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APN: 373-061-010
DONATION AGREEMENT AND JOINT ESCROW INSTRUCTIONS
THIS DONATION AGREEMENT AND JOINT ESCROW INSTRUCTION
(“Agreement”) is made this 8th day of July, 2025 by and between the CITY OF LAKE ELSINORE, a California municipal corporation, herein called “City,” and MICHELLE HERNANDEZ, herein called “Donor.” The City and Donor are sometimes individually referred to as “Party” and collectively as “Parties.”
WHEREAS, Donor is the owner of certain real property located in Riverside County, and as more particularly described on Exhibit A attached hereto (the “Real Property”); WHEREAS, City desires to acquire the Real Property for purposes of providing future housing.
NOW, THEREFORE, City and Donor agree as follows:
1. Dedication of Property. Donor shall offer to dedicate the Property to City and City shall accept the offer of dedication of the Property, or interest therein, upon the terms and conditions set forth in this Agreement. “Property” means collectively the Real Property, all improvements presently or hereafter existing on the Real Property, all water rights, all mineral rights, all plans and specifications relating to the present or planned construction of improvements on the Real Property, including all governmental permits or licenses, utility contracts, service contracts, maintenance contracts, operating contracts, or other intangible property (if any) now or in the future owned by Donor in connection with the development, operation, or ownership of the Property or other rights of any kind or character relating to the ownership, use, or operation of the Property, including all materials purchased by Donor for use on the Property or in the construction of improvements on the Property, and all of Donor’s rights in and to any fees paid to any governmental agency or utility.
2. Obligations of Donor.
2.1 Fee Interest. Upon acceptance by City, Donor shall convey, assign and transfer its fee interest in the Property to City, free and clear of all liens, encumbrances, easements, leases (recorded or unrecorded), bonds, assessments, and taxes except for (i) liens for non- delinquent property taxes and assessments, and (ii) those liens and encumbrances and easements which, in the sole discretion of City, are acceptable pursuant to Section 6.
2.2 Representations and Warranties of Donor. Donor represents and warrants to City that as of the date of this Agreement and as of the Close of Escrow:
2.2.1 Hazardous Substances. The Property is: (i) free from Hazardous Substances; (ii) contains no buried or partially buried storage tanks located on the Property; (iii) has not been used for the generation, storage or disposal of any Hazardous Substance and no 2 3
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Hazardous Substance has been spilled, disposed of, or stored on, under, or at the Property; and (iv) has never been used as a dump or landfill;
2.2.2 Compliance with Law. The Property is in material compliance with all applicable Laws and Environmental Laws;
2.2.3 Leases. No leases, licenses, or other agreements allowing any third party rights to use the Property are or will be in force as of the Closing;
2.2.4 Litigation and Investigations. There is no pending or threatened litigation, administrative proceeding, or other legal or governmental action with respect to the Property, and Donor has received no notice, warning, administrative complaint, judicial complaint, or other formal or informal notice alleging that conditions on the Property are or have been in violation of any Laws or Environmental Laws, or informing Donor that the Property is subject to investigation or inquiry regarding the violation of any Laws or Environmental Laws.
2.2.5 Condition of Property. There are no natural or artificial conditions upon the Property or any part of the Property that could result in a material and adverse change in the condition of the Property;
2.2.6 Access to the Property. There is vehicular access to the Property either directly through a public right of way or through a recorded easement; and
2.2.7 No Insolvency Proceedings. Donor has not (i) made a general assignment for the benefit of creditors; (ii) filed any voluntary petition in bankruptcy or suffered the filing of any involuntary petition by its creditors; (iii) suffered the appointment of a receiver to take possession of all or substantially all of its assets; (iv) suffered the attachment or other judicial seizure of substantially all of its assets; or (v) admitted in writing its inability to pay its debts as they come due.
2.2.8 No Other Agreements, Undertakings or Tenancies. Donor will not enter into any agreements or undertake any new obligations prior to Close of Escrow which will in any way burden, encumber or otherwise affect the Property without the prior written consent of the City.
2.2.9 Disclosure. Donor has disclosed to City all information, records, and studies in Donor’s possession in connection with the Property, including any reports or studies concerning Hazardous Substances. All information that Donor has delivered to City, either directly or through Donor’s agents, is accurate and Donor has disclosed all material facts concerning the operation, development, or condition of the Property.
Donor shall promptly notify City of any facts that would cause any of the representations contained in this Agreement to be untrue as of the Close of Escrow. If City reasonably concludes that a fact materially and adversely affects the Property, City shall have the option to terminate this Agreement by delivering written notice to Donor and Escrow Agent. If City terminates this Agreement pursuant to this Section, Escrow Agent shall cancel the Escrow and Donor shall be responsible for all costs of escrow. 3 3
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2.3 Indemnity. Donor agrees to indemnify City and agrees to defend and hold City harmless from all loss, cost, liability, expense, damage, or other injury, including without limitation, attorneys’ fees and expenses, to the fullest extent not prohibited by applicable law, and all other costs and expenses incurred by reason of, or in any manner resulting from (i) the breach of any warranties and representations in Section 2.2, and (ii) all third-party claims for Donor’s intentional acts or willful misconduct related to the Property occurring prior to the Close of Escrow.
2.4 Definitions.
2.4.1 “Environmental Laws” means all federal, state, local, or municipal laws, rules, orders, regulations, statutes, ordinances, codes, decrees, or requirements of any government authority regulating, relating to, or imposing liability or standards of conduct concerning any Hazardous Substance (as defined subsequently in this Agreement), or pertaining to occupational health or industrial hygiene (and only to the extent that the occupational health or industrial hygiene laws, ordinances, or regulations relate to Hazardous Substances on, under, or about the Property), occupational or environmental conditions on, under, or about the Property, as now in effect, including without limitation, the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (CERCLA) and the Superfund Amendments and Reauthorization Act of 1986 (SARA) [42 U.S.C.A. §§ 9601 et seq.]; the Resource Conservation and Recovery Act of 1976 (RCRA) and the Solid Waste Disposal Act [42 U.S.C.A. §§ 6901 et seq.]; the Clean Water Act, also known as the Federal Water Pollution Control Act (FWPCA) [33 U.S.C.A. §§ 1251 et seq.]; the Toxic Substances Control Act (TSCA) [15 U.S.C.A. §§ 2601 et seq.]; the Hazardous Materials Transportation Act (HMTA) [49 U.S.C.A. §§ 5101 et seq.]; the Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA) [7 U.S.C.A. §§ 136 et seq.]; the Clean Air Act (CAA) [42 U.S.C.A. §§ 7401 et seq.]; the Safe Drinking Water Act (SDWA) [42 U.S.C.A. §§ 300f et seq.]; the Surface Mining Control and Reclamation Act of 1977 (SMCRA) [30 U.S.C.A. §§ 1201 et seq.]; the Emergency Planning and Community Right-to-Know Act of 1986 (EPCRA or EPCRTKA) [42 U.S.C.A. §§ 11001 et seq.]; the Occupational Safety and Health Act of 1970 (OSHA) [29 U.S.C.A. §§ 655, 657]; the California laws regarding the underground storage of hazardous substances [H & S C §§ 25280 et seq.]; the Hazardous Substance Account Act [H & S C §§ 25300 et seq.]; the California laws regarding hazardous waste control [H & S C §§ 25100 et seq.]; the Safe Drinking Water and Toxic Enforcement Act of 1986 [H & S C §§ 25249.5 et seq.]; the Porter-Cologne Water Quality Control Act [Wat C §§ 13000 et seq.], and any amendments of or regulations promulgated under the statutes cited above and any other federal, state, or local law, statute, ordinance, or regulation now in effect that pertains to occupational health or industrial hygiene, and only to the extent that the occupational health or industrial hygiene laws, ordinances, or regulations relate to Hazardous Substances on, under, or about the Property, or the regulation or protection of the environment, including ambient air, soil, soil vapor, groundwater, surface water, or land use.
2.4.2 “Hazardous Substances” includes without limitation:
(i) Those substances included within the definitions of “hazardous substance,” “hazardous waste,” “hazardous material,” “toxic substance,” “solid waste,” or “pollutant or contaminant” in CERCLA, RCRA, TSCA, HMTA, or under any other Environmental Law;
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(ii) Those substances listed in the United States Department of Transportation (DOT) Table [49 CFR 172.101], or by the Environmental Protection Agency (EPA), or any successor agency, as hazardous substances [40 CFR Part 302]; (iii) Other substances, materials, and wastes that are or become regulated or classified as hazardous or toxic under federal, state, or local laws or regulations; and (iv) Any material, waste, or substance that is: a petroleum or refined petroleum product, asbestos, polychlorinated biphenyl, designated as a hazardous substance pursuant to 33 U.S.C.A. § 1321 or listed pursuant to 33 U.S.C.A. § 1317, a flammable explosive, or a radioactive material.
3. Escrow. By this Agreement, City and Donor establish an escrow (“Escrow”) with a reputable title company chosen by City (the “Escrow Agent”), subject to the provisions of the standard conditions for acceptance of escrow and the terms and conditions in this Agreement, with a signed counterpart of this document to be delivered as escrow instructions to Escrow Agent. In the event of any conflict between the terms of this Agreement and the standard conditions for acceptance of escrow, the terms of this Agreement shall control. City’s agent for matters related to the Closing of Escrow shall be the Executive Director or his designee.
4. Feasibility Period.
4.1 During the period commencing on the date of this Agreement and terminating on a date which is sixty (60) days from the date of this Agreement (“Feasibility Period”), City may undertake an inspection of the Property. Said inspection may include: (i) a review of the physical condition of the Property, including but not limited to, inspection and examination of soils, environmental factors, Hazardous Substances, if any, and archeological information relating to the Property; and (ii) a review and investigation of the effect of any zoning, maps, permits, reports, engineering data, regulations, ordinances, and laws affecting the Property.
Within ten (10) days following the full execution of this Agreement by both parties, Donor shall deliver to City copies of all architectural plans, surveys, specifications, and other documents pertaining to the physical, geological, or environmental condition of the Property that are owned by or in the possession of Donor.
4.2 If City’s environmental consultant requires additional time to determine the existence and extent of any Hazardous Substances on the Property, City shall have the right, exercisable by delivering written notice to Donor prior to the expiration of the Feasibility Period, to extend the Feasibility Period for up to an additional sixty (60) days to complete the testing.
4.3 If City disapproves of the results of the inspection and review or the results of any Phase I Environmental Report, City may elect, prior to the last day of the Feasibility Period (or any extension thereof), to terminate this Agreement by giving Donor written notification prior to the last day of the Feasibility Period (or any extension thereof). If City fails to properly notify Donor of the intent to terminate this Agreement, City shall be deemed to be satisfied with the results of the inspection and shall be deemed to have waived the right to terminate this Agreement pursuant to this provision.
5. Access.
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5.1 Access to the Property during the Feasibility Period shall be given to City, its agents, employees, or contractors during normal business hours upon at least one (1) business day’s notice to Donor, at City’s own cost and risk, for any purposes, including, but not limited to, inspecting the Property, taking samples of the soil, and conducting an environmental audit (including an investigation of past and current uses of the Property). City shall indemnify and defend Donor against and hold Donor harmless from all losses, costs, damages, liabilities, and expenses, including, without limitation, reasonable attorney fees arising out of City’s entry onto the Property or any activity thereon by City or its agents, employees, or contractors prior to the Close of Escrow except to the extent any such losses, costs, damages, liabilities, and expenses arise out of the gross negligence or willful acts of Donor. Any entry onto the Property by City or its agents, employees, or contractors shall be at reasonable times. The provisions of this Section shall survive the Close of Escrow. Notwithstanding anything herein to the contrary, City and Donor agree that City shall not incur any liability hereunder merely by the discovery of an “Existing Adverse Condition” (as defined below) regardless of whether such Existing Adverse Condition, once revealed, negatively impacts the value of the Property or otherwise causes Donor to incur liabilities, costs or expenses. The term “Existing Adverse Condition” shall mean an adverse condition existing on or with respect to the Property that is discovered or revealed by City in the course of its Property inspection hereunder.
5.2 In addition to the provisions of Section 4.1, City and its agents, employees, or contractors shall have the right, from the date of this Agreement until the Closing Date, to contact any federal, state, or local governmental authority or agency to investigate any matters relating to the Property. Donor agrees to cooperate reasonably with City and its agents, employees, or contractors in the inspection of the Property and agrees to deliver to City all information in Donor’s possession or control pertaining to the condition of the Property, including engineering and environmental reports, studies, tests, monitoring results, and related documentation.
6. Title.
6.1 Immediately following the execution of this Agreement by both Parties, City shall cause Escrow Agent to issue to City (with a copy to Donor) a preliminary report for an ALTA Standard Policy of Title Insurance, setting forth all liens, encumbrances, easements, restrictions, conditions, pending litigation, judgments, administrative proceedings, and other matters affecting Donor’s title to the Property (“Preliminary Report”), together with copies of all documents relating to title exceptions referred to in the Preliminary Report.
6.2 Following the full execution of this Agreement by both Parties, City may cause a survey and/or an ALTA Survey of the Property to be prepared by a registered surveyor or professional engineer (“Survey”). Donor agrees to deliver to City, promptly following the full execution and delivery of this Agreement, copies of any survey of the Property in the possession of Donor.
6.3 City shall approve or disapprove, in writing to Donor with a copy to Escrow Agent, each exception shown on the Preliminary Report and each encroachment, overlap, or boundary line dispute, or any other matter that materially and adversely affects title to the Property or that violates any law, rule, or regulation reflected on the Survey (each an “Exception”) within twenty (20) business days following the receipt of the Preliminary Report or the Survey (if any), 6 3
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whichever is later. City’s failure to object within the twenty (20) day period shall be deemed to be a disapproval of the Exceptions. The Exceptions approved by City hereunder shall be referred to as the “Approved Exceptions.”
6.4 If any Exception is disapproved or deemed disapproved (each a “Disapproved Exception”), Donor shall have the right, but not the obligation, within thirty (30) days following expiration of the twenty (20) day period provided under Section 6.3 above, to cause each Disapproved Exception to be discharged, satisfied, released, or terminated, as the case may be, of record, and in a form that is reasonably satisfactory to City and Escrow Agent, all at Donor’s sole cost and expense. Donor agrees to deposit into Escrow the sum sufficient to discharge any Disapproved Exception that may be discharged only by the payment of money. If Donor is unable or unwilling to obtain a discharge, satisfaction, release, or termination of any Disapproved Exception within the period specified above, then this Agreement shall automatically terminate ten (10) business days after expiration of the 30-day period for curing the Disapproved Exceptions or after Donor advises City in writing that Donor is unable or unwilling to cause such discharge, satisfaction, release, or termination, whichever occurs first, unless within such 10-business-day period City waives in writing such Disapproved Exception, in which event such Disapproved Exception shall be deemed an Approved Exception under this Agreement. If this Agreement terminates pursuant to the foregoing sentence, then Donor shall pay all charges of the Escrow Agent in connection with this transaction, including the charges of the surveyor and environmental engineering company; and the Parties shall be relieved of all further obligations and liabilities to each other under this Agreement except as otherwise provided herein, and all funds and documents deposited with Escrow Agent shall be promptly refunded or returned, as the case may be, by Escrow Agent to the depositing Party. Anything above to the contrary notwithstanding, it is understood and agreed that City’s indemnity obligations under Section 5 shall not terminate upon termination of this Agreement pursuant to this or any other provision hereof.
7. Reserved.
8. Close of Escrow.
8.1 Title. Simultaneously with the Close of Escrow, Escrow Agent shall issue an ALTA Standard Policy of Title Insurance (formerly referred to as a CLTA Title Policy) (“Title Policy”) in the amount of $10,000 or such lesser amount as approved by the City Manager, subject only to (i) liens for real property taxes, bonds, and assessments not then due, and (ii) the Approved Exceptions.
8.2 Donor’s Deposits into Escrow. Donor shall deposit with Escrow Agent on or prior to the Close of Escrow the following documents:
(i) a grant deed in the form attached hereto as Exhibit “C” executed and acknowledged by Donor, conveying to City good and marketable fee simple title to the Property, subject only to the Approved Exceptions (“Deed”); (ii) copy of the Installation Contract and the Completion Notice described in Section 7;
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(iii) a copy of the development project’s fence plan, as required by Section 9(v), below;
(iv) all funds required to be placed in escrow by Donor; and (v) Donor’s approval of the draft of Escrow Agent’s closing statement.
8.3 City’s Deposits into Escrow. City’s approval of the Survey (if any), and City’s approval of the draft of Escrow Agent’s closing statement. City shall deposit with Escrow Agent prior to or after the Close of Escrow, the documents related to the Installation Contract described in Section 7.
8.4 Closing Date. The conveyance of the Property to City and the closing of this transaction (“Close of Escrow”) shall take place within one hundred twenty (120) days (“Closing Date”) following the establishment of an Escrow pursuant to Section 3 of this Agreement.
8.5 Closing Statements. No more than two days prior to the Closing Date, Escrow Agent shall deliver to City and to Donor, for their respective approvals, drafts of Escrow Agent’s closing statement showing all receipts and disbursements of the Escrow.
8.6 Closing Instructions. On the Closing Date (or any extension thereof), Escrow Agent shall close Escrow as follows:
(i) record the Deed (marked for return to City) with the Riverside County Recorder;
(ii) issue the Title Policy;
(iii) prorate taxes, assessments, rents, and other charges as provided in Section 8.7 below;
(iv) retain an amount of Donor’s funds sufficient to pay the contractor under the Installation Contract described in Section 7; (v) prepare and deliver to both City and Donor one signed copy of Escrow Agent’s closing statement showing all receipts and disbursements of the Escrow; (vi) If Escrow Agent is unable to simultaneously perform all of the instructions set forth above, Escrow Agent shall notify City and Donor and retain all funds and documents pending receipt of further instructions jointly issued by City and Donor.
8.7 Closing Costs and Prorations. Donor shall pay the following closing costs and prorations through the Close of Escrow:
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(i) All governmental conveyancing fees and taxes due upon transfer of the Property, except that no documentary transfer tax will be payable with respect to this transaction, pursuant to Revenue and Taxation Code Section 11922; (ii) The recording charges in connection with recordation of the Deed; except that this Deed is entitled to be recorded without a fee pursuant to Government Code Section 27383 because the Deed is for the benefit of a public agency; (iii) All charges in connection with issuance of the Title Policy; (iv) All costs associated by environmental reports, including the Phase I Environmental Site Assessment Report, and any further testing and reports which may be reasonably necessary as a result of such report;
(v) All charges related to any survey undertaken in connection with an ALTA Extended Policy of Title Insurance;
(vi) All charges in connection with the Installation Contract; (vii) All charges in connection with removing any Disapproved Exceptions pursuant to Section 6.4 and to cure any defect in vesting in order to satisfy the condition set forth in Section 9(v); and
(viii) All fees and charges levied by Escrow Agent.
8.8 Real Estate Taxes, Bonds, and Assessments. Donor shall pay real property taxes at the Close of Escrow based on the most current real property tax bill available, including any additional property taxes that may be assessed after the Close of Escrow, regardless of when notice of those taxes is received or who receives the notice. Donor may seek reimbursement from the Riverside County Tax Assessor’s office for any property taxes that have been assessed for a period after the Close of Escrow as City is a public agency exempt from payment of such taxes.
City further agrees to cooperate with Donor to provide any necessary information to the Assessor’s office in connection with such request for refund. All installments of any bond or assessment that constitutes a lien on the Property at the Close of Escrow shall be paid by Donor.
8.9 Possession. Possession of the Property shall be delivered to City at the Close of Escrow.
9. Acceptance. The acceptance of the Property by City and the Closing of Escrow (as defined in Section 8) are subject to the satisfaction of the following no later than the Closing Date:
(i) City’s approval of the condition of the Property as provided in Section 4 and title to the Property as provided in Section 6. In addition, Donor shall remove any debris or trash from the Property prior to the Close of Escrow; (ii) The representations and warranties of Donor set forth in Section 2.2 shall be true and accurate as of the Closing Date; 9 3
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(iii) Donor’s performance of all obligations under this Agreement;
(iv) No adverse material change shall have occurred with respect to the condition of the Property from the end of the Feasibility Period through the Closing Date; (v) City’s approval of the development project’s fence plan; and (vi) Escrow Agent being prepared to issue the Title Policy on the Close of Escrow, subject only to the Approved Exceptions.
10. Reserved.
11. This Agreement and Escrow may be terminated by City upon three (3) days written notice to Donor and Escrow Agent if the conditions to closing set forth in Section 9 have not been fulfilled on or before the Closing Date. Upon termination by City pursuant to this Section 12, Donor shall be responsible for all costs and expenses of Escrow Agent.
12. As used in this Agreement, notice includes but is not limited to, the communication of any notice, request, demand, approval, statement, report, acceptance, consent, waiver and appointment. All notices must be in writing. Notice is given either (i) when delivered in person to the person or company intended named below, or (ii) when sent via reputable overnight courier (such as Federal Express), addressed by name and addressed to the party or persons intended, as follows:
To Donor: Michelle Hernandez
________________
_________________
_________________
To City: Attn: City Manager
Lake Elsinore City Hall
130 South Main Street
Lake Elsinore, CA 92530
Phone: (951) 674-3124
until such time as a party gives notice of the change of address in accordance with the terms of this section.
13. This Agreement shall not be changed, modified or amended except upon the written consent of the Parties hereto.
14. This Agreement is the result of negotiations between the Parties and is intended by the Parties to be a final expression of their understanding with respect to the matters herein contained. This Agreement supersedes any and all other prior agreements and understandings, oral or written, in connection therewith. No provision contained herein shall be construed against the City solely because it prepared this Agreement in its executed form. 10 3
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15. Donor, their assigns and successors in interest, shall be bound by all the terms and conditions contained in this Agreement, and all the parties thereto shall be jointly and severally liable thereunder.
16. This Agreement is not binding until executed by the City Manager.
17. Notwithstanding any other provision of this Agreement or any other agreement between any of the Parties hereto, once the Property is conveyed to and accepted by the City, the City shall have no obligation to return the Property to the Donor under any circumstances, except in the sole and exclusive discretion of the City.
18. Pursuant to City’s Policies and Procedures for Execution of IRS Form 8283 for Bargain Sales and Donations, City agrees to cooperate with Donor to acknowledge receipt of the donation of the Property by signing Internal Revenue Form 8283 (Non-Cash Charitable Contributions) before the Close of Escrow and any other tax-related forms or documents reasonably requested by Donor and to return any such forms to Donor within thirty business (30) days after City’s receipt of such forms from Donor. Notwithstanding the foregoing, City makes no representation or warranty to Donor regarding the tax attributes of this transaction, nor shall City endorse or otherwise acknowledge any valuation of the Property for tax purposes, it being understood that the Donor has obtained its own appraisals and tax advice for such purposes.
19. This Agreement may be executed in one or more counterparts. Each shall be deemed an original and all, taken together, shall constitute one and the same instrument. [signature page follows]
11 IN WITNESS WHEREOF, the Parties hereto have signed this Agreement as of the respective dates set forth below.
“CITY”
CITY OF LAKE ELSINORE,
a California municipal corporation
Dated: , 2025 By:
Jason Simpson
City Manager
ATTEST
City Clerk
APPROVED AS TO FORM:
City Attorney
“DONOR”
MICHELLE HERNANDEZ
Dated: , 2025
Michelle Hernandez