(a) Inability to Identify a Qualified Purchaser.
(1) In the event the owner or the city is unable to identify a qualified purchaser who is able to purchase the unit within the resale marketing period in compliance with the sales timelines of this chapter and the regulatory agreement, the city shall have the right to purchase the unit at the affordable purchase price. If the city decides not to purchase the unit, the owner may, with the prior written consent of the city, sell the unit to a non-qualified purchaser without regard to the purchaser’s income. The owner’s request to the city to sell to a non-qualified purchaser shall be accompanied by evidence establishing that the owner has actively and in good faith attempted to identify a qualified purchaser for the unit throughout the resale marketing period using affirmative marketing measures. “Affirmative marketing” means that the owner shall have continuously listed the property on the multiple listing service and shall have acted in good faith in responding to inquiries and offers from qualified purchasers.
(2) In the event of an approved resale to a non-qualified purchaser due to the seller’s and the city’s inability to identify a qualified purchaser within the ten-year occupancy requirement, the seller shall be required to pay off the equity share provision of the regulatory agreement to the city at the close of escrow. The amount due to the city shall be the amount which bears the equal ratio to the fair market value at the time the equity share provision is paid off as the initial value that the equity share baseline had in relation to the original fair market sales price.
(b) Resale Necessitated by Hardship.
(1) The owner may sell the unit to a non-qualified purchaser during the ten-year affordability period and pay off the equity share provision of the regulatory agreement to the city in full if the community development director reasonably determines that the sale of the unit to a non-qualified purchaser is necessary due to circumstances of hardship, or “excluded transfers,” which may include:
(A) Financial hardship causing risk of default of the owner’s first mortgage;
(B) A transfer resulting from the death of the owner;
(C) A transfer to the owner and his or her spouse as joint tenants;
(D) A transfer resulting from a decree of dissolution of marriage or legal separation or from a property settlement agreement incident to such decree.
(2) No excluded transfer shall be effective unless the city has received a written request to approve the excluded transfer not less than thirty days prior to the proposed date of transfer. Any such request shall be accompanied by documentation supporting the basis for the excluded transfer.
(3) In the event of an approved resale to a non-qualified purchaser necessitated by the seller’s circumstance of hardship within the ten-year occupancy requirement, the seller shall be required to pay off the equity share provision of the regulatory agreement to the city at the close of escrow. As previously stated, the amount due to the city shall be the amount which bears the equal ratio to the fair market value at the time the equity share provision is paid off as the initial value that the equity share baseline had in relation to the original fair market sales price.
(4) The city may record a default notice on any affordable unit. In the event of default, the city, in its discretion, may purchase the unit. In the event the city purchases an affordable unit pursuant to this subsection or subsection (a)(1), the city shall take reasonable steps necessary to maintain the affordability of the unit and identify a qualified purchaser. The city shall not maintain ownership and rent the affordable unit.
(c) Resale after Close of Ten-Year Occupancy Requirement.
(1) The resale restrictions for affordable units shall be removed after a qualified purchaser has occupied the unit as their primary residence for at least ten years. However, the silent second note will remain with the property secured by the deed of trust or other applicable document until either: (A) the unit is sold; or (B) the silent second becomes amortized and payable after thirty years per the provisions of this chapter, unless extended by the community development director.
(2) In the event that the affordable unit is resold at fair market value, the equity share provision of the regulatory agreement is due in full at the close of escrow. Again, the amount due to the city shall be the amount which bears the equal ratio to the fair market value at the time the equity share provision is paid off as the initial value that the equity share baseline had in relation to the original fair market sales price. (Ord. No. 1393, § 3 (part); Ord. No. 1487, § 3 (part).)