1f Carver Beach Lots 998-1000
CITY OF
CHANHASSEN
City Cnzttr DriVt, PO &x 147
li/nhassm, Minn"ot¡¡ 55317
Pho", 612.937.1900
7enmd Fox 612937.5739
¡inming Fox 612.937.9152
,lie s"ftty Fox 612.934.2524
·b www.a.chanhlllJtn.mn.UJ
MEMORANDUM
TO:
Scott Botcher, City Manager
FROM:
Bob Generous, Senior Planner
DATE:
December 4, 2000
SUBJ:
Approve Purchase Agreement, Anita Benson, 960 Carver Beach
Road
BACKGROUND
As part of the city's Community Development Block Grant (CDBG) program, the
Chanhassen City Council has authorized the use ofCDBG funds for land
acquisition to assist in the provision of affordable housing in the community.
On August 28, 2000, the City Council approved Resolution 2000-65 established a
minimal valuation for purchase of the property at $27,200.00 and authorized staff
to negotiate the purchase of the property.
DISCUSSION
Staff has drafted the purchase agreement and sent it to the property owner for
execution. As of the ",Titing of the staff report, we have not received the executed
agreement. It is our understanding that the property owner is having her own
appraisal prepared for the property. We will update the City Council on Monday,
December I I, 2000, on the status of the execution of the agreement.
In reviewing the history of the parcel, staff discovered that sanitary sewer lateral
connection and watermain lateral connection charges as part of project 75-2 were
never assessed against the property. Since the property valuation of the property
assumed that sewer and water were available to the site with only hookup charges,
we drafted the purchase agreement to have these charges paid with the proceeds
of the purchase price.
An additional contingency on the property acquisition is that the current property
owner receives a variance making the property developable for Habitat for
Humanity. As of the writing of this report, the public hearing for the variance has
not been held. We will update the City Council on Monday, December I I, 2000,
on the status of the variance.
~
Scott Botcher
December 4, 2000
Page 2
The City Council had also been concerned with the method by which the housing constructed by
Habitat for Humanity would remain affordable. Habitat for Humanity secures a Right of First
Offer as part of the mortgaging of the property. Attached is correspondence from them along
with draft documents that explains this. Habitat for Humanity is also in the process of closing on
two additional lots in Chanhassen for construction of single-family homes. The homes for all
three parcels would be constructed in 2001.
RECOMMENDATION
Staff recommends that City Council approve the purchase agreement.
ATIACHMENTS
1. Location Map
2. Purchase Agreement
3. Resolution 2000-65
4. Letter from Matt Soucek to Bob Generous dated 11/29/00 with attachments
g:\plan\bg\cdbg\memo approving purchase agreement benson.doc
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RRAT, F.STATF. PTTRCHASR A.~RF,F.MF.NT
TIDS AGREEMENT (the "Agreement") made and entered into this _ day of
,20-, by and between the CITY OF CHANHASSEN, a Minnesota municipal
corporation, with offices at 690 City Center Drive, Chanhassen, Minnesota 55317 (referred to
herein as the "Buyer"), and ANITA L. BENSON, of 125 North 3'd Street, Apartment 2,
Marsbfield, MN 56258 (referred to herein as the "Seller").
IN CONSIDERATION of the mutual covenants and agreements herein, it is hereby
mutually agreed by Seller and Buyer as follows:
SECTION 1.
SALE AND P1TRC'HASE OF LAND
1. I) Seller shall sell to Buyer and Buyer shall purchase from Seller, upon the terms and
conditions hereof, the following property (all collectively referred to as the "Subject Property"):
1.1.1) The land in Carver County, Chanhassen, Minnesota, legally described on
Exhibit "A" attached hereto and incorporated herein, together with all right, title, and
interest in and to any roads, rights of access, or alleys adjoining or servicing such land,
rights-of-way, or easements appurtenant thereto.
1.1.2) Any improvements and fixtures located on the Land as of the date of
Closing;
1.1.3) All rents, leases, contract rights, causes of action, permits, licenses, and
other rights relating to the Subject Property.
SECTION 2.
PTTRCH ASF PRTCE
2.1) The purchase price for the Subject Property shall be Twenty-Seven Thousand Two
Hundred ($27,200.00) Dollars (the "purchase Price") and shall be payable by Buyer to Seller by
check on the date of closing.
SECTION 3.
TITLE MATTERS
3. I) Seller, at its own expense, shall furnish to Buyer within twenty (20) days hereof a
current commitment for the issuance ofa 1987/1990 ALTA Form B owner's policy of title
insurance (the "Commitment") issued by a Title Insurance Company acceptable to Buyer
("Title") in the amount of the Purchase Price, committing to insure that Buyer will have good and
marketable title to the Subject Property, except matters to which Buyer may consent in writing.
3.2) In the event any exceptions are listed in the Commitment for title insurance, the
Seller shall promptly cause the exception to be removed. If the Seller fails to remove the same
within the time allowed for closing on the Subject Property, the Buyer (at Buyer's option) shall
have the right to: (a) terminate this Agreement; or (b) cause the exceptiones) to be removed and
credit Buyer's cost to remove the exceptiones) against the Purchase Price.
SECTION 4.
CT .OSTNr.
4.]) The closing (the "Closing") shall be at a location designated by Buyer, and shaU
occur 60 days after execution of this Agreement ("Closing Date").
4.2) On the Closing Date, Seller shall deliver to Buyer possession of the Subject Property
free of any and all debris, and all personalty not included in the sale of the Subject Property.
4.3) On the Closing Date, Seller shall execute and deliver or otherwise provide to Buyer:
4.3.1) A duly executed warranty deed, subject only to the exceptions consented to
by Buyer;
4.3.2) A customary affidavit that there are no unsatisfied judgments of record, no
actions pending in any state or federal courts, no tax liens, and no bankruptcy proceeding
2
88764.03
Rev:1 ]/30/00
-.'
filed against Seller, and no labor or materials have been furnished to the Subject Property
for which payment has not been made, and that to the best of Seller's knowledge there are
no unrecorded interests relating to the Subject Property;
4.3.3) a survey of the subject property certified to Buyer; and
4.3.4) A certificate on a form acceptable to Seller that all of the covenants,
representations and warranties of Seller as set forth in Section 5 are true and correct as of
the Closing Date.
4.4) Seller shall pay at Closing all general real estate taxes levied against the Subject
Property due and payable for all years pñor to the year of Closing, together with any unpaid
installments of special assessments due therewith, including Green Acres deferred taxes. Seller
shall pay at closing the remaining balance on all levied and pending special assessments owing
against the Subject Property. Seller and Buyer shall prorate to the date of Closing all the general
real estate taxes levied against the Subject Property due and payable in the year of Closing.
4.5) The Subject Property has not been assessed for sanitary sewer lateral connection
charges or watermain lateral connection charges. Seller shall pay at Closing the following
connection charges to the City of Chanhassen:
watermain lateral connection charge
= $4,075.00
= $4,075.00
sanitary sewer lateral connection charge
4.6) Seller shall pay on or before Closing:
4.6.1) state deed tax;
4.6.2) all costs of updating the abstract oftitle and all costs associated with
obtaining a title insurance commitment, including name searches, tax searches,
bankruptcy searches, and property inspection fees;
4.6.3) recording fees for corrective instruments required to remove encumbrances
3
88764.03
Rev:11130/00
and place marketable title in Buyer's name;
4.6.4) connection charges identified in Section 4.5; and
4.6.5) one-half of the Closing fee charged by a title company, if any.
4.7) Buyer shall pay at Closing:
4.7.1) all recording fees and charges relating to the filing of the deed;
4.7.2) title insurance premiums; and
4.7.3) one-half of the Closing fee charged by a title company, if any.
SECTION 5.
COVFNANTS, RFPRFSFNTATTONS, ANn WARRANTTFS OF SFT.T.FR
5.1) Seller, as an inducement to Buyer to enter into this Agreement, and as part of the
consideration therefor, represents, warrants, and covenants with Buyer and its Successors and
assigns that:
5. I. I) There are no leases, options, purchase agreements, rights to redeem,
tenancy agreements, or rights of occupancy, written or verbal, and no person or party has,
or will have any rights of adverse possession, regarding or arising out of the occupancy of
the Subject Property;
5.1.2) Seller will maintain in force insurance against public liability from such
risk and to such limits as in accordance with prudent business practice and suitable to the
Subject Property from the date hereof to the Closing Date;
5.1.3) To the best knowledge of Seller, no entity or person has, at any time:
i) "released" or actively or passively consented to the "release" or "threatened
release" of any Hazardous Substance (as defined below) from any
"facility" or "vessel" located on or used in connection with the Subject
Property; or
ii) taken any action in "response" to a "release" in connection with the
Subject Property; or
4
88764.03
Rev:! 1130100
iii) otherwise engaged in any activity or omitted to take any action which
could subject SeHer or Buyer to claims for intentional or negligent torts,
strict or absolute liability, either pursuant to statute or common law, in
connection with Hazardous Substances (as defined below) located in or on
the Subject Property, including the generating, transporting, treating,
storage, or manufacture of any Hazardous Substance (as defined below).
The terms set within quotation marks above shall have the meaning given
to them in the Comprehensive Environmental Response and Liability Act,
42 V.S.C. Sec. 9601 e1 seq., as amended ("CERCLA") and any state
environmental laws.
5.1.4) To the best knowledge of SeHer, no person or entity, has, at any time, ever
instaHed, used, or removed any underground storage tank on or in connection with the
Subject Property;
5.1.5) As part of this agreement, SeHer shaH execute the weH disclosure
certificate attached hereto as Exhibit "B". SeHer shall deliver the weH certificate to Buyer
on the date of execution of this agreement. SeHer warrants that aH statements set forth in
the weH certificate are true, accurate, and complete to the best of SeHer's knowledge; and
5.2) The covenants, representations, and warranties contained in Section 5 shall be
deemed to benefit Buyer and its successors and assigns and shall survive any termination or
expiration of this Purchase Agreement or the giving of the Deed. AH of SeHer's covenants,
representations and warranties in this Agreement shaH be true as of the date hereof and of the
Closing Date, and shaH be a condition precedent to the performance of Buyer's obligations
hereunder. If Buyer discovers that any such covenant, representation, or warranty is not true,
Buyer may elect prior to closing, in addition to any of its other rights and remedies, to cancel this
Agreement, or Buyer may postpone the Closing Date up to ninety (90) days to aHow time for
correction.
5
88764.03
Rev:11130/00
SECTION 6.
RNVTRONMRNTAT.lSOn. TNVRSTTr.ATTON ANn TFSTTNr.
6. I) Buyer and its agents shall have the right, at the sole option of Buyer, to enter Upon
the Subject Property without charge and at all reasonable times from the date of the execution of
this Agreement, to perform such enviromnental investigation and soil tests as Buyer may
reasonably deem appropriate. If Buyer investigates and tests the Subject Property pursuant to
this section, Buyer shall pay all costs and expenses of such investigation and testing and shall
hold Seller harmless from all costs and liabilities arising out of Buyer's activities. If the purchase
and sale contemplated by this Agreement is not closed, Buyer shall, at its own expense, repair
and restore any damage to the Subject Property caused by Buyer's investigation and testing, and
shall retum the Subject Property to substantially the same condition as existed prior to such entry.
SECTION 7.
CONTTNr.FNCms
7. I) The obligations of Buyer under this Agreement are contingent upon each of the
7.1.1) The representations and warranties of Seller set forth in Section 5 of this
following:
Agreement must be true as of the date of this Agreement and on the Closing Date, and Seller
shall have delivered to Buyer at Closing a certificate dated the Closing Date, signed by Seller,
certifYing that such representations and warranties are true as of the Closing Date;
7.1.2) Buyer shall have determined on or before the Closing Date, that it is
satisfied, in its sole discretion, with the results of the survey, and enviromnental/soil
investigations and tests of the Subject Property;
6
88764.03
Rev: I 1/30/00
7.1.3) Seller obtaining all variances from the City of Chanhassen or other unit of
local government as determined necessary by Habitat for Humanity to make the lot developable
for residential housing.
With the exception of the contingency set forth in Section 7.1.1, if any of the remaining
contingencies have not been satisfied by at least seven days before the. Closing Date, the Buyer
may, at Buyer's option, terminate this Agreement by giving written notice to Seller. Upon such
termination, neither party shall have any further rights or obligations under this Agreement. The
contingencies are for the sole and exclusive benefit of Buyer, and Buyer shall have the right to
waive the contingencies by giving written notice to Seller.
SECTION 8. .
MISC'F.I .I.A NF.onS
8.1) The covenants, warranties and representations made by Seller shall survive the
Closing of this transaction.
8.2) Seller hereby indemnifies Buyer for any claim, cost, or damage related to any
brokerage fee due because of this Agreement.
8.3) Any notice, demand, or request which may be permitted, required or desired to be
given in connection herewith shaIl be in writing and sent by certified mail, hand delivery,
overnight mail service such as Federal Express, or Western Union telegram or other form of
telegraphic communication, directed to SeIler or Buyer. Any notice shall be deemed effective
when delivered to the party to whom it is directed. Unless other addresses are given in writing,
notices shall be sent to SeIler or Buyer at the applicable address stated on the first page of this
7
88764.03
Rev: 11130/00
Agreement.
8.4) Time shall be of the essence in this Agreement. If any date or time prescribed by
this Agreement falls on a Saturday, Sunday or holiday, such date or time shall automatically be
extended to the next normal business day.
8.5) Each party hereto shall promptly, on the request of the ot!J.er party, have
acknowledged and delivered to the other party any and all further instruments and assurances
reasonably requested or appropriate to evidence or give effect to the provisions of this
Agreement.
8.6) This Agreement represents the entire agreement of the parties with respect to the
Subject Property and all prior agreements, understandings, or negotiations between the parties are
hereby revoked and superseded hereby. No representations, warranties, inducements, or oral
8.7) If Buyer defaults under any of the terms hereof, Seller shall have the right to pursue
agreements have been made by any of the parties, except as expressly set forth herein, or in other
contemporaneous written agreements. This Agreement may not be changed or modified except
by a written agreement signed by Seller and Buyer.
any remedies available to Seller at law or in equity, including without limitation, specific
performance, damages (including reasonable attorney's fees), and to the cancellation of this
Agreement.
8.8) If Seller defaults under any of the terms hereof, including, without limitation, the
delivery of marketable title to the Subject Property as set forth in Section 4 hereof, then Buyer
shall have the right to pursue any remedies that are available to Buyer at law or in equity,
8
88764.03
Rev: 11130100
including without limitation, specific performance and damages (including attorney's fees), and
to the cancellation of this Agreement.
8.9) If any provision of this Agreement is declared void or unenforceable, such provision
shall be deemed severed from this Agreement, which shall otherwise remain in full force and
effect.
8.10) Failure of any party to exercise any right arising out of a breach of this Agreement
shall not be deemed a waiver of any right with respect to any subsequent or different breach, or
the continuance of any existing breach.
8.11) This Agreement shall inure to the benefit of and be binding upon the parties hereto
and their respective heirs, personal representatives, successors and assigns.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day and year first above written.
BUYER:
SELLER:
CITY OF CHANHASSEN
By:
Anita L. Benson
Mayor
By:
Scott A. Botcher
City ManagerlClerk
9
88764.03
R<v: I 1/30/00
STATE OF MINNESOTA)
) ss.
COUNTY OF CARVER )
The foregoing instrument was acknowledged before me this day of
,20_, by and by Scott A. Botcher, respectively the
Mayor and City ManagerlClerk of the CITY OF CHANHASSEN, a Minnesota municipal
Corporation, on behalf of the corporation and pursuant to the authority granted by its City
Council.
Notary Public
STATE OF MINNESOTA)
) ss.
)
COUNTY OF
The foregoing instrument was acknowledged before me this _ day of
, 20-, by Anita L. Benson.
Notary Public
THIS INSTRUMENT WAS DRAFTED BY:
CAMPBELL KNUTSON
Professional Association
317 Eagandale Office Center
1380 Corporate Center Curve
Eagan, MN 55121
Telephone: (651) 452-5000
AMP
20
88764.03
Rev:) 1/30/00
EXHIBIT "A"
to
REAl. If,STATI? PITRCHASF, A(;RFF,MF.NT
T ,p.g-RI np.~rriprinn of the Snhjp.l"t Prnpp.1"ty
Lots 998, 999, and 1000, CARVER BEACH, according to the plat thereof on file and of record
in the office of the Registrar of Titles, Carver County, Minnesota.
11
88764.03
Rev:ll/30/00
A IT ACH - EXH B - WELL DISCLOSURE
12
88764.03
Rev:II/30/00
CITY OF CHANHASSEN
CARVER AND HENNEPIN COUNTIES, MINNESOTA
DATE:
AUl!ust 28. 2000
RESOLUTION NO:
2000-65
MOTION BY: Enl!el
SECONDED BY: Senn
A RESOLUTION ESTABLISHING JUST COMPENSATION AND
AUTHORIZING PURCHASE OF
LOTS 998, 999 AND 1000, CARVER BEACH ADDITON
WHEREAS, the City of Chanhassen is implementing its Corrut).unÎty Development Block
Grant program approved by the City Council on June 14, 1999; and
WHEREAS, the acquisition of the real property known as Lots 998, 999 and 1000 Second
Addition, Carver County, Minnesota, (PID #25.1600850), would be in compliance with the
objectives of the Community Development Block Grant program, the City's participation in the
Livable Communities Act and the City of Chanhassen 2020 Comprehensive Plan; and
WHEREAS, the fair market value of the subject property was made by the Office of the
County Assessor for Carver County; and . .
WHEREAS, the appraisal work has been perfom1ed in a competent manner in accordance
with applicable state law, the Uniform Relocation and Real Property Acquisition Act, and
Department of Housing and Urban Development policies and requirements:
NOW, THEREFORE, BE IT RESOLVED by the Chanhassen City Council:
I. That the fair market value of $27,200.00 for the real property is hereby adopted as fair
and just compensation.
2. That Robert Generous, AICP, is authorized to negotiate the purchase of the subject
property by direct purchase.
Passed and adopted by the Chanhassen City Council this 28th day of August, 2000.
A~~
Scott A. Botcher, City Manager \
L(a.~cZ k Ì{i.uu';;'-
Nancy K. M cino, Mayor
YES
NO
ABSENT
Mancino
Jansen
Labatt
Senn
Engel
None
None
win Cities
\BITAT FOR
'UMANJTY
1)1Y)r
ing Community
Fourth Street SE
~polis MN 55414
. ]2 331-4090
. 61233]·]540
iTW.tchabilat.org
-.,'
November 29,2000
Mr. Bob Generous, Senior Planner
City of Chanhassen
690 City Center Dive
PO Box 147
Chanhassen, MN 55317
RECEIVED
NQV 3 0 2000
CITY OF CHA/'IHASSEN
Dear Bob:
I have enclosed copies of the documents for the Second Mortgage Note and Deed that
are used by our organization in the sale of properties we develop. This mortgage
secures a "Right of First Offer" in favor of our organization, and outlines the process
by which we repurchase properties from Habitat Homeowners in the event that they
desire to sell. It is our view that the arrangements outlined in these documents insure
that the units we develop will continue to be affordable over the entire term of the
mortgage.
The amount of the Second Mortgage for all Habitat sales is equal to 1/3 of the
appraised value of the home. The other 2/3 of the value becomes the First (or
Principal) Mortgage on which monthly payment are made by the borrower. For
example, if a home appraises at $120,000.00, the First Mortgage would be $80,000.00
and the Second Mortgage $40,000.00.
The Right of First Refusal I am referring to is outlined in Section 9 of the document
entitled "Second Mortgage and Right of First Refusal." Basically, a Habitat
Homeowner is required to notify us in the event that they desire to sell their property.
We would then have 10 days to notify the owner that we intend to purchase the
property. In the event that we do decide to purchase the property, the purchase price
is clearly defined as being 2/3 of the appraised value minus the balance remaining on
their First Mortgage. The Second Mortgage would then be forgiven. The Second
Mortgage only become due and payable in the event of a default by the borrower, for
example if they were to fail to afford us our right to make the first offer. In that event,
the Second Mortgage becomes due and payable in full, with interest at 8% from the
date of the notice of default. This arrangement provides the owner with considerable
financial incentive to afford us the Right of First Offer as outlined. In my four years
here, I have only seen one situation in which we did not exercise our right to
repurchase a property, and that situation was surrounded by some rather extenuating
circumstances.
You may also notice, in Section 3 of the Second Mortgage Note, that there are
provisions that limit the amount of equity that a Habitat Homeowner may retain in
the event that they sell their home to us within their first six years of ownership. The
idea here is to limit ones ability to take advantage of the interest-free financing to
create short-term gains, and to encourage a specific time commitment to the home
from the family to whom it is sold.
Equal Housing Opportunity Agency / Equal Opportunity Employer
· .
Hopefully this provides you with an outline of how the homes we hope to build in the
City of Chanhassen would be retained as affordable units for years to come. Please
contact me with any questions or concerns you may have about the enclosed materiaL
1 can be reached at (612) 331-4090, extension 672.
SØi;d~
Matt Soucek
Real Estate Associate
CC: Julie Gugin, TCHFH
Ryan Karis, TCHFH
SECOND MORTGAGE
AND RIGHT OF FIRST OFFER
as of
THIS SECOND MORTGAGE AND RIGHT OF FIRST OFFER (the "Mortgage"), dated
, 20_, is given by
("Borrower," whether one or more),
whose address is
HABITAT FOR HUMANITY, INC., a Minnesota nonprofit corporation ("Lender"), whose
address is
, to:
TWIN CITIES
RECITALS
Borrower is justly indebted to Lender in the Principal Amount of
and -"100 Dollars ($ ), together
with: (a) interest thereon only after a default; and (b) Additional Interest (as
defined in the Note), if any, all as evidenced by that certain Second Mortgage
Promissory Note (the "Note"), of even date herewith, from Borrower payable to
the order of Lender, which Note is fully incorporated herein by reference and is
secured hereby. The Note shall mature on or before
twenty (20)/thirty (30) (circle olle) years after the first day of the first calendar
month after the date of this Mortgage. The maximum -amount secured by this
Mortgage shall be the sum of the Principal Amount specified above plus Thirty
Thousand and NollOO Dollars ($30,000.00).
THEREFORE, in consideration of the loan made by Lender to Borrower, Borrower
hereby covenants to Lender as follows:
L) Mortgage. To secure payment of the Note, and to secure Borrower's performance
of the covenants contained in the Note and herein, Borrower hereby mortgages to Lender the real
property located in the County of , State of Minnesota, legally described on
Exhibit A that is attached hereto and incorporated herein by reference, together with all
tenements, appurtenances, easements, hereditaments, privileges, minerals and mineral rights,
water and water rights, buildings, fixtures, and improvements now or hereafter erected or located
on the above-described real property (the "Mortgaged Premises'').
2.) Statutory Covenants. Borrower makes and includes in this Mortgage the Statutory
Covenants and other provisions set forth in Minnesota Statutes, Section 507.15, or in any future
mortgage, and the Borrower covenants with the Lender the following Statutory Covenants:
(a) To warrant title to the Mortgaged Premises, subject to the Permitted
Encumbrances, if any, as set forth on Exhibit A;
(b) To pay the indebtedness as herein provided;
(c) To pay all taxes;
(d) To keep all buildings insured against fire and against other hazards specified by
Lender for an amount not less than the full replacement cost for the protection of Lender,
including, but not limited to, lightning, hazards under the usual "extended coverage"
endorsement, and all other hazards and risks of direct physical loss occasioned by any
cause whatsoever, subject only to any exceptions and exclusions agreed to in writing by
Lender. Such policy of insurance shall be delivered to Lender, name Lender as loss payee
under the so-called standard mortgage clause, contain no pro rata reduction provision,
provide for not less than thirty (30) days' notice to Lender of cancellation of said policy,
and shall be written by insurance carriers approved by Lender, which approval shaH not
be unreasonably withheld;
(e) To keep the Mortgaged Premises in good repair and commit no waste; and
(1) That the whole of the indebtedness secured hereby shall become due after default
under any of the terms of the Note or this Mortgage, or in the payment of any tax, or in
the performance of any other covenant contained herein, at the option of Lender.
3.) Subordination. This Mortgage shall be subordinate only to a first mortgage
executed and delivered on this date by Borrower to Lender, encumbering the Mortgaged
Premises and securing another loan made to Borrower (the "First Mortgage").
4.) Additional Covenants and Agreements of Borrower. Borrower makes the
following additional covenants and agreements with Lender;
(a) Any award of damages under condemnation or payment in lieu thereof for injury
to or the taking of all or any part of the Mortgaged Premises are hereby assigned and shall
be paid first, for amounts due and payable under the First Mortgage and the promissory
note secured thereby, and then to the indebtedness outstanding on the Note.
(b) Any proceeds of any insurance payable by reason of loss or damage to the
Mortgaged Premises are hereby assigned and shall be paid first, for amounts due and
payable under the First Mortgage and the promissory note secured thereby, and then to
lender with authority to apply the proceeds to the indebtedness outstanding on the Note.
(c) Borrower shall hold Lender harmless from all costs and expenses in connection
with establishing the priority of this Mortgage, and, if Lender becomes a party to any
mechanic's lien suit or other proceeding relating to the Mortgaged Premises or to this
Mortgage, Borrower shall reimburse Lender for Lender's reasonable attorneys' fees,
costs, and expenses in connection with said suit or proceeding.
(d) Borrower shall not sell, convey, mortgage, pledge, grant a security interest in, or
otherwise transfer or encumber all or any part of the Mortgaged Premises or any interest
therein except in compliance with the provisions of this Mortgage and the Note.
2.
(e) Borrower shall pay the principal and interest, when due, on the First Mortgage and
other encumbrances prior to this Mortgage.
(1) Borrower shall promptly pay when due all charges for utilities or other services to
the Mortgaged Premises including, but not limited to, water, sanitary sewer, electricity,
gas, telephone, and trash and garbage removal and, upon request of Lender, shall provide
evidence of such payment.
(g) Borrower shall use and occupy the Mortgaged Premises solely as a personal place
of residence.
(h) Borrower shall not lease, rent or otherwise use the Mortgaged Premises for the
production of income. Nothing in this covenant shall prohibit the Borrower from
receiving payments from members of Borrower's family in compensation for room and
board.
(i) Borrower shall give Lender notice within thirty (30) days of any default or breach
by Borrower of any of Borrower's obligations under the First Mortgage.
5.) Pavment bv Lender. If Borrower fails to pay taxes and assessments, prior liens or
encumbrances, expenses and attorneys' fees as above specified, to insure said buildings,
improvements and fixtures, or deliver the insurance policies as aforesaid, Lender may pay such
taxes, assessments, prior liens, expenses, and attorneys' fees and interest thereon, or obtain such
insurance coverage. The sums so paid shall be impressed as an additional lien upon the
Mortgaged Premises and be immediately due and payable from Borrower to Lender with interest
thereon at the lesser of the maximum rate allowed by Minnesota law and eight percent (8%) per
annum. This Mortgage shall also secure the repayment of such advances.
6.) Events of Default/Acceleration of Maturity. At the option of Lender and in
addition to Lender's rights to accelerate the maturity of the indebtedness secured hereby as set
forth in the Statutory Covenants, the entire remaining indebtedness secured by this Mortgage,
with interest thereon at the lesser of the maximum rate allowed by Minnesota law and eight
percent (8%) per annum, as provided in the Note, shall become immediately due and payable in
full upon the occurrence of any of the following, each of which is herein referred to as an "Event
of Default:"
(a) A default by Borrower under the terms of the Note;
(b) A default by Borrower in the performance of any other covenants or agreements
contained herein;
(c) A default under the terms of the First Mortgage or the promissory note secured
thereby;
(d) If Mortgagor shall: (I) apply for or consent to the appointment of a receiver,
trustee, or liquidator of itself or of its property; (2) be unable to admit in writing its ability
3.
to pay its debts as they mature; (3) make a general assignment for the benefit of creditors;
(4) be adjudicated a bankrupt or insolvent; or (5) file a voluntary petition in bankruptcy or
a petition or answer seeking reorganization or an arrangement with creditors or take
advantage of any insolvency law or file any answer admitting the material allegations of a
petition filed against it in any bankruptcy, reorganization, or insolvency proceeding; or
(e) The use of the Mortgaged Premises, or any part thereof, by Borrower, or others
acting under Borrower's control, for any uulawful activity which is a violation of any
local, state or federal law, including without limitation the manufacturing, selling, giving
away, bartering, delivering, exchanging, distributing or ,possession with intent to
manufacture, sell, give away, barter, deliver, exchange, or distribute a controlled
substance.
Despite any acceleration and payment of amounts owing under the Note, this Mortgage shall not
be deemed satisfied, unless there is a sale of the Mortgaged Premises and Lender has been paid
all amounts outstanding under the terms and conditions of the Note.
7.) Statutory power of Sale. At maturity, whether at the stated time or prior thereto
by the acceleration of maturity pursuant hereto, Lender (in addition to any other Temedies
provided for herein or which it may have at law or equity) shall have the statutory power of sale,
and on foreclosure may retain statutory costs and attorneys' fees.
8.) WAIVER OF NOTICE AND HEARING.
EXPRESSLY:
BORROWER HEREBY
(a) CONSENTS TO THE FORECLOSURE AND SALE OF THE MORTGAGED
PREMISES, AT THE OPTION OF LENDER, BY ADVERTISEMENT PURSUANT TO
MINNESOTA STATUES, CHAPTER 580, WHICH PROVIDES FOR SALE AFTER
SERVICE OF NOTICE THEREOF UPON THE OCCUPANT OF THE MORTGAGED
PREMISES AND PUBLICATION OF SAID NOTICE FOR SIX WEEKS IN THE
COUNTY IN MINNESOTA WHERE THE MORTGAGED PREMISES IS SITUATED;
(b) ACKNOWLEDGES THAT SERVICE OF SUCH NOTICE MUST BE MADE
UPON BORROWER PERSONALLY ONLY IF BORROWER IS AN OCCUPANT OF
THE MORTGAGED PREMISES, AND THAT NO HEARING OF ANY TYPE IS
REQUIRED IN CONNECTION WITH THE SALE; AND
(c) EXCEPT AS MAY BE PROVIDED IN SAID STATUTES, WAIVES ANY AND
ALL RIGHT TO PRIOR NOTICE OF SALE OF THE MORTGAGED PREMISES AND
ANY AND ALL RIGHT TO A PRIOR HEARING OF ANY TYPE IN CONNECTION
WITH THE FORECLOSURE SALE OF THE MORTGAGED PREMISES.
9.) Lender's Right of First Offer. During the time that any amount is outstanding
under the Note, Lender shall have the right to make the first offer to purchase the Mortgaged
Premises in accordance with the terms and conditions of this Section (the "Right of First
Offer"):
4.
(a) Borrower shall notify Lender of Borrower's desire to sell the Mortgaged Premises
at least ten (10) days before listing the Mortgaged Premises for sale or making a formal
offer to sell the Mortgaged Premises to a third party("Sale Notice"). The Sale Notice
shaH include the portion of the Mortgaged Premises being sold, the desired closing date
and any other relevant terms (as deemed by Lender). Within -ten (-10) days after
receiving the Sale Notice from Borrower, Lender may elect (by giving Borrower written
notice of Lender's intent to exercise its Right of First Offer) to purchase all of the
Mortgaged Premises, at the -Purchase Price as determined pursuant to the formula set
forth in Section !O(d) below (the "Election"). If Lender ma!œs the Election, Borrower
shall sell the Mortgaged Premises to Lender for the Purchase Price on reasonably
agreeable Closing terms. If Lender does not make the Election, Borrower may sell the
Mortgaged Premises to a third party. Notwithstanding the foregoing, Lender's failure to
make the Election shall not constitute a consent to assignment, transfer or sale of the
Mortgage to any third party.
(b) If Borrower pays in full all amounts owed to Lender, and Borrower fully satisfies
all of Borrower's obligations, under the Note and this Mortgage; or Lender fails to
exercise its Right of First Offer within the time period specified in the preceding
paragraph, then the Right of First Offer shall automatically become null and void, with
regard to the Mortgaged Premises. Notwithstanding the foregoing, if, for any reason,
Borrower fails to close on the sale of the Mortgaged Premises within twelve (12) months
of the Sale Notice, the Right of First Offer shall remain in full force and effect.
(c) If Lender exercises its Right of First Offer, (i) Lender shall be responsible for, and
pay the cost of, having a purchase agreement drafted for the Mortgaged Premises; and,
(ii) this Mortgage shall continue in full force and effect pursuant to the terms and
conditions herein contained until the closing of Lender's purchase of the Mortgaged
Premises. Upon such closing (and application of the sale proceeds to satisfy the First
Mortgage and this Mortgage), this Mortgage shall terminate and the remaining
obligations under the Note shall be forgiven.
(d) The purchase price (the "Purchase Price") payable by Lender, pursuant to its
exercise of its Right of First Offer, shall be two-thirds (66.66%) of the appraised value of
the property (such appraisal to be conducted within thirty (30) days of the Sale Notice, the
cost of which shall be split equally between the Lender and Borrower) subject to the
adjustments contemplated in Sections I of the Note, addressing repayment, and Section 3
of the Note, addressing Additional Interest.
(e) The closing of the Lender's purchase of the Mortgaged Premises as contemplated
by this section (the "Closing") shall occur within one hundred eighty (180) days after the
Sale Notice is given to Lender, unless postponed or extended in writing by the parties
hereto. The Closing shall take place at a mutually acceptable time and location. The
Closing costs shall be divided between the Lender and Borrower in the customary
manner.
5.
(f) If Lender does not exercise its Right of First Offer, this Mortgage shall continue in
full force and effect pursuant to the terms and conditions herein contained until the Note
is paid in full and Borrower's obligations are satisfied pursuant to the terms and
conditions contained in the Note and this Mortgage.
10.) Miscellaneous. This Mortgage shall be govemed by and construed in accordance
with the laws of the State of Minnesota and shall inure to the benefit of Lender and its successors
and assigns. Any forbearance by Lender 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. The procurement of insurance or the paymeµt of taxes or other liens or
charges by Lender shall not be a waiver of Lender's right to accelerate the maturity of the
indebtedness secured by this Mortgage. If any provision hereof is determined to be
unenforceable or invalid, such provision or such part thereof as may be unenforceable or invalid
shall be deemed severed from this Mortgage, and the remaining provisions shall be carried out
with the same force and effect as if the severed provision or part had not been made a part hereof.
BORROWER:
(Print Name)
(print Name)
STATE OF MINNESOTA
ss.
COUNTY OF
The foregoing instrument was acknowledged before me this _ day of
20---, by and
<marital status>.
Notary Public
THIS INSTRUMENT WAS DRAFfED BY:
LARKIN, HOFFMAN, DALY & LINDGREN, Ltd.
1500 Norwest Financial Center
7900 Xerxes Avenue South
Bloomington, Minnesota 55431
#400442 v2 _ HABITAT SECOND MORTGAGE FORM
6.
EXHIBIT A
to
SECOND MORTGAGE AND
RIGHT OF FIRST OFFER
by
, Borrower
in favor of
TWIN CITIES HABITAT FOR HUMANITY, INC., Lender
Legal Description of Mortgage Premises:
Permitted Encumbrances:
7.
$
,20
SECOND MORTGAGE
PROMISSORY NOTE
FOR VALUE RECEIVED,
(the
"Borrower" whether one or more) jointly and severally PROMISE TO PAY to the order of
TWIN CITIES HABITAT FOR HUMANITY, INC., a Minnesota nonprofit corporation, or its
successors and assigns (the "Lender") at ' Minneapolis,
Minnesota, or at such other place as may be designated from time to time by the Lender, the
principal sum of Dollars ($ ) plus interest and Additional
Interest (as defined in Section 3 below), if any, on or before the twentieth (20th )/thirtieth (30th)
(circle Olre) anniversary of the Commencement Date (as hereinafter defined) (the "Maturity
Date"). This Note shall not bear interest, except after a default by Borrower provided for in
Section 6 below. For purposes of this Note, the term "Commencement Date" shall· mean the
first day of the first calendar month after the date of this Note. This Note is payable as follows:
1.) Repavrnent. The debt and other obligations evidenced by this Note are secured by
that certain Second Mortgage and Right of First Refusal of even date herewith (the "Second
Mortgage") by Borrower for the benefit of Lender. The principal balance of this Note shall be
due and payable (as reduced, if applicable, pursuant to the provisions of Section 2, below), upon
the Sale (as hereinafter defined) by Borrower of the property described in the Second Mortgage
(the "Property"), to the extent that proceeds of the Sale remain after paying off other outstanding
debts which are secured by the Property, including and limited to: (a) the First Mortgage Note
(as defined in Section 6 below); (b) other obligations that were incurred for the purpose of
acquiring or improving the Property; and (c) paying Borrower's "Closing Costs" related to the
Sale (such as brokers' commissions and deed tax). If the Property is Sold during the first six (6)
Note Years (as hereinafter defined), there shall be no reduction of the principal balance as
contemplated in Section 2 below. However, regardless of the timing of the Sale, if the proceeds
of such Sale are sufficient to make full payment of the outstanding principal balance due under
this Note and the items referenced in subparts (a), (b) and (c) above, then Borrower, subject to
Section 3 below, may retain any remaining proceeds of the Sale. If Borrower owns and occupies
the Property until the Maturity Date, the outstanding principal balance due hereunder shall
become zero (0) on the Maturity Date. All Sales must comply with the terms and conditions of
this Note and the Second Mortgage. For purposes of this Note, the term "Sale" (and all forms
and derivatives thereof) shall mean any sale, conveyance, mortgage, pledge, grant of a security·
interest or other transfer of the Property. For purposes of this Note, a "Note Year" shall be any
Initials:
period of twelve (12) months beginning on the Commencement Date and any subsequent
anniversary thereof.
2.) PrinciDal Reduction. Commencing on the first day of the seventh (7th) Note Year,
the outstanding principal balance due hereunder shaIl be reduced by: (a) 1I14th of the original
principal balance (if this is a twenty (20) year Note); or (b) 1I24th of the original principal
balance (if this is a thirty (30) year Note), for each fuIl Note Year during which the Borrower is
the fee owner of the Property after the end of the sixth (6th) Note Year.
3.) Additional Interest. For purposes of this Note, the térm "Additional Interest"
shall mean: (a) ninety percent (90%) of the remaining Sale proceedš after payment of the items
specified in subparts (a), (b), and (c) of Section 1 above, after repayment of the outstanding
principal due under this Note, and after subtracting the aggregate of all principal payments made
under the Note prior to the Sale (the "Net Sale Proceeds"), if the Property is sold during the first
Note Year; (b) seventy-five percent (75%) of the Net Sale Proceeds if the Property is sold during
the second Note Year; (c) sixty percent (60%) of the Net Sale Proceeds if the Property is sold
during the third Note Year; (d) forty-five percent (45%) of the Net Sale Proceeds if the Property
is sold during the fourth Note Year; (e) thirty percent (30%) of the Net Sale Proceeds if the
Property is sold during the fifth Note Year; and (f) fifteen percent (15%) of the Net Sale Proceeds
if the Property is sold during the sixth Note Year. Additional Interest, if any, shaIl be paid to
Lender even if Lender repurchases the Property from Borrower. After the last day of the sixth
Note Year, Additional Interest shaIl be zero (0). In no circumstances shaIl Additional Interest
exceed Thirty Thousand and Noll 00 DoIlars ($30,000.00).
4.) Fon!Îvenessl AssumDtion. If the proceeds of any Sale are insufficient to pay all of
the amounts due under Section 1 above (including without limitation the principal amount due
under this Note), then the unpaid principal amount due hereunder shaIl be forgiven only if:
(a) the Property is sold to Lender; or (b) the Property is sold to a party other than lender (an
"Offeror") and the Sale is for at least the Current Fair Market Value of the Property (as
determined by a certified appraiser with at least five (5) years residential appraisal experience in
the area where the Property is located. Notwithstanding the foregoing, if the Sale is to a family
that is qualified for housing assistance under Lender's programs, then at Lender's sole option, the
outstanding principal balance of this Note shaIl be assumed by the Offeror, and in such
circumstance Borrower and Offeror shaIl deliver to Lender an executed Assignment and
Assumption of Mortgage Agreement in form and substance satisfactory to Lender, pursuant to
which the Offeror shaIl assume all of the outstanding obligations of Borrower under this Note
and the Second Mortgage.
5.) PreDavment. Prepayment of principal due hereunder shaIl be permitted at any
time Upon at least ten (10) days prior written notice, without premium or penalty. No partial
prepayment of this Note shall affect Borrower's obligation to pay succeeding installments until
this Note is paid in fuIl.
6.) Default: Borrower is, on or before this date, also obtaining a first mortgage loan
from Lender. To document and secure that loan, Borrower has executed and delivered a
2
Initials:
promissory note (the "First Mortgage Note") and first mortgage (the "First Mortgage"). If
Borrower shall fail to pay any sums due under this Note, the Second Mortgage, the First
Mortgage Note or First Mortgage as and when the same become due, or shall breach any
provision or covenant contained in the First Mortgage Note or First Mortgage or any provision or
covenant contained in this Note or in the Second Mortgage, then Lender shall have, in addition to
any and all other rights and remedies available to it, the right and option to declare the
outstanding principal balance of this Note immediately due and payable without notice, demand,
or presentment for payment to Borrower or others, and the right to foreclose all liens and security
interests securing the payment of this Note and to invoke all rights and remedies relating thereto.
After a default by Borrower, the unpaid balance of all indebtedness due hereunder shall bear
interest at the lesser of the maximum rate allowed by Minnesota law and eight percent (8%) per
annum from and after the date that Lender declares this Note due and payable through and
including the date of payment in full. The remedies of Lender as provided herein shall be
cumulative and concurrent, may be pursued singly, successively, or together, at the sole
discretion of Lender, and may be exercised as often as occasion therefor shall arise. No act or
omission by Lender, including specifically any failure to exercise any right or remedy, shall be
deemed a waiver or release of the same; any such waiver or release shall be effective only as set
forth in a written document executed by Lender and then only to the extent specifically recited
therein. A waiver or release with reference to one event shall not be construed as continuing as a
bar to or as a waiver or release of any subsequent right or remedy as to any subsequent event.
7.) Non-Recourse Loan: This Note is nonrecourse. Borrower shall not be deemed to
be personally liable for repayment of this Note or the performance of any of the covenants and
agreements contained in this Note and the Second Mortgage. If Lender shall at any time take
action to enforce the obligations of Borrower under this Note or the Second Mortgage, Lender
will proceed to foreclose on the Property in lieu of instituting suit upon this Note. If, from such
foreclosure and sale of the Property, a lesser sum is realized than the amount due and owed to
Lender under this Note, Lender shall not institute any action, suit, claim or demand in law or in
equity against Borrower for or on account of such deficiency. Notwithstanding the foregoing,
Borrower shall at all times be and remain personally liable and obligated on a joint and several
basis, for any and all indebtedness, liabilities, and obligations of Borrower to Lender relating or
pertaining to: (i) fraud or material misrepresentation by or on behalf of Borrower; (ii) the
commission of waste or willful damage with respect to the Property; and (iii) the nonpayment of
real estate taxes and property insurance premiums in accordance with the terms of the Second
Mortgage. Items (i) through (iii) above shall hereinafter be collectively referred to as the
"Carve-outs."
If the Property is sold at a foreclosure sale (or other such appropriate action or proceeding), the
proceeds of such sale shall be applied first to the discharge of that portion of the indebtedness,
obligations and liabilities owed to Lender remaining unpaid, as to which Borrower is not fully
personally liable, it being the intention that the application of the proceeds of any such sale shall
be in such manner as not to extinguish or reduce Borrower's personal liability until all the
indebtedness, obligations and liabilities owed to Lender for which Borrower is not personally
liable have been paid in full. It is expressly understood and agreed that nothing contained in this
paragraph shall in any manner or way constitute or be deemed to be a release or impairment of
3
Initials:
the indebtedness, liabilities and obligations evidenced by this Note, the Second Mortgage or any
other related documents, or otherwise affect or impair Lender's ability to enforce its rights to and
against the Property.
The indebtedness evidence by this Note is secured by a Second Mortgage of this date that
encumbers real property located in County, Minnesota.
BORROWER:
(Print Name)
Borrowers Address:
(Print Name)
::ODMA IPCDOCSILIB 1 \400281 II
4