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1981-212-Approving The Below Market Price Program Deed RestrictionsRESOLUTION 1981 -212 A RESOLUTION APPROVING THE BELOW MARKET PRICE PROGRAM DEED RESTRICTIONS RESOLVED, by the Council of the Town of Los Gatos, that the Town Council adopts the attached deed restrictions to be recorded on the Below Market Price units and Town Council furthermore authorizes the Mayor to execute said deed restrictions in the name and in behalf of the Town of Los Gatos. PASSED AND ADOPTED at a regular meeting of the Town Council of the Town of Los Gatos held on the 5th day of October 1981, by the following vote: AYES: COUNCIL MEMBERS Thomas J. Ferrite, NlarLyn J. Rasmussen, Brent N. Ventura and Peter W. Siemens NOES: COUNCIL MEMBERS None ABSTAIN: COUNCIL MEMBERS ABSENT: COUNCIL MEMBERS Ruth Cannon SIGNED: }r' MAYOR OF THE TOWN OF LOS GATOS ATTEST: A CLERK OF THE TOWN OF LOS ATOS DEED RESTRICTIONS Subject to the following restrictions: 1. Leasing. An owner of the real property conveyed hereby and any im- provements thereon (hereafter "the Premises ") is not permitted to lease, rent, sublet, or otherwise assign his interest in the premises, except that the premises may be leased for limited periods of time when the owner is required to live elsewhere and expects to return. In order to lease under such circumstances, both the owner and his prospective tenant must be qualified within the income limits at the time of the lease under the Below Market Price ( "BMP ") Program established under Chapter 3.90 of the Town Zoning Ordinance and any subsequent amendments or recodifications thereof. 2. Option. Whenever the Owner (as used herein "Owner" refers to Grantee and all successors in interest) of the premises shall no longer de- sire to own the premises, Owner shall notify Town in writing to that effect. Such notice shall be personally delivered or deposited in the United State mail, postage prepaid, first class, certified, addressed to Town Manager, Town of Los Gatos, P. 0. Box 949, Los Gatos, CA. 95031. Town, or its assignee or designee, shall then have the right to exercise an option to purchase said premises, at the price set forth herein, by delivery of written notice, by personal delivery or certified mail, to the Owner at any time within six months from the receipt by Town of the written notice. 3. Assignment. Town may designate a governmental or non - profit organiza- tion to exercise its option to purchase. Town or its designee may assign this option to an individual private buyer who meets the Town's eligibility qualifications. After exercise of the option by Town, its assignee or designee, the party exercising the option may assign said right to purchase to any substitute individual private buyer who meets the Town's eligibility requirements and is approved by the Town; provided, that such subsequent assignment shall not extend any time limits contained herein. 4. Price. The purchase price shall be paid in cash at the close of escrow or as otherwise agreed by the parties. The purchase price of the premises shall be fixed at the lower amount arrived at via the following two methods: Method L Town or its designee shall have an appraisal made by an appraiser of its choice to establish the market value. The Owner may also have an appraisal made by an appraiser of Owner's choice to establish the market value. If agreement cannot be reached, the average of the two appraisals shall be termed the market price. Method 2, The resale price shall be determined by adjust- ing the original price paid by the owner (hereinafter referred to as the "Seller ") as follows: (a) Adding an amount, if any, to compensate for any increase in the Median Income Index for Santa Clara County, as published by the United States Department of Housing and Urban Development for the years the Owner /Seller has lived in the unit. For that purpose, the Index prevailing on the date of the purchase -2- by the Seller of the premises shall be compared with that estimated, on the date of receipt by the Town of notice of intent to sell, to be prevailing sixty (60) days subsequent to said receipt. The percentage increase in the Index, if any, shall be computed and the base price shall be increased in the same per- centage; provided, however, that the price shall in no event be lower than the purchase price paid by the Seller. (b) The price arrived at in the preceding paragraph shall be increased by the value of any substantial structural or permanent -3- fixed improvements which cannot be removed without substantial da- mage to the Premises or substantial or total loss of value of said improvements and by the value of any appliances, fixtures, or equipment purchased to replace appliances, fixtures, or equipment which were originally acquired as part of the Premises by Owner; provided, that such price adjustment for replacement appliances, fixtures, or equipment shall be allowed only when the expenditure is necessitated by the non - operative or other deteriorated condi- tion of the oripinal appliance, fixture, or equipment. If at the time of replacement the original appliance, fixture, or equipment had in excess of twenty percent (20 %) of its original estimated use- ful life remaining,Owner shall document to the Town's satisfaction the condition of the appliance, fixture, or equipment which neces- sitated its replacement. No such price adjustment shall be made significantly in excess of the reasonable cost to replace the ori- ginal appliance, fixture, or equipment with a new appliance, fix- ture, or equipment of comparable quality as hereinafter provided. No such adjustment shall be made except for improvements, appli- ances, fixturesor equipment made or installed by the selling Owner. No improvements, appliance, fixture or equipment shall be deemed substantial unless the actual initial cost thereof to the Owner excees one percent (1.0 %) of the purchase price paid by the Owner for the Premises; provided, that this minimum limitation shall not apply in either of the following situations: (1) Where the expenditure was made pursuant to a mandatory assessment levied by the homeowners' assocation for the development in which the Premises is located, whether levied for improvements to the Premises, the common area, or related purposes. No price -4- adjustment shall be made for any assessment which is levied for maintenance purposes or for any other purpose or improvement for which Owner would not be entitled to a price adjustment had such expenditure been made directly by and at the option of the Owner. (2) Where the expenditure was made for the replacement of appliances, fixtures, or equipment which were originally acquired as part of the Premises by Owner. No adjustments shall be made for the value of any improvements, ap- pliances, fixtures or equipment unless the Owner shall present to the Town valid written documentation of the cost of said improve- ments. The value of such improvements by which the sale price shall be adjusted shall be determined as follows: (a) The value of any improvement, appliance, fixture or equipment, the original cost of which was less than Five Thousand Dollars ($5,000.) shall be the depreciated value of the improve- ment, calculated in accordance with principles of straight -line depreciation applied to the original cost of the improvement, based upon the estimated original useful life of the improvement. (b) The value of any improvement, appliance, fixture or equipment, the original cost of which was Five Thousand Dollars ($5,000.) or more, shall be the appraised market value of the im- provement when considered as an addition or fixture to the premises (i.e., the amount of which said improvement enhances the market value of the premises) at the time of sale. Said value shall be determined in the same manner as the market value of the premises in method 1 above. (c) On January 1, 1984, and every two years thereafter, re- gardless of the date of execution or recordation hereof, the amount -5- of Five Thousand Dollars ($5,000.) referred to in paragraphs (a) and (b) immediately above shall be automatically adjusted for the purpose of those paragraphs in the following manner. On each ad- justment date the Consumer Price Index for the San Francisco - Oakland area published by the U. S. Department of Labor, Bureau of Labor Statistics ( "Index ") prevailing on January 1, 1982, shall be com- pared with the Index prevailing on the date of recordation of this deed. The percentage increase in the Index, if any, shall be com- puted and the sum of Five Thousand Dollars ($5,000.) shall be in- creased in the same percentage. In no event shall the sum be re- duced below Five Thousand Dollars ($5,000.) (d) No price adjustments will be made except upon presenta- tion to Town of written documentation of all expenditures made by Owner for which an adjustment is requested. (c) The sale price determined under paragraph (a) above, shall be adjusted by decreasing said price by an amount to com- pensate for deferred maintenance costs, which amount shall be de- termined as follows: Upon receipt of notice of Owner's intent to sell, Town or its designee shall be entitled to inspect the Premises. Town or its designee shall have an opportunity to determine whether all plumbing, electrical and heating systems are in working order; whether any violations of applicable building, plumbing, electric, fire or housing codes exist; whether all appliances which were ori- ginally furnished to Owner as part of the Premises, or any replace- ments thereof, are in working order; whether walls, ceilings, and floors are clear and free of holes or other defects (except for holes typical of picture hangers); whether doors, windows, screens ®. and similar appurtenances are cracked, broken or torn; and whether carpets, drapes and similar features which were originally fur- nished to Owner as part of the premises, or any replacement thereof, are clean and free of holes, tears or other defects. In the event deficiencies are noted, the Town or its designee shall obtain esti- mates to cure the observed deficiencies. The Owner shall cure the deficiencies in a reasonable manner acceptable to Town or designee within sixty (60) days of being notified of the results of the inspection, but in no event later than close of escrow. Should Owner fail to cure such deficiencies prior to the scheduled date of close of escrow, at the option of Town, its designee or as- signee, escrow may be closed, title passed and moneys paid to the selling Owner subject to the condition that such funds as are necessary to pay for curing such deficiencies (based upon written estimates obtained by Town) shall be withheld from the moneys due the selling Owner and held by the escrow holder for the purpose of curing such deficiencies. Town, its designee or assignee shall cause such deficiencies to be cured and upon certification of com- pletion of work by Town, escrow holder shall utilize such funds to pay for said work. Any remaining funds shall be paid to the selling Owner. No other payment shall be due said Owner. 5. Failure to Exercise Option. If Town fails to exercise its option to purchase the Pre- mises within six (6) months after it receives the notice of intent to sell, Town will cause to be recorded in Santa Clara County a no- tice of intent not to exercise its option with respect to the Pre- mises and declaring that the provisions of the option are no longer -7- applicable to the premises, and shall deliver a copy thereof to Owner /Seller. The notice shall be recorded within fifteen (15) days of Town's decision not to exercise its option. Upon recorda- tion of said notice, the provisions of this option shall no longer be applicable to the premises. 6. Maximum Duration of Option. The provisions in this deed relating to the option of De- veloper shall terminate and become void automatically fifty -nine (59) years following the date of recordation of this deed. The provisions granting the Town an option, being for the eleemosynary purpose of providing and preserving low and moderate income housing, shall remain in effect indefinitely. 7. Escrow. If the Town or its designee exercises its option to pur- chase the Premises, close of escrow of the purchase shall be within ninety (90) days of the opening of such escrow by either Seller or Town. The escrow shall be opened upon delivery to Seller of written notice of the exercise of the option, or as soon there- after as possible. Closing costs and title insurance shall be paid pursuant to the custom and practice in the Town of Los Gatos at the time of the opening of the escrow. Seller shall bear the expense of providing a current written report of an inspection by a licensed Structural Pest Control Operator. All work recommended in said re- port to repair damage caused by infestation or infection of wood - destroying pests or organisms found, and all work to correct con- ditions that caused infestation or infection shall be done at the expense of the Seller. Any work to correct conditions usually deemed likely to lead to such infestation or infection, but where no evidence of infestation or infection is found with respect to -8- such conditions, is not the responsibility of the Seller, and such work shall be done only if requested by the Buyer and at the ex- pense of the Buyer. The Buyer shall be responsible for payment of any prepayment fees imposed by any lender by reason of the :sale of the premises. 8. Liability Limit. In no event shall Town become in any way liable to Seller or become obligated in any manner, by reason of the assignment of its option to purchase, not shall Town be in any way obligated or liable to Seller for any failure of Town's assignee to consummate a purchase of the premises or to comply with the terms of any sale agreement. 9. Nature of Restrictions. The restrictions contained herein shall constitute equit- able servitudes and covenants which shall run with the land and be binding upon Owner(s) and all successors and assigns, and all par- ties having or acquiring any right, title or interest in or to any part of the Premises. Any attempt to transfer title or any interest therein in violation of these covenants shall be void. 10. Exemptions. The following transfers of title or interest therein are not subject to the option provisions hereof: transfer by gift, de- vise, or inheritance to grantee's spouse; taking of title by surviving joint tenant; transfer of title to spouse as part of divorce or dissolution proceedings; acquisition of title or interest therein in conjunction with marriage. However, these covenants shall -Q- continue to run with title to the Premises following such transfers. 11. Foreclosure. Owner shall cause to be filed for record in the County of Santa Clara a request for copy of any notice of default and of any notice of sale under any deed of trust or mortgage with power of sale encumbering the premises, pursuant to Section 2924(b) of the California Civil Code. Such request shall specify that any such notice shall be mailed to the Town Manager, Town of Los Gatos,Box 949, Los Gatos 95031. Any notice of sale given pursuant to Civil Code Section 2924(f) shall constitute a notice of intent to sell here- under, and Town's option to purchase shall take priority over any trustee's sale or foreclosure. If Owner fails to file such request or notice, the Town's option to purchase shall run from the date Town obtain actual knowledge of a sale or proposed sale. If Town elects not to exercise its option on such default, any surplus to which Owner may be entitled pursuant to Code of Civil Procedure Section 727 shall be paid as follows: That portion of surplus (after payment of encumbrances), if any, up to but not to exceed the net amount that Owner would have received after payment of en- cumbrances under the formula set forth above had Town exercised its option to purchase the property on the date of the foreclosure sale, shall be paid to Owner on the date of the foreclosure sale. The balance, if any, shall be paid to the Town. 12. Destruction or Termination of Project. If (1) the project is destroyed and insurance proceeds are distributed to0wner instead of being used to build; or (2) in the event of condemnation, the proceeds thereof are distributed to -10- Owner; or (3) in the event of termination of a condominium, liqui- dation of the association, distribution of the assets or the asso- ciation is made to the members thereof, including Owner: Any sur- plus of proceeds so distributed remaining after payment of encum- brances on said premises shall be distributed as follows: that portion of the suiplus up to but not to exceed the net amount that the Owner would have received under the formula set forth above had Town exercised its option to purchase the premises on the date of the destruction, condemnation valuation date, or liquidation shall be distributed to Owner, and the balance of such surplus, if any, shall be distributed to Town. 13. Notices. All notices required herein shall be sent to the addresses set forth after the signatures to this deed. Any party changing its address shall forthwith give written notice to the other parties hereto. 14. Disputes Any dispute over any aspect of these restrictions shall be settled by arbitration in accordance with the rules of the American Arbitration Association, and the prevailing party shall be entitled to reasonable attorney's fees. 15. Acceptance. By acceptance of this deed, Owner accepts and agrees to be bound by the covenants contained herein. IN WITNESS WHEREOF, the parties hereto have set their hands on dates indicated below. -11- DATED: ? f`, TOWN OF LOS GATOS DATED: -12- ayor OWNER