"Equity Deed Of Trust"
FTHB # NOTICE: THIS NOTE MAY REQUIRE PAYMENT OF PRINCIPAL AND INTEREST UPON THE SALE, RENTAL, REFINANCE OR TRANSFER OF THE PROPERTY OR UPON A PREPAYMENT. FURTHER, THIS NOTE IS A SHARED APPRECIATION NOTE AS DEFINED IN SECTION 1917, ET SEQ. OF THE CALIFORNIA CIVIL CODE. PROMISSORY NOTE SECURED BY DEED OF TRUST $ , 20 Amount Date , El Cajon, CA [Property Address] 1. Borrower’s Promise to Pay. For value received, the undersigned, (collectively “Borrower” or “Trustor”), promises to pay to the El Cajon Redevelopment Agency (“Agency” or “Beneficiary”), or order, the sum of THOUSAND U.S. DOLLARS ($ ) with interest accruing thereon as hereinafter provided, and payable as set forth below. It is understood that the Agency may transfer this Note. The Lender or anyone who takes this Note by transfer and who is entitled to receive payments under this Note will be called the “Note Holder”. 2. No Interest. This Note will bear no interest unless the Borrower defaults under the terms of this Note, the Deed of Trust securing it and/or the Affordable Housing Agreement affecting the Property. In the event of default, interest from the Date of this Note shall be calculated at: (a) the rate equal to the interest rate of the senior trust deed; or, in the event of no senior trust deed, (b) the prevailing rate of the Prime Rate as published in The Wall Street Journal, on the date of default. 3. Payments and Term. The term of this Note extends until the Borrower sells, rents, refinances, transfers or changes the title of the Property designated on the accompanying Deed of Trust. Provided that the Borrower continues to occupy the Property as their primary residence, the principal sum shall be repaid upon the sale, rental, refinance, transfer or change in title to the Property to a non-eligible Low or Moderate Income Person or Family. Sale, rental, refinance, transfer or change in title of the Property prior to the forty-fifth (45th) anniversary date of execution of the Deed of Trust will trigger the shared equity in addition to the principal, plus any interest due in Section 2 above, as described in this Note, the Deed of Trust, and all of Loan Documents made a part of this Project. A transfer constitutes sold, or otherwise conveyed, by operation of law or otherwise. No delay or omission on the part of the Agency shall operate as a waiver of such right of repayment or of any other right of this Note. The principal amount of this Note, together with interest (if any) accruing thereon from the date hereof as set forth in Section 2 and 3, shall be due and payable on or before the date provided by the Agency in the Notice of Acceleration, which shall not be less than thirty (30) days, if all or any part of the Property or any interest in it is sold, rented, refinanced, or transferred to a non-eligible Low or Moderate Income Person or Family (or if a beneficial interest in Borrower is sold or transferred and Borrower is not a natural person)(herein called “Transfer”) without the prior written consent of the Agency. The Agency shall not exercise this right of acceleration if prohibited by federal law as of the date of the Deed of Trust or if the Agency has executed a separate written waiver of this option. The following shall not constitute a Transfer: (a) A transfer of the Property from a deceased Borrower to the surviving spouse of the Borrower if the surviving spouse is also a Borrower; (b) A transfer of the Property by a Borrower to his or spouse pursuant to which the spouse becomes 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 of the Property by a Borrower to an inter-vivos trust in which the Borrower is the sole beneficiary. (e) A transfer by means of encumbering the Property with a lien which is a junior lien to the lien securing the loan to Borrower evidenced by the Deed of Trust. (f) The Property is transferred or sold to a Qualifying Household, with the express written consent of the Agency, subject to the conditions as outlined in the Affordable Housing Agreement, dated Page 1 of 2 Initials __________ , . (g) Renting a room or portion of residence, provided Owner continues to occupy property as the Primary Residence. All payments made under this Note shall be paid in lawful money of the United States to the El Cajon Redevelopment Agency, at 200 East Main Street, El Cajon, CA 92020, Attention: Housing Division. Provided that Borrower is not in default under the terms of this Note, the Note interest/equity share shall be forgiven in its entirety and interest in the equity of the Property shall be relinquished by the Agency forty-five (45) years from the date of the execution of this Note, as provided in Section 5. 4. Prepayment. Borrower has the right to prepay the principal without incurring any penalty, apart from any interest that may be due under default provisions above or the recapture of funds by Agency through a sharing of equity during the Period of Affordability. In the event that Borrower chooses to prepay the Note, Borrower must notify Note Holder in writing. If the Borrower sells, rents, refinances, conveys or transfers title to the Property, the Note will be part of the escrow in any pending or subsequent transaction and appropriate equity share will be incurred as an obligation by Borrower, regardless of the acceptance of any prepayment of the Note. For purposes of this Section 4, Borrower agrees that the Note and the Deed of Trust shall not be discharged or released, nor shall they be deemed satisfied, during the Period of Affordability, unless the Borrower otherwise complies with the recapture of Agency funds through the equity sharing provisions of the Affordable Housing Agreement. 5. Forgiveness of Interest and Relinquishment of Equity. Provided that Borrower is not in default under the terms of this Note, the Note interest/equity share shall be forgiven in its entirety and interest in the equity of the Property shall be relinquished by the Agency forty-five (45) years from the date of the execution of the Note. Nothing contained in this paragraph 5 shall be construed as a promise by the Agency to forgive or relinquish the right to seek repayment of the principal of the Note. 6. Default Under Deed of Trust. Notwithstanding any other provisions of the Note, if default occurs in any of the covenants or agreements contained in the Deed of Trust securing this Note, this Note shall immediately become due and payable in full at the option of the Agency. In the event the Agency exercises such option, the amounts due and payable shall be the principal balance remaining on the Note and other amounts owing, together with accrued but unpaid interest as described above. 7. Attorneys’ Fees. If suit is brought by either party to this agreement to enforce any of its terms, the party deemed the prevailing party, as defined in the Code of Civil Procedure section 1032, shall be entitled to recover from the opposing party all costs and expenses, including attorneys’ fees, incurred by the prevailing party in exercising any of its rights or remedies hereunder or enforcing any of the terms, conditions or provisions hereof. 8. Time. Time is of the essence herein. 9. Amendments. This Note may not be modified or amended except by an instrument in writing expressing such intention and signed by an authorized representative of the Agency and Borrower. 10. Severability. If any term or provision hereof is illegal or invalid for any reason whatsoever, such illegality or invalidity shall not affect the validity and binding effect of the remainder of this Note upon the parties. 11. Borrower’s Waivers. Borrower waives any rights to require the Agency to perform certain acts. Those acts 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”); (c) To obtain an official certification of non-payment (known as a “protest”). 12. Giving of Notices. Any notice that must be given to Borrower under this Note will be given by delivering it or by mailing it first class mail or by certified mail, return receipt requested, addressed to Borrower at the Property address set forth above. A notice that must be given to the Agency under this Note will be given by mailing it certified mail, return receipt requested, to the Agency at the address stated in Section 3, above. Any party may change its address by a notice given to the other party in the manner set forth in this Section. 13. Joint and Several Responsibility. If more than one person executes this Note, each is fully and personally obligated to pay the full amount owed and to keep all promises in this Note. NOTICE TO BORROWER Page 2 of 2 Initials __________ Do not sign this Note if it contains blank spaces. All spaces should be completed before you sign. Date: Date: Page 3 of 2 Initials __________