City Council

Termination of Covenant and Reverter By deed dated ____________ and recorded _____________ in the RMC Office for Charleston County, in Book ____, Page ____, (the “Previous Deed”) the City of Charleston conveyed the real property, together with the improvements thereon, described in said deed to ______________________________, a nonprofit corporation organized under the laws of the State of ______________________________, which party is now the Grantor in this deed. The Previous Deed was made subject to a HOME Investment and Partnership Program Restrictive Covenant and Reverter (the “Covenant and Reverter”) obligating the Grantor of this deed to convey the property subject to the City of Charleston Home Program Resale Provisions, which City of Charleston Home Program Resale Provisions are set forth below and are intended to satisfy the requirements of the Covenant and Reverter. As such, effective upon the proper recording of this instrument, executed by the City of Charleston, as an attachment to this deed, the Covenant and Reverter contained in the Previous Deed are hereby fully and forever terminated and shall be of no further force or effect. City of Charleston Home Program Resale Provisions The real property, together with any improvements thereon (the “Property”) described in this deed (the “Deed”) shall be conveyed subject to the conditions, covenants, restrictions and limitations set forth below (collectively, the “Covenants”). The Covenants shall be considered as covenants running with the land, and shall be binding on the grantee named in the Deed, together with his/her heirs, successors and assigns, including all successors in title to the Property (collectively, the “Owner”). 1. RESTRICTION ON RESALE. For a period of ___ years from the date of this deed (the “Affordability Period”), the Owner shall be entitled to sell the Property only to a “Qualified Purchaser” as certified by the City of Charleston (together with any appropriate department(s) within the City of Charleston designated from time to time with respect to the various provisions of these Covenants, the “City”). In addition to any party deemed to be a Qualified Purchaser pursuant to Paragraph 9 below, a “Qualified Purchaser” shall mean a person who has been certified by the City as having household annual income that does not exceed the Maximum Annual Family Income as determined by the City. Maximum Annual Family Income shall mean 80% of the area median income, as certified by the Housing and Urban Development Agency, and as adjusted by the City for the number of persons in the household (“AMI”). When the Owner decides to sell the Property, the Owner shall promptly, and in any event prior to entering into a binding agreement to convey the Property, contact the City to coordinate the marketing of the Property to Qualified Purchasers and the process of certifying any interested buyer as a Qualified Purchaser by the City. If the City identifies a Qualified Purchaser for the Property, the Owner agrees to negotiate in good faith with such Qualified Purchaser, subject to the terms hereof. 2. MAXIMUM SALES PRICE. During the Affordability Period, the sale from the Owner to a Qualified Purchaser shall be for an amount, as determined by the City in its sole and absolute discretion (the “Resale Price”), that is equal to or less than the Maximum Resale Price, Charleston: 409936 v.7 as hereafter defined. As used herein, the “Maximum Resale Price” shall mean an amount equal to the lesser of: (a) the purchase price paid by such Owner, plus the cost of any Qualified Capital Improvements (hereafter defined) made by such Owner, adjusted by the change in the area median income1 or the consumer price index2 (whichever is greater) occurring between the date such Owner took title and the date of the sale to the Qualified Purchaser, plus any reasonable and necessary resale expenses as determined by the City in its sole discretion; or (b) the HOME Program Maximum Purchase Price.3 3. FAIR RETURN ON INVESTMENT. In determining the Resale Price, as set forth above, the City shall choose a price that is high enough to ensure the Owner a Fair Return on Investment (hereafter defined), provided, however, that in no event shall the Resale Price exceed the Maximum Resale Price. As used herein, the term “Fair Return on Investment” shall mean an amount equal to the sum of: (a) the Owner’s down payment actually paid in connection with the purchase of the Property, (b) loan principal repayments actually made with respect to the purchase money financing originally obtained by the Owner in order to purchase the Property, and (c) the cost of any Qualified Capital Improvements (hereafter defined). The City reserves the right to determine, in its sole discretion, the correctness and eligibility for consideration of any amounts listed in (a), (b), and (c) above. 4. QUALIFIED CAPITAL IMPROVEMENTS. As used herein the term “Qualified Capital Improvements” shall mean permanent fixed improvements to the Property made by the Owner, subject to the remaining terms of this Paragraph 4. In order for an item to be eligible for consideration as a Qualified Capital Improvement, the Owner must provide, upon the City’s request, paid receipts or other evidence reasonably satisfactory to the City documenting the cost of such proposed Qualified Capital Improvements. In addition, any proposed Qualified Capital Improvements made during a given year in excess of the sum of $1,750.00 must be approved by the City, in its sole and absolute discretion, prior to the making of such Qualified Capital Improvements in order to be eligible for consideration as a Qualified Capital Improvement. 5. SALE SUBJECT TO AFFORDABILITY DEED RESTRICTIONS; REPLACEMENT COVENANTS. At the City’s option, and in its sole and absolute discretion, the conveyance of the Property from the Owner to the Qualified Purchaser shall be made subject to additional affordability deed restrictions intended to replace these Covenants (“Replacement Covenants”), and, unless otherwise stipulated therein, upon the proper recording of the Replacement Covenants in the deed to such Qualified Purchaser, these Covenants shall terminate 1 Published annually by the U.S. Department of Housing and Urban Development. 2 Consumer Price Index for All Urban Consumers (CPI-U) for the South urban area, All Items, (Base Period: 1982- 84 = 100), as published by the United States Department of Labor. If the United States Department of Labor should no longer compile and publish such statistical information, the most similar information compiled and published by said Department or any other branch or department of the federal government or by the State of South Carolina shall be used for the purpose of determining the Consumer Price Index. 3 HOME Program maximum purchase prices are the Section 203(b) Single Family Mortgage Limits, as determined by the U.S. Department of Housing and Urban Development’s Office of Single Family Housing. Charleston: 409936 v.7 and be of no further force or effect. In the event the City does not choose to cause the Property to be conveyed subject to Replacement Covenants, these Covenants shall continue in full force and effect throughout the remainder of the Affordability Period. 6. RESTRICTION ON OCCUPANCY: NO RENTALS. During the Affordability Period, the Property shall be used and occupied solely as an Owner occupied, residential dwelling. The Owner shall not lease, nor permit to be leased, the Property. 7. MAINTENANCE; INSURANCE. The exterior appearance of the Property shall be maintained in an attractive and orderly condition and shall be kept free from trash, salvage, rubbish, garbage, and other unsightly or offensive material. The buildings now or hereafter located on the said premises shall be maintained in an attractive and sound condition and repairs as necessary to prevent damage to the building(s) or any part thereof shall be made promptly. The Owner shall keep the Property fully insured against casualty, fire, and flood loss at levels acceptable to the City. 8. CITY’S RIGHT OF REPURCHASE. In the event of a breach of any term or provision of these Covenants, in addition to any other remedy available under the terms hereof, at law or in equity, the City shall have the right to repurchase the Property for the “Discounted Purchase Price”, free and clear of any encumbrances and liens, other than those existing prior to the recording of this Deed. The Discounted Purchase Price shall mean the purchase price recited in this Deed (without regard to the consideration stated in any subsequent deed conveying the Property subject to these Covenants) multiplied by any increase in the AMI from the date of this Deed. For example and for illustration purposes only, if the original purchase price stated in this Deed had been $200,000 and if AMI had increased by 10% from the date of this Deed to the date of the breach, the Discounted Purchase Price would be $220,000. The right of repurchase set forth herein shall survive any conveyance of the Property and shall be enforceable against any record owner thereof. If the City purchases the Property pursuant to this Paragraph 8, the result may be that the then current Owner is obligated to sell the Property to the City for a purchase price that is less than the price the current Owner paid for the Property. The City shall have no obligation to the current Owner or its mortgagee to provide legal assistance in seeking redress against the selling Owner who participated in the breach of these Covenants. Each purchaser and mortgagee is advised to request from a selling Owner a copy of the City’s determination of the Discounted Purchase Price for the transaction. 9. DEEMED QUALIFIED PURCHASERS. Transfers to the following persons, parties or entities (an “Exempt Transfer”) are deemed to be transfers to Qualified Purchasers for purposes of these Restrictions: (a) a transfer resulting from the death of an Owner by operation of law pursuant to any will or trust to a spouse, child (including stepchildren), parent, grandparent or grandchild of any Owner. (b) a transfer from a decree of dissolution of the marriage or legal separation, or from a property settlement agreement incidental to such a decree, by which a spouse who is an Owner becomes the sole Owner of the Property. Charleston: 409936 v.7  (c) a transfer that occurs by virtue of foreclosure of a mortgage encumbering the Property or a transfer that occurs by reason of a deed in lieu of foreclosure shall be deemed to be a transfer to a Qualified Purchaser. Following any Exempt Transfer, the Property shall remain subject to these Covenants, provided, however, that any transfer as set forth in Paragraph 9(c) above shall be subject to the terms and conditions of Paragraph 10 of these Covenants. 10. MORTGAGE PROVISIONS. (a) Purchase Money Mortgage; Restriction against Junior Encumbrances. The Owner shall not refinance, encumber (voluntarily or otherwise) or grant a mortgage on the Property without the prior written consent of the City, which consent may be withheld in the City’s sole and absolute discretion, provided, however, that this provision shall not apply to a purchase money first priority mortgage granted by the Owner in order to acquire the Property (“Purchase Money Mortgage”). No future advances under a Purchase Money Mortgage may be given without first obtaining the City’s written consent, which consent may be withheld in the City’s sole and absolute discretion. If the City consents to the refinancing of a Purchase Money Mortgage, the mortgage replacing the original Purchase Money Mortgage as a result of such refinancing shall be considered a Purchase Money Mortgage for purposes of this Covenant. (b) Notice of Foreclosure. The holder of a Purchase Money Mortgage (a “Purchase Money Mortgagee”) shall give the City sixty (60) days advance written notice of its intent to foreclose upon its Purchase Money Mortgage or to accept a conveyance of the Property in lieu of foreclosure. During the sixty (60) day period, the City, its successors or assigns, shall have the right, but not the obligation, to purchase the mortgage for the amount due thereunder (including applicable expenses), and in such event the Purchase Money Mortgagee shall deliver to the purchaser such assignments and other evidentiary documents as the City shall reasonably request. (c) Termination of Covenant. If a Purchase Money Mortgagee acquires the Property by foreclosure or by deed in lieu of foreclosure under its Purchase Money Mortgage after giving the City the required sixty (60) days notice, the rights and restrictions contained in this Covenant shall terminate, and the Property shall become free from the rights and restrictions in this Covenant. Notwithstanding the foregoing, nothing shall prevent a Purchase Money Mortgagee from selling the Property to a Qualified Buyer in any foreclosure proceeding or after acquisition of title to the Property. The City shall, upon request, provide a determination as to a purchaser’s qualifications as a Qualified Purchaser. In such case, the deed shall indicate that the Property is being sold subject to these Covenants, or Replacement Covenants, as the case may be. (d) Excess Proceeds. If a Purchase Money Mortgagee conducts a foreclosure or other proceeding enforcing its rights under its Purchase Money Mortgage (or accepts a deed in lieu of foreclosure with respect thereto), and the Property is sold for a price that exceeds the Maximum Resale Price that would be applicable on the date of the sale, then all amounts in excess of such Maximum Resale Price shall be paid to the City after payment to the Purchase Money Mortgagee of the outstanding principal balance owing under the Purchase Money Charleston: 409936 v.7 Mortgage (including any future advances approved by the City in accordance with Paragraph 10(a) above), plus accrued interest and all reasonable costs and expenses the Purchase Money Mortgagee is entitled to recover under the terms of its Purchase Money Mortgage. 11. ENFORCEMENT. Grantor, Grantee, and each Owner hereby acknowledge and agree that the covenants, conditions and restrictions set forth herein are imposed for the benefit of residential community of the City of Charleston, and that the City has interests in real property and social, cultural and economic interests that benefit from the imposition of these covenants and restrictions. The benefits of these covenants, conditions and restrictions run with the Property, and bind and burden the Property. These Covenants shall be enforceable by the City. Grantor, Grantee and each Owner further acknowledge and agree that a breach of the covenants, conditions, and restrictions set forth herein shall potentially result in a broad range of economic, social, cultural and residential damages to a large number of parties, that such damages are difficult if not impossible to determine, and that the City shall be entitled to seek such remedies as may be available at law or in equity including but not limited to injunctive relief and specific performance. The City shall be entitled to reasonable attorney fees and costs in the event of a breach by the Owner of these Covenants. 12. NOTICES. Whenever this Covenant requires any party to give notice to another, the notice shall be given in writing and delivered in person or mailed, by certified or registered mail, return receipt requested. Notice to the Owner shall be mailed to the Owner in accordance herewith at the address of the Property, or such other address as designated by like written notice. Notice to the City shall be mailed to the City in accordance herewith to the address set forth below, or such other address as designated by like written notice: City of Charleston Department of Housing and Community Development 145 King Street, Suite 400 Charleston, South Carolina, 29401 13. SEVERABILITY. Whenever possible, each provision of these Covenants shall be interpreted in such manner as to be effective and valid, but if the application of any provision of these Covenants shall be prohibited or held invalid, such prohibition or invalidity shall not affect any other provision or the application of any provision which can be given effect without the invalid provision or application, and, to this end, the provisions of these Covenants are declared to be severable. Notwithstanding anything contained herein to the contrary, if any provision of these Covenants shall be unlawful, void, or voidable for violation of the rule against perpetuities, then such provision shall continue only until ninety (90) years from the date of first recordation. 14. HEADINGS. The headings of the sections in this Covenant are for convenience only and shall not be used to interpret the meaning of any provision contained herein. 15. CITY INSPECTION. The City shall have the right to inspect the Property from time to time to insure compliance with these Covenants. Charleston: 409936 v.7 16. NO SUBDIVISION. Without the prior express written consent of the City, the Property shall not be subdivided, nor converted to any form of horizontal property regime, nor any portion less than all the Property be conveyed, nor shall any form of interval ownership of or time sharing of the Property be permitted. 17. PREVENTION OF HEIRS PROPERTY The Owner shall maintain a current will and will use reasonable efforts to prevent the Property from transferring upon the Owner’s death pursuant to the laws of intestacy. 18. PAYMENT OF AD VALOREM TAXES. The Owner shall promptly pay each year the ad valorem taxes on the Property and shall deliver a copy of the paid receipt for such taxes to the City within 30 days of payment. In order to protect the City’s equitable interest in the Property, the City shall have the right to pay any delinquent taxes on the Property and shall have a lien against the Property for any such amount (“Tax Lien”). In addition to any other remedies provided by law or equity for the breach of these Covenants, the City shall have the right to foreclose on its Tax Lien in the event that the Owner fails to reimburse the City within sixty (60) days of written notice from the City. 19. CLOSING ATTORNEY’S OBLIGATION TO EXPLAIN COVENANTS. At the closing of any conveyance of the Property that is subject to these Covenants, the attorney conducting such closing (“Closing Attorney”) shall explain the terms and conditions set forth herein to the Owner. Within 10 business days after such closing, the Closing Attorney shall forward to the City an affidavit signed by the Owner stating that the Owner has read, understood, been provided a copy of and obtained legal advice with respect to these Covenants. Charleston: 409936 v.7  IN WITNESS WHEREOF, the CITY OF CHARLESTON has caused these presents to be executed this _____ day of _______________, 200__. SIGNED, SEALED AND DELIVERED IN THE PRESENCE OF: CITY OF CHARLESTON _________________________ By:_____________________________(L.S.) Joseph P. Riley, Jr. Its: Mayor _________________________ STATE OF SOUTH CAROLINA ) ) ACKNOWLEDGMENT COUNTY OF CHARLESTON ) THE FOREGOING instrument was acknowledged before me this ______ day of _______________ 200__, by the City of Charleston, by Joseph P. Riley, Jr., its Mayor. __________________________________ Notary Public for South Carolina My Commission Expires:_________ [SEAL] Charleston: 409936 v.7