No Recording Information (3)
FREE RECORDING REQUESTED
PURSUANT TO GOV. CODE SECTION
27383
Recording Requested By:
City of Encinitas
Community Development
505 S. Vulcan Avenue
Encinitas, CA 92024
And When Recorded Mail To:
City of Encinitas
Planning and Building Development
505 S. Vulcan Avenue
Encinitas, CA 92024
DEED OF TRUST
(This is a Second Deed of Trust)
THIS DEED OF TRUST is made this 30th day of August, 2005, among the
Trustor, Michelle D. Madden (herein "Borrower"), and FIDELITY NATIONAL 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 533 Sweet Pea Place , 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 August 31+, 2005, and Note Rider, and extensions and
renewals thereof (herein collectively referred to as the "Note"), in the principal sum of Eighteen
Thousand Fifty U.S. Dollars ($18,050) with interest thereon, fully deferred with the 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 fifty five
(55) 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
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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
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 and shall comply with the provisions of any lease if this Deed of Trust is on a
leasehold. Borrower shall perform all of Borrower's obligations under the declaration of
covenants, conditions and restrictions creating or governing the condominium, the bylaws and
regulations of the condominium, and constituent documents.
7. Protection of CITY Securi ty. 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. If CITY's required
mortgage insurance is a condition of making the loan secured by this Deed of Trust, Borrower
shall pay the premiums required to maintain such insurance in effect until such time as the
requirement for such insurance terminates in accordance with Borrower's and CITY's written
agreement or applicable law.
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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
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 16 hereof. All covenants and agreements of Borrower shall be joint and
several. Any Borrower who co-signs this Deed of Trust, but does not execute the Note:
(a) is co-signing this Deed of Trust only to grant and convey that Borrower's
interest in the Property to Trustee under the terms of this Deed of Trust;
(b) is not personally liable on the Note or under this Deed of Trust; and,
(c) agrees that CITY and any other Borrower hereunder may agree to extend,
modify, forbear or make any other accommodation with regard to the terms of this
Deed of Trust or the Note, without that Borrower's consent and without releasing
that Borrower or modifying this Deed of Trust as to that Borrower's interest in the
property.
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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. Goveming 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
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. Borrowers 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 1 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, unless the person is an
income "Eligible Household". As used herein, an income "Eligible Household" shall mean a
household whose eligible income does not exceed eighty percent (80%) of the Area Median
Income for San Diego, as determined by the U.S. Department of Housing & Urban
Development. Further, the rent charged to the Eligible Household shall not exceed thirty
percent (30%) of eighty percent of the Median Income, minus a utility allowance. For purposes
of this restriction, rents shall be based upon a household size of three (3). Leasing of the
Property to a household that is not an Eligible Household or rents that exceed the restricted
rental rates set forth herein 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.
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17. Transfer. Conveyance of Property Restricted for Fifty Five (55) Years.
The sale, transfer and/or conveyance of the Property is restricted as follows:
If Borrower sells, transfers or conveys the Property less than fifty five (55)
years after the date of recordation of this Deed of Trust, then said sale, conveyance and/or
transfer shall be subject to the following:
(a) 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.
(b) Except as provided in Paragraph 17(d) hereof, the Property must
be used only as the principal residence of the subsequent purchaser during the
term of the Declaration, i.e, fifty five (55) years from the recordation date hereof.
(c) 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 determined by CITY 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, adjusted for a family size of
three.
(d) 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.
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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
Transferors obligation to pay the CITY the amount of the Second Deed of Trust.
(e) The affordability requirement shall remain in effect for a total of fifty-five
(55) 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.
(f) 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 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 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 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
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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.
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
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.
niaddm deed Page 8 of 14
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 pr ima 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.
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
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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. Reconvevance. 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 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 title, 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. Deed of Trust Rider. The Deed of Trust Rider executed by Borrower is
attached hereto and made part of this Deed of Trust.
27. 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.
28. Warranties of Borrower. Borrower warrants to CITY as follows:
(a) That Borrower's household annual gross income does not exceed
eighty percent (80%) 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.
"adm,a«a Page 10 of 14
(1) the date of initial occupancy of the Property; or,
(2) the date of the recordation of this Deed of Trust.
(b) Except as provided in Paragraph 16 of this Deed of Trust, 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.
29. Subordinate to Senior Deed of Trust. This Deed of Trust is subordinate
to any deed of trust or mortgage on the Property made by or held by an institutional lender or
investor.
REQUEST FOR NOTICE OF DEFAULT
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: 25• (DS-- aAu
Michelle D. Madden
madam dwd Page 1 I of 14
DEED OF TRUST RIDER
THIS DEED OF TRUST RIDER (herein "Rider") is attached to and made a part of
the Deed of Trust dated August 31, 2005 made between the CITY OF ENCINITAS, a municipal
corporation (herein "CITY") and executed by Michael Sinclair as Borrower.
Borrower agrees to the provisions of this Deed of Trust Rider in addition to those
of the Deed of Trust. THE LANGUAGE OF THIS RIDER PREVAILS OVER THE DEED OF
TRUST IN THE EVENT OF A CONFLICT.
1. Borrower agrees that the Property being purchased is affordable as
described in the Deed, and that the continued use of the Property must be in accordance with
the Declaration of Covenants, Conditions and Restrictions dated , and that
no transfer of the Property will be permitted and no successor-in-interest to the Borrower(s) will
be permitted to assume the loan of Borrower(s) evidenced by the Note secured by this Deed of
Trust Rider, unless the written consent of CITY to the transfer has been first obtained. No such
consent will be given by CITY except in the following limited circumstances:
(a) the transfer results from the death of a Borrower and the transfer is
to the surviving spouse of the Borrower and the surviving spouse is also a
Borrower;
(b) a transfer by a Borrower to his or her spouse when the spouse
becomes, by such a transfer, a co-owner of the Property;
(c) a transfer of the Property resulting from a decree of dissolution of
the marriage or legal separation or from a property settlement agreement
incidental to such a decree which requires the Borrower to continue to make
payments on the Note and by which a spouse who is already a Borrower
becomes the sole owner of the Property;
(d) a transfer by a Borrower to an inter vivos trust in which the
Borrower is the sole beneficiary; and/or,
(e) a transfer in accordance with the ownership restrictions contained
in paragraphs 16, 17 and 18 of the Deed of Trust.
2. This Deed of Trust is subordinate to any deed of trust or mortgage on the Property made
by or held by an institutional lender or investor.
n,ad& aced Page 12 of 14
NOTICE TO BORROWER:
Do not sign this Deed of Trust Rider if it contains blank spaces. All spaces should
be completed before you sign.
Date: 2 dSC, .
Michelle D. Madden
madd did Page 13 of 14
ACKNOWLEDGMENT
State of California )
County of San Diego )
l.Us I, -
OnI~J) before me, u- oK- personally appeared,
~iGGa,~IRjt~i7 personally known to me (or proved to me on the
basis of satisfactory evidence) to be the person
,(s~-whose names/aesubscribed to the
within instrument "DEED OF TRUST' and "DEED OF TRUST RIDER" and acknowledged to me
that epWy executed the same in PiAer/thpd"authorized capacity(i , and that by
,,hier/tf •r signature,(§Kon the instrument the persoa(sror the entity on behalf of which the
person0racted, executed the instrument.
KAM LOKER
Commission i +356282
Notary Pab0c - GlKomin
WITNESS my hand and official seal. S'" 0Wg0 cOY"++'
q9MYCwn.EVkasMay1Z2=
Sig ur c
(Seal)
nuddm awa Page 14 of 14
NOTE
~ry
August 31, 2005
533 Sweet Pea Place, Encinitas, California 92024
I
1. Borrower's Promise to Pa v. In
I promise to pay Thirty Eight Thousand Nine Hundred
($38,978) (herein "principal") to the order of the (
Corporation (herein "Lender"). 1 understand that Lend
anyone who takes this Note by transfer and who is en,.,.-...~ , cw,vc payments under this
Note may be called "Note Holder".
2. No Interest. This Note will bear no interest unless I default under the
terms of this Note, the Deed of Trust securing it and/or the Covenants, Conditions and
Restrictions affecting the Property. In the event of default, interest from the date of
recordation of the Deed of Trust securing this Note shall be calculated at ten percent (10%)
per annum.
3. Payments. 1 will make any payments at Lender's offices located at
505 S. Vulcan Avenue, Encinitas, California 92024.
This Note is due and payable, including the principal and interest thereon, if
any, upon default by me, or when a Prohibited Transfer occurs as defined in the Deed of
Trust. This Note will be forgiven on the date which is forty-nine (49) years after the
recordation of the Deed of Trust securing this Note, if the Borrower has not defaulted or
made a Prohibited Transfer of the Property, or any portion thereof.
4. This Note Secured by a Deed of Trust. In addition to the protection
given to Note Holder under this Note, a Deed of Trust dated the same day as this Note
protects Note Holder from possible losses which might result if I do not keep the promises
which I make in this Note. That Deed of Trust describes how and under what conditions I
may be required to make immediate payment in full of all amounts that I owe under this
Note.
5. Borrower's Waiver. I waive my rights to require Note Holder to do
certain things. Those things are:
(a) to demand payment of amounts due (known as "presentment");
(b) to give notice that amounts due have not been paid (known as
"notice of dishonor"); and,
(c) to obtain any official certification of nonpayment (known as
"protest").
Anyone else who agrees to keep the promises made in this Note, or who
agrees to make payments to Note Holder if I fail to keep my promises under this Note, or
who signs this Note to transfer it to someone else also waives these rights. These persons
are known as "guarantors, sureties and endorsers".
6. Giving of Notices. Any notice that must be given to me under this
Note will be given by delivering it or by mailing it by certified mail addressed to me at the
Property Address above. A notice will be delivered or mailed to me at a different address if
I give a notice of that different address.
Any notice that must be given to the Note Holder under this Note will be given
by mailing it by certified mail to Note Holder at the address stated in paragraph 3 above. A
notice will be mailed to Note Holder at a different address if I am given a notice of that
different address.
7. Responsibility of Persons Under This Note. If more than one
person signs this Note, each of us is fully and personally obligated to pay the full amount
owed and to keep all promises made in this Note. Any guarantor, surety or endorser of this
Note (as described in paragraph 5 above) is also obligated to do these things. Note Holder
may enforce its rights under this Note against each of us individually or against all of us
together. This means that any one of us may be required to pay all of the amounts owed
under this Note. Any person who takes over my rights or obligations under this Note will
have all of my rights and must keep all of my promises made in this note. Any person who
takes over the rights and obligations of a guarantor, surety or endorser of this Note (as
described in paragraph 5 above) is also obligated to keep all of the promises made in this
Note.
8. Attomevs' Fees. Upon the breach of the terms of this Note, the Deed
of Trust securing it, and/or the Covenants, Conditions and Restrictions encumbering the
Property, I agree to pay Lender any and all attorneys' fees, court costs, trustee fees, and
any and all other fees and costs incurred by Lender as a result of said breach and/or
default.
NOTICE TO BORROWER:
Do not sign this Note if it contains blank spaces. All spaces should be completed
before you sign.
This Note may require payment of principal and interest upon the sale or transfer of
the property or upon a prepayment.
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this Note. The Note Rider executed by Borrower is attached hereto and made a part of
Date: a ' 2- Grrv&
Michelle D. Madden, Borrower
(SIGN ORIGINAL ONLY)
madden m W Page 3 of 8
NOTE RIDER
THIS NOTE RIDER is attached to and made a part of the Note dated _August
30, 2005 made payable to the CITY OF ENCINITAS ("CITY") as Lender and executed by
Borrower.
1. Borrower agrees to the provisions of this Note Rider in addition to
those of the Note. THE LANGUAGE OF THIS RIDER PREVAILS OVER THE
PROMISSORY NOTE IN THE EVENT OF A CONFLICT.
2. Transfer. Conveyance of Property Restricted for Forty-Nine 1491
Years. The sale, transfer and/or conveyance of the Property is restricted as follows:
If Borrower sells, transfers or conveys the Property less than fifty-five
(55) 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) 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 for the
San Diego metropolitan area, as adjusted for family size, and
verified by CITY.
(b) 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.
(c) 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 three.
(d) 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
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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.
(e) The affordability requirement shall remain in effect for a total of
fifty-five (55) years, measured from the date of recordation of
the Deed of Trust securing this Note Rider. 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.
(f) 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 2a through 2d, inclusive, before
the end of the affordability term as defined in paragraph 2, then
such transfer shall be deemed a Prohibited Transfer as defined
in Paragraph 3 hereof.
These provisions of paragraph 2 shall bind the heirs, successors and assigns of the
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Borrower.
3. Prohibited Transfer. If Borrower sells, agrees to sell, conveys, rents
and/or transfers the Property in violation of the terms of Paragraph 2 hereof and
Paragraphs 16 and 17 of the Second Deed of Trust, 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 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 quality 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 3 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.
4. Warranties of Borrower. Borrower warrants to CITY as follows:
(a) Borrower's household annual gross income does not exceed
eighty percent (80%) 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 occupancy of the Property; or,
(2) the date of the recordation of the Deed of Trust.
(b) Except as provided in Paragraph 16 of the Deed of Trust for so
long as Borrower owns the Property, Borrower will reside in the Property as
Borrower's principal place of residence and will not rent, lease or sublet the
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Property during the term of the Declaration, i.e., fifty-five (55) years after the
date of recordation of the Deed of Trust securing this Note Rider.
NOTICE TO BORROWER:
Do not sign this Note Rider if it contains blank spaces. All spaces should be completed
before you sign.
Date:
Michelle D. Madden
(SIGN ORIGINAL ONLY)
niadm„,ote Page 7 of 8
ACKNOWLEDGMENT
State of California )
County of San Diego )
On f,,?9 2005, before me, Lrn LAti personally appeared,
e (or proved to me
on the basis of satisfactory evidence) to be the person hose name s/ayzsubscribed
to the within instrument "NOTE" AND "NOTE RIDER" and acknowledged to me that
she/t
executed the
same in her/t r authorized capacity, and that by
er/their signature~o on the instrument the persoKor the entity on behalf of which
the pers?%-s~acted, executed the instrument.
_ KI1RA I.UKER
4 oy s 1358262
WITNESS my hand and official seal. 3 ry caffomi
San Diego Ceu
M'Cor". Ejqifs M" q2 loop
Signature:
(Seal)
u S- fC 6(e
j-o m.ddmr 1e Page 8 of 8