Loading...
HomeMy WebLinkAboutF-2i - Approval of Assignement for the Benefit of a Lendor - Beacon BayAUG Zy 1981 ;.,, COUNCIL CITY OF NEWPORT BEACH OFFICE OF THE CITY ATTORNEY y Agenda Item No. F) AUG ID 1981 `' 7 -'A' C t'Y COUNCIL Ay-• molar 1981 A I O quasif BEACH ;�':�('O4u rely 83 Oi i ; 1981 l" To: The Honorable Mayor & Members of the City Council From: City Attorney Subject: Approval of Assig Lendor - Beacon B INTRODUCTION On May 11, 1981 the City Council adopted Resolution No. 10040 approving the Agreement to Lease documents for Beacon Bay. The lease document itself, which is to go into effect January 1, 1988, provides a comprehensive system of encumbrancer protection, see paragraph 5 of the lease. The Agreement to Lease, however, since it is not a lease, did not contain a similar provision protecting encumbrancers. During the Agreement to Lease period, it is anticipated that many owners may desire to refinance their property or sell their property subject to a new Note and Deed of Trust. The City has had a specific request regarding No. 8 Beacon Bay for a Consent to Assignment of the Agreement to Lease. The proposed Consent to Assignment does three fundamental things to protect the lendor so his loan may be secured. First, the Consent to Assignment requires the City to provide notice to the encumbrancer should the sublessee under the Agreement to Lease be in default. Secondly, the proposed assignment provides that the encumbrancer has the ability to cure the default, be it failure to make payment to the City under the Agreement to Lease or another failure. Thirdly, the Agreement provides that should the encumbrancer have to foreclose against the borrower the encumbrancer can step into the shoes of the sublessee and assume the obligations and rights in the Agreement to Lease. The City staff, in negotiations with the encumbrancer, has added to the suggested assignment form that should there be a foreclosure and sale, the sale constitutes a sale pursuant to the terms of the Agreement to Lease to cause higher payments to come into effect under the Agreement to Lease. Further, staff has recommended an additional condition that if the encumbrancer holds the property for more than 180 days after a foreclosure sale, at which the encumbracer acquires the property, this constitutes a sale of the property and will cause to come into effect the higher rate of payment under the Agreement to Lease. RECOMMENDATION It is recommended that the City Council authorize the City Manager and City Attorney, by Resolution, to execute a Consent to Assignment of Agreement to Lease, substantially in the form attached hereto, when requests are made by encumbrancers on residential lots in Beacon Bay. DISCUSSION Pursuant to the Agreement to Lease, the City's consent is not required for an assignment for the benefit of a lender of a Beacon Bay residential lot during the agreement to lease period, July 1, 1981 through December 31, 1987. The request of the encumbrancer in question and anticipated request from encumbrancers in general is they be given notice of default by a sublessee, the opportunity to cure the default and the opportunity to step into the shoes of the sublessee should the encumbrancer be obligated to foreclose. Entering into the Consent to the ability of sublessees of properties to refinance their properties. Assignment agreement will facilitate the Beacon Bay residential properties and sell their It is further suggested, due to the anticipated shortness of that City staff be given authority to execute the Consent to Assignment if it is substantially in the form of the Consent Assignment attached hereto. This will facilitate transfers, protect the City's interest since there is a standard format developed and rid the Council of the need of reviewing, on a by case basis, each identical assignme 2 time to case RESOLUTION NO 11022 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF NEWPORT BEACH AUTHORIZING THE CITY MANAGER AND CITY ATTORNEY TO EXECUTE A CONSENT TO ASSIGNMENT OF AGREEMENT TO LEASE - BEACON BAY RESIDENTIAL LOTS WHEREAS, on May 11, 1981 the City Council approved Resolution No. 10040 approving the Agreement to Lease for Beacon Bay residential properties; and WHEREAS, said Agreement to Lease does not provide an automatic provision for a Consent to Assignment to provide notice to encumbrancers of default by sublessees of their obligations to the City, provide the encumbrancer an opportunity to cure any such default, and provide the encumbrancer the opportunity to foreclose against the interest of a sublessee under the Agreement to Lease; and WHEREAS, a request has been made to the City to approve such a Consent to Assignment document, a copy of which is attached hereto; and WHEREAS, it is in the best interest of the City to authorize execution of a Consent to Assignment of Agreement to Lease, substantially in the form attached hereto by the City Manager and the City Attorney of the City of Newport Beach, to facilitate the orderly process of City business; and WHEREAS, the City Council has considered the Consent to Assignment of Agreement to Lease form and finds it satisfactory and adequately protecting the City's interest under the Agreement to Lease of Beacon Bay residential properties, NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Newport Beach that the City Manager and City Attorney be and they are hereby authorized to.execute on behalf of the City, a Consent to Assignment of Agreement to Lease for Beacon Bay residential properties, provided the Consent to Assignment is substantially in the form of the document appended hereto. BE IT FURTHER RESOLVED by the City Council that a transfer fee of $100.00 is hereby established for approval and transfer of said Consent to Assignment. ADOPTED this 24 day of August , 1981. Mayor ATTEST: City Clerk HRC /pr 8/10/81 WHEN RECORDED MAIL: • Cambridge Capital Group 2943 South Pullman Street Santa Ana, California 92705 Space above line for Recorder's use only CONSENT TO ASSIGNMENT OF AGREEMENT TO LEASE THIS CONSENT is given this 27th day of July, 1981, by the CITY OF NEWPORT BEACH, a Chartered Municipal Corporation (hereinafter the "City ") on the following terms and conditions: RECITALS A. The City entered into an Agreement to Lease dated June 30, 1981 (the "Agreement "), with GERALD E. FINSTER and LINDA G. FINSTER AS TRUSTEES OF THE FINSTER INTER VIVOS TRUST DATED JUNE 29, 1981 ( "Sublessee") covering certain real property described as Lot 8 in the City of Newport Beach, County of Orange, State of California, as per Record of Survey Map filed in Book 9, Pages 42 and 43 of Record of Surveys, in the Office of the County Recorder of said County (the "Property "). B. Sublessee is currently subleasing the Property from Carroll B. Beek and others under that certain Master Lease with the City covering the area known as Beacon Bay dated January 9, 1950 ( the "Master Lease "). Said sublease (the "Sublease ") is dated March 14, 1951, and was recorded on July 16, 1951, in Book 2136, Page 601 of the Official Records of Orange 'County, California. .C. The Sublease expires in 1987. Pursuant to the Agreement, the City has'agreed that, provided Sublessee does not default under the Agreement, it will lease the Property directly to Sublessee for a.term of twenty -five years upon expiration of the Sublease. Said direct lease is to be in the form of Exhibit C to the Agreement (the "Direct Lease "). D. Sublessee.has applied to Cambridge Capital Group, a California corporation ( "Lender"), for a $350,000 second trust deed loan to be secured by Sublessee's interest in the Property. Sublessee has also agreed to assign Sublessee's rights under the Agreement.to Lender. As a condition to making such loan, Lender has required that the City (notwithstanding Paragraph S of the Agreement) consent to such assignment of the Agreement according to the terms hereof. CONSENT NOW, THEREFORE, the City does hereby consent to the assignment. to Lender of Sublessee's rights under the Agreement and further agrees in favor of Lender as follows: 1. Should Sublesseedefault under the loan described above and Lender foreclose on the subleasehold interest under the Sublease, the City agrees that it shall confirm in writing to Lender or any other purchaser of such subleasehold interest at the foreclosure sale that Lender or such other purchaser has the rights of Sublessee under the Agreement and is entitled to enter into a Direct Lease with the City pursuant to the terms and conditions of the Agreement. The foregoing agreement of the City shall apply with equal force if the subleasehold interest under the Sublease is assigned to Lender in lieu of foreclosure. The amounts to be paid to the City pursuant to the Agreement shall be adjusted pursuant to Section 5 of the Agreement upon the earlier of (a) any transfer by Lender.of the subleasehold interest under the Sublease and the rights of Sublessee under the Agreement, or (b) a date six months after acquisition by Lender of the subleasehold interest under the Sublease by foreclosure or in lieu of foreclosure. 2. Said assignment of the Agreement to Lender and all rights acquired thereunder shall be subject to each and all of the covenants, conditions and restrictions set forth in the Agreement and to all rights and interest of the City thereunder, except as herein otherwise provided. 3. In the event of any conflict between the provisions of the Agreement and the provisions of any such assignment to Lender, the provisions of the Agreement shall control. 4. Lender shall be liable to perform the obligations of Sublessee under the Agreement only so long as Lender holds title to the subleasehold interest under the Sublease. S. The City agrees that it will not terminate the Agreement because of any default or breach thereunder on the part of Sublessee if Lender, within sixty (60) days after service of written notice on Lender by the City of its intention to terminate the Agreement for such default or breach, shall: (a) Cure such default or breach if the same can be cured by the payment or expenditure of money provided to be paid under the terms of the Agreement; or (b) If such default or breach is not so curable, cause the Trustee under the Trust Deed securing Lender's loan to Sublessee to commence and thereafter to diligently pursue to completion steps and proceedings for judicial foreclosure, the exercise of the power of sale under and pursuant to said Trust Deed in the manner provided by law, or accept from the Sublessee an assignment in lieu of foreclosure; and . (c) Keep and perform all of the covenants and conditions of the Agreement requiring the payment or expenditure of money by Sublessee until such time as said subleasehold shall be sold upon foreclosure pursuant to said Trust Deed, be released or reconveyed thereunder, sold upon judicial foreclosure or transferred by assignment in lieu of foreclosure; provided., however, if Lender shall fail or refuse to comply with any and all of the conditions of this paragraph, then and thereupon the City shall be released from the covenant of forebearance herein contained. 6. The prior written consent of the City shall not be required: (a) To a further assignment by Lender of its rights under the Agreement in connection with a transfer of the subleasehold interest under the Sublease at foreclosure sale under Lender's Trust Deed, under judicial foreclosure or by an assignment in lieu of foreclosure, or (b) To any subsequent assignment by Lender if Lender is the purchaser at such foreclosure sale; -2- provided that in either such event Lender forthwith gives notice to the City in writing of any such assignment setting forth the name and address of the assignee, the effective date of such assignment and the express agreement of the assignee assuming and agreeing to perform all of the obligations of the Agreement together with a copy of the document by which such assignment was made. Any assignee under the above shall be liable to perform the obligations of Sublessee under the Agreement only so long as such assignee holds title to the subleasehold interest under the Sublease. Any subsequent assignment of the Agreement shall be made subject to the conditions relating thereto as set forth in the Agreement. 7. The City hereby represents and warrants to Lender that ? there exists no default under the Agreement or the Master Lease by any party thereto. Without limiting the generality of the foregoing sentence, there is no defense or offset to the enforcement of any of the rights of Sublessee under the Agreement and Sublessee is not in default of any of Sublessee's monetary obligations thereunder. 8. All notices and other communications required or permitted under this Consent to Assignment shall be in writing, served personally on, or mailed by certified or registered United States mail to, the party to be charged with receipt thereof. Notices and other communications served by mail shall be deemed given hereunder 48 hours after deposit of such notice or communication in a United States post office in Orange County, California, as certified or registered mail with postage prepaid and duly addressed to the party to whom such notice or communication is to be given, in the case of Lender, at Cambridge Capital Group, 2943 South Pullman, Street, Santa Ana, California 92705, Attn: Loan Servicing, or the City of Newport Beach at 3300 Newport Boulevard, Newport Beach, California 92663, Attn: Mayor, City Manager or City Clerk. Any such party may change said party's address for purposes of this Section 8 by giving to the party intended to be bound hereby, in the manner provided herein, a written notice of such change. 9. The provisions hereof shall be binding upon and inure to the benefit of Lender and its transferee(s). In this context, the City acknowledges that Lender intends to assign its.interest under the Agreement and the loan to Sublessee, and the City consents thereto under the terms hereof. IN WITNESS WHEREOF, the City has executed this Consent as of the day and year first above written. ATTEST: PRAF Approved as to or nd content. City rney -3- CITY OF NEWPORT BEACH BY �1�) City Manager a tF 5 On the 25th day of August, 1981, before me, the undersigned, a Notary Public in and for said State, personally appeared ROBERT L. WYNN, known to me to be the City Manager of the Municipal Corporation that executed the within instrument and acknowledged to me that such Municipal Corporation executed the same. WITNESS my hand and official seal. CFFl;If.I VAL GS,Uinz CCc:: a MY Comm cn G;s kkA% 5, 1%S