Option to Purchase Addendum through the Campus of Learners
NOTE: Title to the Home to be purchased hereunder will be subject to (1) a first option to purchase by HHA at a market price and (2) a requirement that you share with HHA one-half of any profit from a sale of the Home during the first three years after your purchase.
THIS OPTION TO PURCHASE ADDENDUM (this "Agreement") made this ____ day of ____________, _ _ _ _ _, by and between _______________________________________ of ________________________ ("You") and the HOUSING AUTHORITY OF THE CITY OF HARTFORD, a public body corporate and politic of the City of Hartford, organized and existing under Chapter 128 of the General Statutes of the State of Connecticut, with offices at 475 Flatbush Avenue, Hartford, Connecticut 06106 (hereinafter, "HHA").
1. PURPOSE. You desire to purchase the Home (as defined below) and have entered into this Agreement for the purpose of deferring the purchase until you have completed the Campus of Learners Lease Addendum requirements and have qualified to purchase the Home under Section 6 below and qualify for financing to allow You to purchase the Home. You recognize that You have five years from the date of this Agreement to purchase the Home and until this time will pay rent for the use and occupancy of the Home.
2. GRANT OF OPTION; DESCRIPTION. You are hereby granted the option to purchase, on the terms and conditions stated herein, the land described on Exhibit A attached hereto (the "Lot"), together with the residential structure and all improvements located on the Lot, whether underground or aboveground, and not owned by the Metropolitan District, the City of Hartford or a public utility company (collectively, the "Home") known collectively as ______________________________________________________, Hartford, Connecticut.
3. CURRENT RENT. Your lease with HHA, to which this is attached, provides that your rent will increase if there is an increase in your adjusted monthly income. This increased amount You pay to HHA shall be the sole property of HHA.
4. PURCHASE PRICE. The total purchase price for the Home (the "Purchase Price") will be the fair market value of the Home at the time you exercise your option to buy it as determined by a licensed appraiser selected by HHA. You shall pay the total purchase price to HHA in the following manner:
(a) the amount which is the sum of (1) a reasonable amount of your personal savings as a down payment (which reasonable amount of savings will be determined by HHA in its reasonable discretion and consistent with the requirements of your first mortgage commitment) and (2) the proceeds of the mortgage for which you have obtained a commitment pursuant to paragraph 5, by bank or certified check on the date of closing of title, as hereinafter set forth; and
(b) (i) if (and only if) you qualify for a second mortgage by being a low or very low income household at the time you exercise your purchase option, by executing a second mortgage note and deed in favor of HHA in the amount of the difference between the Purchase Price and the amount you pay under paragraph (a) consisting of your down payment and the mortgage proceeds of the first mortgage. The second mortgage note will be due and payable when you transfer the Home or if You default under the covenants regarding use and occupancy of the Home contained in your deed or your first mortgage, if You put a new mortgage on the Home is not permitted by HHA or if your household income increases because one or more persons become members of the household (unless you notify HHA and refinance your first mortgage in such larger amount as your household can then afford using a 35% monthly housing expense to monthly income ratio); or
(ii) if you do not qualify for a second mortgage at the time you exercise your purchase option, by bank or certified check in the amount of the difference between the Purchase Price and the amount of the mortgage proceeds of the first mortgage.
5. MORTGAGE CONTINGENCY. This Agreement is contingent upon You being able to secure a mortgage from a bank or mortgage company licensed by the State of Connecticut in an amount of not less than the greater of (a) $20,000.00 or (b) the largest mortgage you can afford, subject to the conditions that You not spend more than 35% of your adjusted gross income on monthly housing expenses, the mortgage provides for amortization of principal over thirty years and the annual percentage rate (APR) for the mortgage is not, in HHA’s reasonable opinion, significantly higher than is generally available from banks in the Hartford area. This shall be determined by using a monthly housing expense test under which mortgage interest and principal, property taxes, private mortgage insurance and homeowners’ insurance [including fire, casualty and liability coverages] and utility charges [including gas, water, and electric charges] shall be included in determining monthly housing expenses. If You have been unable to obtain a mortgage commitment within 30 days from time of Your notice to us, we will notify You that this Agreement has been terminated. TIME IS OF THE ESSENCE WITH REGARD TO THIS PROVISION. You will provide HHA copies of all applications, tax returns, pay stubs and other letters and papers you give to or receive from your mortgage lender.
6. QUALIFICATIONS OF BUYER. You and HHA acknowledge and agree that pursuant to certain restrictions to which the Home is subject, the property can only be sold to "low or very low" income households, as determined at the time you enter into your lease and this option to purchase addendum. You also acknowledge and agree that, on the date you exercise your option, you must be in good standing under your lease and the Campus of Learners Lease Addendum and meet certain financial standards of HHA, including a minimum family income of $15,000, in order to purchase the Home. Any question of your compliance with these requirements will be resolved through the HHA tenant grievance procedure. If you are not in full compliance and are acting diligently and in good faith to come into full compliance, HHA will consider requests for extensions of the five-year option period, to be granted in HHA’s sole discretion, but HHA reserves the right to determine the length of the extension, which will be for no more than six (6) additional months. If you no longer are a "low to very low" income household when you exercise your purchase option, you may still buy the Home, but you will not qualify for a second mortgage from HHA to assist you in your purchase of the Home.
7. EXERCISE OF OPTION; CLOSING. Your option to purchase may be exercised by giving HHA written notice that you desire to do so during the sixty day period prior to the annual expiration date of the original or the first four annual renewal dates of the lease. The closing will take place within 30 days of obtaining a mortgage commitment. The closing will be held at the offices of Your lender or at such other place acceptable to HHA.
8. USE AND RESALE RESTRICTION. The Home is limited to use and occupancy only for residential purposes and such incidental activities related to residential use as are permitted by the Hartford Zoning Ordinance as amended from time to time. THE DEED OF THE UNIT TO YOU AND THE SECOND MORTGAGE BETWEEN YOU AND HHA EACH WILL CONTAIN PROVISIONS THAT WILL APPLY IN THE EVENT OF A RESALE OF THE UNIT, WHICH PROVISIONS WILL REQUIRE THAT THE UNIT CAN ONLY BE SOLD IF IT IS FIRST OFFERED FOR SALE TO HHA AND THAT, DURING THE FIRST THREE YEARS AFTER YOU BUY THE UNIT YOU MUST PAY ONE-HALF OF ANY PROFIT TO HHA.
9. TITLE. Title to the Home will be conveyed by a Quitclaim Deed, subject to current taxes, and further subject to (i) all terms, conditions, restrictions, agreements, obligations, easements and rights set forth in the Deed; (ii) HHA’s option to purchase pursuant thereto; (iii) restrictions regarding resale of the Home and (iv) current municipal ordinances and laws, none of which, however, will either render the title uninsurable or be violated by occupancy of the Home for the purposes set forth herein and in the Deed.
10. ADJUSTMENTS. The Purchase Price will be adjusted at Closing for real estate taxes and municipal assessments, lease charges for the month in which title closes, as well as other items normally adjusted between sellers and buyers of real property in accordance with the procedure normally followed by the Hartford County Bar Association.
11. ASSIGNMENT. This Agreement is not assignable by You.
12. CONDITION OF HOME, INSPECTION. Except to the extent required by the New Home Warranty Act, Chapter 827 of the Connecticut General Statutes:
You agree to accept the Home in its condition "as is." HHA agrees to convey the Home to You in the same physical condition as of the signing of this Agreement, normal wear and tear excepted. You acknowledge that You have had the opportunity to make a full and complete inspection of the Home, as to the extent desired by You. You waive any right to object to any defect in the Home. You shall not conduct additional inspections of the Home unless accompanied by a representative of HHA. You acknowledge and agree that You have received a Disclosure of Environmental Conditions, attached hereto as Exhibit B, and accept the Home in its "as is" condition with regard to such conditions and without recourse to HHA.
You and HHA understand that: Under federal law, HHA must permit you a 10-day (unless the parties mutually agree in writing to a different time period) to conduct a risk assessment, or Inspection of the Home for the presence of lead-based paint and lead-based paint hazards before you are obligated under this contract. You may waive this right of inspection in writing.
A LEAD INSPECTION OR RISK ASSESSMENT will be conducted for the presence in the Home of lead-based paint and lead-based paint hazards, as those terms are defined by federal regulation, within 10 days of the signing of this Agreement unless you waive this right by completing the WAIVER.
WAIVER: By initialing here: _ _ _ _ _ You waive the right to conduct a risk assessment or inspection for the presence of lead – based paint and lead – based paint hazards in the Home. HHA acknowledges such waiver by initialing here: _ _ _ _ _.
13. WARRANTIES. HHA AND YOU AGREE THAT HHA DISCLAIMS ANY AND ALL WARRANTIES AVAILABLE TO YOU EXCEPT THOSE REQUIRED BY THE HOME WARRANTY STATUTE OR OTHERWISE MANDATED BY LAW. . If there are unexpired, assignable manufacturers’ warranties on appliances or other items included in the sale of the Home, HHA will assign its warranty rights to you.
14. DEFAULT BY BUYER. In the event You fail to perform any of the agreements, obligations and covenants under this Agreement or the Campus of Learners Addendum, within the time period indicated, You shall be in default under this Agreement and HHA shall thereupon be automatically released and relieved of any and all of its obligations, covenants and agreements hereunder and this Agreement shall be deemed terminated. YOU SPECIFICALLY AGREE THAT YOU WILL NOT HAVE ANY RIGHT TO STAY IN THE UNIT AS A TENANT AND WILL BE RELOCATED BY HHA TO A DIFFERENT HOUSING UNIT IF YOU DEFAULT.
15. DEFAULT BY SELLER. In the event of default by HHA, and upon the return of the Deposit to You, this Agreement will be terminated. In addition, HHA agrees to pay You the sum of $100.00 as liquidated and agreed upon damages arising from such default which shall not be construed as a penalty or forfeiture, but as consideration for the release of HHA by You from any and all further obligations under this contract to You, and You shall thereupon be automatically released and relieved of any and all of its obligations, covenants and agreements hereunder and this Agreement shall be deemed terminated.
16. BROKER OR AGENT. You represent that You have not dealt with any real estate broker or agent, other than officers or employees of HHA in connection with the purchase of the Home. You agree to hold HHA harmless from any claims for fees or commissions due any real estate broker or agent, based on claims made through You. YOU AGREE THAT YOU HAVE HAD THE OPPORTUNITY TO RECEIVE FREE HOME OWNERSHIP COUNSELING FROM NON-PROFIT GROUPS NOT CONNECTED TO HHA. YOU DO NOT NEED TO USE A REAL ESTATE BROKER OR AGENT OR TO PAY ANY FEE TO ANYONE FOR ADVICE CONCERNING THE PURCHASE OF THE UNIT OTHER THAN FOR A LAWYER.
17. DEFINITION OF LOW OR VERY LOW INCOME HOUSEHOLDS. "Low or Very Low Income Households" shall be defined as households that have gross family income at or below the United States Department of Housing and Urban Development ("HUD") income guidelines by family size, which are promulgated on a county basis and adjusted from time to time by HUD. If the HUD guidelines discussed in this section are no longer available, HHA, in conjunction with HUD will determine another appropriate index to satisfy the intent of this section.
18. EXECUTION BY FACSIMILE. The parties agree that this Agreement may be transmitted between them by facsimile machine and the parties intend that a faxed contract containing either the original and/or copies of the signature of all parties shall constitute a binding contract.
19. ONLY AGREEMENT. This Agreement is binding upon the parties hereto and their heirs, successors and assigns and may not be assigned by You. The Buyer’s option to purchase is personal to the Buyer and may be exercised only by the person(s) who originally execute this Agreement as Buyer, notwithstanding any liability that may be assumed by any other person(s) who may execute the Lease (or any amendment or renewal thereof) after the date hereof. If more than one person has executed this Agreement as Buyer, the option may be exercised only by all of such persons jointly; provided, however, any person executing this Agreement as Buyer may waive his or her right to acquire a fractional interest in the Home without prejudicing the rights of any other Buyer who is in compliance with the terms of this Agreement. THIS AGREEMENT SUPERSEDES ANY AND ALL PRIOR UNDERSTANDINGS AND AGREEMENTS OF ANY KIND BETWEEN THE PARTIES AND IT IS MUTUALLY UNDERSTOOD AND AGREED THAT THE TERMS HEREOF, YOUR UNIT LEASE AND THE CAMPUS OF LEARNERS LEASE ADDENDUM., THE APPLICATION FOR ADMISSION AND THE HHA RULES AND REGULATIONS CONSTITUTE THE ENTIRE AGREEMENT BETWEEN THE PARTIES AND THAT NO VERBAL STATEMENTS MADE BY ANYONE WITH REGARD TO THE TRANSACTION WHICH IS THE SUBJECT OF THIS AGREEMENT WILL BE CONSTRUED AS A PART THEREOF, UNLESS THE SAME IS INCORPORATED HEREIN IN WRITING. HHA IS NOT AND WILL NOT BE BOUND BY ANY STIPULATIONS, REPRESENTATIONS, AGREEMENT OR PROMISES, ORAL OR OTHERWISE, NOT PRINTED OR INSERTED IN THIS AGREEMENT. THIS AGREEMENT MAY NOT BE CHANGED OR TERMINATED ORALLY.
YOU RECOGNIZE THE SPECIAL NATURE OF THE TERMS AND CONDITIONS OF THIS AGREEMENT AND, WITH THE INDEPENDENT ADVICE OF LEGAL COUNSEL, FREELY ACCEPT SAID TERMS AND CONDITIONS, INCLUDING, WITHOUT LIMITATION, SUCH TERMS AND CONDITIONS AS MIGHT AFFECT THE MARKETABILITY OR RESALE PRICE OF THE UNIT.
HOUSING AUTHORITY OF THE CITY OF HARTFORD
Title: Duly Authorized