN DIEGO COUNTY, APRIL 24, 1924, DESCRIBED AS FOLLOWS: COMMENCING AT THE SOUTHWEST CORNER OF SAID LOT 1, THENCE ALONG THE SOUTH LINE THEREOF SOUTH 89°25'19" EAST, 169.92 FEET TO THE TRUE POINT OF BEGINNING; THENCE CONTINUING ALONG SAID SOUTH LINE, SOUTH 89°25'19" EAST, 120.00 FEET TO THE SOUTHEAST CORNER OF SAID LOT 1; THENCE ALONG THE EASTERLY LINE THEREOF, NORTH 05°18'12" EAST, 60.26 FEET TO SAID SOUTHERLY RIGHT OF WAY LINE OF LEUCADIA BOULEVARD; THENCE ALONG SAD RIGHT OF WAY, NORTH 89°14'13" WEST, 119.96 FEET; THENCE LEAVING SAID RIGHT OF WAY, SOUTH 05°18'31" WEST, 60.65 FEET TO A POINT ON THE SOUTH LINE OF SAID LOT 1 BEING THE TRUE POINT OF BEGINNING. SAID PROPERTY BEING DESCRIBED AS PARCEL C IN A CERTIFICATE OF COMPLIANCE RECORDED ON JULY 31, 2001 AS FILE NO. 2001-0536777 OF OFFICIAL RECORDS OF SAID SAN DIEGO COUNTY. RESERVING THEREFROM AN EASEMENT AND RIGHT OF AWAY FOR ACCESS, UTILITY AND APPURTENANCES THERETO OVER, UNDER, ALONG AND ACROSS: THAT PORTION OF LOT 1 IN BLOCK 1 OF AVOCADO ACRES, IN THE CITY OF ENCINITAS, COUNTY OF SAN DIEGO, STATE OF CALIFORNIA, ACCORDING TO MAP THEREOF NO. 1791, FILED IN THE OFFICE OF THE COUNTY RECORDER OF SAN DIEGO COUNTY, APRIL 24, 1924, DESCRIBED AS FOLLOWS: COMMENCING AT THE SOUTHWEST CORNER OF SAID LOT 1, THENCE ALONG THE SOUTHERLY LINE OF SAID LOT 1, SOUTH 89°25'1'9'' EAST, 169.92 FEET TO THE TRUE POINT OF BEGINNING; THENCE CONTINUING ALONG SAID SOUTHERLY LINE, SOUTH 89°25'19" EAST, 120.00 FEET TO THE SOUTHEASTERLY CORNER OF SAID LOT 1; THENCE ALONG THE EASTERLY LINE OF SAD LOT 1, NORTH 05°18'12" EAST, 24.08 FEET TO A POINT ON A NON-TANGENT 30.00 FOOT RADIUS CURVE CONCAVE SOUTHERLY (A RADIAL LINE FROM SAD POINT BEARS 0°34'41" WEST); THENCE WESTERLY ALONG SAID CURVE THROUGH A CENTRAL ANGLE 26o31 '27" AN ARC DISTANCE OF 13.89 FEET; THENCE TANGENT TO SAD CURVE 64o03' 14" WEST 8.88 FEET TO THE BEGINNING OF AN 8.33 FOOT RADIUS CURVE CONCAVE NORTHERLY; THENCE WESTERLY ALONG SAD CURVE THROUGH A CENTRAL ANGLE OF 26o31 '27" AN ARC DISTANCE OF 3.86 FEET TO A POINT ON A LINE WHICH IS 16.00 FEET NORTHERLY OF AND PARALLEL WITH SAD SOUTHERLY LINE OF LOT 1; THENCE ALONG SAD PARALLEL LINE NORTH 89025, 19" WEST 95.60 FEET; THENCE SOUTH 05°18'31" WEST, 16.05 FEET TO THE TRUE POINT OF BEGINNING. SAID EASEMENT IS HEREBY DECLARED TO BE APPURTENANT TO AND FOR THE USE AND BENEFIT OF ASSESSOR'S PARCEL NUMBER 256-122-05. PAGE 4 %q..$ 0,./ _ STATE OF CALIFORNIA . COUNTY OF On ~--~v~.q ~0,,~ , before me, person~ a.~l~eared ...~0-~ ~', ~,o , ~ .... ,~,,y ki~OW~ tu iTie (or proved to me on the basis of satisfactory evidence).to be the person(s) whose name(s) is~ subscribed to the within instrument and acknowledged t6'me that he/sh~i~~ executed the same in his/heiZer)authorized capacity(les), and that by his/he~)signature(s) on the instrument the person(s) or the entity upon behalf of which the person(s) acted, executed the instrument. WITNESS m.y, hand and official sea~ ///~ Signature ~...~~. 'k .~ ~~ Commi~ion ~ 1331146 ~ ~ ~~ No~ Public- Cslifomia ~ Title. of Document. Date of Document Other signatures not acknowledged No. of Pages 3008 (1/94) (General) First American Title Insurance Company Recording requested by First American Title 002018 FREE RECORDING REQUESTED /PURSUANT TO GOV. CODE SECTION 27383 Recording Requested By And When Recorded Mail To: City of Encinitas Community Development 505 S. Vulcan Avenue Encinitas, CA 92024 DOC --2002-03 3086 MAY 09, 2002 B:OO AH EIrlCItt ~ ~ I)IEll ~ E[ll~'8 Fl~: 0.00 2002-0393086 CONDITIONS AND RESTRICTIONS Escrow No. 01-1999CM THIS DECLARATION OF COVENANTS, CONDITIONS AND RESTRICTIONS (hereafter "Declaration") is made as of this day of November 30, ,2001, by JERONIMO AND VALENTINA CRUZ (hereafter, "BORROWER" or "DECLARANT"), in connection with that certain parcel of real property ("the Property") located in the City of Encinitas, County of San Diego, Califomia, described in Exhibit "A" attached hereto and incorporated herein by reference. RECITALS Concurrently with the recordation of this Declaration, the CITY is recording a deed of trust (hereafter "Deed of Trust"), to secure a loan from CITY to BORROWER to aid BORROWER in acquiring the Property. The Deed of Trust in favor of the CITY was condi- tioned in part upon the recordation of a document setting forth certain restrictions upon the use and sale of the Property. NOW, THEREFORE, BORROWER hereby declares that the Property shall be subject to the covenants, conditions and restrictions set forth below: 1. RESTRICTIVE COVENANTS. BORROWER agrees and covenants, on behalf of itself and its successors and assigns and each successor-in-interestto the Property, that at all times during the term of this Declaration set forth in paragraph 2 hereof, the Property shall be subject to the provisions of paragraphs 16, 17, 18, 26, and 27 of the Deed of Trust, whether or not said Deed of Trust continues to encumber the Property, which provisions are hereinafterset forth at length: 16. Lease of Property Prohibited. During the term of the affordability restrictions as set forth in Paragraph 17(e) of this Deed of Trust, the Borrower shall not rent or sublet the Property, or any part thereof, to any person and/or entity. Leasing of the Property buyerCC&RS.doc I ' ' 0020 9 shall be deemed a prohibited transfer of the Property, within the meaning of Paragraph 18, and shall trigger the right of the CITY to foreclose and/or exercise its First Right of Refusal. 17. Transfer, Conveyance of Property Restricted for Thirty (30) Years. The sale, transfer and/or conveyance of the Property is restricted as follows: If Borrower sells, transfers or conveys the Property less than thirty (30) years after the date of recordatiOn of the Deed of Trust, then said sale, conveyance and/or transfer shall be subject to the following' (a) Within twenty (20) years after the date of recordation of the Deed of Trust, the resale restrictions in the First mortgage documents by Habitat shall be enforced. (b) Between the dates of the expiration of the Habitat documents and thirty (30) years after the date of recordation of the Deed of Trust, The Property may only be sold, transferred or conveyed to a subsequent purchaser whose income is less than eighty percent (80%) of the median income as defined by HUD from time to time for the San Diego metropolitan area, as adjusted for family size and as verified and approved by CITY. (i) Except as provided in Paragraph 2(d) hereof, the Property must be used only as the principal residence of the subsequent purchaser during the time of ownership. (ii) The sale price to the subsequent purchaser must be at a price that is "affordable to the subsequent purchaser(s)". "Affordable to the subsequent purchaser(s)" is achieved if the monthly payments for principal, interest, property taxes, insurance and a utility allowance do not exceed thirty percent (30%) of the gross income of a family with an income that is eighty percent (80%) of the median income for the area, for a family of five. In the event that a Transferor is unable to find, despite diligent efforts to do so, an Eligible Person or Family to purchase a Housing Unit, the Transferor may sell the Housing Unit to a person other than an Eligible Person or Family by first offering to sell the Housing Unit to the CITY for a purchase price equal to highest purchase price at which an Eligible Person or Family could qualify to purchase the Housing Unit at an Affordable Housing Cost. The CITY shall accept or reject the offer to sell the Housing Unit to the CITY within thirty (30) days of the date of receipt of the offer to sell. In the event that the CITY declines to purchase the Housing Unit, the Transferor may proceed to market and sell the Housing Unit to any purchaser without regard to the resale conditions set forth in this Agreement; provided that upon or prior buyerCC&RS.doc Page 2 of 9 902020 to the close of escrow the Transferor shall pay to the CITY the greater of: 1) the amount of the Second Deed of Trust, or 2) "Equity Sharing Amount", hereinafter defined. The "Equity Sharing Amount" means an amount equal to the appreciation in the value of the Property determined by the difference between the Sales Price and the Affordable Housing Price (as defined below). The "Affordable Housing Price" is the purchase price that could be paid by an Eligible Person or Family at an Affordable Housing Cost. The "Sales Price" is the price to be paid by the buyer of the Property (the "Buyer") to the Transferor for Transferor's interest in the Property, exclusive of escrow fees, title insurance costs, broker's commissions, loan fees or any other closing or transaction costs. Upon a showing of hardship by the Transferor to the CITY in writing, the CITY may waive any one or combination of the following: the resale restrictions, the Transferor's obligation to sell to the CITY, the Transferor's obligation to pay the CITY the Equity Sharing Amount and/or the TransferOr's obligation to pay the CITY the amount of the Second Deed of Trust. (c) The affordability requirement shall remain in effect for a total of thirty (30) years, measured from the date of recordation of this Deed of Trust. This requirement shall remain in full force and effect against all subsequent purchasers during the restricted term. This restriction shall also apply to sales of the Property from the subsequent purchaser to other purchaser(s) during the restricted term. (d) If the Borrower fails, refuses or is unable to convey, sell, or transfer the Property to a person or persons meeting the requirements of paragraphs 16, 17a through 17e, inclusive, before the end of the affordabilityterm as defined in paragraph 17e, then such transfer shall be deemed a Prohibited Transfer as defined in Paragraph 18 hereof. These provisions of paragraph 17 shall bind the heirs, successors and assigns of the Borrower. '18. Prohibited Transfer. If Borrower sells, agrees to sell, conveys, rents and/or transfers the Property in violation of the terms of Paragraphs 16 and 17 hereof, then CITY may, at its option, in addition to any and all other remedies available to it, require immediate payment in full of all sums secured by the Second Deed of Trust. In the instance of a prohibited transfer, the Transferor shall pay to the CITY the greater of: 1) the amount of the Second Deed of Trust, including any interest, as described in the Note, or 2) "Equity buyerCC&RS.doc Page 3 of 9 002021. Sharing Amount", as defined above. As an alternative, CITY may, at its option, purchase the Property for a purchase price equal to the highest purchase price at which an Eligible Person or Family could qualify to purchase the Housing Unit at an Affordable Housing Cost. However, these options shall not be exercised by CITY if such exercise is prohibited by federal law as of the date of the Deed of Trust or if the CITY has executed a separate written waiver of these options. If CITY exercises any of these options, CITY shall give Borrower Notice of Acceleration or, in the alternative, Notice of Exercise of First Right of Refusal Option. The notice shall provide a period of not less than thirty (30) days from the date that the notice is delivered or mailed within which Borrower must pay all sums secured by the Deed of Trust or must enter into an escrow to convey the Property to CITY, depending upon the option exercised by CITY. If Borrower fails to pay these sums or enter into an escrow prior to the expiration of this period, CITY may invoke any remedies permitted by the Deed of Trust without further notice or demand on Borrower. The escrow contemplated by this Paragraph 18 must close not more than ninety (90) days after CITY receives notice of such sale, agreement to sell, conveyance, rental or transfer of the Property in violation hereof. 26. Covenants, Conditions and Restrictions. The Property is subject to Covenants, Conditions and Restrictions ("Restrictions") between CITY and Borrower, which are not attached hereto but are incorporated by reference. Borrower acknowledges receipt of said Restrictions and agrees, for himself, his heirs, successors and assigns to be bound by the same. 27. Warranties of Borrower. Borrower warrants to CITY as follows: (a) That Borrower's household annual gross income does not exceed sixty percent (60%).of the median income for the San Diego metropolitan area, as adjusted for family size, as said median income is determined by HUD, on the latter of: (1) the date of initial occupancy of the Property; or, (2) the date of the recordation of this Deed of Trust. (b) That for so long as Borrower owns the Property, Borrower will reside in the Property as Borrower's principal place of residence. Borrower agrees not to sublet, lease or rent out the Property during the term of this Deed of Trust. Declaration. TERM. This Declaration shall expire thirty (30) years from the recordation of this COVENANT AGAINST DISCRIMINATION BORROWER covenants on behalf buyerCC&RS.doc Page 4 of 9 .' 002022 of itself and its successors and assigns, and each successor in interest to the Property, not to discriminate against any prospective purchaser of the Property on the basis of race, religion, sex or national origin. 4. ENFORCEMENT. BORROWER expressly agrees and declares that the CITY or any successor public agency is a proper party and shall have standing to initiate and pursue any and all actions or proceedings, at law or in equity to enforce the provisions hereof and/or to recover damages for any default hereunder and/or to enforce the terms of this Declaration. Further, the CITY or any successor public agency shall be the proper party to waive, relinquish, release or modify the rights, covenants, obligations or restrictions contained in or arising under this Declaration. 5. ATTORNEYS' FEES. In the event of any litigation for the enforcement or interpretation of this Declaration, whether an action-at-law, arbitration or any manner of non- judicial dispute resolution agreed to by both parties by reason of the breach of any condition or covenant, representation or warranty in this Declaration or otherwise arising out of this Declaration, the prevailing party in such action, arbitration or proceeding shall be entitled to recover from the other reasonable attorneys' fees to be fixed by the court which shall render a judgment, as well as the costs of suit. 6. SEVERABILITY. In the event that any provision or covenant of this Declaration is held by a court of competent jurisdiction to be invalid or unenforceable, then it shall be severed from the remaining portions of this Declaration which shall remain in full force and effect. ' 7. COVENANTS TO RUN WITH THE LAND. The covenants contained herein shall constitute "covenants running with the land" pursuant to Civil Code Sections 1460, 1462, 1463, 1464, 1465, 1467 and 1468, to the extent applicable, and shall bind the Property and every person having an interest therein during the term of this Declaration, including BORROWER and its successors, heirs and assigns. BORROWER agrees for itself and its successors that, in the event that, for any reason whatsoever, a court of competent jurisdiction determines that the foregoing covenants do not run with the land, such covenants shall be enforced as equitable servitude's against the Property. 8. RECORDATION. This Declaration shall be recorded in the Office of County Recorder of San Diego, California. 9. REMEDIES CUMULATIVE. CITY shall have the right, in the event of any breach of any such agreement or covenant contained herein, to exercise all the rights and remedies, and to maintain any actions at law or suits in equity or other proper proceedings to redress the breach of such agreement or covenant. 10. MORTGAGEE PROTECTION. No violation or breach of the covenants, conditions, restrictions, provisions or limitations contained in this Declaration shall defeat, render invalid or in any way impair the lien or charge of any permitted deed of trust recorded on the Property provided, however, that any subsequent owner of the Property shall be bound buyerCC&RS.doc Page 5 of 9 - 002023 by the covenants, conditions, restrictions, limitations and provisions of this Agreement, whether such owner's title was acquired by foreclosure, deed in lieu of foreclosure, trustee's sale or otherwise. 11. HEADINGS. The headings used in this Declaration are for convenience only and are not to be used to interpret the meaning 'of any of the provisions of this Declaration. 12. LIBERAL CONSTRUCTION. The provisions of this Declaration shall be liberally construed to effectuate its purpose. Failure to enforce any provision of this Declaration shall not constitute a waiver of the right to enforce the provision later. 13. NUMBER; GENDER. The singular shall include the plural and the plural the singular, unless the context requires the contrary; and the masculine, feminine and neuter shall include the masculine, feminine or neuter, as the context requires. 14. EXHIBITS. Any exhibits referenced herein and attached to this Declaration are hereby incorporated by reference. 15. NOTICES TO MORTGAGEES OF RECORD. On any loss to the Property, if such loss exceeds One Thousand Dollars ($1,000.00), notice in writing of such loss shall be given to each mortgagee of record. 16. FIRE AND EXTENDED COVERAGE INSURANCE. BORROWER shall obtain and maintain a policy of fire insurance for the full insurable value of all the improvements within the' Property. The form, content and term of the policy, its endorsements and the issuing company must be satisfactory to all mortgagees. If more than one mortgagee has a loan of record against the Property, or any part thereof, the policy and endorsement shall meet the maximum standards of the various mortgagees represented in the Property. The policy shall contain an agreed amount endorsement or its equivalent, an increased cost of construction endorsement, vandalism and malicious mischief coverage, a special form endorsement and a determinable cash adjustment clause or a similar clause to permit cash settlements covering the full value of the improvements in case of partial destruction and a decision not to rebuild. The policy shall name as insureds the owners, BORROWER and the mortgagees, as long as their respective interests may appear. "Mortgagees", as used herein, includes beneficiaries under a deed of trust. 17. BINDING EFFECT. This Declaration shall inure to the benefit of and be binding upon the successors and assigns of the BORROWER and the heirs, personal representatives, grantees, tenants, successors-in-interestor assigns of the owners. 18. CERTIFICATIONS BY BORROWER. As and when required by the CITY, but not more frequently than once a year BORROWER shall certify to the CITY that BORROWER: (a) Complies with all the terms and conditions of this Declaration and the Trust Deed; and, buyerCC&RS.doc Page 6 of 9 002024 (b) Has obtained and does maintain fire and casualty insurance on the Property satisfactory to the CITY, including a certificate of insurance, of which the CITY shall be a holder, from the insurance company providing coverage satisfactory to the CITY which may not be cancelled by the insurance company without thirty (30) days advance notice of cancellation. 19. DECLARATION SUBORDINATE This Declaration shall subordinate to a deed of trust or mortgage on the Property held by Habitat for Humanity, which deed of trust will be senior in recording priority to this Declaration, and will likewise subordinate to any mortgage or deed of trust which is given in connection with any refinancing of the loan secured by such senior deed of trust Or mortgage, provided the loan amount of such refinancing does not exceed the then outstanding balance (plus refinancing and closing costs) of the existing senior loan. "BORROWER" , JERONIMO CRUZ , VALENTINA CRUZ buyerCC&RS.doc Page 7 of 9 002025 ACKNOWLEDGMENT State of California County of San Diego On ~v~- .~ ,~?,1~ before ~."~ ' ~ ar ~'~'~u-o,~r~ o '~ ~ me . personally app~ ~~ ~ ~rsc ..... y,;no~vF, [o ,,,u (o pedto me on the basis of satisfacto~ evidence) to be the person(s) whose name(s) is/are subscribed to the within instrument"COVENANTS, CONDITIONS AND RESTRICTIONS" and acknowledged to me that he/she/they executed the same in his/hedtheir authorized capacityOes), and that by his/hedtheir signature(s) on the instrument the person(s), or the entity on behalf of which the person(s) acted, executed the instrument. WITNESS my hand and official seal. (Seal) buyerCC&RS.doc Page 8 of 9 002026 ACKNOWLEDGMENT State of California County of San Diego On ~,~j~-~ 2~0[, .~00~ ~fore me. '~'k~ [--. ~t~ personally appeared, -..~uo~,,, C~.,?~ ~',~ .... .~llsl~l~,~'~ (or proved to me on the basis of satisfactory evidence) to be the person(s) whose name(s) islam subscribed to the within instrument"COVENANTS, CONDITIONS AND RESTRICTIONS" 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 on behalf of which the person(s) acted, executed the instrument. WITNESS my hand and official seal. Sig natu r~_~~ buyerCC&RS.doc Page 9 of 9 LEGAL DESCRIPTION ORDER NO. 1274020-8 002027 THE LAND REFERRED TO HEREIN IS SITUATED IN THE STATE OF CALIFORNIA, COUNTY OF SAN DIEGO, AND IS DESCRIBED AS FOLLOWS: THAT PORTION OF LOT 1 IN BLOCK 1 OF AVOCADO ACRES, IN THE CITY OF ENCINITAS, COUNTY OF SAN DIEGO, STATE OF CALIFORNIA, ACCORDING TO MAP THEREOF NO. 1791, FILED IN THE OFFICE OF THE COUNTY RECORDER OF SAN DIEGO COUNTY, APRIL 24, 1924, DESCRIBED AS FOLLOWS: COMMENCING AT THE SOUTHWEST CORNER OF SAID LOT 1, THENCE ALONG THE SOUTH LiNE THEREOF SOUTH 89°25'19'' EAST, 169.92 FEET TO THE TRUE POINT OF BEGINNING; THENCE CONTINUING ALONG SAID SOUTH LINE, SOUTH 89°25'19'' EAST, 120.00 FEET TO THE SOUTHEAST CORNER OF SAID LOT 1; THENCE ALONG THE EASTERLY LINE THEREOF, NORTH 05°18'12'' EAST, 60.26 FEET TO SAID SOUTHERLY RIGHT OF WAY LINE OF LEUCADIA BOULEVARD; THENCE ALONG SAID RIGHT OF WAY, NORTH 89°14'13'' WEST, 119.96 FEET; THENCE LEAVING SAID RIGHT OF WAY, SOUTH 05°18'31'' WEST, 60.65 FEET TO A POINT ON THE SOUTH LINE OF SAID LOT 1 BEING THE TRUE POINT OF BEGINNING. SAID PROPERTY BEING DESCRIBED AS PARCEL C IN A CERTIFICATE OF COMPLIANCE RECORDED ON JULY 31, 2001 AS FILE NO. 2001-0536777 OF OFFICIAL RECORDS OF SAID SAN DIEGO COUNTY. RESERVING THEREFROM AN EASEMENT AND RIGHT OF AWAY FOR ACCESS, UTILITY AND APPURTENANCES THERETO OVER, UNDER, ALONG AND ACROSS: THAT PORTION OF LOT 1 IN BLOCK 1 OF AVOCADO ACRES, IN THE CITY OF ENCINITAS, COUNTY OF SAN DIEGO, STATE OF CALIFORNIA, ACCORDING TO MAP THEREOF NO. 1791, FILED IN THE OFFICE OF THE COUNTY RECORDER OF SAN DIEGO COUNTY, APRIL 24, 1924, DESCRIBED AS FOLLOWS: COMMENCING AT THE SOUTHWEST CORNER OF SAID LOT 1, THENCE ALONG THE SOUTHERLY LINE OF SAID LOT 1, SOUTH 89025' I9" EAST, 169.92 FEET TO THE TRUE POINT OF BEGINNING; THENCE CONTINUING ALONG SAID SOUTHERLY LINE, SOUTH 89°25'19'' EAST, 120.00 FEET TO THE SOUTHEASTERLY CORNER OF SAID LOT 1; THENCE ALONG THE EASTERLY LINE OF SAID LOT 1, NORTH 05°18'12" EAST, 24.08 FEET TO A POINT ON A NON-TANGENT 30.00 FOOT RADIUS CURVE CONCAVE SOUTHERLY (A RADIAL LINE FROM SAID POINT BEARS 0°34'41" WEST); THENCE WESTERLY ALONG SAID CURVE THROUGH A CENTRAL ANGLE 26o31 '27" AN ARC DISTANCE OF 13.89 FEET; THENCE TANGENT TO SAID CURVE 64003, 14" WEST 8.88 FEET TO THE BEGINNING OF AN 8.33 FOOT RADIUS CURVE CONCAVE NORTHERLY; THENCE WESTERLY ALONG SAID CURVE THROUGH A CENTRAL ANGLE OF 26o31'27" AN ARC DISTANCE OF 3.86 FEET TO A POINT ON A LINE WHICH IS 16.00 FEET NORTHERLY OF AND PARALLEL WITH SAID SOUTHERLY LINE OF LOT 1; THENCE ALONG SAID PARALLEL LINE NORTH 89025, 19" WEST 95.60 FEET; THENCE SOUTH 05°18'3 I" WEST, 16.05 FEET TO THE TRUE POINT OF BEGINNING. SAID EASEMENT IS HEREBY DECLARED TO BE APPURTENANT TO AND FOR THE USE AND BENEFIT OF ASSESSOR'S PARCEL NUMBER 256-122-05. PAGE4