RecDoc2022-081041 1231 Warren St. #105

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3. OWNER OCCUPANCY AND LEASING OF HOME A. The Owner shall occupy the Home as the "Owner's principal place of residence within sixty (60) days of close of escrow on the purchase of the Home by the Owner. Failure by the Owner to occupy the Home: as the Owner's -principal place of residence shall constitute a default under this Agreement for which the City may exercise its option to purchase pursuant to Section 10 below. The Owner shall be considered as occupying the Home if the Owner is living in the Home for At least ten (10) months out of each calendar year. The Owner shall provide an annual written certification in the form shown in the attached Exhibit C, to the City that the Owner is occupying the Home as his or her principal place of residence, & The Owner shall not rent or lease all or: any part of the Horne -to another party, unless such rental or lease is first approved in writing by the City. The City shall approve the renting or lea 'sing sing of the Home only if all of the following: conditions are met: (1) the term of the rental, or lease is not greater: than twelve (12) months and cannot be extended without City approval; (2) the Owner demonstrates .to the City's reasonable satisfaction that the Owner will, incur substantial al hardship if he or she is not permitted to rent or lease the Home to a third party; (3) the tenant qualifies as a lower-income household, as certified to the City; and (4)the rent for the Homo does not exceed rent determined by the City to .be affordable rent to a lower-income household, as defined in Section, 29.2(C) of the Affordable Housing Ordinance (the "Affordable Ren ' t"). Any rental or lease of the Home in violation of this Agreement is prohibited, and shall be a default under this Agreement and the City Deed of Trust. The Owner further agrees that, in the event the Owner rents or leases the Home to a third party in violation of this Section 313, any excess rents ("Excess Rental Proceeds") paid to the Owner by the lessee over the Affordable Rent shall, be due and payable to the City immediately upon receipt thereof by the Owner. Such Excess Rental Proceeds shall be, considered a recourse debt of the Owner to',the City, as evidenced by this Agreement, which the City may collect by legal action against the Owner, including by foreclosure under the City Deed of Trust. 4. FIRST TIME HOMEBUYER EDUCATION CLASS The Owner shall provide evidence satisfactory to the City that they have completed a U.S. Department of Housing and Urban Development (HUD) approved homebuyer education class prior to the Effective Date of this Agreement. 5. MAINTENANCE AND INSURANCE PROCEEDS A. The Owner shall maintain the Home, including landscaping, in good repair and in a neat, clean and orderly condition (and, as to landscaping, in a healthy condition) and in, accordance with all applicable laws, rules, ordinances, orders an ' d regulations of all federal, state, county, municipal, and other governmental agencies and bodies having or claiming jurisdiction and all their respective departments, bureaus, and officials, Owner will not commit waste or permit deterioration of the Home, and shall make all repairs and replacements necessary to keep the Home in good condition and repair. Failure by the Owner to maintain the Home shall constitute a default under this Agree ment for which the REV- 06-30-22 SK ATTY]AGR.2022.166/Hugo Alberto Zarco Vargas & Andrea Vergara Cardenas (Page 6 of 40)