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1985-0618_BANK OF AMERICA_Maintenance AgreementAGREEMENT RELATING TO THE�'���" INSTALLATION AND MAINTENANCE OF LANDSCAPING - 7 (SUBDIVISION TRACT NOS. 10103, 11093, y 11094 AND 11095 - CAPISTRANO ROYALE) THIS AGREEMENT is made and entered into this 18�day of June, 1985, by and among the CITY OF SAN JUAN CAPISTRANO, a Municipal corporation, hereinafter referred to as "City"; BANK OF AMERICA, N.T.& S.A., a national banking association, here- inafter referred to as "Bank"; AMERICAN SAVINGS AND LOAN ASSOCIATION, a California corporation, hereinafter referred to as "ASL"; AMERICAN FEDERAL SAVINGS AND LOAN ASSOCIATION OF IOWA, a federal savings and loan association, hereinafter referred to as "AmFed"; SECURITY FEDERAL SAVINGS AND LOAN ASSOCIATION, a federal savings and loan association, herein- after referred to as "Security"; and WESTERN HOME MORTGAGE CORPORATION, a California corporation, hereinafter referred to as "WHMC". Bank, ASL, Security and AmFed are sometimes hereinafter collectively referred to as the "Lenders". W I T N E S S E T H WHEREAS, The Goeden Company, a California corporat- ion, hereinafter referred to as "Goeden", entered into a Subdivision Agreement with City pursuant to which Goeden undertook to construct certain public improvements (the "Public Improvements") and to install certain landscaping (as 1 - AGREEMENT 0 more particularly described in Section l.lb(i), the "Landscaping") and certain irrigation equipment (as more particularly described in Section l.lb(ii), the "Irrigation") in connection with Goeden's development of a residential subdivision (the "Subdivision") consisting of 118 residential lots (designated by lot numbers on the recorded final tract maps) and certain common area lots (designated by lot letters on the recorded final tract maps) in Tract 10103, Tract 11093, Tract 11094 and Tract 11095 in the City of San Juan Capistrano, County of Orange, State of California, more popularly known as "Capistrano Royale"; and WHEREAS, Developers Insurance Company, a California corporation, hereinafter referred to as "DICO", issued its performance bond guarantying the completion of the Public Improvements; and WHEREAS, the Capistrano Royale Homeowners Association, a California corporation, hereinafter referred to as the "Association" has been duly incorporated and a board of directors of the Association has been duly elected by the members of the Association for the management and control of the Subdivision pursuant to that certain Master Declaration of Covenants, Conditions and Restrictions for Capistrano Royale (the "Declaration") recorded June 14, 1982 as Instrument No. 82-201112 in the Official Records of Orange County, California; and WHEREAS, each of the Lenders made or purchased cer- tain loans secured by deeds of trust on certain of the resi- dential lots in the Subdivision, the borrowers under said loans have defaulted, the Lenders have commenced foreclosure proceedings under said deeds of trust, AmFed has acquired title to 7 lots, Bank has acquired title to 23 lots, Security has acquired title to one lot and ASL has acquired title to 66 lots and is in the process of foreclosing on 17 lots; and WHEREAS, Goeden has failed to complete construction of the Public Improvements, has failed to complete install- ation of and to maintain the Landscaping and Irrigation, and has failed to complete construction of certain common area improvements in the Subdivision; and WHEREAS, the City has entered into an agreement with RICO for the completion of the Public Improvements and DICO has commenced such work; and WHEREAS, the Lenders agree to contribute certain funds to finance the installation and initial maintenance of the Landscaping and Irrigation in the manner set forth in Section 2.2 hereof and Bank and AmFed agree to make and finance certain other common area improvements in the Sub- division in the manner set forth in Section 3.2 hereof; and WHEREAS, City agrees to form an assessment district for the purpose of installing and maintaining the Landscaping and Irrigation as more fully set forth below; 3 - AGREEMENT 0 0 NOW, THEREFORE, BE IT MUTUALLY AGREED AMONG CITY AND THE LENDERS AS FOLLOWS: ARTICLE I. FORMATION OF LANDSCAPE MAINTENANCE DISTRICT. 1.1 Subject to receipt of the funds to be provided by the Lenders pursuant to Section 2.2 below, City agrees as follows: a. On or before August 6, 1985, City shall adopt a resolution creating a landscape maintenance district (the "District") pursuant to the "Landscape and Lighting Act of 1972" (California Streets and Highways Code SS 22500-22663) for the purposes and with the obligations and powers herein- after set forth. The District shall consist of all property within the Subdivision provided that only residential lots within the Subdivision shall be subject to assessment and common area lots as shown on the recorded final tract maps for the Subdivision shall not be subject to assessment. b. The District shall be responsible for and authorized to do the following: (i) Subject to the limitations set forth in paragraphs c and d, below, installation, maintenance, clean-up and restoration of all Landscaping in accordance with the landscaping plans prepared by R. W. Forsum, pages 1 through 45, initialled and dated by each of the Lenders and City and on file with the City Public Works Director (the "Plans"). 4 - AGREEMENT (ii) Subject to the limitations set forth in paragraphs c and d, below, installation, maintenance, repair and operation of the irrigation in accordance with the Plans including all irrigation lines, sprinkler heads, automatic controllers and other irrigation equipment, with the exception of irrigation plans for Firebreak Lots (as hereinafter defined) which shall be modified so as to delete common service points with a substitute to provide separate Irrigation systems to service the Landscaping on each Firebreak Lot. (iii) Annual weed abatement program as required on all common area lots in the Subdivision. C. Upon completion of the installation of all Landscaping and Irrigation on that portion of Lot A of Tract 11093 consisting of the Association recreation center and parking lot (the "Recreation Center") the maintenance thereof shall be the responsibility of the Association and the District shall have no further obligation to install, main- tain, restore or cleanup the Landscaping or Irrigation on the Recreation Center. However, the District shall retain the obligation to maintain the Landscaping and Irrigation on the remainder of said Lot A of Tract 11093, including, but not limited to, the obligation to maintain slope Landscaping around the Recreation Center. d. The Plans provide for certain firebreak Landscaping and Irrigation to be installed on certain resi- dential lots in with required firebreak Landscaping (the 5 - AGREEMENT 0 0 "Firebreak Lots"). The District shall install the Landscaping and Irrigation on each Firebreak Lot within thirty (30) days after written request therefor by the record owner of such Firebreak Lot (but not prior to such request) provided such Firebreak Lot has an operating water meter. The District shall maintain sufficient reserves to install the Landscaping and Irrigation on any Firebreak Lots on which the Landscaping and Irrigation have not yet been installed. Following installation of the Landscaping and Irrigation on any Firebreak Lot, the maintenance thereof shall be the responsi- bility of the record owner of such Firebreak Lot and the District shall thereafter have no further obligation therefor. e. On or before August 20, 1985, City shall award one or more contracts for the installation and mainte- nance of the Landscaping and Irrigation. City shall use its best efforts to let contracts which are as economical as possible consistent with sound business practice. All contracts shall contain such warranties as are standard in the landscaping and irrigation contracting industries. City shall cause the installation and maintenance of the Landscaping and Irrigation to be commenced not later than August 31, 1985, and completed not later than January 27, 1986. f. On or before August 10, 1985, City shall notify the Orange County Tax Assessor of the assessments to be levied on the residential lots within the District for the operation of the District. 6 - AGREEMENT 0 0 1.2 The Lenders each agree to cooperate in the formation of the District as follows: a. Each Lender agrees to waive its statutory rights as an interested person or as a land owner within the District to protest the formation of the District under California Streets and Highways Code Section 22589. b. The Lenders agree to convey to the District, and Bank shall use its best efforts to cause the Association to convey to the District, such open space easements or other rights of entry over their respective lots as the District shall require for the purpose of installing, maintaining and operating the Landscaping and Irrigation and carrying out the purposes of this Agreement. In the event that the District is terminated, the District shall vacate all such easements and rights of entry. 1.3 After such time as not fewer than seventy-one (71) of the residential lots in the District have been sold to individual homeowners, the City shall entertain a petition signed by a majority of all of the record owners of the residential lots in the District for the termination of the District. City agrees not to terminate the District prior to the filing of such a petition. ARTICLE II. INITIAL FINANCING OF LANDSCAPE MAINTENANCE DISTRICT. 2.1 City shall form the District and cause the District to be operated in accordance with the Landscape 7 - AGREEMENT 0 Budget set forth in Exhibit A attached hereto and incorporated herein by this reference. 2.2 a. On or before June 28, 1985, the Lenders shall contribute in cash a total sum of $390,725 for the cost of the formation of the District and the initial operation of the District for the eight months period commencing upon completion of the installation of the Landscaping and Irrigation all in accordance with the Landscape Budget. The contributions of the Lenders shall be in proportion to their ownership interests of residential lots in the Subdivision as follows: Lender ASL Bank AmFed Security TOTAL Cash Contribution $284,475 $ 78,830 $ 23,993 3,427 39$ 0,725 b. In the event that any Lender or Lenders fails to timely make its or their full contribution in cash on or before June 28, 1985, then this Agreement shall be null and void ab initio, all contributions shall be returned to the Lender or Lenders who timely make their contributions and no party shall have any right or obligation hereunder. 2.3 City shall cause the District to invest the District funds not immediately required for current operating purposes in investments of the type, quality, maturity and 0 yield of investments in which City invests public funds. Each calendar quarter, 73% of all income from the investment of District funds contributed by the Lenders pursuant to Section 2.2 above, shall be paid to ASL. Upon the expenditure or refunding of any portion of such District funds, the District shall have no further obligation to pay to ASL any income from the investment of such District funds so expended or refunded. The balance of such income shall be added to the District funds and utilized for District purposes as set forth in this Agreement. On or before July 1, 1986, City shall cause the District to prepare and deliver to each of the Lenders a final accounting of all District funds received and expended pursuant to Part I of the Landscape Budget for the installation of the Landscaping and Irrigation. On or before July 1, 1987, City shall cause the District to prepare and deliver to each of the Lenders a final accounting of all District funds received and expended for the formation of the District and the operation of the District for the first eight months. Any District funds not utilized for the installation of Landscaping and Irrigation (less reserves for Firebreak Lots) or the formation of the District and the operation of the District for the first eight months as shown in said accountings shall be refunded to the Lenders concurrently with delivery of said accountings in proportion to the Lenders' original contributions to the District funds as set forth in Section 2.2 above. 2.4 Upon completion of the formation of the District 9 - AGREEMENT 0 0 as set forth above and the payment by the Lenders of the initial District funds for the formation of the District and initial operation of the District, (a) the Lenders, and each of them, shall have no further financial responsibility or obligation with respect to the installation of the Landscaping or Irrigation systems and, (b) except to the extent that the residential lots owned by the Lenders within the District shall be liable for District assessments for the ongoing maintenance of the Landscaping and Irrigation, the Lenders, and each of them, shall have no further financial responsi- bility or liability with respect to the maintenance of the Landscaping or Irrigation. ARTICLE III. CAPISTRANO ROYALE HOMEOWNERS ASSOCIATION. 3.1 Bank currently holds record title to 23 of the 28 units comprising the Association and holds 3 of the 5 positions on the board of directors of the Asscociation. Bank, in cooperation with the Association, shall cause the common area Recreation Center to be completed, repaired, rehabilitated and furnished in accordance with the Recreation Center Budget set forth in Exhibit B attached hereto and incorporated herein by this reference. AmFed shall contribute 7/31 to a maximum of $11,595 and Security shall contribute 1/31 to a maximum of $1,657 of the actual, out-of-pocket costs incurred by Bank in completing, repairing, refurbishing and furnishing the Recreation Center. Concurrently with the 10 - AGREEMENT 0 execution of this Agreement, AmFed shall deposit the sum of $11,595 and Security shall deposit $1,657 into an escrow account at a financial institution mutually acceptable to Bank, AmFed and Security to be disbursed to Bank as con- struction progresses pursuant to an escrow agreement among Bank, AmFed, and Security and such escrow holder. Bank shall cause such construction to be completed not later than July 1, 1986 and any funds deposited by AmFed and Security and not disbursed for construction purposes shall be returned to AmFed and Security not later than July 1, 1986. Bank shall arrange for AmFed, Security or their authorized agents and contractors to have access to the Recreation Center during normal business hours for the purpose of inspection of the Recreation Center and all work performed thereon and for obtaining bids for such work. 3.2 Record title to certain common area lots (the "Goeden Lots") currently stands in the name of Goeden or an affiliated person or entity. The Lenders shall use their best efforts to negotiate with Goeden, such affiliated persons or entities, and the trustee in bankruptcy of Goeden, for the immediate conveyance of the Goeden Lots to the Association. This provision shall not obligate any party hereto to commence or intervene in any legal action or to make any payment or give any other consideration for such conveyance. District shall provide up to $2,500 from District contingency funds to pay the fees and costs of the firm of Stroock & Stroock & Lavan incurred in bringing a motion in the bankruptcy court to cause or facilitate such conveyance. 11 - AGREEMENT 0 0 3.3 The deadline dates for the District to commence and to complete the installation of the Landscaping and the Irrigation on the Goeden Lots may be extended by the District for so long as (a) record title to any Goeden Lot remains in Goeden and (b) City or the District reasonably determines that to proceed with installation of the Landscaping and Irrigation on the Goeden Lots may expose City or the District to legal liability. 3.4 a. Bank shall use its best efforts to cause the Association to do whichever of the following as a majority in interest of the Lenders shall agree is most beneficial: (i) assign to the Lenders its cause of action under the Bond for Completion of Common Facilities, Bond No. 103829 dated November 18, 1981, and/or such other bond for completion of common facilities as may have been executed by The Goeden Company in connection with the issuance to it of a final subdivision public report, or (ii) agree to prosecute an action to collect on the foregoing bond(s) in the Association's name with legal expenses to be borne and funded by the Lenders as set forth below. b. No Lender shall be obligated to participate in the prosecution of any action on any such bond or in the legal expenses incurred by the Association. Any one or more of the Lenders may, at their sole option but in cooperation with one another, prosecute or cause the Association to prosecute such an action and each such prosecuting Lender shall bear the legal expenses thereof in the same proportion 12 - AGREEMENT 0 0 as the number of lots owned as of the date hereof by such prosecuting Lender bears the total number of lots owned by all such prosecuting Lenders as of the date hereof. In the event that fewer than all the Lenders prosecute such action and bear such expenses, any recovery from such action shall first be applied to reimburse the actual legal expenses paid by such prosecuting Lender or Lenders plus interest on the amount of such reimbursed expenses at twelve percent (128) per annum plus a bonus equal to twenty percent (208) of the aggregate of such reimbursed expenses. The balance, or in the event that all Lenders participate in such prosecution, the entire recovery, shall be divided among all the Lenders in the same proportion as their respective contributions to the costs of the formation and initial operation of the District pursuant to Section 2.2. In the event that such recovery is insufficient to fully reimburse the prosecuting Lenders for their reimburseable expenses plus interest and bonus, the prosecuting Lenders shall be reimbursed out of such recovery in proportion to their contributions to such reimburseable expenses. C. In the event that the Association has not approved the assignment or prosecution of the cause of action as set forth in paragraph (a), above, on or before June 28, 1985, this Agreement shall be null and void ab initio, any District funds contributed by any Lender pursuant to Section 2.2 shall be forthwith refunded to such Lender and no party hereto shall have any further rights or obligations whatsoever 13 - AGREEMENT hereunder. 3.5 ASL, Security and AmFed agree to cooperate with Bank and the Association in approving and executing any amendments to the Declaration or the Articles of Incorporation or Bylaws of the Association which are made necessary by the formation of the District and City, ASL, Security and AmFed agree to cooperate with Bank and the Association in obtaining the approval of the Department of Real Estate to any such amendments. ARTICLE IV. CERTIFICATES OF OCCUPANCY. 4.1 The residential lots within the Subdivision currently owned by Bank and AMFed have been improved with single family residences for which Bank and AmFed have applied to City for certificates of occupancy. Concurrently with or prior to payment by Bank and AMFed of their proportionate shares of the District funds pursuant to Section 2.2, City agrees to deliver to Bank and AmFed either (1) final certifi- cates of occupancy for each residence within the Subdivision which qualifies for a certificate of occupancy under the City building code, or (2) a complete and final itemized listing ("Punch List") of all items of construction to be completed and all fees to be paid which City or any department or agency of City may require for the issuance of certificates of occupancy for such residences under the City building code. Such Punch List shall include only requirements under the City building code and shall not include any items purporting to be required under any other applicable laws, ordinances, and 14 - AGREEMENT 0 regulations including but not limited to zoning laws, the Sub- division Map Act or the Subdivided Lands Act. Upon request of Bank or AmFed for an inspection of any such residence, City shall cause a building inspector to commence such inspection within two (2) business days of such request and to diligently complete such inspection within ten (10) business days. City agrees that, upon completion of all items set forth in the Punch List in accordance with the City building code, certificates of occupancy will be issued for such residences within two (2) business days. 4.2 City recognizes and agrees that time is of the essence in the issuance of such certificates of occupancy. City agrees to use its best efforts to expedite the procedures for inspection of the residences and issuance of the certifi- cates of occupancy and City agrees that it will not unreason- ably withhold issuance of a certificate of occupancy for any residence. ARTICLE V. MUTUAL SPECIAL RELEASES. 5.1 Prior to the execution of this Agreement, one or more of the Lenders have alleged certain legal rights against City relating to City's refusal to issue certificates of occupancy for homes presently constructed within the Sub- division. City and the Lenders may also allege certain other legal rights or causes of action against one another arising from or related to the Subdivision. In consideration of the mutual covenants and agreements herein contained, and except 15 - AGREEMENT for the exclusions expressly set forth in Sections 5.2 and 5.3, below, City, ASL, Bank, AmFed and Security each hereby release, acquit, and discharge one another and all of each other's past, present, and future directors, employees, agents, partners, joint venturers, affiliates, representa- tives, attorneys, subsidiaries (expressly including Western Home Mortgage Corporation), parent and affiliated corpora- tions, successors, and assigns, and each of them (hereinafter collectively, "the respective related persons") of and from any and all Claims as hereinafter defined. As used herein, the term "Claims" means any and all alleged claims, defenses, causes of action, costs (including attorney's fees and expenses), or demands, whether known or unknown, and whether anticipated or unanticipated, which the parties hereto have, or may now claim to have, or may hereafter claim to have, against each other or against any of the respective related persons, by reason of any act or omission on the part of either of the parties hereto, or on the part of any of the respective related persons, occurring prior to the date of this Agreement, which alleged claims, defenses, causes of action, costs, or demands are embodied in, may arise out of, or are in any way connected with, any fact, matter, or issue pertaining to the Subdivision, including, without limitation (a) any and all rights the Lenders, or any of them, may have against City with regard to alleged damages arising out of City's refusal to issue Certificates of Occupancy prior to the execution of this Agreement, (b) any and all rights which the 16 - AGREEMENT 0 Lenders, or any of them, may have for damages allegedly arising from City's acceptance of any surety bond or other form of security agreement or document City has accepted in connection with any permit, zoning approval or subdivision map approval for any of the tracts involved in the Subdivision, or (c) any claim or cause of action which City may have against Western Home Mortgage Corporation under that certain purported set aside letter dated August 17, 1982. 5.2 The foregoing Mutual Special Releases are not intended to, and shall not, release or affect any Claim (arising out of or related to the sale to AmFed of loans secured by residential lots and improvements thereon in the Subdivision) by AmFed and/or its successors and assigns against Security, WHMC, Mary Morehead Associates and/or any other person or entity not specified in Section 5.1 or any Claim by Security Federal Savings or WHMC against AmFed, Mary Morehead Associates or any other person or entity not specified in Section 5.1 arising under or related to that certain Whole Loan Sale and Servicing Agreement dated June 14, 1982, and/or the submission package and/or related documents, and written, oral or implied representations and warranties relating to said sale. This Section 5.2 does not constitute, and shall not be construed to constitute or evidence, an admission by AmFed, Security, WHMC or Mary Morehead Associates of any wrongdoing or liability whatsoever, nor an admission that there exist any such Claims or any Claims whatsoever against any of them. This Section 5.2 is not intended as a limitation upon the Mutual Special Releases 17 - AGREEMENT in favor of City, ASL or Bank set forth in Section 5.1. In the event of any litigation or dispute arising out of the events described in this Section 5.2, AmFed, Security and WHMC each agree that, subject to Section 5.3, City, ASL or Bank shall not be made a party to such litigation or dispute. Security and WHMC represent and warrant to ASL that, to the best knowledge, information and belief of each and all of the present officers of Security and WHMC, neither ASL nor State Savings and Loan Association were parties to or had any involvement in the origination or sale to AmFed of the loans to Grove Properties, Inc. secured by deeds of trust on lots 3 through 9, inclusive, Tract 11094 which loans were sold by Security to AmFed. 5.3 The Mutual Special Releases set forth above shall be effective as of the date of this Agreement and shall not apply to any Claim arising under this Agreement. 5.4 The execution and delivery of the foregoing Mutual Special Releases by the parties hereto shall not constitute, or be construed to constitute or evidence, an admission of any liability or wrongdoing on the part of any party. The parties hereto, and each of them, warrant and represent that none of the Claims herein released has been assigned to any person or entity prior to the effective date of this Agreement. ARTICLE VI. MISCELLANEOUS. 6.1 This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their res - 18 - AGREEMENT 0 pective successors and assigns; provided, however, that this Agreement shall not burden or run with any of the residential lots in the Subdivision and shall not be binding upon any successor in title to any of the residential lots in the Subdivision unless such successor in title has expressly assumed the obligations hereof in writing. 6.2 Time is of the essence as to each time require- ment set forth in this Agreement. 6.3 This Agreement constitutes the entire under- standing between the parties with respect to the subject matter herein and this Agreement may not be changed except by writing and executed by all of the parties hereto. 6.4 The obligations of ASL, Bank, AmFed and Security hereunder are several and none of them are joint obliga- tions. The obligations of the Lenders to fund their propor- tionate shares of the District Funds shall terminate upon the payment thereof. The obligation of AmFed to fund its share of the Recreation Center Budget shall terminate upon the deposit thereof into escrow. The obligation of Bank to complete the construction and furnishing of the Recreation Center shall terminate upon completion thereof and the issuance of a final certificate of occupancy for the Recreation Center. Except as otherwise provided in this Section 6.4, the obligations of ASL, Bank, AmFed and Security hereunder shall terminate upon the earlier of (i) the full and complete performance thereof or (ii) July 1, 1986. 6.5 Each individual executing this Agreement on 19 - AGREEMENT 0 behalf of a party represents and warrants that he or she has full power and authority to execute this Agreement on behalf of such party pursuant to such party's bylaws or a resolution of its board of directors or, in the case of the individual executing this Agreement on behalf of City, pursuant to a motion of the City Council of City as reflected by a minute order certified by the City Clerk. CITY OF SAN JUAN CAPISTRANO (City) By Ti e: Mavor APPROVED AS TO FORM: Attorney 20 - AGREEMENT BANK OF AMERICA (Bank) By: Title: AMERICAN SAVINGS & LOAN ASSOCIATION (ASL) By: Title: Zxlee- PRC's�ocwT AMERICAN FEDERAL SAVINGS AND LOAN ASSOCIATION (AmFed) Byia25& . , SECURITX4EDERAL SAVINGS AND LO1?il�17qIATyQN (Security) T�G'.By°Title WESTERN HOME MORTGAGE CORPORATION (TIMC By: Ti — 0 0 EXHIBIT A LANDSCAPE BUDGET I. Landscape Improvement Costs Landscape improvements Trees, shrubs, hydroseed, clean-up and restoration Irrigation Improvements Installation of irrigation lines, sprinkler heads and automatic controllers SUB -TOTAL City Administrative Services (10 percent of sub -total) Contingency Fund (25 percent of sub -total) PART I TOTAL II. Langsca a Maintenance District (Costo Formation and Operations) District Formation Maintenance and Operation (Excluding landscape installation and restoration). Based upon eight months at $12,500/month Contingency Deposit PART II TOTAL GRAND TOTAL EXHIBIT A $ 81,500 102,000 $183,500 18,350 45,875 24$ 7,725 $ 3,000 100,000 40,000 143,000 $390,725 I n U Item 0 EXHIBIT B RECREATION CENTER BUDGET Pave Parking Lot Stripe Parking Lot Ground and Security Lights Tennis Court Volleyball Court Recreation Equiment Repair Pool and Spas Clean and Repair V -Ditch TOTAL EXHIBIT B $10,000 4,100 9,840 2,460 2,900 3,500 18,000 550 $51,350