SR-11-B (11)
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A"., -r; tl-lr
MAY 1 5 1990
CA:RMM:bar072jhpadv
city council Meeting 5-15-90
! ~:" ~:o'_ ~ :- ~~ ) C,:
Santa Monica, California
SUPPLEMENTAL STAFF REPORT
TO: Mayor and City Council
FROM: city Attorney
SUBJECT: Proposed Amendments to Tenant Ownership
Rights Charter Amendment, Santa Monica
City Charter section 2000 et seq.
since the city Council's last meeting, this office met with
Paul DeSantis to discuss this office's proposed amendments to the
Tenant Ownership Rights Charter Amendment ("TORCAII) set forth in
its May 8, 1990 staff report to the Council.
Based on these
discussions, this office proposes the following changes to TORCA:
1. TORCA requires that a Tenant-Participating Conversion
Application be signed by cosigning tenants occupying not less
than two-thirds (2/3) of the residential units in the building~
To qualify as a consigning tenant, an individual must be a tenant
and have resided at the building continuously for at least six
(6) months prior to the date that the individual signs a
Tenant-Participating Conversion Application agreeing to the
conversion.
See Charter section 2001 (b) .
The City Attorney's
Office recently became aware that the Planning Department has
considered an owner living on the property as a cosigning tenant
and intending to purchase tenant. We have advised the Planning
Department that this practice is not permitted by TORCA.
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ATIl> If" /l-B
MAY 1 5 1990
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city Charter section 2002 (f) has been modified to provide
that an owner who has continuously resided at the building as his
or her principal place of residence for at least two years prior
to filing the Tenant-Participating Conversion Application shall
be considered a cosigning tenant. This will facilitate TORCA
conversions in small buildings where the two-thirds requirement
is difficult to obtain if the landlord's unit is not included.
This office does not believe that the definition of
Intending to Purchase Tenant should also be expanded to include
owners. TORCA presently requires tenants occupying not less than
50% of the residential units in the building to have signed the
statement of Tenant Intent to Purchase before the City accepts a
Tenant-Participating Conversion Application. This requirement
ensures that a majority of the tenants residing in a building
desire to purchase their units. Particularly in smaller
buildings, allowing an owner to be counted as an Intending to
Purchase Tenant could easily serve to defeat the purpose of the
50% requirement. Moreover, since the landlord already owns the
entire building, his or her statement of intent to purchase
really has no significance. Thus, TORCA will continue to require
that a majority of tenants intend to purchase their units before
the conversion will go forward.
2. Charter Section 2002 (l) has been added to require an
owner to declare in the TORCA application that in obtaining the
necessary tenant approval for the TORCA conversion, neither the
owner nor the owner's agent or representative coerced a tenant to
agree to the conversion of the building or to purchase a unit at
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the building by threatening to utilize the Ellis Act if the
conversion does not take place.
3. Charter Section 2004 (a) has been modified to provide
that an owner's threatening to utilize the Ellis Act if a
proposed conversion does not take place shall be evidence that a
tenant's signature on either the Tenant-Participating Conversion
Application or the statement of Tenant Intent to Purchase was
obtained through coercion. This proposed modification supersedes
the proposed modification of Charter section 2004(a) contained in
the City Attorney's May 8, 1990 staff report.
4. Charter Section 2004 (b) (9) has been added to provide
that no owner shall fail to complete the repairs and alterations
agreed to pursuant to Charter Section 2002 (c) (4) in a timely
fashion. Additionally, for each day that the owner fails to meet
the requirements of Section 2002(C) (4), the owner shall be liable
to the City in the amount of $100.00 per day. This proposed
modification supersedes the modification of Charter Section
2004 (b) (9) proposed in the City Attorney's May 8, 1990 staff
report.
5. Charter Section 2004(b) (12), formerly Charter Section
2004(b) (8) has been further modified to expand the
non-discrimination clause required in the CC & R's to include
prohibitions against discrimination based on sexual orientation.
6. This office's proposed modifications to Charter Sections
2001(l), 2002(k), 2004(b)(2), 2004(b)(7), and 2004(b) (8)
contained in its May 8, 1990 staff report remain unchanged.
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RECOMMENDATION
It is respectfully recommended that the City Council direct
the city Attorney to prepare the necessary resolution to submit
the attached proposed amendments to the voters at the November
general municipal election.
PREPARED BY: Robert M. Myers, city Attorney
Barry A. Rosenbaum, Deputy city Attorney
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PROPOSED AMENDMENTS TO TORCA
Santa Monica City Charter Section 2001 is amended to read as
follows:
SECTION 2001. Definitions. For
purposes of this Article, the following words
and phrases shall have the following meaning:
(a) Applicant. The owner of a building
for which a Tenant-Participating Conversion
Application is filed.
(b) Cosigninq Tenant. Any tenant
agreeing to the conversion by his or her
signature on the Tenant-Participating
Conversion Application who has personally
occupied his or her unit continuously for a
period of at least six (6) months prior to
the date he or she signs the
Tenant-Participatlng Conversion Appllcation.
(c) Disabled Person. Any person who is
receiving benefits from a Federal, state, or
local government, or from a private entity on
account of a permanent disabil i ty that
prevents the person from engaging in regular,
fulltime employment.
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(d) Intending to Purchase Tenant. Any
tenant who has personally occupied his or her
unit in the building continuously for a
period of at least six (6) months immediately
preceding the date the tenant signs a Tenant
Intent to Purchase.
(e) Limi ted Equity. Programs subj ect
to the restrictions set forth in the Health
and Safety Code section 33007.5 and other
programs which limit, to a similar extent and
a similar length of time, the owner's return
at resale. For purposes of this Article,
shared appreciation equity loans or similar
loans shall not be construed to be forms of
limited equity.
(f) Low and Moderate Income Households.
Persons and families whose income does not
exceed eighty percent (80%) of the median
gross income for Los Angeles County, adjusted
for family Slze as determined by the
Secretary of Housing and Urban Development
and under Section B(f)(3) of the United
States Housing Act of 1937, as amended, or if
programs under Section 8 (f) are terminated,
eighty percent (80%) of the median gross
income determined under the method used by
the Secretary prior to such termination.
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(g)
Middle Income Households.
Persons
and families whose income exceeds eighty
percent (80%) but is less than one hundred
and twenty percent (120%) of the median gross
income for Los Angeles county, adjusted for
family size as determined by the Secretary of
Housing and Urban Development under section
8 (f) (3) of the united States Housing Act of
1937, as amended, or if programs under
Section B(f) are terminated, more than eighty
percent (80%) but less than one hundred
twenty percent (120%) of the median gross
income determined under the method used by
the Secretary prior to such termination.
(h)
Building.
Owner.
The owner of a Qualifying
(i) Participating Tenant. Any tenant,
including both cosigning and non-co signing
tenants, residing in the building at the date
of the approval of the Tenant-Participating
conversion Application.
(j ) Price Index. The index for Urban
Wage Earners and Clerical Workers, United
states city Average, as published by the
Uni ted States Bureau of Labor statistics, or
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in the event such index is discontinued any
comparable index.
(k) Tenant Intent to purchase. A form
prepared by the City to comply with state law
and which shall be in substantially the
following form and substance:
STATEMENT OF TENANT INTENT
TO PURCHASE
This is a Tenant Intent to Purchase form
that is used to determine how many tenants
want to purchase the apartment units that
they currently are renting.
Everything that the owner guarantees or
promises you in exchange. for your signature,
including the sales price, is set forth in
writing in the Tenant-participating
Conversion Application. These promises,
including the promise to sell you the unit
for the price stated on the form, will be
made conditions of the approval of the
conversion and the signed form will become
public record.
Signing this form does not mean that you
must buy the unit. It only means that you
currently want and intend to buy the unit for
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the sales price indicated on the form if you
are able to obtain satisfactory financing and
if the application is approved.
IF~ AFTER FINAL APPROVAL OF THE
CONVERSION, THE OWNER REFUSES TO SELL THE
UNIT AS AGREED OR DEMANDS A HIGHER PRICE, YOU
SHOULD IMMEDIATELY CONTACT THE APPROVING
ATTORNEY AND THE CITY ATTORNEY.
I/We, the undersigned, as tenant (s) of
unit at Santa
Monica, California, at the time of filing of
the Tenant-Participating Conversion
Application of such property, do certify
my/our intent to purchase my/our occupied
Unit No.
I/We have seen and received a copy of
the Tenant-Participating Conversion
Application which lists the maximum sales
prices for all tenant occupied units in this
building and other information on the
Tenant-Participating Conversion Application
to be filed with the City of Santa Monica,
and this list indicates that the maximum
sales price for my/our unit is to be
$
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I/We further understand that this Intent
to Purchase Form will be filed with the City
for the purpose of establishing the
percentage of tenants that may be expected to
purchase units pursuant to this Article.
I/We declare I under penalty of perj ury I
that all of my/our statements above are true
an correct.
(Signed and Separately Dated by Intending to
Purchase Tenant(s) and owner.)
(1). Qualifying Building. Any building
used for residential rental purposes in the
City for which no eviction has occurred
pursuant to Government Code Section 7060 et
seq. (the Ellis Act) within a five (5) year
period prior to the filinq of an Application
for Tenant-Participatinq Conversion and for
which no eviction has occurred pursuant to
Section 1806(h) of this Charter (relating to
eviction for purposes of owner occupancy or
occupancy by relative of the owner) within a
two (2) year period prior to the filinq of an
Application for Tenant-Participating
Conversion.
(m) Senior Citizen. Any person
sixty-five (65) years of age or older.
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(n) Tenant.
authorized tenant
residential rental
Tenant-Participating
is being processed.
Any person who is an
of an owner of a
building for which a
Conversion Application
form
of
Tenant ownership. Ownership in the
either condominiums, community
stock cooperatives, cooperative
limited equity stock
any other means authorized
(0)
apartments,
associations,
cooperatives or
under state law.
(p) Tenant-participating Conversion.
Any conversion to tenant ownership
implemented pursuant to this Article.
(q) Tenant's Sales Price. The maximum
price for each unit as set forth in the
Tenant-Participating Conversion Application.
santa Monica City Charter section 2002 shall be amended to
read as follows:
SECTION 2002. Application for Tenant
Participating Conversion. An application for
a Tenant-participating Conversion shall be
complete if it meets the following
requirements:
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(a) Identifies the building, and its
owner, which is the subject of
application and contains a declaration
such building is a qualifying building.
(b) Sets forth, for each tenant occupied
unit, the following sales information:
the
that
(1) The maximum sales price for each
unit.
(2) The minimum down payment for each
unit.
(3) If seller financing will be offered,
the minimum amount to be financed, the
maximum rate of interest and the minimum term
of the loan offered by the seller.
(c) Sets forth, for
following common areas,
budget information:
each unit,
maintenance
the
and
(1) The plan for the assignment and use
of parking spaces.
(2) The plan for the use of all common
area facilities.
( 3 ) The occupancy and management plans
and policies.
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(4) A list of all repairs and
alterations, if any, which will be performed
before the close of the first escrow.
(5) The plan for allocating costs and
expenses for the building.
(6) A prepared monthly maintenance
budget based upon actual maintenance expenses
for at least the preceding two years plus a
reserve fund which states the monthly
maintenance assessment for each unit.
(7) The procedures for allocation and
use of such reserve funds.
(d) contains a declaration with the
following information:
(1) That there has been a building
inspection report of the accessible portions
of the entire building, including but not
limited to, the roof, walls, floors, heating,
air conditioning , plumbing, electrical
systems or components of a similar or
comparable nature, and recreational
facilities of the building prepared by a
Building Inspection Service or similar agency
within the preceding three (3) months.
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(2) That, for each tenant occupied unit,
a written statement setting forth any
substantial defects or malfunctions
identified in the building inspection report
regarding the unit and the common areas has
been delivered to the unit or a tenant
occupying the unit.
(3) That, for each tenant occupied unit,
a copy of the complete building inspection
report has been del i vered to the unit or a
tenant occupying the unit.
(e) Sets
ownership for
submitted.
forth
which
the
the
form of tenant
application is
(f) Is signed by cosigning tenants
occupying not less than two-thirds (2/3) of
all the residential units in the building.
I f there is more than one tenant in a unit,
the signature of only one tenant shall be
required.
For purposes of this subsection, an
owner of the buildinq shall be deemed a
cosigninq tenant if the owner has
continuously resided at the buildinq as his
or her principal place of residence for at
least two years prior to the filinq of the
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Application
Conversion.
for
Tenant-Participatinq
(g) Identifies the cosigning tenants and
the units occupied by such tenants and lists
all other tenants known to the owner in the
building and the units they occupy.
(h) Contains a declaration that the
signature of each cosigning tenant was
obtained only after the delivery, in writing,
to such tenant of the information required in
Subsections (a) (b) (c) (d) and (e) of this
Section.
(i) Contains a
lawful notices have
declaration that
been given of
all
the
application for conversion.
(j) Has attached to the application
Statements of Tenant Intent to Purchase,
signed by intending to Purchase Tenants
occupying not less that fifty percent (50%)
of the total number of residential units in
the building. If there is more than one
tenant in a unit, the signature of only one
tenant shall be required.
(k) contains a declaration that in
obtaininq the siqnatures of cosiqninq tenants
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and intending to purchase tenants, the owner
neither offered nor agreed to pay money or
other financial consideration to
participating tenants if the tenants would
release all riqhts that they had to purchase
a rental unit in the buildinq.
(1)
Contains a declaration that
in
obtaininq the signatures of consigning
tenants and intending to purchase tenantsr
nei ther the owner nor the owner 's aqent or
representative coerced a tenant to sign by
threatening that the owner, or any successor
thereof, would cease operatinq the property
as residential rental property pursuant to
Government Code Section 7060 et seq. ("the
Ellis Act") if the proposed conversion of the
building pursuant to this Article did not
occur.
(m) That 1 for each tenant occupied unit 1 a
Tenant Intent to Purchase has been delivered
to the unit or a tenant occupying the unit.
Santa Monica City Charter section 2004 shall be amended to
read as follows:
SECTION 2004. Approval or Denial of Tenant
Participating Conversion Application. A
Tenant-participating conversion Application
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shall be approved or denied within the time
periods set forth in section 2003 of this
Article and in accordance with the following
standards:
(a) A Tenant-Participating Conversion
Application, along with any required
tentative subdivision map or tentative parcel
map shall be denied if the
Tenant-Participating Conversion Application
fails to meet any of the requirements of this
Article, was the result of fraud,
misrepresentation, or threat or similar
coercion, or fails to meet any mandatory
requirements of the Subdivision Map Act of
the state of California.
Evidence of coercion shall include1 but
not be limited to, obtaininq any tenant's
siqnature on the Tenant-Participatinq
Conversion Application or on the statement of
Tenant Intent to Purchase form attached to
the Application by threateninq that the
owner 1 or any successor thereof 1 might cease
opera ting the property as residential rental
property pursuant to the Ellis Act if the
proposed conversion of the building pursuant
to this Article did not occur.
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(b) A Tenant-Participating Conversion
Application, along with any required
tentative subdivision map or tentative parcel
map, shall be approved if it meets the
requirements of this Article and shall be
subject to the following conditions and no
others:
(1) The owner must file with the City
wri tten consent to each condition imposed in
connection with the approval of a
Tenant-Participating Conversion Application.
The written consent shall be filed prior to
the approval of any required final
subdivision map or final parcel map, or if no
such map is required, within six (6) months
from the date of approval of the
Tenant-Participating Conversion Application.
The filing of such written consent shall
constitute an agreement, with the City of
Santa Monica and each participating tenant,
binding upon the owner and any successors in
interest, to comply with each and every
condition imposed in connection with approval
of a Tenant-participating Conversion
Application. The city and any participating
tenant shall have the right to specific
enforcement of this Agreement in addition to
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any other remedies provided by law.
(2) The owner shall offer and continue
to offer the exclusive right to purchase each
rental unit in the building to the
participating tenant thereof upon the terms
set forth in the application, without change,
for a period of not less than two (2) years
from the date of final approval by the
California Department of Real Estate or the
date the first unit in the building is
offered for sale, if no approval by the
California Department of Real Estate is
required. Unless a participating tenant has
already provided the owner with written
acceptance of the offer, the Tenant's Sale
Price may be adjusted at the beginning of the
second year according to any change reflected
in the Price Index occurring during the
preceding year. Upon the written acceptance
of the offer by the participating tenant at
any time within the two year period, escrow
shall open wi thin thirty (30) days from the
written acceptance by the participating
tenant. Unless otherwise agreed by the
parties, the period of the escrow shall not
exceed sixty (60) days.
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(3) No participating tenant shall at
any time after the approval of the
Tenant-Participating Conversion Application
be evicted for the purpose of occupancy by
the owner, occupancy by any relative of the
owner, or for demolition of the unit. In the
event the participating tenant does not
exercise his or her right to purchase within
the time period set forth in this Article,
the owner may transfer the unit without any
price restriction to the participating tenant
or any other person. However, in the event
such transfer is to someone other than the
participating tenant, the transfer shall be
expressly made subj ect to the rights of the
partic1pating tenant to continue to occupy
the unit as provided for in this Article.
(4) Each unit shall at all times remain
subj ect to all the terms and conditions of
Article XVIII of this Charter, except Section
1803(t), before, during and after any
Tenant-Participating conversion. If any unit
is rented, the maximum allowable rent for
each unit shall be no greater than the
maximum allowable rent allowed under Article
XVIII of this Charter.
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(5) The building may be required to
comply only with the applicable laws,
including the building, safety, and zoning
codes, which were in effect as of the date
the building was constructed. No new,
additional requirements including, but not
limi ted to, parking, room size, or interior
or exterior improvements of any kind, may be
imposed as a condition, either directly or
indirectly, of the Tenant-Participating
Convers ion. Notwi thstanding the above, the
City may impose reasonable health or safety
requirements consistent with this Article
upon such buildings provided that such
requirements uniformly apply to all similar
multiresidential structures in the City of
Santa Monica, regardless of the form of
ownership of the building.
(6) Prior to the approval of any
required sUbdivision map or final parcel map
for the Tenant-Participating Conversion, or
if no such map is required, prior to the
filing of the written consent required by
Subdivision (b) (1) of this Section, each
participating tenant shall be informed in
wri ting , in a form approved by the city, of
his or her rights under this Article.
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(7) In addition to the protections of
Subdivisions (b) (3) and (b) (4) of this
Section:
(A) all non-purchasing Participating
Tenants who are senior citizens or disabled
on the date of filing the
Tenant-participating Conversion Application
and who personally occupied a rental unit in
the qualifying building continuously for at
least six (6) months immediately preceding
the date of the filing of
Tenant-Participating Conversion Application
shall be glven the nonassignable right to
continue to personally reside in their unit
as long as they choose to do so subject only
to just cause evictions provided that the
eviction is not for the purpose of occupancy
by the owner, occupancy by any relatlve of
the owner, or for demolition of the unit. In
addi tion, should the maximum allowable rent
provision of Article XVIII of this Charter no
longer apply, the rent for each such unit
shall be adjusted annually to allow an
increase of no more than the increase in the
Price Index plus a reasonable, pro rata share
of capital improvements for the buildings
common areas or agreed to capital
improvements for the unit. within sixty (60)
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days after the approval of a
Tenant-Participating Conversion Application,
any senior citizen participating tenant who
is entitled to the protections of this
Subdivision may designate in writing the name
of one person who is entitled to continue
living in the rental unit under the same
terms as the senior citizen if the senior
citizen pre-deceases him or her and if the
person designated is residing in the unit at
the time of the death of the senior citizen.
The person designated by the senior citizen
must be a lawful occupant of the unit, at
least fifty-five (55) years of age on the
date of the filing of the
Tenant-Participating Conversion Application,
and must have resided in the unit for a
continuous period of six months prior to the
filing of the Tenant-Participating Conversion
Application.
(B) All other non-purchasing
Participating Tenants who personally occupied
a rental unit in a qualifying building
continuously for at least six (6) months
immediately preceding the date filing the
Tenant-Participating Conversion Application
shall be given the nonassignable right to
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continue to personally reside in their unit
subject only to just cause eviction for a
period of five (5) years form the date the
first unit is offered for sale. No eviction
shall be allowed during this time period
except for just cause provided the eviction
is not for the purpose of occupancy by the
owner, occupancy by any relative of the
owner, or demo I it ion of the uni t. In
addition, during this time period, should the
maximum allowable rent provisions of Article
XVIII of this Charter no longer apply, the
rent for each unit shall be adjusted annually
to allow an increase of no more than the
increase in the Price Index plus a reasonable
pro rata share of capital improvements for
the building's common areas or agreed to
capital improvements for the unit.
All rights under this Subsection shall
expire upon the termination of the
landlord-tenant relationship between the
owner and the participating tenant entitled
to the protection of this Subsection.
For purposes of this Subsection, lIJust
cause" means one of the reasons set forth in
Subdivisions (a) through (g) of Section 1806
of this Charter.
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This Subsection shall be interpreted in
accordance with Santa Monica City Attorney
Informal Opin1on Number 84-57. All
amendments to this Subsection are declaratory
of existinq law.
(8) Non-purchasinq Participatinq
Tenants shall not be subiect to eviction
pursuant to Government Code Section 7060 et
seq. (lithe Ellis Act").
(9) No owner shall close the first
escrow without completinq the repairs and
alterations agreed to pursuant to Section
2002 (c) (4) of this Article~ In addition to
any other remedy provided by law t for each
consecutive calendar day followinq the close
of the first escrow that an owner fails to
complete the repairs and alterations agreed
to pursuant to section 2002 (c) (4) t the owner
shall be liable to the city in the amount of
one hundred dollars ($100.00) per day.
( 10) The requirements of this section
shall be set forth in the Declaration of
Covenants, Conditions, and Restrictions, or
equivalent document, and shall specifically
name the Participating Tenants in each unit
enti tIed to the benefits and protections of
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this Article. The City shall review and
approve for compliance with this Article the
Covenants, Conditions, and Restrictions, or
equivalent documents, prior to the approval
of any required final subdivision map or
final parcel map, or if no such map is
required, prior to the filing of the written
consent required by Subdivision (b) (1) of
this section. To the extent applicable, the
requirements of this Article shall be made a
part of the rental agreement wi th the
Participating Tenants.
(11) The
Tenant-Participating
manner required by
Article.
owner shall pay
conversion Tax in
section 2008 of
the
the
this
(12) The Declaration of Covenants,
Conditions, and Restrictions, or equivalent
document, shall contain a non-discrimination
clause in substantially the following form:
"No unit owner shall execute or file for
record any instrument which imposes a
restriction upon the sale, leasing or
occupancy of his or her unit on the basis of
sex, race, color, religion, ancestry,
national
status,
origin,
family
age, pregnancy,
composition,
marital
handicap,
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Acquired
(A.LD.S.),
potential
children.
Immune
sexual
Deficiency
orientation,
syndrome
or the
or actual occupancy
The association
of
shall
minor
not
discriminate on the basis of sex,
race,
color, religion, ancestry, national orlgin,
age, pregnancy, marital status, family
composition, handicap, Acquired Immune
Def iciency Syndrome (A. I . D. S . ) , sexual
orientation, or the. potential or actual
occupancy of minor children."
(13) The approval of a
Tenant-participating Conversion Application
shall expire if any required final
subdivision map or final parcel map is not
approved within the time periods set forth in
the Subdivision Map Act of the State of
California, or if no such map is required, if
the written consent required by Subdivision
(b) (1) is not filed within the required time
period.
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PAUL C DESANTIS ~
SALLY ANN L MOllOY + +
!?!3u,> @$a:J< 0/
PAUL C. DESANTIS
3002 SANTA MONICA BOULEVARD, SUITE C
SANTA MONICA. CALIFORNIA 90404-2506
TELECOPIE"ll213l829-1476
TElEPHONE (213) 453-1888
; ~ 07 ~
OF CO'J"'SO:L
t.~'='i.._E"'- "-C;:-I:"'1.t..N ?'D C:8:..t-.,EG:
Ai-SO "-'IE'\o1BEP OF .....SV'.. .....ORK BA"P
... ALSC> MEr.IIE!EFi OF PENNSVLVA......A 5A~
May 15, 1990
Honorable Mayor and Members of the City Council
Santa Monica City Hall
1685 Main Street
Santa Monica, CA 90401
Re: Prooom Amendmen~ to Tenant Ownership Ri2'hts Charter Amendment
(TORCA)
Dear Mayor and Members of the City Council:
I support your intention to make technical corrections which would restate the law
more clearly, including your intention to respond to Ellis Act issues. The following
suggestions do not necessarily reflect the poSItion of any political group. I am writing as an
individual who was instrumental m developing the TORCA program and as one who has had
experience representing both tenants and owners in over seventy projects.
As you know, TORCA was enacted with strong hi-partisan support. That historic
"social contract" between renter leaders and apartment owner leaders is now almost six years
old. The purpose of the proposed amendment to TORCA is to make technical changes in the
Charter and to respond to Ellis concerns. It is not intended to re-open the major substantive
rules which have been in effect for the last six years. Self-discipline is essential to avoid the
enormous temptation to re-write one or another of the major provisions to favor one side or
the other. TORCA was a compromise of different points of view. Each side would hke to
remake one or another provision to favor its point of view. It there IS any evidence of
tampering WIth the main provisions. then the six year old social contract will be broken.
I believe that the staff is to he commended for its intention to respect the major
substantive provisions and to merely make technical corrections to preserve the integrity of
the program. I believe that the majority of the staff suggestions would not affect the way
TORCA has operated during the past few years. On a small number of issues, however, the
changes proposed may be viewed by many apartment owners as being one-sided. Ironically,
two of those provisions actually would mcrease Ellis evictions. If those provisions were left
in their present form, community consensus would be difficult to achieve.
After the initial pubhc staff report was released for last week's heanng, I discussed
several issues with the City Attorney. The discussions were very constructive. DIfferences
remain, but the gap has been narrowed considerably. I still believe that on those few
...
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Mayor and Members of the City Councll
May 15, 1990
Page - 2
mstances~ additlOnallanguage and/or modifications of the staff language are necessary. The
staff report for the May 8th heanng recommends nine (9) changes to the TORCA Charter
Amendment. I wIll dIvIde the proposed amendments mto three groups~ those where the staff
language is accepted~ those where new amendments are suggested and, third, those where
modification to the staff language is suggested. I will also attempt to respond to certam
changes 10 the staff report whIch may be ISSUed for tonight's hearing.
SUPPORT LANGUAGE AS DRAFTED:
1. CHANGE DEFINITION OF "QUALIFYING BUILDING" (Section 2001 (L))
Symbolically, this is probably the most significant provision in the staff report. Under
current law, there are a number of obstacles to "Ellis- TORCA" conversions, including
significant barriers under State law and a two year time limit currently under Secuon
2001 (L) for an owner-occupancy eviction, other legal issues, as well as a number of
financial dismcentives due to the long bme it takes to complete a TORCA conversion.
So far, these obstacles have deterred would-be "E1lis-TORCA tI converters. To my
lrnowledge only one " Ellis- TORCA tI application has been filed in the last six years. I
did not counsel that applicant. I have been told, however, that in this case TORCA
was not the motive for the Ellis evictions.
The staff's language will prevent TORCA applications where there has been an Ellis
withdrawal in the previous five years. Please note that, from a practical pomt of
view, the staff's proposed language does not break new ground. A two year anti-
" Ellis-TORCA to provision would be essentially declarative of current law. The
variance with current law is that the proposed language calls for a five year prohibition
on such Ellis- TORCA conversions.
2. IMPARTIAL VOTE PROVISION (Section 2002 (k))
Adds new sectIon to insure that tenants did not receive financial conSIderation for
signature apart from reduced purchase price. This section would prevent both owners
from offering such consideratIon and tenants from requiring such consideration.
3. WHEN PRICE INCREASE APPLIES (Section 2004 (b)(1))
Surprisingly ~ this issue has caused the highest number of phone calls to me, and I
understand one of the highest number of calls to the City Attorney's office. WhIle
both the City Attorney's office and I agree how this provision should be interpreted,
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Mayor and Members of the Clty Council
May 15, 1990
Page - 3
that meamng obVIously IS not clear to the average reader, Often, tenants wait until
very last mmute to exercise theIr optIon, frequently Just before the end of the first year
when the owner has the nght to mcrease the purchase price accordmg to the increase
in the Consumer Price Index. ThIS provIsion would make clear that If a written offer
from the tenant is made l;>efor~ the end of the first year, then no cpr increase applies,
even if the tenant's escrow had not closed at the end of the first year, assummg of
course, that the tenant closed escrow in a reasonable time after exercismg the opnon.
According to TORCA, a reasonable time for escrow is sixty days (Section 2004(b)(2)),
This clarification should make it clearer that the CPI increase does not apply to offers
made before the end of the first year
4. INCORPORATING SECTION (b)(3) AND (b)(4) (Section 2004(7))
Technical correction to incorporate by reference Section (b)(4) concerning the
applicability of Article 18 into recitatIon of Section 2004 (7). I am not aware of any
problem under current law but see no reason why this change should not be made.
5. REFERENCE TO CITY ATIORNEY OPINION (Section 2008)
Restates current law. Reference to CIty Attorney Opinion dated May 21, 1984, #84-
57 which contains interpretations used during the last six years.
6. NO ELLIS EVICTIONS (Section 2004(8))
This restates current Jaw. The Court already sustained the City's position in the only
attempted EllIS eviction after a TORCA conversion. Santa Monica vs. GItlen. ThIS
section would be useful to give clearer notice that such eVlctions are not permitted
after TORCA project is approved.
7. A,I.D.S. (Section 2004 (b) (12))
Restates current law prohIbIting discnmination on basis of A.I.D.S. or sexual
orientation. This provision is already being added to all TORCA Declarations of
Covenants, CondItions and Restricnons.
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Mayor and Members of the CIty CouncIl
May 15, 1990
Page - 4
SUGGESTED ADDmONAL TECHNICAL PROVISIONS:
1. (New) Sectlon 2002(1) Add to eXIsting language: For purposes of this subsection, an
owner of a qualifymg buildmg whIch IS the subject of the application, who reszdes aJ
the qualifj'mg building as hIs or her pnnclpal place of residence and has mailUained
such residency for at least SiX momhs pnor to applicatlOn, shall be eligible to be
mcluded as a Coslgning Tenant.
2, (New) SecUon 2002G) Add to existing language: For purposes of chIS
subsection, an owner of a qualifymg .:. which is the subject of the
application. who resides at che qualifying buzlding as his or her princzpal place
of residence and has mazntamed such reSIdency for Gl least six malUm pnor 10
applicanon, shall be eligible to be included as an Intending to Purchase
TenalU.
Both of these proposed addItions are declarative of eXisting law. When the very first
TORCA application was filed, TPC#Ol, the City considered thiS issue. The four unit
buildmg had an owner-occupant who voted for the project. At that time it was decJded that
such owner-occupants should be allowed to vote If they met all other TORCA requirements,
For almost six years, the City has allowed owner-occupants to vote. Recently, I have been
mformed that an internal staff discussion has begun on whether owners may vote for the
project on the Consent form and on the non-binding Intent to Purchase form. The Act does
not exclude resident owners from voting. There has been nearly six years of past practice of
allowmg resIdent owners to vote (including City Attorney approval of CC&Rs and other legal
documents designating without exception resIdent owners as partIcipating tenants). To clarify
this Issue, it would be helpful to add language clarifying that resident owners who reSIde at
the property as their principal place of residence and have lived there for at least six months
can be included as cosigmng tenants and tenants intending to purchase. Again, such language
would merely be declarative of long-standing City policy. (See attached Exhibu A lest of City-
approved TORCAs having resident owners.)
To my knowledge, there has been no sIgnificant abuse caused by allowing owners to
vote. Most of the owners have lived m their units for many years, some since before rent
control was enacted. I presume that the CIty Attorney's dIscussion with the Planning staff
was motivated by Ellis concerns. Since the proposed charter revision will contain new, very
exacting ann-EIlls provisions, the concern over whether owners may vote would be moot.
Ironically, to disallow owners from votlng would have the opposite effect on Ellis eVlctlon.
If one is really concerned about reducing Ellis evictions, then why prevent the owners of
smaller bUIldings -- whose propertIes are most prone to Ellis development -- from voting? I
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Mayor and Members of the CIty CouncIl
May 15, 1990
Page - 5
respectfully suggest that tenants would be harmed by changing: our long.-standing !'Olicy. If
the owners of these bmldings are prohibited from using TORCA. then there wIll be more
Ellis eVIctions. To date. afmQst a (hird Qf qfl TORCA profec(s are filed by small mom and pop
owners who live in their apartment bwldinf!s. I have known many of these owners.
Typically, they are moving into retirement age and want to get out of the rental business.
TORCA allows them to sell the project to their tenants at affordable prices while allowing the
owners to remain as one of the condominium owners. Usually the TORCA conversion will
be as economIcally profitable as selling to an Ellis developer. Also, tenants are helped in
smaller buildings when new owners purchase in order to complete a TORCA rather than an
Ellis/new development project. The proposed language would simply set forth the City's
long-standing polIcy.
SUGGESTED TEXT FOR STAFF'S PROVISIONS:
1. COMPLETE COMMON AREA REPAIRS Section 2004(b)(9)
In the May 8th staff report, the provision C3lled for a $IOO/day penalty for failure to
complete a repair or alternation, regardless of the amount of the repair/improvement and
regardless of whether the owner was acting in good faith to correct the situation. It also did
not make clear to whom the penalty would be paid, although the theory of the penalty was
that the City was a third party beneficiary to TORCA and that the City. as well as the buyers,
were bemg harmed by the failure to complete the repair/alteration. I have discussed my
concern with the CIty Attorney's office. I stated that this provision should not penalize an
owner for a good f31th improvement whIch was subsequently proven to be defective. For
example, if a new electric gate were added but it dId not operate properly, and If the owner
promptly corrected the problem, then the $100 penalty would not apply. The intention of this
- provision IS to deal WIth gross neglect of the TORCA responsibilities before closing the first
escrow. Also, fairness suggests that the penalty should fit the offense. The $lOO/day penalty
should be lImited to 150% of the cost of the repair not completed. In other words, there
should not be a $2,500 fine for a leaky faucet but a $10,000 fine may be appropriate if major
portions of the plumbing were not completed.
In the last few days I have been exploring another ffself-enforcingff approach which
would more likely prevent the problem from happening. There is a rigorous procedure in
effect established by the California Department of Real Estate ("DRE") which could prevent
this problem using standard procedures and regulations. These regulations are based on years
of experience m admmistering sales of hundreds of thousands condominium umts. They WIll
work for TORCA repairs and alteratlons provic;l~ that these repairs and alterations are clearly
set forth in the Purchase Contract, If they are included in the Purchase Contract, which must
be reVIewed by the DRE in each and every project which conSIst of five umts or more (the
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Mayor and Members of the CIty CounCIl
May 15. 1990
Page - 6
vast majority of TORCA projects). then escrow cannot close unless the common area
unprovements are completed or that future completion is assured. The reason this has been a
problem in the past is that the TORCA repairs and Improvements are not clearly set forth In
the Purchase Contract and thus It has been routinely assumed that the repairs and
lmprovements were completed or that none existed. I suggest the following language:
Replace the proposed language: "Each Deposit Receipt andlor
Purchase Contract and each complete set of escrow instructions
for the first sale of each unit shall contain a "Certification
Concerrnng Completion of TORCA Repairs and Alterations" in
substantiall y the language set forth below. Intentional failure to
comply with this provision shall constitute a misdemeanor.
"Cenification Concemine Comt>letion of TORCA Reoairs and Alterations"
- - -
II We. . bemg all of the Buyer(s) woo is/are
purchasing Urnt and the SelIer(s) or Seller's
authorized agenl. certify that we have read the TORCA
application filed with the City of Santa Monica and certify that
attached to the Deposit Receipt and/or Purchase Contract and to
the escrow instructions is a photocopy of each page. if any. of
the TORCA application which contains any repair and/or
alteration as required by Secrion 2002(b)(4). Both Buyer and
Seller have inspected the project and the repalT(s) and
alteration(s). if any, which were listed in the TORCA applicaJion.
Buyer and Seller cenify that one of the following statements is
true by placing their initials below the appropriate statement:
1) no repair or alteration was setfonh in the TORCA application
filed with the City of Santa Monica for this project;
tt"~: Ill!} Elt__ ~ _ _
Yf"\: SE[ /,/":J( __ _
2) the repairs and alterations have been completed to Buyer's
satisfaction;
Yc"': /l1.~ )'1"1(
)','.' . \"1.I./I.N
3) a mutually agreed amount o/funds will be placed in escrow
and remain in escrow until any remaming incomplete repairs or
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Mayor and Members of the City Counell
May 15, 1990
Page - 7
alterations have been completed. Written details of this
arrangement is set forth In our escrow InstructiOns,'
y,"!: m:)"l1l
Yt'\: S/~/1.M(_. _.
4) a Complenon Bond approved by the California DepartmenJ of
Real Estate IS in effect to insure the completion of the repairs or
alteratIOns. Details of the Completion Bond are set fonh in our
escrow instructions.
Yt": lIlJYI,R...
Yt .\,' S/~/.l J.N _ _
Completion of common area improvements has only been a problem with a few
projects. Prevention is the best way to avoid the problem. I believe that the above provisIon,
which is patterned after the Department of Real Estate approach towards the similar problem
of completion of common area improvements should solve the problem. (Attached as Exhibit
B is DRE information on how the DRE assures common area completion.) We do not have
to re-invent the wheel.
It is important to bear in mind that there are very few violations in this area. The
contracts on Common Area improvements are almost completed. In those Instance where they
ar not, the self-pohcmg mechanism of this provision would allow any violations to be
resolved without involving the City Staffs energy and time.
2. ANTI-ELLIS COERCION PROVISIONS (New) SectIons 2002(m) and 2004(a)
I suggested the following in response to the staffs May 8th report. Since that time,
there has been some modification of the staff language. For purposes of discussIons, I Will
restate my original proposal:
[Add]: Contains a declaration that in obtaming the signatures of
Cosigning Tenants and Intending to Purchase tenants, neither the
owner nor owner's agent or representative has coerced a tenant
to sign by threatenmg to evict tenants pursuant to Government
Code SectIOn 7060 (the "Ellis Act").
and
[Replace proposed language]: A tenam-paniclpating conversion
application shall be denied if it is determined that the owner, or
any representative or agent of the owner has, coerced any telUln/
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Mayor and Members of the City CounCIl
May 15, 1990
Page - 8
at the property to sign the Statement of Tenant Intent to Purchase
or Agreemem to Conven form with threats of an evictIOn
pursuant to Government Code Section 7060 et seq.
The CIty already has authonty to deny a TORCA apphcation if there IS fraud or
coerCIon under current law m Section 2004(a). The staff language goes beyond current law
by addmg overly broad language to Sectlon 2004(a). I suggest approaching tlns objective by
adding language to two sections lIsted above, instead of the one section recommended by May
8th staff report.
The staff's May 8th proposed language would prevent legitlmate discussion and
encourage abuse. I fear that the staff language violates the protective speech provisions of the
First Amendment m the U.S. Constitution. It also attempts to make a legitimate dIscussion of
the Elhs Act illegal -- an area where the State of California has chosen to pre-empt Santa
Monica law. The staff language creates an impossible burden of proof for the owner to prove
himself/herself "innocent". Whenever anyone alleges that an owner said that eIther the owner
or a successor in mterest -might" cease operating the property under the Ellis act~ the owner
would then have the burden of proof to prove himself/herself innocent. The invitation for
abuse is obvious. It is human nature -- whether one is a tenant or a property owner -- to
attempt to leverage one's negotiating position. Once a project is filed, a tenant could then
threaten the owner WIth making a claim that Ellis was discussed unless the owner agreed to
new conceSSIOns. How could anyone meet the burden of proof! Typically, TORCA
negotiations take many weeks~ often many months. Owners would have to video tape each
and every tenant contact and only communicate in wnting on other questions they may have,
A misguided tenant could use this provision for extortion because the leverage here is more
than mere denial of the project. The owner could be exposed to potential criminal penalties
within TORCA for violating Its provisions,
What is our objective? Is the objective to prevent coercive speech or to prevent all
diSCUSSIOn of the EllIs Act? By analogy, is our intention to prohibit all speech about fire in a
crowded theater or do we allow someone to shout "fire" if the building is actually on fire? I
believe that we must look to the intent of the speech. If the Ellis speech was intended to
threaten and be coercive ("I wIll evict you under the EllIS Act if you do not sign the TORCA
forms"), then it is legitimate to prohibit such speech. If the speech were not intended to be
coercive, but to merely truthfully set forth facts, then such speech should be permitted.
Unfortunately, proposed language prohibits all speech about the EllIS Act~ regardless of the
speaker's intent. I suggest that the objective should be to prevent coercive speech.
Let us see how thIS language would work in a typical rea1life situatIon. The
Whiteacre Development Company approaches Mr. & Mrs. Apartment Owner who own a five
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Mayor and Members of the CIty CouncIl
May 15, 1990
Page - 9
unit apartment buIldmg North of WIlshire Boulevard. Whiteacre presents Mr. & Mrs,
Apartment Owner with an all cash purchase offer for a "fifteen times the gross rental
Income", a price much higher than the property could command based on its rental income.
Whlteacre tells Mr. & Mrs. Apartment Owner that he intends to eVIct all the tenants under
EllIs Act and then to build luxury condomimums.
Mr. & Mrs. Apartment Owner want to retire from the rental business. They find the
cash offer very tempting. Mr. Apartment Owner has heard of TORCA and decides that he
should give hIS tenants a chance to buy theIr umts under TORCA. After doing his homework
he finds that after all expenses, he could sell the units to the tenants at half the price of the
luxury umts Whiteacre plans to build and still end up WIth about the same profit as he could
receIve from Whlteacre. Mr. Apartment Owner begins discussion with hIS tenants. The
tenants ask why he is offering the units for sale to them. At this point, what should Mr.
Apartment Owner do? Should he tell the truth and risk having his TORCA application denied
on the grounds of coercion? Or should he share the truth about the economic realIties with
the tenants? Do the tenants have a right to know about Whiteacre's pending offer? Are
tenants entitled to information which will have such a dramatic impact upon their lives? I
believe that Mr. Apartment Owner should be able to truthfully present the situation, proVlded
it is not presented in a coerCIve, threatemng fashion.
EllIs withdrawals represent a real or potential threat to tenants. All that Wlll be
accomplished by the staff language IS to make owners even more reluctant to use TORCA.
Who IS served by language which will discourage owners from choosing TORCA when the
alternative for tenants Will be an Ellis withdrawal? Certainly not the tenants.
To solve the "Ellis Coercion" challenge without at the same time causing new
problems, I respectfully suggest adding a declaration by the owner in the application and by
the tenant intending to purchase in the actual intent to purchase statement. I believe such
declarations are sufficiently specific to adVise both applicants and tenants of the seriousness of
the issue, Also, experience has shown that bad faith tactics on the part of either tenants or
owners of any sort will usually kIll a project long before the application stage. There must be
a feeling of good faith or the project will not succeed. I believe the declaration will be a
suffiCient deterrent. I believe the incidents of such coercive threats are quite low. As a
practIcal matter, threats or Intimidation of any sort -- by owners or tenants -- are extremely
counterproductive. TORCA requires a super-majority tenant approval. This is the best
deterrent against bad faith tactics.
Smtl\fARY
.
.
Mayor and Members of the CIty CouncIl
May 15, 1990
Page - 10
The Ellis Act has had an extraordmary impact on this City. Most tenants think that
Ellis is a threat but most apartment owners feel that Ellis is theIr only way to regain theIr lost
equity. One thing is clear. We cannot escape the market forces which have increased the
value of Santa Moruca real estate. Ellis withdrawal adds an additional, harsh dimension to
our housmg crisis. I fear that tlus Fall we will see two well financed, terribly contentious
campaigns talking about the Ellis Act. Tonight, we are proposing an amendment to the CIty
Charter. I belIeve that there is agreement on the basic objective to preserve the integrity of
the TORCA Act. I would urge you to do continue the bi-partIsan spirit which has been the
hallmark of the TORCA program for the past six years. We must avoid over-reaction as well
as under-action. We also must be careful to avoid rushing to a solution which would actually
cause more Ellis Act eVIctions.
If desired, I am willing to work with you and with staff in an effort to resolve these
technical differences while worlang toward a mutual goal of preserving the integnty of this
landmark legislation.
Very truly yours,
~{'. j)p~
Paul C. DeSantis
attachments
Icp\h\torlet7 .
., ...
~
.
Exhibit A
APPENDIX
.
List of TORC4 conversions approved by Planning Commission where resident ownen were
cenified by City as participating tenanls in City-approved Consents to Conditions and CC&.Rs.
(No files were found where resident owners were not certified by City as paJticipating tenants.)
No. Owner- Tenant Tenant
Occupied Agreements Intents
TPC# Owner or Addres$ No. l,Jnits Units to C€;mv~rt to Purchase
001 Wilson 4 1 4 4
003* Scaccianoce 6 1 4 4
005* Stanton 4 1 3 3
007 Handin 7 I 6 6
008* Weil 4 1 '3 3
009* Grinshpun 5 5 5 5
011 Gratz 6 1 5 5
013 Bejany 6 1 5 3
020* Yahrous 5 5 5 5
034 Copeland 4 4 4 4
036 Feinstein 4 4 4 4
038 1127 15th 6 1 6 6
041 Doubek 12 1 10 9
042 Kamomick 4 1 3 3
043* Meepos 7 1 5 5
044 Overin 6 I 5 4
045 Doctorow 5 1 5 4
052 1227 Berkeley 6 1 5 4
053 2431 3rd St. 11 1 11 8
059 Pratt 4 1 4 3
061 Chi 7 1 7 7
063 Yahrous 5 5 5 5
067* Erickson 4 1 3 3
076 Lipman 4 1 4 4
083* Gray 5 2 4 4
086 Kanze 6 1 5 5
087* Lamy 7 1 5 5
No. of files with resident owners and Jess than 12 units: 27
* Files where owner's vote was determinative: 9
~ .
.
SrATE OF CAUFOR.....'lA
CXNI Sir B
PACKET INSTRUCTIONS
(RE 621, A, and C)
RE 621B (Rev 12187)
.
DEPARTMEl>,-r OF REAr. ESTATE
SUBDMSIO-':S
RE 621, 62 I A and 62 I C were desIgned for the express purpose of
allowmg subdlVlders to postpone the submIttal of a bond (or other
secuTIty) to the Department of Real Estate (DRE) m complIance
With Section 11018 5(a) of the Busmess and ProfessiOns (B&P)
Code untIl after a Fmal PublIc Report has been ISSUed
The use of 11115 procedure may result m savmg the substantIal cost
of bond premmms
The followmg fonns are dIscussed m thIS fonn:
RE 6]0
RE 611
RE 611-2
RE 621
RE 621A
RE 621 C
RE 629
Sample Escrow InstructIons [11018 5(a)(2)(E)
Bond For Compleuon of FacllIues
Planned Construcuon Statement
Escrow InstruchOns r~llOI8.5(a)J
Supplemental Instrucuons [~110l8.5(a)J
SubdivIder Statement
Sample Set-AsIde Letter [~11018.5(a)(2)(E)J
Do not use RE 621. 621 A and 62 I C 1f you mtend to use one of the
followmg established practIces:
SubdiVIders who choose to comply WIth Section
11018 5(a)(2)(B) of the B&P Code, may use tradluonal meth-
ods to demonstrate tmanc12.1 arrangements and escrow msttuc-
lIOns that compl y with the provISIons of the above code section.
SubdIVIders who choose to comply wllh Section
l1018.5(a)(2)(A) o{theB&PCode Code prior to obtainmg a
Fmal Pubhc Report may furmsh a bond or other secunty along
WIth RE 611-2 and the appropriate clause m the escrow mstruc-
tions. Include proVISions In the covenants, condmons and
restnctions (CC&Rs) that comply WIth CommIssIoner's Regu-
latton 2792.4.
.:. If the "621 Procedure" 15 chosen the bond or other secunty and
RE 62lA and 621C should be furnished at least 45 days prior
to the mtended close of escrows in the subdI VISion, 11115 should
allow DRE enough time for approval of me secunty amount
If you want to obtaIn a Fmal SubdIviSIon Pubhc Report before the
common areas and faCllll1es In the SUbdIVISIon are completed and
you Intend to close escrows and convey utle to subdIVISIOn mterests
pnor to completion of the common areas and facrlitIes, men you
should conSider the use of me RE 62], 62lA and 621C III accor-
dance With the followmg procedure'
Submit a completed, executed, RE 621 as one of the documents
when you file your apphcatlOn for your pubhc report InslTuct
your attorney to mclude CommISSIOner's RegulatIOn 2792 4 m
the project CC&Rs
After a Fmal SubdJvislOn PublIc Report has been ISSUed, sales
escrows cannot close uotd the project IS completed, free aod
clear of hens and encumbrances or untIl you have furnished a
bond or other fmanclal secunty, along WIth RE 611.2 and
attendant documents, to guarantee compleuon of the common
areas and faclliues that remam Incomplete as of the date of
submtttal of the bond and RE 611.2 to DRE, In a "cluster"
planned development or a condommmm project, the secwity
should ordInanly mclude the residenual umts
If the common areas are not complete, at least 45 days before
the subdIvider intends to close sales escrows, the subdl\'Jder
may fUea cOmpleted RE 621A and 621 C, fonnal of the secunty
(RE 611 or 629) and a completed RE 611-2 The RE 611-2
must descnbe In detatl the Improvements whose hen-free
compleuon is to be guaranteed by bond or other SecurIty.
Submit maps, drawmgs, contracts, bIds or other matenals
which venfy the adequacy of the secunty amount to complete
the remainder of the prOject
SubdIviders who use Lellers of Credit m lieu of bonds must use
specIal escrow instructions. RE 610 Submn RE 610 With the
Letter of CredIt
A DRE appraIser wIll mspect the sIte to determine the ade-
quacy of the secunty amount proposed for work not yet com-
pleted, After approval by the appnnser, RE 621A WIll be
executed by a DRE Deputy or Manager and forwarded to the
escrow depoSItory. After recelvmg RE 621Aand the security
(WIth special escrow mstrucuons, If the secunty is a Lener of
Cred1t), the escrow depoSItory wIll:
1) execute RE 621A (and If apphcable, the special escrow
mstrUCuons for a Letter of CredIt)
2) forward to the DRE Deputy who IS handlIng the SUbWVl-
Slon file, caples of the fully-executed RE 621A, the secu-
nty instrument and specIal escrow mstrucuons, If applI-
cable:
3) close the open escrows, If otherwIse appropnate.
If lins procedure IS selected, we recommend you make your
submIttals promptly WIthout long delays between acuons.
The longer the delay between the issuance of the final Pubhc
Report and the submIttal of the secun ty and the RE 621 A, the
greater the posslblhty of a mateflal change
.:. If there are matenal changes to the SUbdIVISIOn (see
CommISSIOner's Regulation 2800), an Amended SubdiVISIOn
PublIc Report must be obtamed
~
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. STA TE or CALIFORS1A
.
.
DEPART\{E"',OFREAL Es7..TE
St. 'BDf\1SlQ'\S
ESCROW INSTRUCTIONS
[~11018.5(a)]
RE 62) (Rev 6/88)
In accordance wlm the provIsions of Sectlon ] 1018 5(a} of the Business and ProfCSSlOns (B&P) Code, rc2.sona[\Jc
Coumy of
arr:mgemems to assure completion of..
(hereaner The $Ubd]VIslOn) meludmg .3ll
(Swbdll"SJOII StJrnL or..d Tr~CI or Pared Map ^'unibcr)
DRE FIle No
Willmon areas and faclllUcs Included In the offenng,
(.....a~ of Escrow D~pOSll0ry)
(heremafter Escrow DeposltoJY) ]S hereby mSlrucz.ed that no funds receIved by Escrow Depository from or on behalf cf 2
prospective buyer of a lot. parcel. unit or Olher subd]vls]on mterest m The SubdivIsIon shall be disbursed from escrow, ;"lor
shall any charge be made agamst the escrow account ofIhe prospecuve buyer by Escrow DepOSllory unless and U....l111 t;1.lc-
or other Interest contracted for by the prospecuve buyer - to the lot, parcel, urut or other SUbdIVIsion mterest IS cOu\'e:: ed
to the buyer and untIl the appllcable condmons ~pec1fied m paragraph (A) (1) and (2) or m paragraph (B) hereof are rr:Cl
(~) (1) A l'ouce of CompletIon as defined m CIVIl Code Sectlon 3093 was recorded for
....a
(1)
o
(Use for non-cluster hOUSing planned development)
,till common facIliues inc1udmg the improvementS on Common Area Lot ~o (s)
as listed on RE 624A appended hereto and marked Exhibn A.
of Tract
(]i) (Use for cluster housmg planned developme.ntS )
o .AJ.l common faCIlil1es includmg the improvements on Common Area Lot No(s),
of Tract
as listed on RE 624.-\ appended hereto and marked Exhibit A.
o
and the cluster residential structure(s) which contam(s) the subJ eet lot's 11 vi ng uni t, covenng all lots and unIts
In the cluster (List each of the groups of lots wluch comprise a cluster building)
(ui)
(Usefor COndomlnlwnpro)ects wherem evu)"thzng except the Jlvzng untts IS owned In common {undl'olded
interests] by all owners)
.AJl common facilities. on Common Area Lot No.(s)
appended hereto and marked E'"(}ubIt A, including
residential units.
o
of Tract as listed on RE 6~~A
structures contauung a total of
(iv)
(Use/or condominiwn projectS wherein the land parcelLS conveyed to the homeowners aSSOClanon and the
resldentlal buildmg parcels, excepting units, are owned In common [undivided mterests] by all owners of 1Ii-
dividual units located within the buildmg.)
All common faCilities includmg the Improvements on common Area Lot No(s).
as listed on RE 624A appended hereto and marked Exhibit A,
o
of Tract
. .
o
and the residential structure which contains the subject unit, covering all unItS In lhe struc[Ure (List each
of the groups of lots whIch compnse a cluster buildmg )
ASD
(2) The statutory period for recording mechamcs lien clalffis against all the improvements descnbed In paragraph
(A)( 1) has explTed or, 10 the alternative. buyer wIll receIve a policy of tItle Insurance covering the imereslmal the
buyer WIll receive in The SubdIvisIOn and insunng agamst possIble future mechamcs liens that are nOl recorded
as of the close of escrow
RE 62J
e
-
Pose 2 of2
OR
(B) You have accepted a deposit. by or on behalf of the undersigned as subdivider. of a bond. cash deposit or other financial
secunty in a fonn and amount acceptable to the Department of Real Estate of the Stale of CalIfornia (hereafter DRE)
10 assure the hen-free completion of all those Improvements which are not completed and paid for as of the date of
furnishmg the financIal security to assure completion
The estim.iled completion dale of ilie non-resIdential common areas and faclliues is
the estimated completion date of the resIdential units in the subdivision is
and
SUBDIVIDER
Evidence of the security (as defined In (B)) to assure completion must be accomparued by RE 621A Supplemental
Instructions to Escrow DepoSItory. executed by or on behalf of the undersigned and countersigned by a DRE Deputy or
M anagerto signify DRE approval of the form of the Supplemental Escrow Instructions and the amount of the finanCial security
to assure completion
Slll- nure of SubchVldcr
Date
>-
Prinled :\une of SubdiVider
Title
Addre5S
euy
Stau:
Zip Code
ESCROW DEPOSITORY
Escrow Depository acknowledges receipt of an executed copy of these instructions and agrees to carry out the terms
thereof.
Sli~.lurc
Dale
>-
ucrow Dq>aSUOl)'
TItle of SlJnor
Address
City
StaU:
ZIp code
ST ^ TE OF CA!.IFOR....1A
.
.
DEPARTMENT OF REAL EsT ^ TE
SL,l3DIVISIO....S
SUPPLEMENTAL INSTRUCTIONS
[~11018.5(a)J
RE 621A (Rev 6/88)
These instructions supplement ongmal escrow mSlrucLlons heretofore furnished to
(hereafter Escrow DepoSItory) on RE 621 for the subdlVlslOn (hereafter The SubdiVision) lden-
tlfied as
County of
, Department of Real Estate File No.
Subdivider has transmmed herewith to Escrow Depository as trustee, a
o Surety Bond
o Cash Deposit
o Lener of Credit and escrow instructIons as per RE 610
Q Other
In the amount of Dollars ($ ).
A copy of said secunty or eVidence of said cash deposlt is attached hereto. This secunty IS bemg proVided by subdiVIder
pursuant to
o Section 11018.5 (a)(2)(A) of the BUSiness and ProfeSSions Code
o Section 11018.5 (a)(2)(E) of the Busmess and Professions Code
for the purpose of assunng the ben-free completion of the subdivision improvements m The SubdIViSIOn for wluch
assurance of lien-free completion is not otherwise provided as of the date of fuffilshmg of tlus security.
Any security instrument shall remain in the custody or subject to the comrol of Escrow Depository until the explra-
lion of all appllcable lien periods after receIpt of notification by escrow from the
homeowners association that all of the common area lII1provements and any
cluster building(s) designated in the Planned Construction Statement have been completed to the satisfaction of the
homeowners association.
SIgnature of SubdtVlder
Date
~
Pnnted Name of SulxhVlder
Title
..:
Address
Cuy
SLaLe
Z1p Code
.
.
Page 20/2
'-
RE 621 A
DEPARTMENT OF REAL ESTATE
Based upon eVidence submmed by subdivider. these supplemental escrow instructions and the fonn and amount of
the security instrument referred to above are approved by the Deparunent of Real Estate of the State of California as a
reasonable arrangement within the meaning of Secuon 1] 018 Sea) to assure completion of The SubchvislOn and all
Improvements for wruch the finanCIal secunty IS provIded.
Slgnalure of Deputy ComnusSIOIIc.f
Dale
~
Pruned Name of Deputy CcmmUSloner
Tille
Address
City
State
ESCROW DEPOSITORY
Escrow Deposito!')' ACknowledges receipt of an executed copy of these supplemental instrucnons and agrees to
cany out the tenns lhereof.
SlgrJaWR: of &erg.... Holder
Date
>--
P~ted Name of Escrow Holder
TlIle
Address
euy
State
ST A IT OF CAlIFORh'lA
.
.
DEPARTME......-r OF REAL ESTATE
Sl.'BOI>1SIOo,,;S
SUBDIVIDER STATEMENT
r~ 11 018.5(3)]
RE 621C (Rev. 12/87)
In consideration of lhe use ofRE 621A submitted herewith for the purpose of assunng the lIen~free completion of the
Improvements m The SubdIviSIOn Identlfied as
County. I hereby cemfy under penalty ofpelJury that
1. As of thIS date, % (percent) of the common facIlities in thIs SUbdiViSIon are now complete. (Include the
percentage of residential structures com pleted if reSidential units are hsted on the PI anned Construction Statement
Residennal structures are ordinanly included on the Planned Construction Statement in condommmm, Slack
cooperative. limited equity housmg cooperative. time share, commuruty apartment or "cluster housing" planned
development subdivIsions) ,
2 As of date of transmission to escrow deposito!')'. or trustee. of a 0 surety 1:xmd. 0 cash depoSit, 0 letter of credit.
o other, e.videnced by the attached copy of completely executed RE 621A. all mechanics and materialmen v. ho
have furmshed labor or material which contnbuted to a work of improvement In the subdIvision have been pmd
in full, and
3. There are no mechanics' or materialmen's lIens currently fIled against The Subdivision, and
4. Arrangements have been made for buyers in open escrows to receive a policy of title insurance covering the interest
that the buyer will receive in The SubdiVision which insures agamst poSSible future mechanics hens which are not
recorded as of the close of escrow.
I am the owner of the SubdiVIsion descnbed above or I am the agent authonzed by such person to complete thiS state-
ment. (If agent, submit written authonzation to act as agent.)
Signature of St:lbdlvlder/Agenl
Dale
>-
Pnnu:d Name of SubdiVIder/Agent
lille.CaplcJly
Address
CllY
State
Zlp Code
to
ST "TE OF c.....uFoR..~"lA
,
.
.
DEPART~El'\T OF REAL ESTATE
SUBDIVISIO"\S
BOND
(Completion o/Common Facilities)
RE 611 (Rev. 3/89)
Bond Number.
PremIUm: $
Know all men by these presents:
That we
as Principal. and
a corporation organized under the laws of the State of
busmess of surety In the State of California as Surety. are finnly held and bound unto
(Name
(Name of Subdnlder)
(Name of Sure!)')
. and authorized to transact the
of Homeowners' ASsoCUlIlon) ,
(hereinafter referred 10 as OblIgee) in the penal sum of
Dollars ($ )
for wluch sum, well and nuly to be paid. we bind ourselves, our hms. adminIstrators. successors and assigns, Jomtly and
severally, firmly by these presents,
This bond is given pursuant to ~ l1018.5(a)(2)(A) of the California Business and ProfeSSIOns Code 10 assure lien.free
completion of the improvementS described in Pnnclpal's "Planned Construction Statement", a copy of which IS anached
hereto and incorporated herein by reference, for the SUbdiVision development known as
situated in the County of
, State of
Surety, for value received. hereby agrees that the matters set forth in California Civil Code 93225, or simIlar acts or
omissions which might release the Surety pursuant to law. shall not in any way release Surety from the obbgation ofth1s bond
or reduce Surety's obligation thereunder.
Surety. for value received. does hereby waive the right granted to Surety under CalIfornia Clvll Code g2845 10 reqUIre
that Obhgee proceed independently against PrinCipal to enforce this obligation, but reserves to Itself any right under saId
~2845 to require that Obligee proceed jointly aga10st Principal and Surety in any such action.
The condltion of this obligation is such that if Principal shall complete or cause 10 be completed said improvements free
ofbens and claims on or before the latest completion date specIfied in said "Planned Construction Statem ent", or an extension
thereof given in writing by Obligee to Pnncipal and assented to in writing by Surety, then tlus obligation shall be null and VOId;
otherwise, it shall remain in full force and effect
A suit or action of this bond must be filed within two (2) years after the latest completion date set fOM in the Planned
Construction Statement or any extension thereof given 10 wnting by Obligee to Principal an assented to in wnting by Surety.
The terms, conditions and coverage of this bond have been approved by the Real Estate Commissioner of the State of
California.
In Witness Whereof, Principal and Surety have caused these presents to be duly signed and sealed this
19
day of
SIgnature of PrlN:l{Jal
SlgNJlure of Surety
By.
By:
(. Bond must bear corporate seal of Surety . lfname of state and date of incorporation are speCIfied in sealt Surety' S SIgnature
need not bear Notary's acknowledgment. Otherwise, Notary's acknowledgment is required