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HomeMy WebLinkAbout10-4-2016 Bridges, Settlement Agreement and ReleaseSETTLEMENT AGREEMENT AND RELEASE This Settlement Agreement and Release ("Agreement") is entered into this [ _ k day of 0 G�btlf 2016 (the "Effective Date") by the City of San Luis Obispo, a municipal corporation and charter city ("City") and Colby L. Bridges, an individual ("Bridges") (City and Bridges are collectively referred to herein as the "Parties"). Recitals WHEREAS, on September 3, 2015, Bridges purchased the property located at 867 Humbert Ave., San Luis Obispo, CA 93401 (the "Property"). The Property was reserved for purchase by moderate income households. As part of that purchase, Bridges executed the following documents: 1. Occupancy, Use, Refinancing, and Shared EquityAgreement (the "Equity Share Agreement") dated September 10, 2015, recorded in the Official Records of San Luis Obispo County on September 18, 2015 as Document No. 2015047628; 2. Promissory Note ("Note") dated September 9, 2015 in favor of the City for the principal sum of $109,625; and 3. Deed of Trust and Security greement ("Deed of Trust") dated September 9, 2015 encumbering the Property and securing certain terms and conditions of the Equity Share Agreement and the Note. A true and correct copy of the Equity Share Agreement, Note and Deed of Trust is attached as Exhibit "A" and incorporated herein by this reference. WHEREAS, on August 30, 2016, City notified Bridges that he was in default under the Equity Share Agreement, the Note and Deed of Trust for failing to occupy the Property as his sole principal place of residence and for renting the Property to a third party; WHEREAS, Section 2 of the Equity Share Agreement requires, among other things, that any rents received by Bridges ("Excess Rents") shall be due and payable to the City immediate upon receipt. City and Bridges currently dispute the potential total amount of Excess Rents that are due to City; WHEREAS, the City's equity share affordable housing program, as implemented through the Equity Share Agreement, Note and Deed of Trust, allows Bridges to sell the Property to a third party subject to certain conditions. Upon such sale, the Property would no longer be restricted as an affordable unit; P WHEREAS, by this Agreement, the City would like to ensure that the Property is retained as an affordable unit and City and Bridges would like to forever resolved any disputes related to Bridges' compliance with the Equity Share Agreement, the Note and Deed of Trust. Initials: /� Agreement NOW, THEREFORE, in consideration of the mutual promises and covenants contained herein and other good and valuable consideration, the sufficiency of which is hereby acknowledged, and intending to be legally bound hereby, the Parties hereby agree as follows: A. The Parties shall execute this Agreement. B. Purchase and Sale of the Property. a. Subject to the terms and conditions herein, Bridges agrees to sell, and City agrees to purchase, the Property. b. Purchase Price. The total purchase price of the Property shall be the payoff amount of the first deed of trust on the property, Loan No.: 0071899033, as of the Close of Escrow, not to exceed $283,302.45 (the "Purchase Price"). There shall be no deposits associated with this transaction. c. Property Condition. Within five (5) days of the Effective Date, Bridges shall furnish to City a preliminary title report ("PTR") issued by First American Title Company (the "Title Company") in the amount of the Purchase Price and copies of all documents referred to as exceptions to title in the PTR. Prior to Close of Escrow, City shall determine whether matters affecting the title to the Property are acceptable to City. In any event and notwithstanding anything to the contrary herein, Bridges shall provide that all monetary liens and encumbrances (except any statutory liens for non -delinquent real property taxes) are removed from title on or prior to the Close of Escrow. Prior to the Closing, Bridges shall not enter into or record any easement, covenant, license, permit, agreement or other instrument against the Property, or any portion thereof. d. Property Inspection. During the period commencing on the Effective Date and terminating on Close of Escrow (the "Due Diligence Period"), City shall undertake at City's expense an inspection of the Property; a review of the physical condition of the Property, including but not limited to, inspection and examination of all structures and improvements on the Property including termite inspection(s) and sewer system(s) inspection(s), soils testing and analysis, and a review of environmental conditions on the Property. City, or persons designated by City, shall have the right during this Agreement and at all reasonable times to enter on the Property for the purpose of conducting those inspections as City may require to ascertain the suitability of the Property for City's purposes. City shall also indemnify and hold Bridges harmless against any claims arising from City's or City's designated persons' entry on the Property. If City disapproves of the results of the inspection and review of the physical conditions of the Property, City may elect, prior to the 2 Initials: 1 close of business on last day of the Due Diligence Period, to terminate this Agreement by giving Bridges written notification thereof. e. Escrow and Closing. Upon execution of this Agreement, the parties will open an escrow with First American Title Insurance Company ("Escrow" or "Escrow Holder"), 899 Pacific Street, San Luis Obispo, CA 93401, Attn: Lisa Bertrand, for the purpose of consummating the purchase and sale of the Property in accordance with the terms hereof. Escrow shall close forty-five (45) days following the Effective Date ("Close of Escrow") unless the parties mutually agree to close Escrow sooner or later than that date. Bridges shall comply with all covenants and restrictions of the Equity Share Agreement, Note, Deed of Trust and shall continue paying all amounts due under the first Deed of Trust referenced above up until Close of Escrow. f. Documents. i. Bridges' Documents. At least one (1) business day prior to the Closing of Escrow, Bridges shall deposit into Escrow: 1. one (1) original duly executed, acknowledged and dated grant deed in a form approved by City and suitable for recordation, conveying to City fee simple title to the Property ("Grant Deed"), which shall be recorded in the Official Records of San Luis Obispo County, California at the Close of Escrow; 2. one (1) original of an affidavit from Bridges which satisfies the requirements of Section 1445 of the Internal Revenue Code, as amended duly executed by Bridges; 3. one (1) California Form 593-C duly executed by Bridges; 4. any disclosures required by state law; and 5. such other instruments and documents as may be reasonably requested by Escrow Holder relating to Bridges, to the Property and as otherwise required to transfer the Property to City pursuant to the terms and conditions of this Agreement. ii. City's Documents. At least one (1) business day prior to the Closing Date, City shall deposit into Escrow: 1. one (1) originally executed Certificate of Acceptance to be attached to the Grant Deed; 2. one (1) originally executed preliminary change of ownership report; and 3 Initials: CA /� 3. such other instruments and documents as may be reasonably requested by Escrow Holder as otherwise required to transfer the Property to City pursuant to the terms and conditions of this Agreement. g. Funds. At least one (1) business day prior to the Closing Date, City shall deposit (or cause the acquisition funding sources to deposit) into Escrow by wire transfer in an amount which shall equal the Purchase Price plus/minus any additional amounts necessary to cover costs, credits and/or prorations under this Agreement. If amounts are sent by check rather than wire transfer the checks must clear at least one (1) business day prior to the Closing Date. i. Prorations. 1. All real and personal property taxes based on the most recent property tax bills available, bonds, additional taxes, special assessments, rents, issues and profits from the Property, and such other matters as the parties shall instruct Escrow Holder shall be prorated as of the Close of Escrow, or cancelled as of the date of Close of Escrow, if applicable. 2. Any tax bills received by City after the Close of Escrow relating to a period prior to the Close of Escrow shall be prorated between the parties as if said tax bills had been available as of the Close of Escrow. The provisions of this Section shall survive the Close of Escrow. ii. Closing. Bridges shall pay all closing costs associated with this transaction, including, but not limited to, the following: (i) the escrow fee; (ii) all documentary tax, sales tax, or real property transfer tax, if applicable; and (iii) the premium for the Title Policy. Each party shall pay its own attorneys' fees and other expenses incurred by it in connection herewith. h. Possession. Bridges shall deliver possession of the Property to City as of the Close of Escrow. i. Title Insurance Policy. Title to the Property shall be insured effective as of Close of Escrow by a CLTA standard owner's policy of title insurance (the "Title Policy") issued by the Title Company with liability in the amount of the Purchase Price, insuring title to the Property to be vested in City, subject only to current real estate taxes and assessments not delinquent, if applicable, and the approved exceptions to title. j. Conditions to Closing. If, upon the Close of Escrow, any condition precedent set forth below is not satisfied or waived by the party for whose primary benefit it exists said benefited party may terminate this Agreement by written 4 Initials: /_ notice to the other party, and the parties shall have no further obligation to each other under this Agreement. i. City's Conditions. 1. All instruments and documents described in Section B.f.i have been delivered to the Escrow Holder; 2. Title Company is in a position and is prepared to issue to City the Title Policy; 3. Bridges has submitted all funds into Escrow to cover the closing costs as required herein; 4. The City has determined that the acquisition of the Property is in conformance with the City's General Plan as required by Government Code section 65402; 5. The City Council has allocated funds to purchase the Property; and 6. Bridges shall have performed, observed, and complied with all covenants, agreements and conditions required by this Agreement to be performed, observed, or complied with by Bridges prior to, or as of, the Closing Date, including, but not limited to, continued compliance with the terms and covenants of the Equity Share Agreement, Note and Deed of Trust. ii. Bridges Conditions. 1. All instruments and documents described in Section B.f.ii have been delivered to the Escrow Holder; 2. All funds have been delivered to the Escrow Holder; and 3. City shall have performed, observed, and complied with all covenants, agreements, and conditions required by this Agreement to be performed, observed, or complied with by City prior to, or as of, the Closing Date. iii. Final Verification of Condition. City shall have the right to make a final verification of the condition of the Property up to the Closing Date. k. Close of Escrow. Upon satisfaction or completion of the foregoing conditions and deliveries, the parties shall direct Escrow Agent to immediately cause the Grant Deed to be dated and recorded in the Official Records of the County of San Luis Obispo, and to date and deliver the documents described above to 5 Initials: / A the appropriate parties and make disbursements according to the closing statements executed by Bridges and City in accordance with the terms hereof. I. No Broker. Each party represents to the other that it has not used a real estate broker or finder in connection with this Agreement or the transaction contemplated by this Agreement. If any person asserts a claim for a broker's commission or finder's fee against one of the parties to this Agreement, the party on account of whose conduct the claim is asserted shall indemnify and hold the other party harmless from and against any and all losses, liens, claims, judgments, liabilities, costs, expenses or damages (including reasonable attorneys' fees and court costs) of any kind or character arising out of or resulting from any agreement, arrangement or understanding alleged to have been made by such party or on its behalf with any broker or finder in connection with this Agreement or the transaction contemplated hereby. C. Upon Close of Escrow, City hereby releases and forever discharges Bridges, its agents, officers, employees, representatives, and attorneys from any and all claims or causes of action which may now exist or which may accrue in the future arising from or related to the compliance with the Equity Share Agreement, the Note, the Deed of Trust, including, but not limited to, waiver of any demand for Excess Rents. D. The Parties represent and warrant that they understand that they have the right to be represented by counsel and expressly acknowledge that they have had the opportunity to review this Agreement with their chosen counsel. The Parties represent that they fully understand the terms of this Agreement and agree to be bound by its contents. The Parties further represent that they have full authority to enter this Agreement and do so of their own accord. E. In any action or proceeding to enforce or interpret the terms of this Agreement or otherwise arising out of the Agreement, the prevailing party shall be entitled to recover reasonable attorney's fees. F. This Agreement constitutes the entire agreement between the Parties with regard to the subject matter set forth herein. G. City and Bridges agree to execute all documents and instruments reasonably required in order to consummate the purchase and sale herein contemplated and to do such further acts as may be necessary, desirable, or proper to carry out more effectively the purposes of this Agreement. H. It is expressly understood that this Agreement is in full accord and satisfaction of disputed claims, and this Agreement will not be deemed an admission of liability or responsibility of either Party hereto for any purpose. I. This Agreement may be executed in multiple counterparts, each of which shall be deemed an original, and all of which shall constitute one document to be effective as of the Effective Date. Signatures that have been transmitted by facsimile or electronic mail shall be 6 Initials: / aim deemed to be original signatures for the purposes of this Agreement. Photocopies of this Agreement shall have the same effect as the original and may be used in lieu of the original for any purpose. J. All notices, requests, demands, approvals, consents or other communications required or permitted by this Agreement shall be addressed as set forth in the signature block below, shall be in writing and shall be sent by (a) nationally recognized overnight courier, or (b) facsimile or email shall be deemed received (i) if delivered by overnight courier, when received as evidenced by a receipt, or (ii) if given by facsimile or email, when sent provided the sender receives no indication that the transmission was not successful. Any notice, request, demand, direction, or other communication sent by facsimile must also be sent within forty-eight (48) hours delivered in accordance with the clause (a) above. IN WITNESS WHEREOF, the Parties have executed this Agreement as of the last date indicated below. Colby L. Bridges Send all notices herein to: 867 Humbert Ave. San Luis Obispo, CA 93401 City of San Luis Obispo Jan Mar ayor Attest: Carrie Gallagher, Ci y Clerk Approved as to form: istine Dietrick, City Attorney all notices herein to. City Attorney 990 Palm Street San Luis Obispo, CA 93401 7 Initials: !_