11-A
TO: Honorable Mayor and Members of the City Council
ATTENTION: Jeffrey L. Stewart, City Manager
FROM: Jim DellaLonga, Director of Economic Development
SUBJECT: Consideration and possible action to conduct a public hearing to consider adopting Resolution No. 22-63 – A Resolution authorizing the City Manager to amend the FY 2022-23 Operating Budget and execute Purchase and Sale Agreement File No. 963, in a form approved by the City Attorney, with the 1991 Jacquelyn S. Connolly Revocable Living Trust U/D/T for the purchase of real property located at 9818 Artesia Boulevard (APN 7160-008-021). [Continued from October 10, 2022]
DATE: November 14, 2022
EXECUTIVE SUMMARY
This item was continued from the October 10, 2022, City Council Meeting. Executing the Purchase and Sale Agreement File No. 963 (PSA) with the 1991 Jacquelyn S.
Connolly Revocable Living Trust U/D/T (the “Connolly Trust”) would cause the City to purchase real property located at 9818 Artesia Boulevard for $1,200,000. The property includes the Shoe Kingdom building and is adjacent to a City-owned public parking lot.
Acquiring the property would give the City control over its future use in a manner that contributes to the South Bellflower Boulevard area’s economic growth and image as an extension of Downtown Bellflower. For this acquisition and determination of General Plan conformity, the City Council will act as the City’s Planning Agency in accordance with Bellflower Municipal Code § 2.32.050(F).
RECOMMENDATION TO CITY COUNCIL
1) Continue to take documentary and testimonial evidence; and after considering the evidence, adopt Resolution No. 22-63 amending the fiscal year 2022-23 Operating Budget to allocate funds for the property purchase and authorizing the Mayor to execute Purchase and Sale Agreement 963, in a form approved by the City Attorney; or
2) Alternatively, discuss and take other action related to this item.
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Staff Report – Purchase and Sale Agreement File No. 963 with the Connolly Trust November 14, 2022
FISCAL IMPACT
The City will pay $1,200,000 to the 1991 Jacquelyn S. Connolly Revocable Living Trust U/D/T to acquire the Property plus $10,000 to cover estimated escrow fees and title insurance costs.
A budget amendment to the 2022-23 fiscal year operating budget is needed to allocate $1,210,000 in the Public Projects Fund – Account No. 012-47212-9000 for the purchase of the Property.
PUBLIC NOTICE
On September 29, 2022, a Public Hearing Notice was posted at City Hall, Brakensiek Library, Bellflower Substation, Thompson Park, and Simms Park; also on September 29 and October 7, 2022, a Public Hearing Notice was published in the Herald American newspaper. A Notice of Continuance for the public hearing was posted on October 11, 2022.
DISCUSSION
In late 2021, the Public Works Department contacted the Connolly Trust to discuss incorporating portions of its property at 9818 Artesia Boulevard (the “Property”) in the parking lot repaving project for the adjacent City-owned parking lot. The Property consists of a 5,658 square foot building (“Shoe Kingdom”) on a 15,581 square-foot parcel and a recorded purchase option agreement affecting the adjacent City-owned parking lot. Since that time, the Connolly Trust offered to sell the Property to the City including the purchase option that still affects the City’s parking lot.
A review of the location and its economic potential demonstrates that the Property will definitely contribute to the commercial vitality of that site. Additionally, the City obtained an appraisal report which supports the purchase price of $1,200,000.
After acquiring the Property, staff proposes to continue leasing the property to Shoe Kingdom and construct parking lot and driveway improvements to improve drainage and access to the City-owned public parking lot to the rear. All proceeds from the lease will be deposited into the City’s general fund. Additional City Council consideration is desirable to determine the long-term development of the Property.
Attached is a Summary Report required by Government Code § 52201 that describes the following:
a) the cost of the agreement to the City;
b) the estimated value of the interest to be conveyed or leased determined at the highest and best uses permitted under the general plan or zoning;
c) if applicable, the estimated value of the interest to be conveyed or leased determined at the use with the conditions, covenants, and development costs required by the sale or lease;
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Staff Report – Purchase and Sale Agreement File No. 963 with the Connolly Trust November 14, 2022
DISCUSSION – Continued
d) the purchase price or present value of the lease payments which the lessee will be required to make during the term of the lease;
e) if the sale price or total rental amount is less than the fair market value of the interest to be conveyed or leased, determined at the highest and best use, then the City shall provide, as part of the summary, an explanation of the reasons for the difference; and
f) an explanation of why the sale or lease of the property will assist in the creation of economic opportunity (as defined by Government Code § 52200.2), with reference to all supporting facts and material relied upon in making this decision.
ATTACHMENTS
Summary Report ............................................................................................................. 4 Resolution No. 22-63....................................................................................................... 6 Purchase and Sale Agreement File No. 963 ................................................................... 9
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Summary Report Government Code Section 52200 – Purchase and Sale Agreement – 9818 Artesia Bl. 1
SUMMARY REPORT PURSUANT TO
GOVERNMENT CODE § 52201
REGARDING A
PURCHASE AND SALE AGREEMENT
BY AND BETWEEN THE
CITY OF BELLFLOWER AND
THE 1991 JACQUELYN S. CONNOLLY REVOCABLE LIVING TRUST U/D/T
The following Summary Report was prepared pursuant to Government Code § 52201.
This report sets forth certain details of the proposed Purchase and Sale Agreement (“Agreement”) between the City of Bellflower (“City”) and the 1991 Jacquelyn S.
Connolly Revocable Living Trust U/D/T (“Connolly Trust”).
CONNOLLY TRUST owns a total of 15,581 square feet of land located at 9818 Artesia Boulevard on one parcel (APNs 7160-008-021) (“Property”). The Agreement causes the Connolly Trust to sell the Property to the City. Additionally, the Agreement provides that the Connolly Trust will extinguish a purchase option affecting a City-owned parking lot directly adjacent to the Property.
The following Summary Report is based upon information required by the Government Code. It is organized into the following three sections:
I. Salient Points of the Agreement: This section summarizes the major responsibilities agreed to by the Connolly Trust and the City by the Agreement.
II. Cost of the Agreement to the City: This section details the total cost to the City associated with implementing the Agreement.
III. Creation of Economic Opportunity: This section describes the existing condition of the subject property and explains how the Agreement will assist in the creation of economic opportunity.
This report and the Agreement are to be made available for public inspection before the approval of the Agreement and not later than the time of publication of the first required notice of the public hearing pursuant to Government Code § 52201.
I. SALIENT POINTS OF THE AGREEMENT
A. Project Description
The Project is the City’s purchase of all that certain real property located at 9818 Artesia Boulevard, Bellflower, CA 90706 on APN 7160-008-021. Additionally, the Project includes the extinguishment of a purchase option held by the Connolly Trust affecting a City-owned parking lot directly adjacent to the Property.
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Summary Report Government Code Section 52200 – Purchase and Sale Agreement – 9818 Artesia Bl. 2
B. Seller Responsibilities Under the Agreement
The Agreement causes the Connolly Trust to accept the following responsibilities:
1. The Connolly Trust agrees to sell the Property, following the satisfactory inspection(s) of the Property by the City and approval of documents produced during a Standard Due Diligence Period. It also causes the Connolly Trust to convey, via a quit claim deed, its purchase option regarding a City-owned parking lot adjacent to the Property.
2. The Connolly Trust agrees to pay the costs associated with a CLTA Standard Coverage Policy of Title Insurance showing title to the Property vested in Buyer.
C. City Responsibilities Under the Agreement
1. The City will purchase the Property for $1,200,000 following satisfactory inspection(s) of the Property during escrow and the Due Diligence Period.
II. COST OF THE AGREEMENT TO THE CITY
The cost incurred by the City to implement the Agreement is approximately $1,210,000, title insurance, and a 50/50 share of the closing costs for the purchase of the Property.
III. ECONOMIC OPPORTUNITY
Significant new development is occurring within the vicinity of the Property. This includes the Golden Corral, In N Out Burger, Dunkin’ Donuts, the Exchange, Starbucks in Belle Fleur Centre, and the Boulevard Collection by City Ventures. A recent street widening of Bellflower Boulevard between the 91 Freeway and Artesia Boulevard will complement a planned Bellflower Boulevard streetscape project in 2023 that will improve the section of Bellflower Boulevard from Artesia Boulevard south to the city boundary.
The Property is owned by the Connolly Trust and is currently occupied by a retail tenant on a short-term lease. It is a legacy property with a pre-Prop 13 tax basis. It currently generates minimal sales tax from a shoe store and a minimum of state and local property taxes. The City intends to market the Property to produce a business venture or development project that will create economic opportunity, as defined by Government Code § 52200.2, by increasing property tax revenues to all property tax collecting entities by at least 15% at full implementation of a project when compared to the year before the Property being acquired by the City. Further, the Agreement with Connolly Trust will cause a purchase option to be extinguished affecting City-owned real property directly adjacent to the Property. It is in the public interest for this purchase option to be removed from City’s title.
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CITY OF BELLFLOWER
RESOLUTION NO. 22-63
A RESOLUTION AUTHORIZING THE MAYOR TO EXECUTE
A PURCHASE AND SALE AGREEMENT BETWEEN THE
CITY OF BELLFLOWER AND THE 1991 JACQUELYN S. CONNOLLY
REVOCABLE LIVING TRUST U/D/T FOR THE PURCHASE OF
REAL PROPERTY LOCATED AT 9818 ARTESIA BOULEVARD
(APN 7160-008-021)
THE CITY COUNCIL DOES RESOLVE AS FOLLOWS:
SECTION 1. The City Council finds and declares as follows:
A. In September 2022, the 1991 Jacquelyn S. Connolly Revocable Living Trust U/D/T offered to sell its property located at 9818 Artesia Boulevard (APN 7160-008-021; the “Property”)) to the City of Bellflower for a purchase price of $1,200,000;
B. Based on a property appraisal commissioned in September 2022, the City verified the offering price for the property as a fair market purchase price;
C. The 1991 Jacquelyn S. Connolly Revocable Living Trust U/D/T desires to convey the Property to the City of Bellflower for a purchase price of $1,200,000, which represents a fair market value for the Property per the City’s property appraisal;
D. The City believes that the Property is an important asset that contributes to the economic activity in the Bellflower Boulevard corridor. Accordingly, the City desires to purchase the Property; and
E. Toward that end, the City and the 1991 Jacquelyn S. Connolly Revocable Living Trust U/D/T desire to enter into a Purchase and Sale Agreement for the Real Property.
SECTION 2. Planning Agency. Pursuant to Bellflower Municipal Code (“BMC”) § 2.32.050(F), the City Council will act as the Bellflower Planning Agency for purposes of this resolution.
SECTION 3. General Plan Findings. Pursuant to Government Code § 65402(c), the City Council (acting as the Planning Agency) finds that acquisition of the Property conforms with the General Plan including, without limitation, meeting the following Goals, Policies, and Programs:
A. General – Goal 2: Create a City that functions efficiently, is aesthetically pleasing, and makes the best use of its various resources. - Page 6 of 35 -
City of Bellflower
Resolution No. 22-63
The Property is being acquired to promote economic growth within its vicinity, to allow the City to control the aesthetic appeal of hat Property, and to eliminate uncertainty regarding a 1967 purchase option affecting a City-owned parking lot that provides additional vehicle parking for the public.
B. Commercial Policy 1, Implementation Program 1.3: Provide lot consolidation incentives for commercial parcels in order to create large, viable, commercial properties.
The Property is adjacent to successful business operations that already contribute toward the economic improvement of the area. Among other things, acquisition of the Property – and its improvement – will allow the City to sell it to interested buyers that will provide additional economic benefits to the City and surrounding businesses. A review of the entire Property (which includes adjacent businesses) demonstrates that it will form an important business hub for that area.
SECTION 4. Environmental Assessment. Adopting this Resolution is exempt from further environmental review pursuant to the California Environmental Quality Act (Public Resources Code §§ 21000, et seq., “CEQA”) and the regulations promulgated thereunder (14 Cal. Code of Regulations §§15000, et seq., the “CEQA Guidelines”).
Specifically, the proposed conveyance is exempt from CEQA requirements pursuant to CEQA Guidelines § 15312. The 1991 Jacquelyn S. Connolly Revocable Living Trust U/D/T proposes to sell the Property; the Property is not located in an area of concern; the Property does not have significant value for wildlife habitat or other environmental purpose; and the use of the Property and adjacent property has not changed since the time the 1991 Jacquelyn S. Connolly Revocable Living Trust U/D/T acquired the Property. Accordingly, this action conforms to a Class 12 categorical exemption under CEQA.
SECTION 5. Authorizations. The City Council authorizes the purchase of the Property from the 1991 Jacquelyn S. Connolly Revocable Living Trust U/D/T to the City upon payment of $1,200,000 by City. In order to effectuate that conveyance, the Mayor and City Manager are authorized to execute all documents, in a form approved by the City Attorney, needed to implement the conveyance of the Property as contemplated by this Resolution including, without limitation, escrow instructions, the grant deed, a quit claim deed needed to extinguish a purchase option for adjacent property owned by the City, closing statement, and the certificate of acceptance. The City Manager is further authorized to accept the grant deed and quit claim deed and cause them to be recorded in the Office of the County Recorder of the County of Los Angeles after they are executed by the 1991 Jacquelyn S. Connolly Revocable Living Trust U/D/T.
SECTION 6. The City Manager, or designee, is directed to amend the FY 2022-2023 Operating Budget to allocate $1,210,000 in the Public Projects Fund Account No. 012-47212-9000 to account for the acquisition of property.
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City of Bellflower
Resolution No. 22-63
SECTION 7. Electronic Signatures. This Resolution may be executed with electronic signatures in accordance with Government Code §16.5. Such electronic signatures will be treated in all respects as having the same effect as an original signature.
SECTION 8. The Mayor, or presiding officer, is hereby authorized to affix his signature to this Resolution signifying its adoption by the City Council of the City of Bellflower, and the City Clerk, or her duly appointed deputy, is directed to attest thereto.
SECTION 9. This Resolution will become effective immediately upon adoption and will remain effective unless repealed or superseded.
PASSED, APPROVED, AND ADOPTED BY THE CITY COUNCIL OF THE CITY OF BELLFLOWER THIS 14th DAY OF NOVEMBER 2022.
________________________________
Ray Dunton, Mayor
ATTEST:
________________________________
Mayra Ochiqui, City Clerk
APPROVED AS TO FORM:
________________________________
Karl H. Berger, City Attorney
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CITY OF BELLFLOWER
AGREEMENT FILE NO. 963
PURCHASE AND SALE AGREEMENT AND JOINT ESCROW INSTRUCTIONS
THIS PURCHASE AND SALE AGREEMENT AND JOINT ESCROW
INSTRUCTIONS (this “Agreement”) is made and entered into as of November 14, 2022 (the “Effective Date”), by and between THE 1991 JACQUELYN S. CONNOLLY REVOCABLE LIVING TRUST (“Seller”) and THE CITY OF BELLFLOWER, a general law city and municipal corporation (“Buyer”). Seller and Buyer are sometimes each individually referred to as a “Party” and collectively as the “Parties.”
IN CONSIDERATION of the mutual covenants and agreements contained in this Agreement, and other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the Parties hereby agree as follows:
1. Purchase and Sale. Seller agrees to sell and convey to Buyer, and Buyer agrees to purchase from Seller, subject to the terms and conditions of this Agreement, the following (collectively, the “Property”):
1.1 all of the fee simple interest in, to and under that certain real property located at 9818 Artesia Boulevard, Bellflower, California, Parcel Number 7161-008-021 and more particularly described on Exhibit A attached hereto (the “Land”);
1.2 all of Seller’s right, title and interest in, to and under all privileges and easements appurtenant to the Land, including, without limitation, all of Seller’s right, title and interest, if any, in and to all minerals, oil, gas and other hydrocarbon substances in, on and under the Land, all development rights, air rights, water rights and water stock owned by Seller relating to the Land, and all easements, rights of way or other appurtenances of Seller used in connection with the beneficial use and enjoyment of the Land (collectively, the “Appurtenances,” and together with the Land, the “Real Property”); and
1.3 all of Seller’s right, title and interest in, to and under all intangible property used in the ownership, use, operation, occupancy, maintenance or development of the Real Property, including without limitation all (a) licenses, permits, certificates, entitlements, approvals, authorizations and other entitlements issued (the “Permits”); (b) reports, test results, environmental assessments, surveys, plans, specifications (the “Plans”); and (c) other intangible property related to the Real Property (collectively, the “Intangible Property”); and
1.4 all of Seller’s right, title and interest in, to and under all privileges and interest contained in the instrument recorded as document number BKD3698P6570 and captioned “Option Agreement and Use of Existing Driveway” dated June 14, 1967, and recorded July 11, 1967 (the “Option,” and together with the Land and Real Property, the “Entire Property”). Seller agrees and understands that conveying the Option to Buyer in accordance with this Agreement is a material inducement for Buyer to purchase the Real Property and that the failure to convey the Option will render this Agreement void.
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2. Purchase Price. The total Purchase Price of the Property is $1,200,000 (“Purchase Price”), payable as follows:
2.1 Deposit. Within three calendar days after mutual execution and exchange of this Agreement, Buyer will deposit into Escrow (as defined below) the amount of $36,000 (the “Deposit”), in the form of a wire transfer payable to First American Title Escrow Attn: Gabriel Guerra (“Escrow Holder”). Escrow Holder must deposit the Deposit in a non-commingled trust account and invest the Deposit in an insured, interest bearing money market accounts, certificates of deposit, United States Treasury Bills or such other instruments as directed by Buyer and reasonably acceptable to Seller and interest thereon must be credited to Buyer’s account and deemed to be part of the Deposit. In the event of the consummation of the purchase and sale of the Property as contemplated hereunder, the Deposit will be paid to Seller and credited against the Purchase Price on the Closing Date. In the event the sale of the Property is not consummated because of (a) a Seller default, (b) the termination of this Agreement by Buyer in accordance with any right to so terminate provided herein, or (c) the failure of any of Buyer’s Closing Conditions (as defined below) to occur, then the Deposit must be immediately and automatically paid over to Buyer without the need for any further action by either Party hereto. The sole remedy for a failure by Buyer to make the Deposit as and when required hereunder is for Seller to terminate this Agreement.
2.2 Closing Payment. On or before the Closing Date, Buyer must deposit with the Escrow Holder to be held in Escrow the balance of the Purchase Price (the “Closing Payment ”), as adjusted by (a) the prorations and adjustments provided for in this Agreement and (b) the Deposit, which is to be credited against the Purchase Price.
2.3 Independent Contract Consideration. Notwithstanding anything in this Agreement to the contrary, $100 of the Deposit is delivered to the Escrow Holder for delivery to Seller as “Independent Contract Consideration,” and the Deposit is reduced by the amount of the Independent Contract Consideration so delivered to Seller, which amount has been bargained for and agreed to as consideration for Seller’s execution and delivery of this Agreement.
3. Title to Property.
Title Insurance. At the Closing, Seller must convey to Buyer fee simple title to the Real Property by duly executed and acknowledged Deed (as defined in Section 6.3.1 below). A condition to Buyer’s obligations under this Agreement is the issuance by First American Title Company (the “Title Company”) to Buyer of a 2006 ALTA Extended Coverage Owner’s Policy of Title Insurance (with the general exceptions deleted) insuring fee simple title to the Real Property in Buyer with liability in the amount of the Purchase Price, subject only to such exceptions as Buyer approved pursuant to Section 3.2 below (the “Permitted Exceptions”), and without survey exceptions (the “Title Policy”). The Title Policy must provide full coverage against all labor, mechanics’ and materialmen’s liens, and contain such endorsements as Buyer may reasonably require, including any endorsements required by Buyer (the “Endorsements”). Notwithstanding anything in this Agreement to the contrary, and notwithstanding any approval or consent given or deemed given by Buyer hereunder, Seller covenants to cause to be released and reconveyed from the Property, and to remove as exceptions to title on or before the Closing Date all labor, - Page 10 of 35 -
materialmen’s and mechanics’ liens, mortgages, deeds of trust and other monetary encumbrances, assessments and/or indebtedness, except for real estate taxes not yet due or payable (the “Pre- Disapproved Exceptions”).
3.1 Procedure for Approval of Title. Seller must cause, not later than three business days following the Effective Date (the “Title Delivery Date”), a title insurance commitment for the Property (the “Commitment”), together with legible copies of all items identified as exceptions therein (the “Title Documents”) to be delivered to Buyer. Within three days following the Effective Date, Seller must furnish Buyer with a copy of the most recent survey of the Property in Seller’s possession (the “Prior Survey,” and if no New Survey is obtained, the “Survey”), and on or before the expiration of the Due Diligence Period, Buyer may at its option obtain a current as-built survey (a “New Survey,” and collectively with the Prior Survey, the “Survey”) of any or all of the Land and the Improvements by a registered land surveyor. Buyer must pay all costs and expenses incurred in obtaining a New Survey. Buyer has 15 business days following the receipt of the later of the Title Documents and the New Survey to review and approve, in writing, the condition of the title to the Real Property (“Title Review Period”). If the Title Documents or the Survey reflect or disclose any defect, exception or other matter that is unacceptable to Buyer (each, a “Title Defect,” and collectively, the “Title Defects”), then Buyer must provide Seller with written notice of Buyer’s objections not later than the conclusion of the Title Review Period; provided, however, that if Buyer fails to notify Seller in writing within the Title Review Period either that the condition of title is acceptable or of any specific objections to the state of title, then Buyer is deemed to have objected to all exceptions to title or other conditions or matters which are described in the Title Documents or shown on the Survey. Seller may, at its sole option, elect, by written notice given to Buyer within five days following the conclusion of the Title Review Period (“Seller’s Notice Period”), to cure or remove, or agree to cure and remove by Closing, the Title Defects; provided, however, Seller in all events has the obligation to (i) act in good faith in making such election and curing any Title Defects that Seller elects to cure, (ii) specifically remove the Pre-Disapproved Exceptions, and (iii) remove any Title Defect that attaches to the Property subsequent to the conclusion of the Title Review Period. The failure of Seller to deliver written notice electing to cure any or all such objected to exceptions during Seller’s Notice Period is deemed an election by Seller not to cure such exceptions. In the event Seller elects (or is deemed to have elected) not to cure or remove any objection, or in any event Seller fails to cure or remove any objection which Seller agrees or is required to cure, then Buyer is entitled, as Buyer’s sole and exclusive remedies, either to (i) terminate this Agreement and obtain a refund of the Deposit or (ii) waive any Title Defects that Seller has not elected to cure and close this transaction as otherwise contemplated herein. The failure of Buyer to provide written notice to Seller within 10 days following the expiration of Seller’s Notice Period waiving any Title Defects Seller has not elected to cure is deemed an election by Buyer to waive its objections as to all Title Defects that are (x) not Pre-Disapproved Exceptions and (y) Seller has not agreed to release or cure. If at any time before the Closing Date, Buyer receives a new, updated or supplemental Commitment or Survey and such new, updated or supplemental Commitment or Survey discloses one or more Title Defects that are not Permitted Exceptions (in each case, a “New Title Defect”) and any New Title Defect is unacceptable to Buyer, Buyer may, within three business days after receiving such new, updated or supplemental Commitment or Survey, as the case may be, deliver to Seller another written notice of Buyer’s objections with respect to any New Title Defect only and the process described in this Section shall apply thereto. If any of the time periods set forth in this Section 3.2 extend beyond the expiration of the Due Diligence Period, Buyer is nevertheless afforded any rights (including termination of this Agreement and return of the Deposit) on the terms set forth in this - Page 11 of 35 -
Section.
4. Due Diligence Items.
4.1 Due Diligence Items. Seller must, on or before three business days after the Effective Date (the “Delivery Date”), deliver or otherwise make available to Buyer all of the information regarding the Property as Buyer may reasonably request including, without limitation, items such as Seller’s existing title policies, any preliminary title reports, all surveys, all existing environmental reports, tax bills, current and historical actuarial studies, “as built” and/or engineering drawings for the Real Property, all reports, notices received by any governmental entity, authority, or agency, including without limitation notices alleging violations of any zoning, building, fire, health, safety or environmental code applicable to the Property, contracts, licenses or agreements affecting the Property, existing licenses and permits, insurance policies (and claims history for Seller’s entire ownership period) (collectively, the “Due Diligence Items”).
5. Inspections.
5.1 Procedure. Buyer, at its sole expense, may conduct feasibility, environmental, engineering and physical studies of the Property at any time during the period beginning on the Effective Date and expiring on the date that is 30 days after the Effective Date (the “Initial Due Diligence Period”). Buyer and Buyer’s agents, employees, representatives, contractors, attorneys, and potential financing sources (collectively, “Buyer Representatives”) are permitted to enter upon the Property at all reasonable times during the Due Diligence Period upon at least 24 hours advance notice (which may be given by email) to Seller in order to conduct engineering studies, soil tests or other environmental studies and any other inspections and/or tests that Buyer may deem necessary or advisable in Buyer’s sole discretion including without limitation a Phase I environmental survey of the Property and, in the event the Buyer discovers evidence of possible contamination from hazardous waste or other toxic substances at the Property or a the Phase I environmental survey otherwise recommends, a Phase II environmental survey of the Property (collectively, the “Inspections”).
5.2 Approval.
5.2.1 Buyer has until the conclusion of the Due Diligence Period to approve or disapprove of the Inspections, Due Diligence Items, the scope of the Stormwater Drainage Damage, and the economic feasibility of the Property, it being acknowledged that Buyer is permitted, before the expiration of the Due Diligence Period, to terminate this Agreement for any reason or no reason. Buyer must endeavor, before the expiration of the Due Diligence Period, to notify Seller in writing of its intention to proceed (and waive its termination right relating to due diligence approval) or terminate this Agreement and have the Deposit returned, provided, however, that if Buyer fails to deliver a written notice to Seller and Escrow Holder within the Due Diligence Period approving Buyer’s due diligence in Buyer’s sole and absolute discretion, this Agreement is automatically terminated, Buyer is not entitled to purchase the Property, Seller is not obligated to sell the Property to Buyer, and the Parties are relieved of any further obligation to each other with respect to the Property. Upon termination (or any deemed termination), Escrow Holder must, without any further action required from any Party, return all documents and funds, including the Deposit, to the Party who deposited same and no further - Page 12 of 35 -
duties shall be required of Escrow Holder.
6. Escrow.
6.1 Opening of Escrow. The sale of the Property must be consummated through an escrow (“Escrow”) to be opened with Escrow Holder within two business days after the execution of this Agreement by Seller and Buyer. This Agreement constitutes the joint escrow instructions between the Parties. In the event of any conflict between the terms and conditions of this Agreement and any further escrow instructions, the terms and conditions of this Agreement control.
6.2 Closing Date. The consummation of the purchase and sale of the Property (the “Closing”) occurs 30 days after the execution of this Agreement or (B) such date as agreed to by Seller and Buyer. The date upon which the Closing actually occurs is referred to as the “Closing Date.” For all purposes under this Agreement, subject to Section 6.8 hereof, the Closing is deemed to have occurred at 12:00:01 a.m. local time (i.e., in the time zone where the Property is located) on the Closing Date.
6.3 Seller Deliveries. Not later than one (1) business day before the Closing Date (or such earlier date as is specified in any subsection below), Seller must deliver to Escrow Holder the following:
6.3.1 Deeds. One original Grant Deed in the form attached hereto as Exhibit B (the “Deed”), duly executed and acknowledged by Seller and in proper form for recording, conveying fee title to the Property to Buyer. In addition, one original Quit Claim Deed in the form attached as Exhibit C (the “Quit Claim Deed”), duly executed and acknowledged by Seller and in proper form for recording, conveying all rights, obligations, and title contained in the “Option Agreement and Use of Existing Driveway” dated June 14, 1967 and recorded July 11, 1967 to Buyer;
6.3.2 Assignment Agreement. Two originals of an Assignment and Assumption Agreement in the form attached hereto as Exhibit D (the “Assignment Agreement”), duly executed by Seller;
6.3.3 Transferor’s Certification of Non-Foreign Status. One original certification as to Seller’s non-foreign status which complies with the provisions of Section 1445(b)(2) of the Internal Revenue Code of 1986, as amended, any regulations promulgated thereunder (“Internal Revenue Code”), and any revenue procedures or other officially published announcements of the Internal Revenue Service or the U.S. Department of the Treasury in connection therewith (“FIRPTA”);
6.3.4 Form 593-C. One California Form 593-C, duly executed by Seller
6.3.5 Title Documents. Such other documents and instruments, executed and properly acknowledged by Seller, if applicable, as Title Company may require from Seller in order to issue the Title Policy including, without limitation, the Title Company’s standard owner’s/seller’s affidavit;
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6.3.6 Authority Documents. Such resolutions, authorizations, bylaws, or other corporate and/or partnership documents or agreements relating to Seller and its partners as are reasonably required by Title Company and Buyer;
6.3.7 Closing Statement. A customary Closing Statement prepared by Escrow Holder and approved by Seller showing the payment of the Closing Payment by Buyer and the balance payable to Seller;
6.3.8 Other Documents. Such other documents as may be required by this Agreement or as may reasonably be required to carry out the terms and intent of this Agreement, provided that such documents shall not increase Seller’s liability or result in a material expense to Seller.
6.4 Buyer Deliveries. Not later than one business day before the Closing Date, Buyer must deliver to Escrow Holder the following:
6.4.1 Purchase Price. The Closing Payment;
6.4.2 Assignment Agreement. Two originals of the Assignment Agreement, duly executed by Buyer;
6.4.3 Title Documents. On or before the Closing Date, such other documents as the Title Company may require from Buyer in order to issue the Title Policy;
6.4.4 Closing Statement. A customary Closing Statement prepared by Escrow Holder and approved by Buyer showing the payment of the Closing Payment by Buyer and the balance payable to Seller; and
6.4.5 Other Documents. Such other documents as may be required by this Agreement or as may reasonably be required to carry out the terms and intent of this Agreement, provided that such documents do not increase Buyer’s liability or result in a material expense to Buyer.
6.5 Post-Closing Deliverables. Within one business day after the Closing Date, Seller must deliver to Buyer the following:
6.5.1 Permits. The original Permits;
6.5.2 Records. All records and files relating to the Property, including, without limitation, all insurance policies and property tax bills; and
6.6 Seller’s Costs. Seller must pay the following:
6.6.1 One-half (½) of Escrow Holder’s fee, costs and expenses;
6.6.2 All realty transfer, recordation and documentary fees and taxes imposed on the Deed, the conveyance of the Property or the transaction contemplated by this Agreement;
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6.6.3 The CLTA portion of the premium costs and expenses of the Title Policy for the Property (including all costs related to title searches, examinations and issuance of the Commitment);
6.6.4 All costs incurred in connection with the prepayment, satisfaction or reconveyance of any loan encumbering the Property or any portion thereof, including, without limitation, all prepayment, reconveyance and recording fees, penalties or charges, and any legal fees associated therewith, and any other document(s) required by the Title Company in order to release Title Defects or New Title Defects;
6.6.5 All costs associated with the cure of any Title Defect and/or New Title Defect identified in Section 3.2 above that Seller has agreed to remove (collectively, “Curative Endorsements”);
6.6.6 All other costs customarily borne by sellers of real property in Los Angeles County, California.
The provisions of this Section 6.6 survive the termination of this Agreement.
6.7 Buyer’s Costs. Buyer must pay the following:
6.7.1 One-half (½) of Escrow Holder’s fees, costs and expenses;
6.7.2 Any additional premium necessary to obtain the Title Policy in ALTA extended form and the cost of any Endorsements (other than the Curative Endorsements) as well as the cost of the New Survey; and
6.7.3 All other costs customarily borne by buyers of real property in Los Angeles County, California.
The provisions of this Section 6.7 survive the termination of this Agreement.
6.8 Prorations.
6.8.1 Items to Be Prorated. Subject to the immediately following paragraph, the items set forth in this Section 6.8.1 shall be prorated between Seller and Buyer as of the Closing Date with Buyer being deemed the owner of the Property as of the Closing Date and with Buyer receiving credit for or charged with the entire day of the Closing. Except as hereinafter expressly provided, all prorations must be done on the basis of the actual number of days in the year in which Closing occurs for the actual number of days elapsed to the Closing Date or the actual number of days in the month in which the Closing occurs and the actual number of days elapsed in such month to the Closing Date, as applicable
(a) Taxes and Assessments. Seller must pay, on or before Closing, any and all delinquent real estate taxes and assessments with respect to the Property.
General real estate taxes and assessments that are due or accrue during the year in which the Closing occurs must be prorated as of the Closing Date; provided, however, that Seller must pay on or before Closing the full amount of any bonds or assessments against the Property, including - Page 15 of 35 -
interest payable therewith, and including any bonds or assessments that may be payable after the Closing Date that are a result of or relate to the construction or operation of any public improvements that serve only the Property. If after the Closing there is any retroactive increase in the real property taxes or assessments imposed on the Property: (i) if such increase relates to the tax year in which the Closing occurred, then such increase must be prorated by Seller and Buyer on a per diem basis based on their respective periods of ownership during the period to which such increase applies, (ii) if such increase relates to any tax year subsequent to the tax year which the Closing occurred, then such increase is the obligation of Buyer, and (iii) if such increase relates to any tax year prior to the tax year in which the Closing occurred, then such increase is the obligation of Seller. The prorations must be based upon the most recently issued tax bill for the Property. If the most recent tax bill is not for the current tax year, then the Parties will reprorate within 90 days after the receipt of the tax bill for the current tax year.
6.8.2 Calculation; Reproration. Escrow Holder must prepare and deliver to Buyer not later than three business days before the Closing Date an estimated closing statement which sets forth all costs payable, and the prorations and credits provided for in this Agreement. Any item which cannot be finally prorated because of the unavailability of information will be tentatively prorated on the basis of the best data then available and adjusted when the information is available in accordance with this subsection. The Parties must attempt in good faith to reconcile any differences or disputes regarding such estimated closing statement not later than one business day before the Closing Date. The estimated closing statement as adjusted as aforesaid and approved in writing by the Parties (which may not be withheld if prepared in accordance with this Agreement) is referred to as the “Closing Statement.” If the prorations and credits made under the Closing Statement prove to be incorrect or incomplete for any reason, then either Party is entitled to an adjustment to correct the same; provided, however, that any adjustment shall be made, if at all, within 90 days after the Closing Date, and if a Party fails to request an adjustment to the Closing Statement by a written notice delivered to the other Party within the applicable period set forth above (such notice to specify in reasonable detail the items within the Closing Statement that such Party desires to adjust and the reasons for such adjustment), then the prorations and credits set forth in the Closing Statement are binding and conclusive against such Party.
6.8.3 Items Not Prorated. Seller and Buyer agree that (a) on the Closing Date, the Property will not be subject to any financing arranged by Seller; (b) none of the insurance policies relating to the Property will be assigned to Buyer and Buyer is responsible for arranging for its own insurance as of the Closing Date; and (c) utilities, including telephone, electricity, water and gas, must read on the Closing Date and Buyer is responsible for all the necessary actions needed to arrange for utilities to be transferred to the name of Buyer on the Closing Date, including the posting of any required deposits and Seller may recover and retain from the providers of such utilities any refunds or overpayments to the extent applicable to the period before the Closing Date, and any utility deposits which it or its predecessors may have posted. Accordingly, there will be no prorations for debt service, insurance or utilities. In the event a meter reading is unavailable for any particular utility, such utility is prorated in the manner provided in Section 6.8.2 above.
6.8.4 Indemnification. Buyer and Seller shall each indemnify, protect, defend and hold the other harmless from and against any claim in any way arising from the matters for which the other receives a credit or otherwise assumes responsibility pursuant to this Section 6.8.
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6.8.5 Survival. This Section 6.8 survives the Closing.
6.9 Duties of Escrow Holder. Escrow Holder’s Obligations at Closing. Escrow Holder must undertake the following at or promptly after Closing:
6.9.1 If necessary, Escrow Holder is authorized and instructed to insert the Closing Date as the effective date of any documents conveying interests herein or which are to become operative as of the Closing Date;
6.9.2 Cause the Deed and any other recordable instruments which the Parties so direct to be recorded in the Official Records of the Recorder of the County in which the Property is located. If permitted by applicable law, Escrow Holder is instructed not to affix the amount of the documentary transfer tax on the face of the Deed, but to pay on the basis of a separate affidavit of Seller not made a part of the public record;
6.9.3 Cause each non-recorded document to be delivered to the Party acquiring rights thereunder, or for whose benefit such document was obtained, unless there are sufficient fully executed counterparts so that each Party executing the same can receive its own fully executed counterpart;
6.9.4 Deliver the Title Policy to Buyer as soon as practicable; and
6.9.5 Deliver to Seller the Closing Payment, and such other funds, if any, as may be due to Seller by reason of credits under this Agreement.
6.9.6 Comply with all applicable federal, state and local reporting and withholding requirements relating to the close of the transactions contemplated herein. Without limiting the generality of the foregoing, to the extent the transactions contemplated by this Agreement involve a real estate transaction within the purview of Section 6045 of the Internal Revenue Code, Escrow Holder shall have sole responsibility to comply with the requirements of Section 6045 of the Internal Revenue Code (and any similar requirements imposed by state or local law). For purposes hereof, Seller’s tax identification number is 81-6721133. Escrow Holder must defend, indemnify and hold Buyer, Seller and their counsel free and harmless from and against any and all liability, claims, demands, damages and costs, including reasonable attorneys’ fees and other litigation expenses, arising or resulting from the failure or refusal of Escrow Holder to comply with such reporting requirements. - Page 17 of 35 -
7. Seller Representations, Warranties, and Covenants.
7.1 Representations and Warranties. Seller represents and warrants as of the date hereof and as of the Closing Date as follows:
7.1.1 Organization and Authorization. Seller is the Jacquelyn S.
Connolly Trust, duly created and validly existing under the laws of the State of California and authorized to enter into this transaction in the State of California. Seller has full power and authority to enter into this Agreement, to perform its obligations under this Agreement and to consummate the transactions contemplated hereby. The execution, delivery and performance of this Agreement and all documents contemplated hereby by Seller have been duly and validly authorized by all necessary action on the part of Seller and all required consents and approvals have been duly obtained and will not result in a breach of any of the terms or provisions of, or constitute a default under, any indenture, agreement or instrument to which Seller is a Party or otherwise bound. This Agreement is a legal, valid and binding obligation of Seller, enforceable against Seller in accordance with its terms, subject to the effect of applicable bankruptcy, insolvency, reorganization, arrangement, moratorium or other similar laws affecting the rights of creditors generally.
7.1.2 No Conflicting Agreements. The execution and delivery by Seller of, and the performance of and compliance by Seller with, the terms and provisions of this Agreement, do not (a) conflict with, or result in a breach of, the terms, conditions or provisions of, or constitute a default under, Seller’s organizational documents, or any other agreement or instrument to which Seller is a Party or by which all or any part of the Property is bound, (b) violate any restriction, requirement, covenant or condition to which all or any part of the Property is bound, (c) constitute a violation of any applicable code, resolution, law, statute, regulation, ordinance or rule applicable to Seller or the Property, (d) constitute a violation of any judgment, decree or order applicable to Seller or specifically applicable to the Property, or (e) require the consent, waiver or approval of any third Party.
7.1.3 Title. To Seller’s knowledge, there are no outstanding rights of first refusal, rights of first offer, rights of reverter, purchase options or other similar rights or options relating to the Property or any interest therein. Upon conveyance of the Property to Buyer, neither Seller nor anyone claiming by, through or under Seller shall have any right of redemption in the Property, and Seller and all such persons or entities will be estopped from asserting any claim to or right of redemption against the Property.
7.1.4 FIRPTA. Seller is not a “foreign person” within the meaning of Section 1445(f) of the Internal Revenue Code.
7.1.5 Litigation. There are no actions or suits, or any proceedings or investigations by any governmental agency or regulatory body pending or threatened against Seller (related to the Property) or the Property. Seller has not received notice of any threatened actions, suits, proceedings or investigations against Seller (related to the Property) or the Property at law or in equity, or before any governmental board, agency or authority which, if determined adversely, would materially and adversely affect the Property or title to the Property (or any part thereof). The are no unsatisfied or outstanding judgments against Seller (related to the Property) or the Property.
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7.1.6 Compliance with Laws and Environmental Conditions. To the best of Seller’s knowledge, there is no violation of any laws, orders, rules or regulations, ordinances or codes of any kind or nature whatsoever (collectively, “Laws”) including, without limitation, (i) laws relating to “Hazardous Materials” (as hereinafter defined) (“Environmental Laws”) (ii) laws relating to the Property or the ownership or operation thereof (including, without limitation, building, fire, health, occupational safety and health, zoning and land use, planning and environmental laws, orders, rules and regulations); (iii) any covenants, conditions, restrictions or agreements affecting or relating to the ownership, use or occupancy of the Property; or (iii) any order, writ, regulation or decree relating to any matter referred to in (i) or (ii) above. To the best of Seller’s knowledge, with respect to the Property: (a) there have been no releases or threatened releases of Hazardous Materials on, from or under the Property, except in compliance with all Environmental Laws; (b) no Hazardous Materials have been or are being used, generated, stored or disposed of at the Property, except in compliance with all Environmental Laws; (c) underground storage tanks on or under the Property, if any, have been and currently are being operated in compliance with all applicable Environmental Laws; (d) any closure, abandonment in place or removal of an underground storage tank on or from the Property was performed in compliance with applicable Environmental Laws, and any such tank had no release contaminating the Property or, if there had been a release, the release was remediated in compliance with applicable Environmental Laws to the satisfaction of regulatory authorities; and (e) no summons, citation or inquiry has been made by any such environmental unit, body or agency or a third party demanding any right of recovery for payment or reimbursement for costs incurred under CERCLA or any other Environmental Laws, and the Property is not subject to the lien of any such agency. “Disposal” and “release” has the meanings set forth in CERCLA. For purposes of this Agreement, “Hazardous Materials” are substances defined as: “toxic substances,” “toxic materials,” “hazardous waste,” “hazardous substances,” “pollutants,” or “contaminants” as those terms are defined in the Resource, Conservation and Recovery Act of 1976, as amended (42 U.S.C. § 6901, et seq.), the Comprehensive Environmental Response Compensation and Liability Act of 1980, as amended (42 U.S.C. § 9601, et seq.), the Hazardous Materials Transportation Act, as amended (49 U.S.C. § 1801, et seq.), the Toxic Substances Control Act of 1976, as amended (15 U.S.C. § 2601, et seq.), the Clean Air Act, as amended (42 U.S.C. § 1251, et seq.) and any other federal, state or local law, statute, ordinance, rule, regulation, code, order, approval, policy and authorization relating to health, safety or the environment; asbestos or asbestos-containing materials; lead or lead-containing materials; oils; petroleum-derived compounds; pesticides; or polychlorinated biphenyls. To the best of Seller’s knowledge, no part of the Property has been previously used by Seller, or by any other person or entity, for the storage, manufacture or disposal of Hazardous Materials, except as may be disclosed in the Due Diligence Items.
Except as set forth in the Due Diligence Items, to the knowledge of Seller, there are no underground storage tanks of any nature located on any portion of the Property.
7.1.7 Unpaid Claims. There are no unpaid bills, claims, or liens in connection with any construction or repair of the Property except for those that will be paid in the ordinary course of business prior to the Closing Date, or which have been bonded over or the payment of which has otherwise been adequately provided for to the satisfaction of Buyer. On the Closing Date, there will be no written or oral contract made for any improvements, including capital improvements to the Property, or for offsite improvements related to the Property, which have not been fully completed and paid for or a credit given to Buyer at Closing in the amount sufficient to complete the improvement.
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7.1.8 Leases. Seller represents to Buyer that all such leases are month to month and may be terminated by Buyer upon 30 days notice to tenant.
7.1.9 Condemnation Proceedings. There are no presently pending or contemplated proceedings to condemn or assess the Property or any part of it, or any utilities, sewers, roadways or other public improvements serving the Property.
7.1.10 Service Contracts. There are no contracts or agreements relating to the operation, maintenance, or repair of the Real Property.
7.1.11 Due Diligence Items. To Seller’s knowledge, the Due Diligence Items provided to Buyer constitute all of the material documents, information, data, reports or written materials that are in response to Buyer’s written requests and relate to the Property, in Seller’s possession, control or known to Seller and Seller has not knowingly provided to Buyer any Due Diligence Items which it knows to be false or inaccurate in any material respect. In addition, Seller has provided all material information in Seller’s possession, control, or otherwise known to Seller relating to any Stormwater Drainage Damage.
7.1.12 Patriot Act Compliance. To the extent applicable to Seller, Seller has complied with the International Money Laundering Abatement and Anti-Terrorist Financing Act of 2001, which comprises Title III of the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (the “Patriot Act”) and the regulations promulgated thereunder, and the rules and regulations administered by the U.S. Treasury Department’s Office of Foreign Assets Control (“OFAC”), to the extent such Laws are applicable to Seller. Seller is not included on the List of Specially Designated Nationals and Blocked Persons maintained by the OFAC, or is a resident in, or organized or chartered under the laws of, (A) a jurisdiction that has been designated by the U.S. Secretary of the Treasury under Section 311 or 312 of the Patriot Act as warranting special measures due to money laundering concerns or (B) any foreign country that has been designated as non-cooperative with international anti-money laundering principles or procedures by an intergovernmental group or organization, such as the Financial Action Task Force on Money Laundering, of which the United States is a member and with which designation the United States representative to the group or organization continues to concur.
7.1.13 Insurance. Seller currently maintains adequate insurance for the Property.
7.1.14 Bankruptcy; Insolvency. Seller has not filed or been the subject of any filing of a petition seeking or consenting to reorganization or relief as debtor under any applicable federal or state law relating to bankruptcy, insolvency or other relief for debtors, suffered the appointment of a receiver to take possession of all, or substantially all, of its assets, suffered the attachment or other judicial seizure of all, or substantially all, of its assets, made any general assignment for the benefit of its creditors, admitted in writing its inability to pay its debts generally as they come due, nor made an offer of settlement, extension or composition to its creditors generally, nor taken any action in furtherance of any of the foregoing. Seller has not concealed assets from any creditor nor entered into any transaction with the intent to hinder, delay
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or defraud creditors of Seller or the creditors of any other person or entity. Seller is not, and as a result of the transactions contemplated by this Agreement will not be rendered, insolvent, undercapitalized, or unable to pay its debts as they become due.
The foregoing representations and warranties of Seller are made by Seller as of the Effective Date and again as of the Closing Date, shall survive the Closing for a period of 12 months and shall not be merged as of the Closing Date hereunder.
7.2 Covenants of Seller. Seller hereby covenants from and after the Effective Date and through the Closing Date as follows:
7.2.1 Seller Insurance. To cause to be in force fire and extended coverage insurance upon the Property, and public liability insurance with respect to damage or injury to persons or property occurring on the Property in at least such amounts, and with the same deductibles, as are maintained by Seller on the Effective Date.
7.2.2 Liens. To not sell, assign, or convey any right, title, or interest whatsoever in or to the Property, or create or permit to attach any lien, security interest, easement, encumbrance, charge, or condition affecting the Property (other than the Permitted Exceptions).
7.2.3 Agreements. To not, without Buyer’s written approval, enter into any service, operating or maintenance agreement affecting the Property that would survive the Closing.
7.2.4 Operations. To operate the Property from and after the Effective Date in substantially the same manner as prior thereto.
8. Buyer Representations and Warranties. Buyer hereby represents and warrants to Seller as of the Effective Date that:
8.1 Organization and Authorization. Buyer is a municipal corporation duly organized and validly existing under the laws of the State of California. Buyer has full power and authority to enter into this Agreement, to perform this Agreement and to consummate the transactions contemplated hereby. This Agreement is a legal, valid and binding obligation of Buyer, enforceable against Buyer in accordance with its terms, subject to the effect of applicable bankruptcy, insolvency, reorganization, arrangement, moratorium or other similar laws affecting the rights of creditors generally.
8.2 No Conflicting Agreements. The execution, delivery and performance of this Agreement and all documents contemplated hereby by Buyer have been duly and validly authorized by all necessary action on the part of Buyer and all required consents and approvals have been duly obtained and will not result in a breach of any of the terms or provisions of, or constitute a default under, any indenture, agreement or instrument to which Buyer is a Party or otherwise bound.
8.3 Patriot Act Compliance. To the extent applicable to Buyer, Buyer has complied in all material respects with the Patriot Act and the regulations promulgated thereunder, - Page 21 of 35 -
and the rules and regulations administered by OFAC, to the extent such Laws are applicable to Buyer. Buyer is not included on the List of Specially Designated Nationals and Blocked Persons maintained by the OFAC, or is a resident in, or organized or chartered under the laws of (A) a jurisdiction that has been designated by the U.S. Secretary of the Treasury under Section 311 or 312 of the Patriot Act as warranting special measures due to money laundering concerns, or (B) any foreign country that has been designated as non-cooperative with international anti-money laundering principles or procedures by an intergovernmental group or organization, such as the Financial Action Task Force on Money Laundering, of which the United States is a member and with which designation the United States representative to the group or organization continues to concur.
9. Conditions Precedent to Closing.
9.1 Conditions Precedent. The obligation of Buyer to purchase the Property pursuant to this Agreement is, at the option of Buyer, subject to the fulfillment, on or before the Closing Date, of all of the conditions set forth in this Section 9.1 (“Buyer’s Closing Conditions”), any or all of which may be waived by Buyer in its sole and absolute discretion:
9.1.1 Representations, Warranties and Covenants. All of the representations and warranties of Seller set forth in this Agreement must be true and correct as of the Effective Date and as of the Closing Date, and Seller has fully complied with all of Seller’s duties and obligations contained in this Agreement.
9.1.2 Title Policy. On the Closing Date, the Title Company is unconditionally obligated and prepared, subject to the payment of the applicable title insurance premium and other related charges, to issue to Buyer the Title Policy in accordance with the requirements of Section 3.2.
10. Eminent Domain. If, before the Closing Date, proceedings are commenced for the taking by exercise of the power of eminent domain of all or a material part of the Property which, as reasonably determined by Buyer, would render the Property unacceptable to Buyer or unsuitable for Buyer’s intended use, Buyer shall have the right, by giving written notice to Seller within 10 days after Seller gives notice of the commencement of such proceedings to Buyer, to terminate this Agreement, in which event this Agreement will automatically terminate, the Deposit must be returned to Buyer without any further action required from either Party, and neither Party shall have any continuing obligations hereunder. If, before the Closing Date, proceedings are commenced for the taking by exercise of the power of eminent domain of less than a material part of the Property, or if Buyer has the right to terminate this Agreement pursuant to the preceding sentence but Buyer does not exercise such right, then this Agreement remains in full force and effect and, on the Closing Date, the condemnation award (or, if not theretofore received, the right to receive such portion of the award) payable on account of the taking will be assigned, or paid to, Buyer. Seller must give written notice to Buyer within three business days after Seller’s receiving notice of the commencement of any proceedings for the taking by exercise of the power of eminent domain of all or any part of the Property. The provisions of this Section 10 survive the Closing.
11. Notices. All notices, demands, or other communications of any type given by any Party hereunder, whether required by this Agreement or in any way related to the transaction - Page 22 of 35 -
contracted for herein, are void and of no effect unless given in accordance with the provisions of this Section 11. All notices must be in writing and delivered to the person to whom the notice is directed, either (a) in person, (b) by United States Mail, as a registered or certified item, return receipt requested, or (c) by a nationally recognized overnight delivery service. Notices transmitted to the then designated email address of the Party intended to be given notice are deemed received when sent, notices sent by a nationally recognized overnight delivery service are deemed received on the next business day and notices delivered by certified or registered mail are deemed delivered three days following posting. Notices must be given to the following addresses:
Buyer: The City of Bellflower
Jeff Stewart, City Manager
16600 Civic Center Drive
Bellflower, CA 90241
E-mail: [email protected]
With a copy to: Karl H. Berger, City Attorney
2600 W. Olive Avenue, Suite 500
Burbank, California 91505
E-mail: [email protected]
Seller: Sean Connolly, Trustee
Jacqueline S. Connolly Living Trust
P.O. Box 735
Gleneden Beach, OR 97388
Telephone: (424) 299-1380
E-mail: [email protected]
With a copy to: Molly K. Zurflueh, Esq.
Law Office of Molly K. Zurflueh
1278 Glenneyre Street #262
Laguna Beach, CA 92651
Telephone: (949) 218-1325
E-mail: [email protected]
If to Escrow Holder:
First American Title Escrow
Attention: Gabriel Guerra
30110 Crown Valley Pkwy #203
Laguna Niguel CA 92677
Telephone: 760-277-2138
Email: [email protected]
12. Remedies.
12.1 Seller Default. In the event the sale of the Property is not consummated because of default under or breach of this Agreement on the part of Seller, Buyer has the option
FOLLOWING NOTICE TO SELLER AND FIVE DAYS THEREAFTER DURING - Page 23 of 35 -
WHICH PERIOD SELLER MAY CURE THE DEFAULT, as its sole and exclusive remedy at law or in equity, to either (i) terminate this Agreement by delivery of written notice of termination to Seller, whereupon Buyer and Seller are each released from all liability hereunder (except for those provisions which recite that they survive termination), the Deposit must be returned to Buyer and Seller must reimburse Buyer for all of Buyer’s reasonable third-party costs and expenses (including all consultant, expert and legal fees and expenses) incurred by Buyer in connection with this Agreement, or (ii) continue this Agreement and seek the equitable remedy of specific performance and deliver the documents required to convey the Property to Buyer in accordance with this Agreement pursuant to California Civil Code Section 1680 and Sections 3384 through 3395. The provisions of this Section 12.1 to the contrary notwithstanding, if the remedy of specific performance is not available or is impracticable to Buyer as a result of a willful breach of this Agreement by Seller, then Buyer may avail itself of any and all rights and remedies available at law or in equity. Additionally, in the event that Buyer elects to pursue the equitable remedy of specific performance and in any such action for specific performance, the court rules that such remedy is unavailable, then the rights and remedies available under this Section 12.1 and the running of any and all statutes of limitation, statutes of repose, passage of time relating to laches and other statutes, rules, doctrines or principles which impose any time limits for commencing any suit, action, arbitration, mediation or other proceeding on account of such breach or default by Seller are suspended and tolled while Buyer is pursuing any such action for specific performance.
12.2 Buyer Default. IN THE EVENT THE SALE OF THE PROPERTY IS
NOT CONSUMMATED SOLELY BECAUSE OF A DEFAULT UNDER THIS
AGREEMENT ON THE PART OF BUYER FOLLOWING NOTICE TO BUYER AND
FIVE DAYS THEREAFTER DURING WHICH PERIOD BUYER MAY CURE THE
DEFAULT, SELLER MAY DECLARE THIS AGREEMENT TERMINATED, IN WHICH CASE, AS SELLER’S SOLE AND EXCLUSIVE REMEDY, THE DEPOSIT MUST BE PAID TO AND RETAINED BY SELLER AS LIQUIDATED DAMAGES. THE PARTIES HAVE AGREED THAT SELLER’S ACTUAL DAMAGES, IN THE EVENT THE SALE
OF THE PROPERTY IS NOT CONSUMMATED SOLELY BECAUSE OF A DEFAULT
BY BUYER, WOULD BE EXTREMELY DIFFICULT OR IMPRACTICABLE TO DETERMINE. THEREFORE, BY PLACING THEIR INITIALS BELOW, THE PARTIES
ACKNOWLEDGE THAT THE DEPOSIT HAS BEEN AGREED UPON, AFTER NEGOTIATION, AS THE PARTIES’ REASONABLE ESTIMATE OF SELLER’S DAMAGES AND AS SELLER’S SOLE AND EXCLUSIVE REMEDY AGAINST BUYER,
AT LAW OR IN EQUITY, IN THE EVENT THE SALE OF THE PROPERTY IS NOT
CONSUMMATED SOLELY BECAUSE OF A DEFAULT UNDER THIS AGREEMENT
ON THE PARTY OF BUYER AND EACH PARTY IS THEREUPON RELIEVED OF ALL
FURTHER OBLIGATIONS AND LIABILITIES, EXCEPT ANY WHICH SURVIVE TERMINATION. SUCH RETENTION OF THE DEPOSIT BY SELLER IS INTENDED TO CONSTITUTE LIQUIDATED DAMAGES PURSUANT TO SECTIONS 1671, 1676 AND 1677 OF THE CALIFORNIA CIVIL CODE, AND MAY NOT BE DEEMED TO
CONSTITUTE A FORFEITURE OR PENALTY WITHIN THE MEANING OF SECTION 3275 OR SECTION 3369 OF THE CALIFORNIA CIVIL CODE OR ANY SIMILAR PROVISION. SELLER HEREBY WAIVES THE PROVISIONS OF CALIFORNIA CIVIL CODE SECTION 3389 AND ANY RIGHT TO AN ACTION FOR SPECIFIC PERFORMANCE OF ANY PROVISION OF THIS AGREEMENT.
INITIALS: SELLER BUYER
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13. Assignment. Seller may not assign any of its right, title, claim or interest in, to or under this Agreement. Buyer may, without Seller’s consent, assign any or all of its rights and obligations under this Agreement (or directly deed the Land and assign all of the Property) to any one or more persons or entities upon notice to Seller; provided, however, that (i) notwithstanding any such assignment, Buyer must be an affiliate of, or continue to act as the liaison on behalf of, such assignee(s), and (ii) absent the express agreement of Seller, no such assignment releases Buyer from its liabilities hereunder until Closing, at which time Buyer (but not such assignee(s)) is released from its liabilities hereunder. For the avoidance of doubt, any provisions herein which state that all or any portion of the Property may be assigned or transferred “to Buyer” are deemed to mean “to Buyer or its assignee.”
14. Interpretation and Applicable Law. This Agreement must be construed and interpreted in accordance with the laws of the State of California. Where required for proper interpretation, words in the singular shall include the plural; the masculine gender includes the neuter and the feminine, and vice versa. The terms “successors and assigns” include the heirs, administrators, executors, successors, and assigns, as applicable, of any Party hereto.
15. Amendment. This Agreement may not be modified or amended, except by an agreement in writing signed by the Parties. The Parties may waive any of the conditions contained herein or any of the obligations of the other Party hereunder, but any such waiver is effective only if in writing and signed by the Party waiving such conditions and obligations.
16. Entire Agreement; Survival. This Agreement, including all Exhibits and Schedules attached hereto, constitutes the entire agreement between the Parties pertaining to the subject matter hereof and supersedes all prior and contemporaneous agreements and understandings of the Parties in connection therewith. No representation, warranty, covenant, agreement, or condition not expressed in this Agreement is binding upon the Parties hereto nor will affect or be effective to interpret, change, or restrict the provisions of this Agreement. The obligations of the Parties hereunder and all other provisions of this Agreement survive the Closing or earlier termination of this Agreement, except as expressly limited herein.
17. Counterparts. This Agreement may be executed in any number of counterparts, all of which when taken together constitutes the entire agreement of the Parties.
18. Time Is of the Essence; Calculation of Time Periods. Time is of the essence in this Agreement as to each provision in which time is an element of performance. Unless otherwise specified, in computing any period of time described herein, the day of the act or event after which the designated period of time begins to run is not to be included and the last day of the period so computed is to be included, except that if such last day falls upon a Saturday, Sunday, or legal holiday under the Federal law or laws of the State(s) where the Property is located, then such period runs until the end of the next day that is neither a Saturday, Sunday, or legal holiday under Federal law or the laws of the State(s) where the Property is located. The last day of any period of time described herein shall be deemed to end at 11:59 p.m. Los Angeles, California time.
19. Real Estate Commission. Seller and Buyer each represent and warrant to the other that neither Seller nor Buyer has contacted or entered into any agreement with any real estate broker, agent, finder or any other Party in connection with this transaction, and that neither Party has taken any action which would result in any real estate broker’s, finder’s or other fees or - Page 25 of 35 -
commissions being due and payable to any Party with respect to the transaction contemplated hereby. Each Party hereby indemnifies and agrees to hold the other Party harmless from any loss, liability, damage, cost, or expense (including reasonable attorneys’ fees) resulting to the other Party by reason of a breach of the representation and warranty made by such Party in this Section.
20. Severability. If any provision of this Agreement, or the application thereof to any person, place, or circumstance, shall be held by a court of competent jurisdiction to be invalid, unenforceable or void, the remainder of this Agreement and such provisions as applied to other persons, places and circumstances shall remain in full force and effect.
21. Further Assurances. Each Party will, whenever and as often as it is requested to do so by the other Party, execute, acknowledge and deliver, or cause to be executed, acknowledged and delivered any and all such further conveyances, assignments, approvals, consents and any and all other documents and do any and all other acts as may be necessary to carry out the intent and purpose of this Agreement. The provisions of this Section 21 survive the Closing.
22. Exclusivity. Until the Closing Date or the date that this Agreement is terminated, Seller may not enter into any contract, or enter into or continue any negotiations, to sell the Property to any person or entity other than Buyer, nor will Seller solicit proposals from, or furnish any non-public information to, any person or entity other than Seller’s agents, attorneys and lenders and Buyer regarding the possible sale of the Property.
23. No Option; Binding Effect. The submission of this Agreement for examination and review does not constitute an option to purchase the Property, an offer to sell the Property or an agreement to purchase and sell. This Agreement has no binding effect and will only be effective upon Seller’s and Buyer’s execution and mutual receipt of the others executed version of this Agreement. Escrow Agent’s execution of this Agreement is not a prerequisite to the effectiveness of this Agreement.
24. Natural Hazard Disclosure Statement. Seller must cause the property disclosure report (the “Disclosure Report”) to be delivered to Buyer within five Business Days after the Effective Date. The Disclosure Report fully and completely discharges Seller from its disclosure obligations, if any, which may be required under the Natural Hazard Disclosure Act, California Government Code Sections 8589.3, 8589.4, and 51183.5, California Public Resources Code Sections 2621.9, 2694, and 4136, and 1103.2, and any successor law, and, for the purposes of this Agreement, the provisions of Civil Code Section 1103.4 regarding the non-liability of Seller for errors and/or omissions not within its personal knowledge shall be deemed to apply and the preparer of the Disclosure Report is deemed to be an expert, dealing with matters within the scope of its expertise with respect to the examination and Disclosure Report. Nothing set forth in the Disclosure Report (A) requires Seller to remediate any matter referred to in the Disclosure Report or (B) creates any liability by Seller to Buyer therefor and Seller may not in any event be required to expend funds to remediate any matters disclosed in the Disclosure Report. Following the Closing, Buyer is solely responsible for preparing and delivering its own disclosure report to any subsequent prospective buyers of the Property.
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SIGNATURE PAGE TO PURCHASE AND SALE AGREEMENT AND JOINT
ESCROW INSTRUCTIONS
SELLER:
By:
Name: Sean Connolly, Trustee of the
Jacquelyn S. Connolly Living Trust
THE CITY OF BELLFLOWER
By:
Name: Raymond Dunton
Its: Mayor
ATTEST:
__________________________
Mayra Ochiqui, City Clerk
APPROVED AS TO FORM:
__________________________
Karl H. Berger, City Attorney
ESCROW HOLDER:
The undersigned Escrow Holder accepts the foregoing Purchase and Sale Agreement and Joint Escrow Instructions and agrees to act as Escrow Agent under this Agreement in strict accordance with its terms.
By:
Name:
Its:
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EXHIBIT A
LEGAL DESCRIPTION
ALL THAT CERTAIN REAL PROPERTY SITUATED IN THE CITY OF BELLFLOWER, COUNTY OF LOS ANGELES, STATE OF CALIFORNIA, DESCRIBED AS FOLLOWS: THE SOUTHERLY 139.07 FEET OF THE NORTHERLY 159.07 FEET OF LOT 461 OF SOMERSET
ACRES, IN THE CITY OF BELLFLOWER, COUNTY OF LOS ANGELES, STATE OF CALIFORNIA, AS PER MAP RECORDED IN BOOK 14, PAGE 105 OF MAPS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY.
EXCEPT THEREFROM THE WESTERLY 20 FEET.
Address: 9818 Artesia Boulevard
Assessor’s Parcel Number: 7161-008-021
RECORDING REQUESTED BY AND WHEN RECORDED MAIL TO:
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EXHIBIT B DEED
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EXHIBIT C
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EXHIBIT D
ASSIGNMENT AND ASSUMPTION AGREEMENT
THIS ASSIGNMENT AND ASSUMPTION AGREEMENT (the “Assignment”) is entered into as of , 202_ (the “Effective Date”), by and between , (“Assignor”), and (“Assignee”).
FOR GOOD AND VALUABLE CONSIDERATION, the receipt and sufficiency of which are hereby acknowledged, the Parties hereby agree as follows:
1. Assignment. As of the Effective Date, Assignor hereby grants, conveys, transfers and assigns to Assignee all of Assignor’s rights, title and interest in, to and under any and all of the following to the extent they are related to that certain real property commonly known as Xxx and more particularly described in Exhibit A attached hereto (the “Real Property”): to the extent assignable, all intangible personal property now or hereafter owned by Assignor and used in the ownership, use, operation, occupancy, maintenance or development of the Real Property, including, without limitation (i) all licenses, permits, certificates, approvals, authorizations and other entitlements issued; (ii) all reports, test results, environmental assessments, surveys, plans, specifications; and (iii) all other intangible property related to the Real Property (collectively, the “Intangible Property”).
2. Assumption. As of the Effective Date, Assignee hereby accepts the foregoing assignment and assumes all of Assignor’s obligations under the Real Property and Intangible Property (collectively, the “Assigned Interest”) with respect to the period from and after the Effective Date.
3. Assignor’s Indemnity. Assignor hereby agrees to indemnify, protect, defend and hold Assignee harmless from and against any and all claims, demands, liabilities, losses, costs, damages or expenses (including, without limitation, reasonable attorneys’ fees and costs) arising out of or resulting from any breach or default by Assignor under the terms of the Assigned Interests arising prior to the Effective Date.
4. Assignee’s Indemnity. Assignee hereby agrees to indemnify, protect, defend and hold Assignor harmless from and against and any all claims, demands, liabilities, losses, costs, damages or expenses (including, without limitation, reasonable attorneys’ fees and costs) arising out of or resulting from any breach or default by Assignee under the terms of the Assigned Interests arising on or after the Effective Date.
5. Further Assurances. Assignor hereby covenants that it will, at any time and from time to time upon written request therefore and without the assumption of any additional liability thereby, execute and deliver to Assignee, its successors and assigns, any new or confirmatory instruments and take such further acts as Assignee may reasonably request to fully evidence the assignment contained herein and to enable Assignee, its successors and assigns to fully realize and enjoy the rights and interests assigned hereby.
6. Successors and Assigns. The provisions of this Assignment shall be binding upon, and shall inure to the benefit of, the successors and assigns of Assignor and Assignee, respectively.
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7. Counterparts. This Assignment may be executed in any number of counterparts, each of which shall be deemed an original, but all of which when taken together shall constitute one and the same instrument.
IN WITNESS WHEREOF, Assignor and Assignee have caused their duly authorized representatives to execute this Assignment as of the date first above written.
SELLER:
By:
Name:
Its:
BUYER:
By:
Name: Raymond Dunton
Its: Mayor
ATTEST:
Mayra Ochiqui, City Clerk
APPROVED AS TO FORM:
Karl H. Berger, City Attorney
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EXHIBIT C
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