1 BVCLT Ground Lease Simple Version Parties to the Ground Lease: Land Trust (CLT) & Tenant Parties the Ground Lease affects: Tenant s Lender, Property Manager& Subtenants Leasehold Financing: Tenant s interest in this 99-year ground lease, the leasehold interest, is a property right which lets Tenant borrow money and pledge certain rights to a lender as security for the loan. If Tenant fails to repay the loan, lender can exercise its rights to get repaid through the property. Lender remedies include receiving Subtenants rents, taking possession, or foreclosing (a forced sale that lets Lender get paid first out of any profits from the sale). Because lender s security is the leasehold interest lender wants (1) the lease to outlast the mortgage should lender need to get repaid from the property and (2) to get repaid as quickly and easily as possible. Therefore, Tenant s Lender will review the ground lease carefully for the following items: Rent that is predictable and not so variable as to interfere with Tenant s ability to make its mortgage payments. Lease Term that is longer than the mortgage term as a guarantee that Lender s security is available to repay Lender. Land Trust Termination Rights that are limited to Tenant s non-monetary defaults during the mortgage term and let lender pay Tenant s monetary defaults, like unpaid rent or taxes, so that lender doesn t lose its security. Property Use Restrictions, like the ground lease restriction to use the property only for low-income housing, that can be lifted so Lender can sell its leasehold interest quickly and at the highest price possible should it need to foreclose Many of the restrictions in the Ground Lease do not apply or are modified when a Tenant s Lender forecloses or exercises one of its remedies for Tenant s default on its loan. Because Tenant cannot buy the leasehold interest without borrowing money, Landlord must be willing to make ground lease compromises that protect Tenant s Lender. LEASE PROVISION Land Trust Tenant Art. 1. Property Lease Can t use property for anything lease doesn t specify. (1.2) Art. 3-Lease Term Gives Tenant a right to buy the land before it Lease unaffected if Land Trust sells the land. (3.2) can sell it to anyone other than a public benefit agency. (3.2) Art. 4. Rental Entitled to rent at a rate attached to an adjuster Must pay all water, gas, electricity, and other utilities Tenant uses on the for inflation. (4.1) property. (4.2) Must pay all taxes associated with its property. ( , ) Owes interest on any late payment, including rent. (4.4)
2 LEASE PROVISION Land Trust Tenant Art. 5. Possession of Gets the buildings only if Tenant abandons, Owns the buildings. (5.2) Property surrenders, or is dispossessed. (5.3) Gives Land Trust a right to buy the buildings before it can sell them to anyone else. (5.4) No removing or demolishing any improvements from property, except as lease permits. (5.2) Art. 6. Representations & Promises that it owns the property. (6.1) Takes the property as is. (6.2) Warranties Promises that it owns the buildings. (6.2) Art. 7. Alterations and Property Development Art. 8. Use of Property, Hazardous Materials, & Nondiscrimination Must approve any modification costing more that 10% of the building s acquisition value as adjusted for inflation. (7.1) Must consent to development/redevelopment. (7.2) Can inspect the property yearly for compliance with property standards. (8.11.1) Must approve any property manager Tenant hires& for cause can demand Tenant remove a property manager. (8.12) Can file a claim against Tenant for nonpermitted hazardous substance use 5 years after the lease ends. (8.16) Art. 9 Insurance Can require additional insurance as needed. (9.4) Responsible for all modification related costs. (7.1) Responsible for all development/redevelopment costs. (7.2) Must sell 100% of the individual units at affordable prices to households at or below 60% of AMI, & at least 20% of those units to those at 30% AMI. (8.3) Must yearly submit a Certificate of Continuing Program Compliance showing the % of units occupied or held vacant for its low-income subtenants. (8.10.(d)) Can t allow or use hazardous substances not required for its use & maintenance of the property and must reimburse Land Trust for any claims against Land trust if it does so. (8.13, 8.15) Can t discriminate, or let anyone with whom it contracts discriminate, on the basis of race, color, creed, religion, sex (gender), sexual orientation, marital status, national origin, or ancestry in subleasing housing or otherwise using the property. ( ) Must have acceptable insurance that names Land Trust as an additional insured (9.6) Art. 10 Maintenance, Repairs; Alterations; Reconstruction Must keep the property in good repair & in accord with all applicable laws & insurance company requirements.
3 LEASE PROVISION Land Trust Tenant Art. 11 Ownership & Responsibility for Owns the buildings, but can t destroy or remove them. (11.1.1) Must get Land Trust consent to any material building alterations. (11.3) Improvement Art. 13 Indemnification Must defend & pay for any claims or losses Land Trust suffers due to Art. 14 Damage or Destruction of Property or Improvements Art. 15 Eminent Domain Tenant negligence or failure to comply with the lease term. Must approve restoration plans. (14.3.1) Must restore buildings to a standard at least equal to their condition immediately before the damage or destruction (unless damage is in the lease s last 5 years & use its insurance to do so (unless its lender requires using it to pay off Lender s loan). (14.1.1, ) Must complete restoration within 30 months of Land Trust approval. (14.3.2) Entitled to any money left after Tenant s lender & then Tenant are paid from the money awarded for a Total Taking. (15.3.2) Can dispute Tenant s right to end the lease for a Substantial Taking & is entitled to the value of its loss, after Tenant s Lender is paid, from the money awarded for the taking. ( ) Entitled to the fair market value of its buildings from the money awarded for a Total Taking. (15.3.2) Can end the lease for a Substantial Taking & is entitled to the value of its loss, after its Lender & then Land Trust are paid, from the money awarded for the taking. (15.4.2) Can t end the lease for a Partial or Temporary Taking, must keep paying rent, & restore the buildings to the same or better condition. (15.6.1, 15.7, , ) Art. 16 Appraisal Splits appraisal related costs with Land Trust. (16.3) Art. 17 Assignment Gives Tenant s Lender the right to transfer Tenant s property without Land Trust s consent). (17.2) Art. 18 Mortgages Must automatically approve a mortgage from a lender the lease specifies. (18.1.1(b)) Entitled to pay Tenant s mortgage default within the mortgage specified cure period. (18.1(c)) Can t cancel, surrender, terminate, or modify the lease without Tenant Lender s consent. (18.1.2) Must get Land Trust written consent to transfer, sell, or assign, its lease rights. (17.1) Must get Land Trust approval for any mortgage. (18.1.1(a)) Its mortgage must require the lender give Land Trust notice of Tenant s default on the mortgage. (18.1.1(c)) Its mortgage must prohibit lender from demanding the full loan amount or foreclosing during the cure period. (18.1.1(c)) Its mortgage must give Land Trust the right to buy it if the lender demands the full amount due in preparing to foreclose. (18.1.1(d)) Its mortgage must require the lender to fix all defaults, except those only
4 LEASE PROVISION Land Trust Tenant Gives Tenant s Lender rights to notice of Tenant s lease default & to fix the default with another 90 days beyond what the lease gives Tenant to fix its default. (18.2.2, ) Promises Tenant s lender that it won t mortgage the land. (18.6) Gives Tenant s lender the right to enter into any dispute resolution between Land Trust & Tenant. (18.8) Agrees to amend the lease to meet Tenant Lender s loan security needs. (18.9) Art. 19 Subleasing Gets Tenant s subleases if Tenant defaults on the lease. (19.1.4) Art. 20 Performance of Tenant s Covenants Art. 21 Events of Default; Remedies Art. 22 Permitted Contests Art. 23 Arbitration of Disputes Art. 24 Force Majeure Can pay any property taxes or insurance that Tenant fails to pay. (20.1) Can end the lease, sue for damages, and take possession or lease to someone else. (21.2) Can arbitrate all lease disputes, except those about its rights to pursue remedies for Tenant s default & to assign, transfer, sell, or mortgage its Property interest. (23.1, ) Art. 25 General Provisions Can inspect Tenant s property improvements. (25.8) Tenant can fix, like its bankruptcy or hazardous waste use, before Land Trust transfers Tenant s lease or enters into a new one with the lender due to lender s foreclosure. (18.2.3) Must make all its subleases subject to the lease provisions. (19.1.7) Its subtenants can ask Land Trust not to cancel their subleases if Land Trust ends Tenant s lease. (19.2) Allows transfer of subtenant units to specified subtenant heirs. (19.4) In default for making payments more than 15 days late, vacating or abandoning the property for more than 30 days, defaulting on its lender s mortgage, declaring bankruptcy, or failing to fix any other lease violation within 30 days. ( ) Can dispute, subject to certain conditions, any legal or insurance requirement that applies to the Property. Can arbitrate all lease disputes, except those about its obligations to make payments, indemnify Land Trust, & keep the property & buildings free of mechanics or similar liens. (23.1, ) Excused for delays due to events beyond its control, like earthquakes & strikes, but must resume within 30 days after the event ends. Must pay all utilities. (25.6) Not personally responsible for rent /monetary lease violations (25.11).
5 LEASE PROVISION Land Trust Tenant For Tenant s monetary violations can only get Must pay Land Trust s attorney fees & costs for any dispute that Tenant paid out of Tenant s leasehold interest & loses. (25.13) Improvements (lease value & sublease rents. Can control transfer of its shares, individual units, & subleases as long as (25.11) it s not in default on its lease. (25.5) Must pay Tenant s attorney fees & costs for any dispute that Land Trust loses. (25.13) Emphasizes Tenant must sell & sublease its individual units at 8.3 affordable prices. (25.5)
6 EXHIBIT B RECORDING REQUESTED BY AND WHEN RECORDED RETURN TO: Beverly-Vermont Community Land Trust 117 Bimini Place, Room 201 Los Angeles, CA Attention: President APNs: and  MEMORANDUM OF GROUND LEASE THIS MEMORANDUM OF GROUND LEASE ("Memorandum"), dated as of, 2012, for identification purposes only, is made by and between Beverly-Vermont Community Land Trust ("CLT"), a California nonprofit corporation, and Urban Soil/Tierra Urbana, a California limited equity housing cooperative ("Tenant"). RECITALS A. Concurrently with this Memorandum, CLT and Tenant have entered into a Ground Lease dated as of, 2012 and as may be amended from time to time (the "Lease"); and B. Desiring to enter into this Memorandum to provide for the Lease and to place it of record, CLT and Tenant agree as follows: 1. CLT and Tenant are party to the unrecorded Lease for certain real property (the "Property") located in Los Angeles, California, as legally described in attached Exhibit "1". The Lease commences on the date on which this Memorandum first records in the Official Records of the County of Los Angeles, California, and expires on, The rent Tenant will pay and all CLT and Tenant rights and obligations relating to the Property are set forth in the Lease. 3. This Memorandum is subject to all Lease terms and provisions. It is not intended to alter, amend, expand or restrict the Lease or any CLT and Tenant rights and obligations under the Lease, all of which rights and obligations are fully incorporated in this Memorandum by this reference. B-1
7 4. This Memorandum may be executed in multiple counterparts, each of which shall be deemed an original. All attached Exhibits are incorporated in this Memorandum by this reference. IN WITNESS WHEREOF, CLT and Tenant have executed this Memorandum as of the day and year first written above. CLT Beverly-Vermont Community Land Trust, a California nonprofit corporation By: Its: President Tenant Urban Soil/Tierra Urbana, a California limited equity housing cooperative By: Its: B-2
8 STATE OF CALIFORNIA ) ) ss: COUNTY OF LOS ANGELES ) On, 2012 before me,, Notary Public, personally appeared who proved to me on the basis of satisfactory evidence to be the person whose name is subscribed to the within instrument and acknowledged to me that she is the person who executed the instrument in her authorized capacity, and that by her signature on the instrument the entity on behalf of which she acted executed the instrument. I certify under PENALTY of Perjury under the laws of the State of California that the paragraph above is true and correct. WITNESS my hand and official seal. Notary Public [Seal] B-3
9 STATE OF CALIFORNIA ) ) ss: COUNTY OF LOS ANGELES ) On, 2012 before me,, Notary Public, personally appeared who proved to me on the basis of satisfactory evidence to be the person whose name is subscribed to the within instrument and acknowledged to me that she is the person who executed the instrument in her authorized capacity, and that by her signature on the instrument the entity on behalf of which she acted executed the instrument. I certify under PENALTY of Perjury under the laws of the State of California that the paragraph above is true and correct. WITNESS my hand and official seal. Notary Public [Seal] B-4
10 Exhibit 1 LEGAL DESCRIPTION OF THE PROPERTY THAT CERTAIN LAND SITUATED IN THE CITY OF LOS ANGELES, COUNTY OF LOS ANGELES, STATE OF CALIFORNIA, DESCRIBED AS FOLLOWS: Lots 30, 31 and all of Lot 32, Except that portion lying North of the South line of the Right of Way conveyed to Los Angeles Railway Company, by Deed recorded in Book 3947, Page 50 of Deeds; also that part of Lot 33 lying South of the Los Angeles Railway Company s Right of Way of the Bimini Tract, in the City of LOS ANGELES, as per Map recorded in Book 5, Page 133 of Maps, in the Office of the County Recorder of Los Angeles County, California. Address: 117 Bimini Place, Los Angeles, CA Assessor s Parcel Number: Parcel 1: and Lots 28 and 29 of Bimini Tract, in the City of Los Angeles, County of Los Angeles, State of California, as per map recorded in Book 5, page 133 of Maps, in the office of the County Recorder of said County. Except the South 1 foot of the West 17 feet of said Lot 28. Parcel 2: A non-exclusive easement for ingress and egress over that portion of Lot 27 of said Bimini Tract, described as follows: Beginning at the Northeast corner of said Lot 27, thence along the Easterly line of said lot, South 0 18 West, a distance of 6.65 feet; thence West, a distance of feet; thence North West, a distance of feet; thence South West, a distance of feet; thence North West, a distance of feet to the Northerly line of said Lot 27; thence North East, a distance of feet to the point of beginning. Address: ½ Bimini Place, Los Angeles, CA Assessor s Parcel Number: B-5
11 EXHIBIT B RECORDING REQUESTED BY AND WHEN RECORDED RETURN TO: APN:  MEMORANDUM OF UNRECORDED GROUND LEASE THIS MEMORANDUM OF UNRECORDED GROUND LEASE ("Memorandum"), dated as of, 200, for identification purposes only, is made by and between Beverly-Vermont Community Land Trust ("CLT"), a California nonprofit corporation, and Terra Urbana, a California limited equity housing cooperative ("Tenant"). RECITALS A. Concurrently with this Memorandum, CLT and Tenant have entered into a Ground Lease dated as of, 200 (the "Lease"); and B. Desiring to enter into this Memorandum to provide for the Lease and to place it of record, CLT and Tenant agree as follows: 1. CLT and Tenant are party to the unrecorded Lease dated as of, 200, for certain real property (the "Property") located in Los Angeles, California, as legally described in attached Exhibit "A". The Lease commences on the date on which this Memorandum first records in the Official Records of the County of Los Angeles, California, and expires on, The rent Tenant will pay and all CLT and Tenant rights and obligations relating to the Property are set forth in the Lease. 3. This Memorandum is subject to all Lease terms and provisions. It is not intended to alter, amend, expand or restrict them or any CLT and Tenant rights and obligations under them, all of which are fully incorporated in this Memorandum by this reference. B-1
12 4. This Memorandum may be executed in multiple counterparts, each of which shall be deemed an original. All attached Exhibits are incorporated in this Memorandum by this reference. IN WITNESS WHEREOF, CLT and Tenant have executed this Memorandum as of the day and year first written above. "CLT" Beverly-Vermont Community Land Trust, a California nonprofit corporation By: Its: Tenant Terra Urbana, a California limited equity housing cooperative By: Its: B-2
13 EXHIBIT C RIGHT OF FIRST REFUSAL Whenever CLT and Tenant shall have a right of first refusal under this Lease as to the Property and/or Improvements, the following procedures and rights shall apply. The one offering for sale the property to which it has title ( Offering Party ), upon receiving a bona fide, third-party purchase offer that it is willing to accept shall: a. Give the other who holds the right of the first refusal ( Holder ) a written notice of the offer ( Notice of Offer ) which specifies: (1) the name and address of the prospective purchaser, (b) the purchase price offered, and (c) all other terms and conditions of the sale. Holder shall have a period of forty-five (45) days after receiving a Notice of Offer ( Election Period ) to exercise its right of first refusal. Holder shall exercise its right of first refusal in the Election Period by giving, the Offering Party written notice of its intent to purchase the Offering Party s property ( Notice of Intent to Purchase ) for the same price and on the same terms and conditions as specified in the Notice of Offer. b. If Holder exercises its right to purchase, Holder shall complete the purchase within sixty (60) days after Offering Party receives the Notice of Intent to Purchase or by any later date that the Notice of Offer specifies for completing the purchase. Holder shall complete the purchase by performing the terms and conditions, including paying the purchase price, specified in the Notice of Offer. c. If Holders fails to exercise the right of first refusal within the Election Period, the Offering Party shall have the right, subject to any other applicable restrictions in this Lease, to accept the bona fide, third party purchase offer and sell its property, on terms and conditions not more materially favorable to the purchaser, than those specified in the Notice of Offer, in the sixty (60) days following expiration of the Election period. If the sale is not completed in those sixty (60) days, the Offering Party s right to so sell shall terminate, and all the above provisions of this Right of First Refusal shall apply to any future offer. If the sale is completed in those sixty (60) days, the purchaser shall purchase subject to a renewed right of first refusal in the property. C-1
14 EXHIBIT "D" CERTIFICATE OF CONTINUING PROGRAM COMPLIANCE With reference to that certain Lease Agreement by and between Terra Urbana, ("Tenant") and the Beverly-Vermont Community Land Trust, dated as of, (the "Lease Agreement"), Tenant hereby certifies, as of the date of this Certificate, the following percentages of units at the Housing Project, Los Angeles, California are occupied or being held vacant for Low-Income Tenants: 1. Occupied by 30% of Median Income Tenants: %; Unit Nos. 2. Occupied by % of Median Income Tenants: %; Unit Nos. 3. Occupied by % of Median Income Tenants: %; Unit Nos. 4. Occupied by 60% of Median Income Tenants: %; Unit Nos. 5. Unoccupied units: %; Unit Nos. The undersigned hereby certifies that the information contained in this Certificate is true and complete and that Tenant is not in default under the Ground Lease. "Tenant" Terra Urbana, a California limited equity housing cooperative By: Its: D-1
15 EXHIBIT E INSURANCE REQUIREMENTS Tenant and Contractors shall ensure that they procure and maintain, at their own expense, for the duration of their agreement with Beverly-Vermont Community Land Trust the following insurance against claims for injuries to persons or damage to property which may arise from or in connection with the performance of the work by the Tenant / Contractors, its agents, representatives, employees, or subcontractors. These requirements are subject to change. 1. Comprehensive General Liability: written on ISO policy form CG or its equivalent with limits of not less than the following; General Aggregate $2,000,000 Products/Completed Operations Aggregate $1,000,000 Personal and Advertising Injury $1,000,000 Each Occurrence $1,000,000 The Beverly-Vermont Community Land Trust, and its officers and employees, shall be covered as insured with respect to: liability arising out of activities performed by or on behalf of the Developer / Contractor; products and completed operations of the Developer; premises owned, leased, or used by the Developer. The Developer shall provide as part of the comprehensive general liability insurance an additional named insured endorsement naming the Beverly- Vermont Community Land Trust. 2. Umbrella Liability Policy: Coverage shall be at least $5,000,000 and shall name Beverly-Vermont Community Land Trust as an additional insured. 3. Property Insurance: All Risk ISO Special Form property insurance. The amount of the property coverage shall at all times exceed the full replacement value of all improvements and fixtures on the site and the insurer shall waive any coinsurance via an agreement endorsement, including without limitation builder s risk protection during the course of construction, covering the full replacement value of real property and equipment utilized for the project. Coverage shall extend to provide debris removal and shall provide coverage for earthquake and flood if this protection is available from responsible carriers at reasonable cost. E-1
16 4. Automotive Liability: written on ISO policy form CA or its equivalent with a limit of liability of not less than $1 million for each incident. Such insurance shall include coverage of all owned, non-owned, and hired vehicles. 5. Worker s Compensation and Employers Liability insurance providing compensation benefits, as required by the Labor Code of the State of California. In all cases, the above insurance also shall include Employer s Liability coverage with limits of not less than the following: Each Accident $1,000,000 Disease- Policy Limit $1,000,000 Disease-Each Employee $1,000,000 E-2