(a) Resale and non-judicial foreclosure sale of an ADU.
(1) The ADU sale control price of an ADU for resale shall be controlled for a period of fifteen years after recordation of the deed from the initial sale of such ADU (“ADU fifteen-year control period”). At the time of the initial sale of an ADU, the owner shall provide in the sales contract and shall record, prior to the deed for each ADU sold, a declaration of ADU covenant (“ADU Covenants”) running with the land in favor of the County.
A. During the ADU fifteen-year control period such ADU shall not be the subject of a resale for an amount that exceeds the ADU sale control price determined by the ADUAB as adjusted in accordance with sub-section (a)(3) hereof (“Adjusted ADU Sale Control Price”).
B. Each time the ADU may be offered for resale, it must first be offered exclusively to certified purchasers through the Board, and then to the Board or its designee who may include a qualified non-profit, at Board’s discretion, for a period of forty-five days in accordance with sub-section (a)(2) hereof. An additional thirty days shall be allowed for settlement.
C. The ADU covenants shall provide that the ADU is subject to the provisions of the ADU Program, as set forth in this chapter and Article 7 of the County Zoning Ordinance.
D. The ADU covenants and any lien imposed on the ADU in favor of the County pursuant to this chapter shall be senior to all covenants, liens, mortgages, deeds of trust or other financing instruments secured by such ADU, that may be recorded after the ADU covenants, and shall be binding upon all assignees, lien holders, trustees, mortgagees, purchasers and other successors in interest.
E. Any lender, lien holder, or trustee, as applicable, shall provide to the Board or its designee written notice of any delinquency or other event of default under a mortgage, lien, deed of trust or any other financing instrument secured by such ADU. For a forty- five day period after receipt of such notice, the Board or its designee shall have the right to cure such a default, although the Board shall have no obligation to cure the default.
F. The total aggregate amount of principal of all financing instruments secured by an ADU shall not exceed theadjusted ADU sale control price of such ADU. Any financing in excess of such adjusted ADU sale control price shall not be secured by any interest in the applicable ADU.
(2) At least forty-five days prior to an ADU being offered for resale, such ADU shall first be offered exclusively to certified purchasers through the Board, and then to the Board or its designee who may include a qualified non-profit, at Board’s discretion. The forty- five-day resale period shall begin upon the Board’s receipt of written notice, sent by registered or certified mail that an ADU is available for resale. The written notice shall include the address and the parcel identification number of the ADU. An additional thirty-days shall be allowed for settlement.
A. Repealed.
B. Upon the expiration of the forty-five-day period, if neither a certified purchaser nor the Board or its designee, has elected to purchase the ADU, such ADU may be offered to members of the general public at fair market value, provided that the difference between the actual resale price of the ADU and the adjusted ADU sale control price shall be divided equally between the seller and the County Housing Trust.
(3) Units offered for resale during the ADU fifteen-year control period shall not be offered for a price that exceeds the ADU sale control price determined by the ADUAB plus the following:
A. A percentage of the ADU sale control price determined by the ADUAB equal to the increase in the Consumer Price Index-For All Urban Consumers calculated as of the date of the resale;
B. The current fair market value of those home improvements, as determined to be eligible to be added to the selling price of ADUs by the ADUAB, made to the ADU between the date of the initial sale and the date of resale;
C. An allowance for payment of closing costs, on behalf of the purchaser, which shall be paid by the seller; and
D. An allowance for the payment of a 1.5 percent sales commission/finder’s fee to be paid to a real estate agent, if any, who secures a purchaser for the ADU. ADUAB may, when necessary due to change in the market conditions in the County, revise the 1.5 percent sales commission/finder’s fee to another reasonable percentage.
(4) After the expiration of the ADU fifteen-year control period, but prior to the expiration of fifty years after recordation of the deed from the initial sale of such ADU (“ADU Extended Control Period”), such ADU may be offered for resale to members of the general public, at fair market value, provided that the difference between the actual resale price and the adjusted ADU sale control price shall be divided equally between the seller and the County Housing Trust.
(5) At least forty-five days prior to an ADU being offered to resale after the expiration of the ADU fifteen-year control period, but prior to the expiration of the ADU extended control period, such ADU shall first be offered at fair market value exclusively to the Board or its designee. The forty-five-day resale period shall begin upon the Board’s receipt of written notice, sent by registered or certified mail, that an ADU is available for resale. The written notice shall include the address of the ADU as well as its parcel identification number. An additional thirty-days shall be allowed for settlement.
(6) Any amount owed to the County Housing Trust pursuant to sub-sections (a)(2)B. or (a)(4) hereof that remains unpaid after the resale of an ADU shall automatically become a lien on such ADU with priority over any lien recorded after the declaration of ADU covenants on such ADU as provided in sub-section (a)(1)D. hereof, with the exception of the deed(s) of trust that financed the certified owner who is reselling the ADU, up to the amount permitted by sub-section (a)(1)F. hereof. Such lien shall also attach to any proceeds from the resale of such ADU with the same priority as provided herein. Should the proceeds from the resale of the ADU be insufficient to pay the amount owed to the County Housing Trust, the lien for the unpaid balance shall remain on the ADU.
(7) Non-judicial foreclosure sales of ADUs may be conducted at fair market value.
A. Prior to the expiration of the ADU extended control period, the lender, lien holders, or trustee, as applicable, shall provide to the Board or its designee written notice of any delinquency or other event of default under a lien or deed of trust secured by such ADU. For a forty-five day period after receipt of such notice, the Board or its designee shall have the right to cure such default, although the Board shall have no obligation to cure the default.
B. Prior to the expiration of the ADU extended control period, and at least forty-five days prior to an ADU being sold at a non-judicial foreclosure sale, the lender, lien holder, or trustee, as applicable, shall provide to the Board or its designee written notice, including the address and parcel identification number of the ADU, that such ADU will be subject to a non-judicial foreclosure sale. For a forty-five day period after receipt of such notice, such ADU may first be offered by the ADU owner at fair market value exclusively to the Board or its designee, with additional thirty-days allowed for settlement. The Board or its designee may bid on the ADU at any non-judicial foreclosure sale.
C. The trustee foreclosing an ADU may use the proceeds from the non-judicial foreclosure sale of such ADU to pay the costs/expenses of such foreclosure and to satisfy those deed(s) of trust that encumber the ADU up to the amount permitted by sub-section (a)(1)F. hereof, even if such deed(s) of trust were recorded after the ADU covenants. Thereafter, out of the surplus funds, an amount equal to half of the difference between the actual non-judicial foreclosure sale price of the ADU and the ADU sale control price adjusted as provided in sub- section (a)(3) hereof as of the date of the non-judicial foreclosure sale shall be paid by the foreclosing trustee to the County Hosing Trust. Any amount owed to the County Housing Trust that remains unpaid shall automatically become a lien on the ADU, which shall attach to the surplus funds from the non-judicial foreclosure sale of such ADU, with priority over any lien recorded after the declaration of ADU covenants on such ADU as provided in sub-section (a)(1)D. hereof. Should the surplus funds be insufficient to pay to the County Housing Trust such amount, the trustee shall pay the entirety of the surplus funds to the County Housing Trust, and no lien shall remain on the ADU for the balance.
D. Upon the non-judicial foreclosure sale of an ADU, all restrictions imposed by the ADU covenants and this chapter will automatically and permanently terminate with respect to the foreclosed ADU.
(8) Any lender, lien holder, or trustee, as applicable, shall provide to the Board or its designee, written notice of any delinquency or other event of default under a mortgage, lien, deed or trust or any other financing instrument secured by a project or development containing ADUs. For a forty-five day period after receipt of such notice, the Board or its designee, shall have the right to cure such a default, although the Board shall have no obligation to cure the default.
1999 Replacement
(b) Subsequent rental of ADUs.
(1) The ADU rental control price for subsequent rentals shall be controlled for a period of twenty years after execution of the initial lease agreement for the respective rental ADU (“Twenty-Year Control Period”). Prior to approval of a record plat for single family detached or attached dwelling lots containing rental ADUs or site plans for multifamily buildings containing rental ADUs, the owner shall record a declaration of ADU covenants (“Rental ADU Covenents”), running with the land in favor of the County.
A. Within the twenty-year control period, no ADU shall be rented except in compliance with all requirements of this chapter and the County Zoning Ordinance, including that no ADU may be rented for an amount that exceeds the limits set by the ADUAB pursuant to section 1450.07 (“ADU Rental Control Price”).
B. Within the twenty-year control period, each time an ADU is offered for rent, it must be offered exclusively through the County to certified tenants.
C. The rental ADU covenants shall provide that within the twenty- year control period, the rental ADU shall be subject to the provisions of this chapter and the County Zoning Ordinance.
D. The rental ADU covenants shall be senior to all covenants, liens, mortgages, deeds of trust or other financing instruments secured by such ADU that may be recorded after the rental ADU covenants and shall be binding upon all assignees, lien holders, trustees, mortgagees, purchasers and other successors in interest.
E. Within the twenty-year control period, the substitution of ADUs with comparable units within the same development may be permitted by written agreement between the landlord and the Board or its designee, at the sole discretion of the Board, provided that at all times the number of dwelling units of each bedroom size and comparable square footage administered and maintained as rental ADUs within the project or development is not less than the number of rental ADUs of each bedroom size and comparable square footage required by the County Zoning Ordinance or the proffers, as applicable, for such project or development.
(2) Any rentals during the twenty-year control period shall not exceed the ADU rental control price.
(3) Within the twenty-year control period, any lender, lien holder, or trustee, as applicable, shall provide to the Board or its designee, written notice of any delinquency or other event of default under a mortgage, lien, deed of trust or any other financing instrument secured by a project or a development containing rental ADUs. For a forty-five day period after receipt of such notice, the Board or its designee, shall have the right to cure such a default, although the Board shall have no obligation to cure the default.
(4) Within the twenty-year control period, and at least forty-five days prior to a project or a development containing rental ADUs being offered for sale at a judicial sale or a non-judicial foreclosure sale, such project or development shall first be offered exclusively to the Board or its designee. The forty-five-day period shall begin upon the Board’s receipt of written notice sent by registered or certified mail that such project or development will be sold or foreclosed. The written notice shall include the name and address of the project and development and the parcel identification number(s).
(5) Within the twenty-year control period, the sale or judicial sale of a project or development containing rental ADUs does not terminate the restrictions on such project or development imposed by this chapter, the County Zoning Ordinance or the respective rental ADU covenants, which shall apply to such project or development for the twenty-year control period. Upon the non-judicial foreclosure sale of a project or development containing rental ADUs, all restrictions imposed by the ADU covenants and this chapter will automatically and permanently terminate with respect to the foreclosed project or development.
(Ord. 99-07. Passed 6-16-99; Ord. 19-13. Passed 7-10-19.)