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HomeMy WebLinkAboutAttachment 2: Letter from Focus GroupAttachment 2 BLANCHARD, KRASNER & FRENCH A PROFESSIONAL CORPORATION THOMAS L. GOTFREDSON, ESQ. ALAN W. FRENCH (Of Counsel) 800 SILVERADO STREET, SECOND FLOOR (Deceased) LA JOLLA, CALIFORNIA 92037 TELEPHONE: (858) 551-2440 FACSIMILE: (858) 551-2434 E-MAIL: lgot fred son@i.bk Il a w.com WEB: http://w'ww.hkfla w.colll May 21, 2012 REVISED AND AMENDED VIA EMAIL The Honorable Ron Morrison Mayor of National City City Hall 1243 National City Blvd. National City, CA 91950 Re: Status of Centro Condominium Unit 401/Purchase of the Revolution 2 Parcel Dear Mayor Morrison: I am writing concerning two matters related to the Centro/Revolution 2 project. The first deals with the City's interest in a condominium unit at the Centro project, and the second with the proposed sale of the Revolution 2 site to my client. 1. Status of Centro Condominium Unit 401. On June 15, 2011, the owner of the Centro development deeded condominium unit 401 to the Community Development Commission of the City of National City ("CDC"). A copy of the recorded deed is attached. The transfer of this unit was provided for in Amendment No.5 to the Disposition and Development Agreement by and between the CDC and Constellation Property Group ("Constellation"), and was memorialized in CDC Resolution 2010-267. Stewart Title Company was recently retained by the City of National City to issue a title commitment establishing the condition of title to condominium unit 401. Copies of Amendment No. 5, the CDC Resolution 2010-267, and the Stewart Title commitment are attached. The Stewart Title commitment establishes that fee ownership to condominium unit 401 at the Centro Condominium is vested in the CDC. It also discloses that two liens exist against the condominium unit in the nature of two deeds of trust, the first dated October 13, 2005 in favor of East West Bank (as successor in interest) in the amount of $5,230,000.00, and the second dated December 13, 2007 in favor of the CDC in the amount of $2,500,000.00. Stewart Title has called for the reconveyance of both the East West Bank and CDC deeds of trust in order to remove these liens. 1 have prepared, and Stewart Title has reviewed and approved, the The Honorable Ron Morrison May 21, 2012 Page 2 of 4 reconveyance document needed to remove these liens. All proposed reconveyance documents are attached to this letter. As will be discussed in detail in part two of this letter, the reconveyance by the CDC (through the successor agency) will not affect the CDC or successor agency's ability to pursue an action against Constellation for repayment of the $2,500,000.00 promissory note owed by Constellation to the CDC. We would request that the appropriate agency within the City of National City execute and deliver the attached reconveyance document in order to remove the CDC lien from the condominium unit. At the same time, it is intended that East West Bank will execute and deliver a reconveyance removing their lien from the condominium unit. 2. The Revolution 2 Project. The purchase of the Revolution 2 site by my client is presently being prevented due to encumbrances in favor of East West Bank and the CDC against a "sliver" parcel of land just north of City Hall on the boundary between the Revolution 2 project (Lot 2) and the Centro condominium project (Lot 1). My client, The Focus Group, desires to purchase the Revolution 2 parcel from East West Bank, which foreclosed on a series of loans encumbering these parcels and is now the owner. Because it easily becomes confusing to try and keep the parcels straight (in a manner reminiscent of Abbott and Costello's Who's on First), I have attached a survey map showing where the sliver parcel is between the Centro and Revolution 2 project. When East West Bank foreclosed on the Centro parcel in 2011, mistakenly attached to the Notice of Sale and the Trustee's Deed was a legal description that did not match the legal description contained in the original Deed of Trust recorded in 2007. The portion omitted is referred to as the sliver parcel. How did this happen? In 2007, the map for the Revolution 2 and Centro projects had not been recorded. In its place was an older parcel map with twb different parcels (known as Parcel 1 and Parcel 2), and their boundaries varied from the boundaries that were later established when the Revolution 2 and Centro project map was recorded. The 2007 Deed of Trust encumbered Parcel 2, which primarily comprised the Centro parcel, but which overlapped and included portions of what became the Revolution 2 project. In 2011, when East West Bank foreclosed on the Centro project, it did not attach the legal description that matched the 2007 Deed of Trust (for old Parcel 2), but rather attached the legal description for new Lot 1 (the Centro project). The foreclosure was successful as to the Centro project (Lot 1), but it missed the balance of old Parcel 2 that is on the Revolution 2 side of the boundary. This is the sliver parcel. Subsequently, East West Bank acquired title to the sliver parcel by Quit Claim Deed from the debtor Constellation, and it now owns the entirety of the Revolution 2 project. However, the lien for the East West Bank Deed of Trust remains against the sliver parcel, as does the lien of The Honorable Ron Morrison May 21, 2012 Page 3 of 4 the Second Deed of Trust in favor of the Community Development Commission of the City of National City. The East West Bank Deed of Trust originally secured a note in the amount of $20,340,000.00, while the National City CDC Second Deed of Trust secured a note in the amount of $2,500,000.00. At the foreclosure sale in 2011, East West Bank successfully bid in $8,000,000.00, leaving a shortfall of $15,704,257.91. The East West Bank Deed of Trust provides that the "Trustee...shall sell the Property...either as a whole or in separate parcels, and in such order as Lender may determine." Para. 17 (b) of Deed of Trust. East West Bank therefore retains a lien for the shortfall against the sliver parcel that it could still foreclosure upon, senior to the lien of the CDC Second Deed of Trust. The Second Deed of Trust holder is referred to in these circumstances following the sale as a "sold out junior" lien holder. Because East West Bank received a Quit Claim Deed from Constellation for the sliver parcel, there has been some discussion of the Doctrine of Merger, which generally holds that the joinder of the lien with the fee results in the extinguishment of the lien. However, in circumstances where there is a second deed of trust, the lien of the first deed of trust remains so as not to work a hardship on the first trust deed holder. Miller and Starr, California Real Estate, Section 10:42. "In other words, the first lien remains in existence and superior to the junior liens even though the deed of trust and the title are held by the same person." Miller and Starr, citing a series of California cases dating back to 1898. The title company insuring title to the property when the sale to my client is completed, Lawyer's Title, has requested that the National City CDC (and now the successor agency) reconvey its interest under the Second Deed of Trust in order to allow East West Bank to provide clean title to my client at the sale. In circumstances where the holder of a Deed of Trust wishes to preserve its rights against the debtor, Lawyer's Title has a special form of reconveyance document which preserves the rights of the creditor (CDC) while releasing the lien of its deed of trust. This document is called a Substitution of Trustee and Full Reconveyance (debt ont cancelled), and a copy of the document is attached. If the successor agency to the CDC were to execute the Substitution of Trustee and Full Reconveyance (debt not cancelled), the effect would be that the lien against the sliver would be extinguished, but the rights of the successor agency against the debtor Constellation would remain intact. Even if the sliver parcel held any value on its own -and I would suggest it does not, and likely does not constitute a legal parcel in any event -the CDC Deed of Trust is junior to a $15,000,000.00 First Deed of Trust. Like countless other junior lenders as a result of the collapse of the real estate market in the Great Recession, the CDC Second Deed of Trust, as a lien, is worthless. Lawyer's Title has reviewed the contents of this letter and concurs with its findings. The Honorable Ron Morrison May 21, 2012 Page 4 of 4 Recovery could still be attempted upon Constellation on its note to the CDC. Inquiry could be made as to the financial condition of the Constellation, and if it is determined that the debtor is solvent, the proper agents could be employed to seek a recovery. 3. Conclusion. We respectfully request that the National City City Council and the Oversight Board as successor agency to the Community Development Commission acknowledge the findings stated above and execute and deliver the attached Substitution of Trustee and Full Reconveyance (debt not cancelled). This will remove the lien of the CDC against Condominium unit 401 and the sliver parcel, allowing the Revolution 2 project to be reconfigured and developed, eliminating an eyesore that for too long has blighted the view from City Hall. Respectfully submitted, Thomas L. Gotfredson for Blanchard, Krasner & French TLG:af cc: Doug Abernathy, Lawyer's Title Co. John Hosack, Esq., attorney for East West Bank Enclosure r AND WHEN RECORDED MAIL TO: CDC City of National City 1243 National City Blvd National City, CA 91950-4301 Title Order No.: 7034-A.3592 55 5 v J oGN cc DO ff 2011-0307437 11011 J1 IUIflh1III1I11011IIH !l 111111111111 JUN 16, 2011 3:12 PM OFFICIAL RECORDS SAN DIEGO COUNTY RECORDER'S OFFICE Ernest J. Dronenburg. Jr., COUNTY RECORDER FEES: 19.00 OC: to 8575 PAGES: 9 1 IIII 1llIl111111 III 1 11111 III111II I I111i II II I111111 IIII1 II 11 IIIII I1II ItII [THIS SPACE FOR RECORDER ONLY] Grantor declares Documentary Transfer Tax: $0.00. Conveyance to a Governmental Agency per R€tR 11922 GRANT DEED THIS PAGE ADDED TO PROVIDE ADEQUATE SPACE FOR RECORDING INFORMATION (ADDITIONAL RECORDING FEE APPLIES) MAI L TAX STATEMENT TO RETURN ADDRESS ABOVE m 8576 GRANT DEED The undersigned Grantor declares: n4,ve , ` i /' P2 z- (1) The documentary transfer tax is $, which is computed on full value of the property conveyed, County of San Diego. (2) The property is located in the City of National City, County of San Diego. FOR VALUABLE CONSIDERATION, receipt of which is hereby acknowledged, CONSTELLAATION PROPERTY GROUP (A AVENUE) LP, a Delaware limited partnership ("Grantor"), hereby grants to the Community Development Commission of the City of National City, a public body, corporate and politic, ("Grantee") the following described real property in the City of National City, County of San Diego, State of California: AS PER EXHIBIT "A" ATTACHED HERETO AND MADE A PART HEREOF. GRANTOR: CONSTELLATION PROPERTY GROUP (A AVENUE) LP, a Delaware limited partnership By: Constellation Property Management, Inc., a Delaware orporation, its General Partner STATE OF CALIFORNIA By: Name: r ! k Its: .) �L Q'J' ACKNOWLEDGMENT ) ss. COUNTY OF SAN DIEGO On June 15, 2011, before me, Virginia Miller, a Notary Public for the State of California, personally appeared ,4r l re✓..0 Z/t.n ,,) , 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 he executed the same in his authorized capacity, and that by his signature on the instrument the person, or the entity upon behalf of which the person acted, executed the instrument. I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. WITNESS my hand and official seal. Signature t'.{1S. "THIS DCGUMENT WAS FILED FOR RECORDING BY STEWAONLY. IT HAS NOTTBEEN EXAMINED AS TO ITSTITLE AS ANATION VECUTION OR AS TO ITS EFFECT UPON THE TITLE, OR ITS RECORDABILUTY.' (Seal) VIRGINIA MILLER Commission # 1874998 Notary Public - California San Mato County Comm. • ins Dec 25.2813 8577 EXHIBIT "A" A Condominium comprised of: PARCEL 1: An undivided 1/61st fee simple interest as a tenant in common in and to Lot 1, of Map No. 15807, in the City of National City, County of San Diego, State of California, filed in the Office of the Recorder of San Diego County, on December 30, 2010 as File No. 2010- 0729372, EXCEPTING THEREFROM, the Association Property and Units 101 through 419, inclusive, of said Lot 1, of Map No. 15807, as shown on that certain Condominium Plan, recorded on April 19, 2011, as Instrument No. 2011-0202/639, of Official Records, in the Office of the County Recorder of San Diego County ("Condominium Plan"). **Units 101-104 inclusive; 201-219 inclusive; 301-319 inclusive; 401-419 inclusive. ALSO EXCEPTING THEREFROM, for the benefit of Grantor, its successors in interest, and others, together with the right to grant the same to others, such Exclusive Use Association Property easements as defined, described and shown in said Condominium Plan and the Declaration of Establishment of Conditions, Covenants and Restrictions for Centro ("Declaration"), recorded on April 19, 2011, as Instrument No. 2011-0202640, of the Official Records of San Diego County, California, including any amendments thereto. PARCEL 2: Unit No, 401, of said Lot 1, of Map No. 15807, as shown and described in said Condominium Plan. RESERVING FROM SAID PARCELS 1 AND 2 ABOVE, for the benefit of Grantor, its successors in interest, and others, easements for access, use, enjoyment, repairs, and for other purposes, all as described in the Declaration. PARCEL 3: Those certain Exclusive Use Association Property balcony and/or patio shown and designated in the above -referenced Condominium Plan located adjacent to the Unit, consisting of exclusive easements for use thereof appurtenant to Parcels 1 and 2 above, as defined and described in the Declaration and the Condominium Plan. PARCEL 4: Those certain Exclusive Use Association Property parking spaces shown and designated in the above -referenced Condominium Plan with the designation "49&50", consisting of exclusive easements for use thereof appurtenant to Parcels 1. and 2 above, as defined and described in the Declaration and the Condominium Plan. PARCEL 5: Nonexclusive easements for access, ingress, egress, use, enjoyment, drainage, encroachment, support, maintenance, repairs, and for other purposes, all as described in the Declaration. ACKNOWLEDGMENT STATE OF CALIFORNIA COUNTY OF SAN DIEGO 8578 On June 15, 2011, before me, Virginia Miller, a Notary Public for the State of California, personally appeared Brad Raulston, 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 he executed the same in his authorized capacity, and that by his signature on the instrument the person, or the entity upon behalf of which the person acted, executed the instrument. I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct.VIRG 1A MILLER ;fit, Camnmission # 18749 S WITNESS my hand and official seal. ttotarytzliC • California San Virgo County Cam Extirr Signature 44cfa 74,:/114 (Seal) SUBJECT TO: 1. Taxes for the fiscal year, 8579 2. Covenants, Conditions, Restrictions, reservations, rights, rights of way, easements of record, if any. 3. The "Notice of Seller's Election for Handling of Construction Claims Pursuant to California Civil Code Section 895, et seq.", recorded on April 20, 2011, as Instrument No. 0205035, in the Office of the County Recorder of said County, 4. All other covenants, conditions, restrictions, reservations, rights, rights -of -way and easements of record as well as any of such matters that are apparent. BY ACCEPTANCE AND RECORDATION OF THIS DEED, AND BY ITS EXECUTION OF THIS DEED, GRANTEE HEREBY (A) ACCEPTS AND APPROVES ALL OF THE FOREGOING IN THIS DEED, (B) GRANTS TO GRANTOR AND A AVENUE LIVING, INC. SUCH POWERS AND RIGHTS AS ARE SET FORTH IN THE DECLARATION, AND (C) ACCEPTS, APPROVES, ADOPTS, RATIFIES AND AGREES TO BE BOUND BY, AND TO ASSUME PERFORMANCE OF, ALL OF THE APPLICABLE REQUIREMENTS, COVENANTS, CONDITIONS, RESERVATIONS, RESTRICTIONS, EASEMENTS AND OTHER MATTERS SET FORTH IN THE DECLARATION, AND ALL AMENDMENTS THERETO, ALL OF WHICH PROVISIONS ARE INCORPORATED HEREIN BY REFERENCE THERETO WITH THE SAME FORCE AND EFFECT AS THOUGH FULLY SET FORTH HEREIN AT LENGTH, AND AGREES TO PAY PROMPTLY WHEN DUE, ANY AND ALL ASSESSMENTS AS REQUIRED UNDER SAID DECLARATION. GRANTEE: Community Development Commission of the City of National City, a public body, corporate and politic By: Braulston Executive Director AMENDMENT NO. 5 TO DISPOSITION AND DEVELOPMENT AGREEMENT This Amendment No. 5 to Disposition and Development Agreement (this "Amendment") is made and entered into as of December j:`i'2010 (the "Effective Date"), by and between the -Community Development Commission of the City of National City, a public body, corporate and politic (the "CDC") and Constellation Property Group (A Avenue) LP a Delaware limited partnership ("Constellation") and is acknowledged, consented and agreed to by East West Bank, as Assignee of the FDIC as Receiver of United Commercial Bank, a California Banking Corporation ("East West") Recitals A. The CDC and Constellation entered into that certain Disposition and Development Agreement dated August 30, 2005 (the "Original DDA") for the Centro Project ("Project"). B. Under the terms of the Original DDA, the CDC transferred the property on which the Project is constructed (the "Property") to an affiliate of Constellation pursuant to that grant deed recorded on October 26, 2005, as Document No. 2005-0930606, in the County Recorder's Office of the County of San Diego, California (the "Original Grant Deed"). C. Under the terrns of the Original DDA, in return for the Property, Constellation was to provide the CDC with the construction of (1) office space in the Project (the "Office Space") and (2) a trolley transit center and certain street improvements to A Avenue (the "A Avenue improvements", together with the Office Space the "DDA Obligations"). D. On October 17, 2006 the DDA was amended, modifying the DDA Obligations (the "Second Amendment," together with the Original DDA, the "DDA") Under the Second Amendment, the obligation to provide the Office Space was removed and in its place, Constellation was obligated to provide a condominium unit and two parking spaces (the "Condominium Unit"). E. On or about October 16, 2007 Constellation obtained a construction loan ("Loan") from United Commercial Bank ("UCB") and entered into a construction loan agreement (the "Loan Agreement") with UCB to construct the Project. Pursuant to the Loan Agreement, Constellation entered into a promissory note ("Promissory Note") with UCB, which was secured by a deed of trust recorded on December 23, 2007 as Document No. 2007-0789160 in the offices of the recorder of the County of San Diego (the "Deed of Trust".) The Promissory Note secured by the Deed of Trust is junior to the DDA Obligations. F. On or about November 6, 2009, UCB ceased to operate and was taken over by the FDIC. East West Bank ("East West") acquired certain assets of UCB including the Loan from the FDIC. East West is currently the holder of the Promissory Note. DDA AMENDMENT NO. 5 1 G. CDC and Constellation now wish to formalize the transfer of the Condominium Unit on the terms and conditions set forth below. NOW, THEREFORE, in consideration of the mutual covenants herein contained, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the CDC, Constellation and East West agree as follows: 1. Nomination of Condominium Unit. The Condominium Unit to be provided to the CDC shall be Unit No. 401 (the "Condominium Unit"). 2. Transfer of the Condominium Unit. Prior to the receipt of the certificate of Occupancy for the Project, Constellation shall transfer the Condominium Unit to the CDC pursuant to the grant deed attached hereto as Exhibit A. 3. East West Partial Reconveyance of Deed of Trust. Upon the transfer of the Condominium Unit to CDC , East West agrees to release the Condominium Unit from the Deed of Trust by a partial reconveyance of the Deed of Trust as to the Condominium Unit only. Except as expressly stated in this Paragraph 3, the Deed of Trust shall not be otherwise modified, impacted or impaired. 4. Completion of Obligations. Upon the transfer of the Condominium Unit, the CDC acknowledges and agrees that the DDA Obligations shall have been fully and finally completed. 5. Miscellaneous. Except to the extent expressly modified by this Amendment, the DDA, and all subsequent amendments, remain in full force and effect. Further, this Amendment shall not impair, affect or modify the agreement terms and the respective rights and obligations of the parties to this Amendment as set forth in Subordination Agreements including but not limited to Subordination Agreement dated October 16, 2007. To the extent of any inconsistency between this Amendment and the DDA, the terms and conditions of this Amendment shall control. This Amendment may be executed in multiple counterparts, all of which, taken together, shall constitute one and the same document. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] DDA AMENDMENT No. 5 2 IN WITNESS WHEREOF, the CDC and Constellation have executed this Amendment as of the Effective Date first set forth above. Attested: CDC Secretary CDC: Community Development Commission of the City of National City, a public body, corporate and politic By: Name: Its: CONSTELLATION: Constellation Property Group (A Avenue) LP, a Delaware limited partnership By: Constellation Property Management, Inc., a Delaware corporation Its: General Partner By: AGREED, ACKNOWLEDGED AND ACCEPTED East West Bank: By: BLit Name: Its: .1- DDA AMENDMENT NO. 5 3 IN WITNESS WHEREOF, the CDC and Constellation have executed this Amendment as of the Effective Date first set forth above. CDC: Community Development Commission of the City of National City, a public body, corporatpd politic By: Name: Ron Morrison Its: Chaiman CONSTELLATION: Constellation Property Group (A Avenue) LP, a Delaware limited partnership By: Constellation Property Management, Inc., a Delaware corporation Its: General Partner B y: AGREED, ACKNOWLEDGED AND ACCEPTED East West Bank: By: Name: Its: DDA AMENDMENT NO. 5 3 EXHIBIT A Grant Deed RECORDING REQUESTED BY: STEWART TITLE COMPANY WHEN RECORDED RETURN TO: *************************************************************************** GRANT DEED The undersigned Grantor declares: (1) The documentary transfer tax is $ , which is computed on full value of the property conveyed, County of San Diego. (2) The property is located in the City of National City, County of San Diego. FOR VALUABLE CONSIDERATION, receipt of which is hereby acknowledged, CONSTELLATION PROPERTY GROUP (A AVENUE) LP, a Delaware limited partnership ("Grantor"), hereby grants to , ("Grantee") the following described real property in the City of National City, County of San Diego, State of California: AS PER EXHIBIT "A" ATTACHED HERETO AND MADE A PART HEREOF. GRANTOR: CONSTELLATION PROPERTY GROUP (A AVENUE) LP, a Delaware limited partnership By: Constellation Property Management, Inc., a Delaware corporation Its: By: Name: Its: DDA AMENDMENT NO. 5 4 EXHIBIT "A" A Condominium comprised of: PARCEL 1: An undivided 1/61st fee simple interest as a tenant in common in and to the Lot , of Map No. , in the City of National City, County of San Diego, State of California, filed in the Office of the Recorder of San Diego County, 201_. EXCEPTING THEREFROM, the Association Property and Units through , inclusive, of said Lot , of Map No. , as shown on that certain Condominium Plan, recorded on , 201, as Instrument No. , of Official Records, in the Office of the County Recorder of San Diego County ("Condominium Plan"). ALSO EXCEPTING THEREFROM, for the benefit of Grantor, its successors in interest, and others, together with the right to grant the same to others, such Exclusive Use Association Property easements as defined, described and shown in said Condominium Plan and the Declaration of Establishment of Conditions, Covenants and Restrictions for Centro ("Declaration"), recorded on , 201, as Instrument No. , of the Official Records of San Diego County, California, including any amendments thereto. PARCEL 2: Unit No. , of said Lot , of Map No. , as shown and described in said Condominium Plan. RESERVING FROM • SAID PARCELS 1 AND 2 ABOVE, for the benefit of Grantor, its successors in interest, and others, easements for access, use, enjoyment, repairs, and for other purposes, all as described in the Declaration. PARCEL 3: Those certain Exclusive Use Association Property balcony and/or patio shown and designated in the above -referenced Condominium Plan located adjacent to the Unit, consisting of exclusive easements for use thereof appurtenant to Parcels .1 and 2 above, as defined and described in the Declaration and the Condominium Plan. PARCEL 4: Those certain Exclusive Use Association Property parking spaces shown and designated in the above -referenced Condominium Plan with the designation " ", consisting of exclusive easements for use thereof appurtenant to Parcels 1 and 2 above, as defined and described in the Declaration and the Condominium Plan. PARCEL 5: Nonexclusive easements for access, ingress, egress, use, enjoyment, drainage, encroachment, support, maintenance, repairs, and for other purposes, all as described in the Declaration. DDA AMENDMENT NO. 5 6 SUBJECT TO: 1. Taxes for the fiscal year. 2. Covenants, Conditions, Restrictions, reservations, rights, rights of way, easements of record, if any. 3. The "Notice of Seller's Election for Handling of Construction Claims Pursuant to California Civil Code Section 895, et seq.", recorded on 201 , as Instrument No. , in the Office of the County Recorder of said County. 4. All other covenants, conditions, restrictions, reservations, rights, rights -of -way and easements of record as well as any of such matters that are apparent. BY ACCEPTANCE AND RECORDATION OF THIS DEED, AND BY ITS EXECUTION OF THIS DEED, GRANTEE HEREBY (A) ACCEPTS AND APPROVES ALL OF THE FOREGOING IN THIS DEED, (B) GRANTS TO GRANTOR AND A AVENUE LNING, INC. SUCH POWERS AND RIGHTS AS ARE SET FORTH IN THE DECLARATION, AND (C) ACCEPTS, APPROVES, ADOPTS, RATIFIES AND AGREES TO BE BOUND BY, AND TO ASSUME PERFORMANCE OF, ALL OF THE APPLICABLE REQUIREMENTS, COVENANTS, CONDITIONS, RESERVATIONS, RESTRICTIONS, EASEMENTS AND OTHER MATTERS SET FORTH IN THE DECLARATION, AND ALL AMENDMENTS THERETO, ALL OF WHICH PROVISIONS ARE INCORPORATED HEREIN BY REFERENCE THERETO WITH THE SAME FORCE AND EFFECT AS THOUGH FULLY SET FORTH HEREIN AT LENGTH, AND AGREES TO PAY PROMPTLY WHEN DUE, ANY AND ALL ASSESSMENTS AS REQUIRED UNDER SAID DECLARATION. GRANTEE: DDA AMENDMENT NO. 5 7 ACKNOWLEDGMENT STATE OF CALIFORNIA ) ) ss. COUNTY OF ) On , 201 , before me, , a Notary Public for the State of California, personally appeared and who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument, and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. WITNESS my hand and official seal. Signature DDA Amendment No. 5 Page J 8 858,E RESOLUTION NO. 2010 - 267 RESOLUTION OF THE COMMUNITY DEVELOPMENT COMMISSION OF THE CITY OF NATIONAL CITY AUTHORIZING THE CHAIRMAN TO EXECUTE AMENDMENT NO. 5 TO THE DISPOSITION AND DEVELOPMENT AGREEMENT BY AND BETWEEN THE COMMUNITY DEVELOPMENT COMMISSION AND CONSTELLATION PROPERTY GROUP (A AVENUE) LP, AND ACCEPTING THE CONVEYANCE AND RELEASE OF REAL PROPERTY PURSUANT TO SAID AMENDMENT WHEREAS, on August 30, 2005, the Community Development Commission of the City of National City ("CDC") entered into a Disposition and Development Agreement ("DDA") with Constellation Property Group (A Avenue), LP ("Constellation") for the redevelopment of approximately 1.2 acres between National City Boulevard, B Avenue, 11th Street, and 12th Street (the "Site"); and WHEREAS, as part of the redevelopment project, Constellation was to construct on the Site approximately 40 condominium units known as "Centro". Pursuant to the DDA, as amended, Constellation was obligated to convey to the CDC for $10 a residential condominium unit and two parking spaces; and WHEREAS, Constellation will be in a position to convey the residential condominium unit to the CDC upon approval of the final subdivision map for Centro, Constellation and East West Bank, the construction lender and holder of a first deed of trust on the Site, desire to memorialize the transaction pursuant to which the residential condominium unit will be conveyed to the CDC; and WHEREAS, In order to memorialize the transaction, Constellation and East West Bank have proposed Amendment No. 5 to the Disposition and Development Agreement by and between the CDC and Constellation (the "Amendment"). The Amendment will be entered into between the CDC, Constellation, and East West Bank, and provides that prior to receipt of a Certificate of Occupancy for Centro by Constellation, Constellation will convey the residential condominium unit to the CDC, and that upon such conveyance, East West Bank will release that portion of its deed of trust relating to the condominium unit. NOW, THEREFORE, BE IT RESOLVED that the Community Development Commission of the City of National City hereby authorizes the Chairman to execute Amendment No. 5 to the Disposition and Development Agreement by and between the Community Development Commission -of the City of National City and Constellation Property Group (A Avenue), LLP. BE IT FURTHER RESOLVED that the Community Development Commission of the City of National City hereby accepts a Grant Deed from Constellation Property Group (A Avenue), LLP, for the conveyance of one residential condominium unit in the Centro condominium project, together with all related exclusive rights and nonexclusive easements in said project, and directs that the City Clerk record the same. BE IT FURTHER RESOLVED that -the Community Development Commission of the City of National City hereby accepts the release of the residential condominium unit from East West Bank, and directs that the City Clerk record the same. — Signature Page to Follow-- 8582 Resolution No. 2010 — 267 Page 2 PASSED and ADOPTED this 23rd day of November, 2010. Ron Morrison, Chairman ROVED AS TO FORM• Si General Co , CDC 8583 Passed and adopted by the Community Development Commission of the City of National City, California, on November 23, 2010 by the following vote, to -wit: Ayes: Commissioners Morrison, Sateto-Solis, Zarate. Nays: Commissioner Van Deventer. Absent: None. Abstain: None. AUTHENTICATED BY: RON MORRISON Chairman, Community Development Commission BRAD RAULSTON Secretary, Community Development Commission By, Deputy HEREBY CERTIFY that the above and foregoing is a full, true and correct copy of RESOLUTION NO. 2010-267 of the Community Development Commission of the City of National City, California, passed and adopted on November 23, 2010. Secret ity Development Commission By: Deputy stewart j P � title of california, inc. Order Number Title Unit Numb er Stewart Title of California, Inc 7676 Hazard Center Dr., 14th Floor San Diego, CA 92108 (619) 692-1600 Phone PRELIMINARY REPORT : 467482 : 7034 Buyer/Borrower Name: Seller Name: : Centro Indy LLC Property Address: 45 East 12th Street Unit 401, National City, California In response to the above referenced application for a Policy of Title Insurance, Stewart Title of California, Inc. hereby reports that it is prepared to issue, or cause to be issued, as of the date hereof, a Policy or Policies of Title Insurance describing the land and the estate or interest therein hereinafter set forth, insuring against loss which may be sustained by reason of any defect, lien or encumbrance not shown or referenced to as an Exception on Schedule B or not excluded from coverage pursuant to the printed Schedules, Conditions, and Stipulations of said Policy forms. The printed Exceptions and Exclusions from the coverage and Limitations on covered Risks of said policy or policies are set forth in Exhibit A attached. The policy to be issued may contain an arbitration clause. When the Amount of Insurance is less than that set forth in the arbitration clause, all arbitrable matters shall be arbitrated at the option of either the Company or the Insured as the exclusive remedy of the parties. Limitations on Covered Risks applicable to the CLTA and ALTA Homeowner's Policies of Title Insurance which establish a Deductible Amount and a Maximum Dollar Limits of Liability for certain coverages are also set forth in Exhibit A. Copies of the policy forms should be read. They are available from the office which issued this report. Please read the exceptions shown or referred to below and the exceptions and exclusions set forth in Exhibit A of this report carefully. The exceptions and exclusions are meant to provide you with notice of matters, which are not covered under the terms of the title insurance policy and should be carefully considered. It is important to note that this preliminary report is not a written representation as to the condition of title and may not list all liens, defects, and encumbrances affecting title to the land. This report, (and any supplements or amendments thereto) is issued solely for the purpose of facilitating the issuance of a policy of title insurance and no liability is assumed hereby. If it is desired that liability be assumed prior to the issuance of a policy of title insurance a binder or commitment should be requested. Dated as of: May 11, 2012 at 7:30 a.m. Michael Muldoon, Title Officer When replying, please contact Michael Muldoon, Title Officer File Number: 467482 Page 1 of 9 PRELIMINARY REPORT The form of Policy of Title Insurance contemplated by this report is: ❑ California Land Title Association Standard Coverage Policy ❑ American Land Title Association Owners Policy ❑ American Land Title Association Residential Title Insurance Policy ❑ American Land Title Association Loan Policy ❑ CLTA/ALTA Homeowners Policy ❑ ALTA Short Form Residential Loan Policy (06/16/07) ❑ 2006 ALTA Loan Policy Ii PRELIMINARY REPORT ONLY SCHEDULE A The estate or interest in the land hereinafter described or referred to covered by this report is: A condominium, as defined in Section 783 of the California Civil Code, in fee. Title to said estate or interest at the date hereof is vested in:. The Community Development Commission of the City of National City, a public body, corporate and politic File Number: 467482 Page 2 of 9 LEGAL DESCRIPTION The land referred to herein is situated in the State of California, County of San Diego, and described as follows: A Condominium comprised of: PARCEL 1: An undivided 1/61st fee simple interest as a tenant in common in and to Lot 1, of Map No. 15807, in the City of National City, County of San Diego, State of California, filed in the Office of the Recorder of San Diego County, on December 30, 2010, as File No. 2010-0729372 of Official Records. EXCEPTING THEREFROM, the Association Property and Units 101 through 419, inclusive, Units 101- 104 inclusive; 201-219 inclusive; 301-319 inclusive; 401-419 inclusive of said Lot 1, of Map No. 15807, as shown on that certain Condominium Plan, recorded on April 19, 2011, as Instrument No. 2011-0202639, of Official Records, in the Office of the County Recorder of San Diego County ("Condominium Plan"). ALSO EXCEPTING THEREFROM, for the benefit of Grantor, its successors in interest, and others, together with the right to grant the same to others, such Exclusive Use Association Property easements as defined, described and shown in said Condominium Plan and the Declaration of Establishment of Conditions, Covenants and Restrictions for Centro ("Declaration"), recorded on April 19, 2011, as Instrument No. 2011- 0202640, of the Official Records of San Diego County, California, including any amendments thereto. PARCEL 2: Unit No. 401, of said Lot 1, of Map No. 15807, as shown and described in said Condominium Plan. PARCEL 3: Those certain Exclusive Use Association Property balcony and/or patio shown and designated in the above -referenced Condominium Plan located adjacent to the Unit, consisting of exclusive easements for use thereof appurtenant to Parcels 1 and 2 above, as defined and described in the Declaration and the Condominium Plan. PARCEL 4: Those certain Exclusive Use Association Property parking spaces shown and designated in the above -referenced Condominium Plan with the designation "49&50", consisting of exclusive easements for use thereof appurtenant to Parcels 1 and 2 above, as defined and described in the Declaration and the Condominium Plan. PARCEL 5: Nonexclusive easements for access, ingress, egress, use, enjoyment, drainage, encroachment, support, maintenance, repairs, and for other purposes, all as described in the Declaration. (End of Legal Description) File Number: 467482 Page 3 of 9 SCHEDULE B At the date hereof, exceptions to coverage in addition to the printed exceptions and exclusions contained in said policy or policies would be as follows: Taxes: A. Property taxes, which are a lien not yet due and payable, including any assessments collected with taxes, to be levied for the fiscal year 2012 — 2013. Affects: The herein described land and other land. B. General and Special City and/or County taxes, including any personal property taxes and any assessments collected with taxes, for the fiscal year 2011 - 2012: 1" Installment: $49,028.01, Paid, w/ Penalty 2nd Installment: $49,028.01, Paid Parcel No.: 556-554-22-00 Code Area: 06036 Affects: The herein described land and other land. C. The lien of supplemental taxes, if any, assessed pursuant to the provisions of Chapter 3.5 (commencing with Section 75) of the Revenue and Taxation Code of the State of California. D. Assessments, if any, for Community Facility Districts affecting said land which may exist by virtue of assessment maps or notices filed by said districts. Said assessments are collected with the County Taxes. Exceptions: 1. Water rights, claims or title to water in or under said land, whether or not shown by the public records. 2. An easement or right of way for the construction and maintenance of flumes, canals or aqueducts, conveyed by deed from Frank A. Kimball and Warren G. Kimball to Kimball Brothers Water Company, a Corporation, dated June 9, 1869 and recorded October 14, 1869, in Book 7, Page 124 of Deeds. The interest of said grantee in and to said easement passed of record to the California Water and Telephone Company, a Corporation. Said deed does not contain the location of said easement. 3. A document entitled "Notice of Assessment: National City PBID", recorded November 17, 2004 as file no. 2004-1090803 of Official Records. 4. Deed of Trust to secure an indebtedness in the amount shown below, and any other obligations secured thereby: Amount: $5,230,000.00 Dated: October 13, 2005 File Number: 467482 Page 4 of 9 Trustor: Constellation Property Group (NatCity 12th) LP, a Delaware Limited Partnership Trustee: U.F. Service Corporation, a California corporation Beneficiary: United Commercial Bank, a California banking corporation Recorded: October 26, 2005 as Instrument/File No. 2005-0930607 of Official Records Loan No.: 490100647-0 Affects: The herein described land and other land. An agreement to modify the above Deed of Trust was recorded January 20, 2006 as Instrument/File No. 2006-0044759 of Official Records. An agreement to modify the above Deed of Trust was recorded January 23, 2006 as Instrument/File No. 2006-0048586 of Official Records. An agreement to modify the above Deed of Trust was recorded April 14, 2006 as Instrument/File No. 2006-0260568 of Official Records. An agreement to modify the above Deed of Trust was recorded January 24, 2007 as Instrument/File No. 2007-0051652 of Official Records. A Notice of default recorded January 15, 2009 as Instrument/File No. 2009-0020107 of Official Records. Substitution of Trustee under said Deed of Trust which names as the substituted trustee, the following: Trustee Fidelity National Title Company Recorded May 7, 2009 Instrument/File No. 2009-0242274 of Official Records A Notice of Trustee's Sale recorded May 7, 2009 as Instrument/File No. 2009-0242275 of Official Records. A foreclosure deed by and between Fidelity National Title Company and East West Bank, as Successor in Interest to United Commercial Bank, recorded December 2, 2009 as Instrument/File No. 2009-0668038 of Official Records, which affects all that portion of Lot 2 of Maps 15807, lying within Parcel 1 of Parcel Map 10377. This Company will require a Partial Reconveyance as to Unit 401 to remove this item from the Report. 5. Deed of Trust to secure an indebtedness in the amount shown below, and any other obligations secured thereby: Amount: $2,500,000.00 Dated: December 13, 2007 Trustor: Constellation Property Group (A Avenue) LP, a Delaware Limited Partnership Trustee: Stewart Title of California, Inc. Beneficiary: Community Development Commission of the City of File Number: 467482 Page 5 of 9 Recorded: National City, a public body, corporate and politic December 24, 2007 as Instrument/File No. 2007-0789163 of Official Records Said matter affects: Said Deed of Trust affects all that portion of Lot 2 of Map 15807 lying within Parcel 2 of Parcel Map 10377. The above instrument has been subordinated to Deed of Trust recorded December 24, 2007 as Instrument/File No. 2007-0789160 of Official Records by that certain agreement recorded September 14, 2009 as Instrument/File No. 2009-0510957 of Official Records. The above instrument has been subordinated to Deed of Trust recorded December 24, 2007 as Instrument/File No. 2007-0789160 of Official Records by that certain agreement recorded March 5, 2010 as Instrument/File No. 2010-0108720 of Official Records. This Company will require a Partial Reconveyance as to Unit 401 to remove this item from the Report. 6. An easement for public utilities, appurtenances, ingress, egress and rights incidental thereto in favor of the San Diego Gas and Electric Company as set forth in a document recorded December 12, 2008 as Instrument/File No. 2008-0633750 of Official Records, affects a portion of the herein described land. The exact location of the easement is not disclosed by the instrument. 7. A document entitled "Private Storm Water Best Management Practices (BMPs) Maintenance Agreement", recorded September 3, 2009 as file no. 2009-0496416 of Official Records. 8. Covenants, conditions, and restrictions as set forth in instrument recorded April 29, 2011 as Instrument No. 2011-0222856, Official Records, but omitted any covenant, condition or restriction, if any, based on race, color, religion, sex, handicap, familial status or national origin unless and only to the extent that the Covenant, condition or restriction; (a) is exempt under title 42 of the united states code; or (b) relates to handicap, but does not discriminate against handicapped persons. Note: section 12956.1 of the government code provides the following: if this document contains any restrictions based on race, color, religion, sex, familial status, marital status, disability, national origin, or ancestry, that restriction violates state and federal fair housing Iaws and is void, and may be removed pursuant to section 12956.1 of the government code. Lawful restrictions under state and federal law on the age of occupants in senior housing or for older persons shall not be construed as restrictions based on familial status. Said Covenants, Conditions, and Restrictions provide that a violation thereof shall not defeat or render invalid the lien of any mortgage or deed of trust made in good faith and for value. Note: Section 12956.1 of the Government Code provides the following: If this document contains any restrictions based on race, color, religion, sex, sexual orientation, familial status, marital status, disability, national origin, source of income as defined in subdivision (p) of Section 12955, or ancestry, that restriction violates state and federal fair housing laws and is void, and may be removed pursuant to Section 12956.2 of the Government Code. Lawful restrictions under state and federal law on the age of occupants in senior housing or housing for older persons shall not be construed as restrictions based on familial status. File Number: 467482 Page 6 of 9 9. Matters in various instruments of record which contain, among other things, easements and rights of way in, on, over and under the common area for the purpose of constructing, erecting, operating or maintaining thereon or thereunder overhead or underground lines, cables, wires, conduits, or other devices for electricity, power, telephone and other purposes, storm water drains and pipes, water systems, sprinkling systems, water, heating and gas lines or pipes, and any similar public or quasi - public improvements or facilities. Also the equitable right of use and enjoyment in and to and throughout the common area as well as non-exclusive easements and equitable rights for ingress, egress to the owner herein described. Reference is hereby being made to various documents and maps of record for full and further particulars. (End of Exceptions) File Number: 467482 Page 7 of 9 NOTES AND REQUIREMENTS The Company is not aware of any matters which would cause it to decline to attach CLTA Endorsement 100 and 116, indicating that there is located on said land a condominium known as 45 East 12th Street #401, National City, California, to an extended coverage policy. There are no conveyances affecting said land, recorded with the County Recorder within 24 months of the date of this report. File Number: 467482 Page 8 of 9 CALIFORNIA "GOOD FUNDS" LAW California Insurance Code Section 12413.1 regulates the disbursement of escrow and sub -escrow funds by title companies. The law requires that funds be deposited in the title company escrow account and available for withdrawal prior to disbursement. Funds received by Stewart Title of California, Inc. via wire transfer may be disbursed upon receipt. Funds received via cashier's checks or teller checks drawn on a California Bank may be disbursed on the next business day after the day of deposit. If funds are received by any other means, recording and/or disbursement may be delayed, and you should contact your title or escrow officer. All escrow and sub -escrow funds received will be deposited with other escrow funds in one or more non - interest bearing escrow accounts in a financial institution selected by Stewart Title of California, Inc.. Stewart Title of California, Inc. may receive certain direct or indirect benefits from the financial institution by reason of the deposit of such funds or the maintenance of such accounts with the financial institution, and Stewart Title of California, Inc. shall have no obligation to account to the depositing party in any manner for the value of, or to pay to such party, any benefit received by Stewart Title of California, Inc.. Such benefits shall be deemed additional compensation to Stewart Title of California, Inc. for its services in connection with the escrow or sub -escrow. If any check submitted is dishonored upon presentation for payment, you are authorized to notify all principals and/or their respective agents of such nonpayment. Wire Instructions If you anticipate having funds wired to Stewart Title of California, Inc., our wiring information is as follows: Additional Note: Direct wire transfers to: Union Bank 530 "B" Street San Diego, CA 92101 Routing Number: 122-000-496 Credit to Stewart Title of California, Inc. Account Number: 9120054632 Reference Order Number: 467482 Title Unit Number: 7034 Title Officer Name: Michael Muldoon When instructing the financial institution to wire funds, it is very important that you reference Stewart Title of California, Inc.'s order number. Should you have any questions in this regard please contact your title officer immediately. File Number: 467482 Page 9 of 9 RECORDING REQUESTED BY AND WHEN RECORDED MAIL TO NAME East West Bank Attn: Sarah Teng ADDRESS 555 Montgomery St., 10`h Floor CITY San Francisco, CA 94111 STATE & ZIP SUBSTITUTION OF TRUSTEE AND FULL RECONVEYANCE WHEREAS, CONSTELLATION PROPERTY GROUP (A AVENUE) LP, a Delaware limited partnership, was the original Trustor, STEWART TITLE OF CALIFORNIA, INC, the original Trustee, and UNITED COMMERCIAL BANK, a California banking corporation, the original Beneficiary, under that certain Deed of Trust dated October 16, 2007 and recorded on December 24, 2007, as Instrument No. 2007-0789160, or in book , page Official Records of the County of San Diego, State of California, and affecting the land described in said Deed of Trust, and WHEREAS the undersigned Beneficiary desires to substitute a new Trustee under said Deed of Trust in place and stead of STEWART TITLE OF CALIFORNIA, INC.; NOW, THEREFORE, the undersigned hereby substitutes itself as Trustee under said Deed of Trust and does hereby reconvey, without warranty, to the person or persons legally entitled thereto, the Estate now held by it thereunder. APN NO.: Beneficiary and Substituted Trustee DATE: East West Bank By: Title State of California ) ) County of San Diego On before me, , notary public, personally RECORDING REQUESTED BY AND WHEN RECORDED MAIL TO NAME East West Bank Attn: Sarah Teng ADDRESS 555 Montgomery St., 10th Floor CITY San Francisco, CA94111 STATE & ZIP SUBSTITUTION OF TRUSTEE AND FULL RECONVEYANCE WHEREAS, CONSTELLATION PROPERTY GROUP (NatCity 1291) LP, a Delaware limited partnership, was the original Trustor, U.F. SERVICE CORPORATION, a California corporation, the original Trustee, and UNITED COMMERCIAL BANK, a California banking corporation, the original Beneficiary, under that certain Deed of Trust dated October 13, 2005 and recorded on October 26, 2005, as Instrument No. 2005-0930607, or in book , page , Official Records of the County of San Diego, State of California, and affecting the land described in said Deed of Trust, and WHEREAS the undersigned Beneficiary desires to substitute a new Trustee under said Deed of Trust in place and stead of U.F. SERVICE CORPORATION; NOW, THEREFORE, the undersigned hereby substitutes itself as Trustee under said Deed of Trust and does hereby reconvey, without warranty, to the person or persons legally entitled thereto, the Estate now held by it thereunder. APN NO.: Beneficiary and Substituted Trustee DATE: East West Bank By: Title w -J 11TH STREET WEST LINE OF PARCEL 2 OF P.M. 10377 LOT -7 (REVOLUTION 2) A P NO, r1 A r1 ,♦ r— i-/ 5 F! I F- I I / 1 I 11../ L_ L_ A A A r 1 I\/I !_\ F• I 1 ! 1 I r- A r- i\ r— 1 A F.' /_1 Ft" i F- I 1 I I 4 I 1 • L— L_ 1 'A' AVENUE A I / I \ I f E I V A . LOT - {CENTRO) J5807 A ir7 r7 I 1 I < / / I \ r". A r-s ,\ r 1 �� F 15 i-r I I-- 1 / 4 I \• I L— L_ L- T LEGEND, - INDICATES LAND LAYING BETWEEN THE EAST LINE OF PARCEL 1 OF PARCEL MAP 10377 AND THE EAST LINE OF LOT 2 OF MAP NO. 15807 12TH STREET or 1 SEM NC1221 NAMARA DRAM A.FLOF S D,AM9LER SHEET imE Jag Hoff PLAT THE SLIVER PARCEL MD 05-09-12 SNIPES -DYE ASSOCIATES S848 CENTER DRNE. BUTTE G. LA MESA. CA 91042. PH OHM E07-0284. FAX (E101 400-2088 6)