Restrictive Covenants and Option to Purchase Property

RESTRICTIVE COVENANTS AND OPTION TO PURCHASE PROPERTY

IF YOU ARE A NATURAL PERSON, YOU MAY REMOVE OR STRIKE ANY OF THE FOLLOWING INFORMATION FROM ANY INSTRUMENT THAT TRANSFERS AN INTEREST IN REAL PROPERTY BEFORE IT IS FILED FOR RECORD IN THE PUBLIC RECORDS: YOUR SOCIAL SECURITY NUMBER OR YOUR DRIVER’S LICENSE NUMBER.

Date:

Homeowner:

Homeowner’s Address:

AHFH:Austin Habitat For Humanity, Inc., a Texas nonprofit corporation

AHFH’s Address:

Note:

Date: ______, 20___

Amount:$______

Lender:Austin Habitat For Humanity, Inc.

Security:The Note is secured by a first lien against the Property.

Property:

Recital of Facts

AHFH’s mission is to
provide affordable housing at below market prices to qualified and deserving members of the local community who are Eligible Persons as that term is defined in this agreement;
insure that the housing provided remains affordable and consumes no more than 30% of an Eligible Person’s income;
insure that ad valorem taxes for the Property are based upon affordable housing values;
insure that the Property can be passed to the surviving spouse, domestic partner, lineal descendants or siblingsof an Eligible Person while remaining affordable; and
insure the availability of the Property for future Eligible Persons.

The covenants in this agreement and the option of AHFH to repurchase the Property will
assist AHFH in fulfilling its stated mission; and
benefit Borrower by preserving the future affordability of the Property.

Capitalized terms defined in this agreement will have the meaning stated in the Definitions Section of this agreement.

These recitals are an integral part of this agreement and are incorporated by reference into the agreement.

Agreement

AHFH and Homeowner agree as follows:

Term. This agreement will be effective during the Affordability Period as defined in this agreement.
1.Restrictive Covenants. During the Affordability Period
a.the Homeowner must occupy the Property as his or her principal residence, provided, however, upon the death of a Homeowner, title to the property may be transferred to a Qualified Transferee.
b.If the Property is reacquired by AHFH during the Affordability Period, it must be resold to an Eligible Person at an affordable price.

2.Restrictive Covenants. During the Affordability Period the Homeowner must occupy the Property his or her principal residence, provided, however, upon the death of a Homeowner, title to the property may be transferred to a Qualified Transferee.

Purchase Option. During the Affordability Period, AHFH is granted the option to purchase the Property (“Option Rights”) if (a)Homeowner gives AHFH written notice that Homeowner intends to sell the Property; (b) title to the Property is transferred by a written instrument or operation of law to anyone other than Homeowner, a Qualified Transferee, or an Eligible Person; or (c) Homeowner sells the Property without the prior written consent of AHFH.
Option Terms. If AHFH exercises its Option Rights, it may purchase the Property under these terms and conditions:

Exercise of Option Rights. During the Affordability Period, AHFH may exercise its Option Rights by giving Homeowner written notice of its intent to exercise its Option Rights (i) within sixty (60) days of receipt of Homeowner’s notice of intent to sell the Property or, (ii) if Homeowner sells the Property in violation of this agreement,at any time during the Affordability Period upon 60 days’ noticeto Homeowner of its intent to purchase.

AHFH Obligations. If AHFH exercises its Option Rights within the stated time limits, AHFH must either (i) purchase the Property, or (ii) assign the Option Rights to an Eligible Person. If AHFH exercises its Option Rights during the Affordability Period, it must be resold to an Eligible Person at an affordable price.

If AHFH does not intend to exercise its Option Rights, it must give written notice to the Homeowner of its election not to exercise its Option Rights. If AHFH does not comply with these obligations, Homeowner may sell the Property to third parties but must comply with the provisions stated in the “Sale to Third Parties” section of this agreement.

a.AHFH Obligations. If AHFH exercises its Option Rights within the stated time limits, AHFH must either (i) purchase the Property, or (ii) assign the Option Rights to an Eligible Person. If AHFH does not intend to exercise its Option Rights, it must give written notice to the Homeowner of its election not to exercise its Option Rights. If AHFH does not comply with these obligations, Homeowner may sell the Property to third parties but must comply with the provisions stated in the “Sale to Third Parties” section of this agreement.

Failure of AHFH or Its Assignee to Close. If AHFH exercises its option but fails to close the purchase within 60 days of the date of its exercise of its Option Rights due to no fault of the Homeowner, the Homeowner may terminate the contract with AHFH, or its assignee, and sell the Property to a third party in compliance with the terms of the section of this agreement entitled “Sale to Third Parties”. AHFH will give Homeowner reasonable documentation required by a third party to confirm Homeowner’s compliance with this agreement.
Purchase Price. If AHFH’s First Refusal Rights mature and AHFH elects to purchase the Property within one year of the Effective Date of this agreement, the purchase price will be the original principal amount of the Note. At any time thereafter during the Affordability Period, the purchase price will be the Affordable Resale Price, but never more than the appraised value of the property as determined by an independent appraiser licensed by the State of Texas, hired and paid by AHFH and completed within 60 days of exercise of its Option Rights.
Additional Terms of Sale. If AHFH exercises its Option Rights, Homeowner and AHFH or its Eligible Person assignee, will, within 15 days of the exercise of Option Rights, enter a purchase and sale contract with a purchase price determined by this agreement and which:
Requires closing of the purchase within sixty (60) days of the date of the contract;
RequiresHomeowner to pay:
all closing costs related to the purchase by AHFH, including, but not limited to,the basic premium for an owner’s title insurance policy in the amount of the purchase price, pro ratataxes from January 1 of the year of closing to the closing date;
any amount due under the Note;
a fee payable to AHFH equal to 3% of the Purchase Price to reimburse AHFH for services and expenses incurred by AHFH related to the exercise of its Option Rights and purchase of the Property; and
any costs of curing title objections made byAHFH.
Contains other usual and customary terms and conditions for similar real estate transactions in the county in which the Property is located,
Requires closing at the title company insuring title to the Property or another mutually acceptable closing office.
Equitable Remedies. If the parties fail to enter into a purchase and sale contractthis agreement will be specifically enforceable by AHFH in a court of equity.
Sale to Third Parties. If AHFH is entitled to exercise its Option Rights and fails to exercise those rights or fails to closethe purchase after exercising its Option RightsHomeowner may sell the Property to a bona fide purchaser for value subject to these conditions:
The buyer must be an Eligible Person;
The Property must be properly advertised and marketed to the public for not less than 30 days before Homeowner contracts to sell the Property, unless AHFH waives this requirement in writing;
The sales price must not be greater than the Affordable Resale Price;
The Note must be paid in full at closing of the purchase;
All closing costs must be paid by Homeowner or the third party purchaser and not by AHFH; and
AHFH may charge a reasonable fee for preparation and recordation of all releases related to this transaction.

Notice Requirements. Any notice required by this agreement must be in writing and must be given by certified mail, return receipt requested to the address stated in this agreement or the last known address of the party entitled to notice.
Maintenance of Property. The Homeowner must maintain the Property in good, safe, and habitable condition, except for normal wear and tear, and in full compliance with all laws, ordinances, rules and regulations of any governmental authority with jurisdiction over the condition of the Property. The Homeowner must obtain permission from AHFH before making any Capital Improvements but may make normal and customary repairs and maintenance of the Property without prior approval.
Primary Residence Requirement. Prior to completion of the purchase of the Property,each purchasing Homeowner must certify his or her intent to occupy the Property as his or her primary residence; and, the Owner must declare the Property as the Homeowner's residential homestead, as provided in Texas Tax Code Chapter 11, as amended, revised or re-codified. Except for leasing, allowed by this agreement, Homeowner must live in the Property at least nine calendar months each year of Homeowner's ownership of the Property.
Required Deed Provision. Any deed transferring an interest in the property during the Affordability Period Homeowner who sells the Property mustinclude the following provision in 12 point all capital type on the front page of the deed conveying the Property:

THIS DEED IS DELIVERED AND ACCEPTED SUBJECT TO THE PROVISIONS CONTAINED IN THE AFFORDABLE HOUSING COVENANTTHEIS RESTRICTIVE COVENANT AND OPIOTOIN TO PURCHASE PROPERTY, DATED ______, RECORDED UNDER DOCUMENT NO. ______OF THE OFFICIAL PUBLIC RECORDS OF ______COUNTY, TEXAS.

Leasing. Any lease of the Property must comply with these conditions:
The Property may not be leased without the prior approval of AHFH and approval will be granted only for hardship reasons;
The term of a lease approved by AHFH must be three months or less;
The Property may not be leased more than one time each seven (7) years;
All leases must be on a lease form approved by AHFH and must contain terms and conditions acceptable for AHFH.
Enforcement of this Agreement and Covenants. AHFH may enforce this agreement and all covenants contained in the agreement by any lawful means, including without limitation specific performance.
Attorney Fees. If AHFH must pursue legal action to enforce this agreement, it will be entitled to an award of reasonable and necessary attorney's fees and other reasonable and necessary costs incurred to enforce the agreement.
Venue. Venue for a suit enforcing compliance will be proper in Travis County, Texas.
Covenants. The Property is held subject to all covenants in this agreement which will run with the land and bind and inure to the benefit of the Homeowner, his or her heirs, legal representatives, executors, successors in interest and assignees, and to AHFH, its successors, designees, or assignees. Any future owner of the Property will be deemed to have consented to and accepted the covenants, conditions, restrictions and limitations contained in this agreement.
Termination of Agreement.This agreement and the rights and obligations of all parties will terminate automatically, without the need of a release, at the end of the Affordability Period.
Successors and Assigns. This Agreement will be binding on the parties, their heirs, successors, and assigns.
No Guaranty of Price. Nothing in this agreement will be construed to represent or guarantee that the Property will be re-sold at an amount equal to the Affordable Resale Price.
Severability of Provisions. Each provision of this Agreement will be separable and if for any reason any provision which is not essential to the effectuation of the basic purposes of this Agreement is determined to be invalid and contrary to any existing or future law, such invalidity will not impair the operation of or affect those provisions of this Agreement which are valid.
Counterparts. This Agreement may be executed in several counterparts, each of which will be deemed to be an original copy and all of which together will constitute one agreement binding on all parties, notwithstanding that all the parties will not have signed the same counterpart.
No Waiver. The waiver by any party of any breach of this Agreement will not operate or be construed to be a waiver of any subsequent breach.
Applicable Law. This Agreement will be construed and enforced under the laws of the State of Texas.
Notices. All required notices, demands or other communications must be in writing and will be deemed given when (i) deposited in the United States mail and sent by certified or registered mail, postage prepaid or (ii) deposited with Federal Express or a similar overnight delivery service.

Addresses for Notice:

If to AHFH:

Austin Habitat For Humanity, Inc.

500 W. Ben White Blvd

Austin, Texas78704

If to the Homeowner:

«Name»

«Address»

Austin, Texas 787__

Captions. The captions of the paragraphs in this Covenant are for convenience only and will not be used to interpret the meaning of any provision thereof.
Interpretation of Agreement. This agreement must be interpreted to avoid speculation on the Property and insure to the extent possible that its purchase price and mortgage payments remain affordable during the Affordability Period.
Modification. This agreement can only be revised or modified with the written consent of all parties and any modification must be recorded in the public records of the county in which the Property is located before becoming effective.
Assignment. AHFH may assign its Option Rights to an assignee who qualifies as a low to moderate income owner occupant purchaser of property.
Definitions. The terms defined in this section will, when used in this agreement, have these meanings:
Affordability Period means forty (40) years beginning on the date of this agreement.
Affordable Resale Price means a sales price equal to the original amount paid by the Homeowner to purchase the Property (“Original Purchase Price”) PLUS an amount equal to the Original Purchase Price multiplied by 1.5% per annum for each year, or a portion of a year calculated daily,the Homeowner has owned the Property. The original documented cost of any Eligible Capital Improvements will be added to the Affordable Resale Price and the cost of any Required Resale Repairs will be deducted. As an example the formula to calculate the Affordable Resale Price for a Homeowner who paid $100,000 for the Property and has owned the Property for 10 years and has made $10,000 in Eligible Capital Improvements and has no required repair is: $100,000 + ($100,000 X 1.5% X 10 years) + $10,000 = $125,000. The attached Appreciation Chart which is incorporated by reference charts the permissibleannual increase in value of the Property from appreciation of the Property.
Affordability Standards. The term “Affordability Standards” means the financial standards applied by AHFH to determine the eligibility of Homeowner for assistance in purchasing the Property.
. Asset Limit means the total of all assets, including cash, personal property and real property cannot exceed Fifty-Thousand Dollars ($50,000.00), excluding employer or tax deferred retirement plans and any amount used as the down payment for the Property. The Asset Limit will be increased or decreased annually based upon the Federal Costs of Living Adjustment (COLA).
Capital Improvements means capital improvements to the Property which require building under applicable building codes or ordinances.
Eligible Capital Improvements means Capital Improvements approved by AHFH in writing prior to construction and made in compliance with zoning and building codes and with proper building permits, the cost of which has been certified by AHFH after receipt of documentation provided by the Homeowner.
Eligible Person means a person whose assets do not exceedthe Asset Limit and whose Household Income is not over 80% of the median family income for the Austin Metropolitan Statistical Area as defined annually by HUD, adjusted to reflect the family size of the Homeowner certified by AHFH as meeting the Asset Limit and Household Income requirements.
Homeowner means anyone who now or in the future owns an interest in the Property other than AHFH including any heir, devisee, trustee in bankruptcy, creditor, or any other party acquiring an interest in the Property by operation of law.
Household Income means the income of the Eligible Person, PLUS, if the Property is owned by more than one person or the Eligible Person is married, has a domestic partner who lives on the Property or if any person living on the Property hascustody of children under the age of eighteen, the income of all persons in the household including each Property owner, the spouse or domestic partner of a Property owner, and all children living on the Property who are age eighteen or older will be counted to determine the Household Income; and (c) the United States Department of Housing and Urban Development (“HUD”) Low Income Limit will be adjusted to reflect the household's size.
Income means the definition of income under Section 8 of the United States Housing Act of 1937, codified at 42 U.S.C.S § 1437a(b)(l990), as further determined by the United States Secretary of Agriculture in 24 CPR § 813.106 (1997). IfSection 8 is repealed or the definition of income under Section 8 is substantially modified, then “income” will mean the anticipated total income for the next twelve month period received from all sources by each member of the Homeowner’s household, excluding, temporary or non-recurring income (including gifts), income from the employment of children under age 18, payments for the care of foster children or foster adults, and amounts received specifically for the reimbursement of medical expenses for a member of the household.
Qualified Transferee means a person or persons who acquired an interest in the Property because of:
A transfer resulting from the death of a Homeowner where the transfer is to (a) the Homeowner’s spouse, children, grandchildren, or siblings, if the transferee occupies the Property as the primary residence of the transferee or (b) to the Homeowner’s estate, for not more than one year unless AHFH gives written approval for a longer period,to administer the estate and distribute assets.
A voluntary transfer of not more than a 50% interest in the Property by a Homeowner to a spouse.
A transfer to Homeowner’s spouse because of divorce, provided the spouse is the sole owner after the divorce.
A transfer to any other beneficiaries, heirs, legatees or devisees of the Homeowner certified by AHFH to be an Eligible Person.
Required Resale Repairs means all repairs required to be made to preserve the condition of the Property or to protect the health and safety of the occupants or future owners of the Property including, without limitation, structural, mechanical, electrical and plumbing repairs that would require the issuance of a building permit and repairing or replacing the roof and built-in appliances and fixtures.

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