AGREEMENT AMONG TENANTS IN COMMON
3619 Hillcrest Drive, Belmont, California
September 12th, 1997
Revised September 17th, 1997
Revised September 23rd, 1997
Revised October 6th, 1997 (Removal of Gardener)
WHEREAS, each of Kevin Hester, Mark Maxham and Dave Evans (collectively referred to as "Homeowners") wish to jointly purchase, as tenants in common, a one-third (1/3) undivided interest in real property commonly known as 3619 Hillcrest Drive, Belmont, California (the "Real Property"); and
WHEREAS, the Homeowners wish to set forth their agreement concerning occupation, operation and maintenance of the Real Property, in order to avoid disputes and create a framework for resolving any disputes that arise;
NOW THEREFORE, in consideration of the joint purchase of the Real Property, and the promises contained herein, and incorporating the recitals made above, the parties agree as follows:
SECTION 1: Responsibility for Payment and Upkeep.
Each of the Homeowners agrees that they have a joint and a mutual obligation, as among themselves, (and not withstanding anything else set forth in this Agreement,) to be equally liable for all costs, expenses, and other obligations arising out of, connected with or related to the Real Property. The Homeowners each agree that they shall equally share all such costs, expenses and other obligations, (unless otherwise specified in this Agreement) and do so in the manner set forth in this Agreement. For purposes of this Agreement, "Mortgage" refers to any obligation secured by the Real Property, and "Upkeep" includes interest, insurance, taxes, assessments of any kind, and any contract for services or improvements entered into which provides for payment over time.
SECTION 2: Mortgage Payments.
A) All Homeowners in Residence
When each of the Homeowners is residing on the Real Property, then all Mortgage and Upkeep payments shall be divided one-third (1/33) each between the Homeowners, after the amount of any income derived from the Real Property is applied to the Mortgage payment.
B) Less Than All of the Homeowners in Residence.
In any month wherein less than all of the Homeowners are in residence on the Property, Mortgage payments shall be determined as follows:
(1) A "virtual rent" shall be assigned to each bedroom on the premises.
(2) Those tenants in residence will pay the virtual rent for their respective bedrooms.
(3) The virtual rent paid by the Homeowners in residence, together with any other rents or incomes collected from the Real Property, shall be applied to the entire amount of Mortgage and Upkeep payments;
(4) The Homeowners will then split one-third (1/3) apiece any remaining sums owed in that month for Mortgage and Upkeep.
C) Determination of Virtual Rent.
The Homeowners will attempt to agree amongst themselves as to a value to assign for virtual rent on a bedroom by bedroom basis. Should the Homeowners be unable to agree as to virtual rent, then the current market rental for the home as a whole shall be determined by recourse to an appraisal professional. That current market rental will then be divided amongst the number of bedrooms to achieve a virtual rent, with an offset for differences in desirability of the various bedrooms. If any Homeowner disagrees with the current market rent so established, that Homeowner may hire another independent appraisal professional, at the sole expense of the Homeowner who disagrees, to provide a second appraisal. The average of the two appraisals will be used to arrive at a current market rent. The differences in desirability for the various bedrooms shall be set forth in terms of percentage of the current fair market rent on Exhibit "A" attached hereto.
SECTION 3: Maintenance.
As among themselves, all Homeowners shall be jointly and equally responsible for any and all obligations arising from or connected with maintenance of the Real Property, provided any repairs are conducted in accordance with this section.. Any emergency maintenance shall be conducted forthwith by any of the Homeowners. Emergency maintenance shall consist of broken appliances, broken pipes or other defects in plumbing, defects in the heating, ventilation and air conditioning system , defects in the electrical system, or any defects that materially and immediately affects safety or is likely to cause great waste. No other maintenance or repair shall be conducted without approval. Any non-emergency maintenance obligation whose repair costs between Fifty Dollars ($50.00) and One Thousand Dollars ($1,000.00) shall require a majority vote. Any maintenance obligations requiring a greater than One Thousand Dollar ($1,000.00) cost or expense shall require a unanimous vote.
The Homeowners shall hire a mutually agreed upon housekeeper, and a mutually agreed upon gardener. Homeowners further agree that in a monthly meeting, the Homeowners by majority vote shall identify tasks, chores and works of improvement to be done around the Property, and assign each task on an equitable basis to a given Homeowner. The date of this meeting will be eight PM the first Monday of the month, unless agreed otherwise by the homeowners. Material failure to perform a task in greater than a sixty (60) day period shall result in a Fifty Dollar ($50.00) penalty to the defaulting Homeowner, payable to the Maintenance Account.
SECTION 4: Accounts.
The Homeowners shall establish two (2) checking accounts, to be maintained in trust for the benefit of the Real Property. One account shall be denominated the "Mortgage Account" and the other account shall be denominated the "Maintenance Account." Each of the Homeowners shall be a signatory on each account, however only the acting treasurer is authorized to write checks from the account. Each account shall require two authorized signatures in order to draft checks or make other withdrawals on the account. Each account shall be an interest bearing account.
Each Homeowner shall deposit into the Mortgage Account, within five (5) days after the settlement estimate is received from the relevant escrow company, an amount equal to one third (1/3) of all costs and fees associated with the purchase of the Real Property which costs and fees are not otherwise covered by the financing for the Real Property. Each Homeowner shall deposit that individual Homeowner’s share of monthly payments for Mortgage and Upkeep, (based upon the best estimate of the treasurer at the time,) into the Mortgage Account no later than seven (7) days prior to the date upon which the Mortgage is due. Any decision to make a prepayment on any Mortgage must be agreed upon unanimously by all Homeowners, and must be made at the same time by all Homeowners.
Each Homeowner shall initially deposit into the Maintenance Account One Thousand Dollars ($1,000.00), and each Homeowner shall further pay Fifty Dollars ($50.00) per month into the Maintenance Account. Whenever the amount of funds in the Maintenance Account is less than Two Thousand Dollars ($2,000.00), than each Homeowner shall deposit into the Maintenance Account the amount necessary to re-establish a $3,000 balance in the maintenance account (not to exceed a maximum contribution of Five Hundred Dollars ($500.00) per month) within five (5) days of written demand for such monies from the then treasurer. For any extraordinary repairs exceeding two thousand dollars, the Homeowners shall jointly establish a means of financing such repairs.
A) Late Payment.
Should any payment for Mortgage and Upkeep be more than two (2) days late, than an administrative charge of Fifty Dollars ($50.00) shall be made to the Maintenance Account, and interest on the late payment at ten percent (10%), or the highest permissible rate of interest under the law, whichever is less, shall be paid to the other Homeowner(s) who made the payment. The delinquent Homeowner shall also be liable for any late fees, interest or penalties charged by the relevant financial institution, taxation authority, insurer or service provider.
B) Missed Payments.
Should any Homeowner:
(1) fail to make three Mortgage and/or Upkeep payments in a sixth month period in a timely manner (ie, within thirty (30) days of the date upon which they are due,
(2) fail to make two Mortgage payments at all within a six month period, or
(3) fail to pay any outstanding interest, penalties and/or late fees within six months of when they were first incurred,
then the delinquent Homeowner shall be in Financial Default. When any Homeowner is in Financial Default, the remaining Homeowners shall have the option (at the non-delinquent Homeowners sole election) of purchasing any and all interest of the delinquent Homeowner in the Real Property by either:
(1) paying to the delinquent Homeowner one hundredEighty percent (1080%) of the amount of Mortgage payments Homeowner has made to date; or
(2) paying to Homeowner one-third (1/3) of the appraised value of the Property adjusted for the amount outstanding on the Mortgage, (and provided that the non-delinquent Homeowners make a reasonable effort to have the delinquent Homeowner released from the Mortgage.)
If any Homeowner shall miss twelve (12) months of payments in any three (3) year period, than that Homeowner shall transfer hisforfeit his/her share of ownership in the Real Property and transfer that ownership equally to the non-defaultingremaining Homeowners.
The options created pursuant to this Section concerning buy-out of the delinquent Homeowner’s interest shall remain in full force and affect until 1) the delinquent Homeowner repays all amounts unpaid and all late fees and penalties (including interest thereon); and 2) the delinquent Homeowner deposits into the Mortgage Account a six (6) months deposit of estimated Mortgage and Upkeep payments, and thereafter ensures that at no time the amount of the advance Mortgage deposit falls below four (4) months.
In addition to the rights set forth above, should any Homeowner pay more than that Homeowner’s share of Mortgage, Upkeep, Maintenance or other expenses, then the overpaying Homeowner can recover a pro-rata share of the overpayment from the non-paying Homeowners, and is entitled to a lien against the interests of the non-paying Homeowner(s). Any Homeowner may alternatively proceed to recover any overpayment from any non-paying Homeowner personally.
SECTION 6: Treasurer.
Each Homeowner shall serve as treasurer for the Real Property for a three (3) month term, on a rotating basis. The Treasurer shall be responsible for preparing all bills for payment, and administering the payment of bills and other obligations. The Treasurer shall provide a detailed quarterly report to each of the other Homeowners, together with a statement of the existing Mortgage loan balance. To the extent possible, the Treasurer will automate payment of obligations.
SECTION 7: Benefits
The Homeowners shall share equally all benefits of ownership, including rental income and tax benefits (although rental income shall be paid into the Mortgage Account).
SECTION 8: Tenancy By Homeowners.
Each of the Homeowners shall have an absolute right to tenancy on the Real Property, unless a Homeowner has voluntarily moved from the premises and all bedrooms are currently occupied by lawful tenants. A list of the available bedrooms and the assignment to individual Homeowners of specific bedrooms is set forth on "Exhibit ‘A’" Should at any time a Homeowner leave the Real Property and then desire to reenter the Real Property, provided the existing tenancy for a non-Homeowner tenant can be legally terminated, it shall be done, and the absent Homeowner shall be allowed back into the Real Property.
Any differential in value caused by the desirability of various rooms shall be adjusted in a manner that the Homeowners agree upon. Storage space outside the confines of a bedroom shall be assigned to the Homeowners in an equitable manner as set forth on Exhibit "A".
The Homeowners shall prepare rules of conduct for the occupation, maintenance, Upkeep and safety of the Real Property. The rules may be changed at any time, in writing, by a majority vote.
No smoking shall be allowed on the Real Property. Preexisting pets, as well as the adoption of pets of other family members of a given Homeowner, shall be allowed to live on the premises. Other than that, the acquisition of a pet shall require a unanimousthe majority vote of the Homeowners. All chairs in the common areas of the Real Property shall be hanging rattan chairs.
SECTION 9: Additional Renters.
The Home is presently suitable for four occupants in total, leaving space initially for one (1) additional renter, and should any existing Homeowner vacate the property, then additional rentals will be available. It is the intention of the Homeowners that all four (4) bedrooms be profitably occupied at any time any bedroom is not occupied by a Homeowner.
The initial tenant is identified on Exhibit ‘A’, attached hereto. All future rental applicants shall be required to submit a financial statement, and any other data that ccan lawfully be requested and that the Homeowners agree by majority vote is needed to evaluate a candidate. A majority vote shall be needed to approve any renter for a vacant room. Each Homeowner shall have one absolute veto per vacancy that the Homeowner can use to quash rental to any applicant, to be exercised in that Homeowner’s sole discretion, for any legal reason or no reason at all. All renters shall be tenants on a month-to-month basis, unless agreed otherwise by a majority of the Homeowners, and it shall require a unanimous vote of the resident Homeowners to terminate the tenancy of any renter, or to evict a renter.
SECTION 10: Right to Quiet Enjoyment.
Each Homeowner represents and promises to grant to each other Homeowner and tenant a right of quiet enjoyment. No Homeowner shall commit any unsafe acts on the Real Property, acts that create a threat to any other occupant, or acts amounting to waste. No bedroom shall be occupied at any time by more than one (1) tenant. No guest may be allowed to remain on the premises for more than seven (7) consecutive nights, without the consent of a majority of owners. No tenant or pet, shall be allowed to create any offensive odors, or to create any excessive noise past twelve midnight (12:00 a.m.). Each Homeowner shall be strictly liable for the affairs, behavior and acts of their guests and invitees.
SECTION 11: Insurance.
The Homeowners shall maintain insurance as required by the Mortgage. The Homeowners agree, amongst themselves, to maintain insurance providing coverage as defined on Exhibit "B" hereto. The amount of coverage may be changed by a majority vote of the Homeowners at any time, but shall not violate any terms of the Mortgage. The Homeowners agree that they shall maintain earthquake insurance provided that earthquake insurance can be obtained for a costs of no more than Two Thousand Dollars ($2,000.00) per year.
SECTION 12: Waste and Destruction.
Normal wear and tear on the Real Property or any improvement thereto shall be considered maintenance and the costs therein shared by all Homeowners. Should any item of waste or damage be directly attributable to a single Homeowner, and should such item of waste or damage result from more than simple negligence, then the single Homeowner shall be charged with the costs of repairs. Simple negligence, to be shared all, shall consist of acts such as furniture breaking inadvertently by normal use, mowing the lawn and cutting a hose or a sprinkler head, or spills on flooring. For an item of damage to be charged to a single Homeowner, some degree of negligent culpability is required.
SECTION 13: Improvements.
No improvements shall be made without the approval of at least a majority of the Homeowners. Any Improvement exceeding Five Hundred Dollars ($500.00) in costs must be approved by a unanimous vote of the Homeowners.
SECTION 14: Sale of Real Property.
At any time, any Homeowner can demand that the Real Property be sold. Such demand must be made by written notice to the other Homeowners
A) Option to Purchase.
Upon the receipt of any Notice of Demand for Sale, the non-demanding Homeowners, either together or separately, shall acquire an automatic option to purchase the selling Homeowner’s interest at the then existing fair market value. Similarly, upon the death of any Homeowner, the remaining Homeowner’s shall acquire an option to purchase the decedent’s interest at the then existing fair market value. Any Homeowner who wishes to exercise such option must give the Demanding Homeowner or, as applicable, the heirs of the deceased Homeowner, written notice of their exercise of the option within fifteen days of delivery of written demand to sell or within thirty days of the death of any Homeowner. Should the non-demanding Homeowners elect not to exercise the option or should the non-demanding Homeowners fail to perform timely, then the Real Property shall be placed upon the open market for sale.
B) Determination of Value.
The Homeowners shall attempt to agree upon a fair market value. If no fair market value can be achieved, then an appraisal shall be obtained, which shall be from a qualified and independent appraisal professional, whose services shall be paid out of the Maintenance Account. If the parties are still not able to unanimously agree upon a price, then the parties that disagree with the appraisal so obtained, may obtain, at their own expense, an additional appraisal from a second independent, qualified appraiser. Should any party refuse to accept the mean of the two appraisals, then the disagreeing party shall hire a third independent appraiser and the mean of three (3) appraisals shall be the fair market value. The Homeowners shall have thirty (30) days from notice of their election to exercise their option to obtain appraisals. Once a price is established, the Homeowners shall have five (5) days in which to confirm their election at the established value and sixty (60) additional days in which to close the transaction (close of escrow).
SECTION 16: Sale of the Real Property.
Any sale of the Real Property shall be made with the assistance of a licensed real estate broker. The selection of a real estate broker and the terms of any agreement with the real estate broker shall be agreed upon by a majority of the Homeowners. The initial asking price shall be determined by a majority of the Homeowners. The decision to accept or reject any offers to purchase, and the terms of any counteroffers shall be decided by an agreement of a majority of the Homeowners.
SECTION 17: Proceeds From The Sale of The Real Property.
If at any time the Real Property shall be sold to anyone other than the original Homeowners, then the proceeds shall be divided in the following order:
In the event of a loss from the sale of the Property, the loss shall be proportioned equally to each of the then existing Homeowners, provided that any Homeowner in default on Mortgage payments or who has failed to pay penalties, interest or late fees shall be required to immediately repay the remaining Homeowners, with interest, for such amounts.
SECTION 18: Specific Performance.
The parties agree that breach of this Agreement will cause irreparable harm to the non-breaching Homeowners, and in that event, in addition to other remedies provided by applicable law, the non-breaching party will be entitled to immediate issuance of a temporary restraining order or preliminary injunction enforcing this Agreement. The Homeowners reserve all rights they have at law in addition to any rights provided by this Agreement
SECTION 19: General Provisions:
A) Governing Law.
This Agreement will be governed by and construed in accordance with the laws of the United States and the State of California as applied to agreements entered into and to be performed entirely within California between California residents.
B) Entire Agreement/Modification.
This Agreement, including all Exhibits to this Agreement, constitute the entire agreement between the parties relating to this subject matter and supersedes all prior or simultaneous representations, discussions, negotiations, and agreements, whether written or oral. Any and all amendments, changes, revisions, and/or modifications to this Agreement must be in writing signed by all of the Homeowners.
C) Waiver:
No term or provision hereof will be considered waived by either party, and no breach excused by either party, unless such waiver or consent is in writing signed on behalf of the party against whom the waiver is asserted. No consent by either party to, or waiver of, a breach by either party, whether express or implied, will constitute a consent to, waiver of, or excuse of any other, different, or subsequent breach by either party.
D) Successors and Assigns:
No Party may assign its rights or obligations arising under this Agreement without prior written consent of the other parties. This Agreement will be for the benefit of the Homeowner’s successors and assigns, and will be binding on each Homeowners heirs, legal representatives and permitted assignees.
E) Legal Fees:
If any dispute arises between the parties with respect to the matters covered by this Agreement which leads to a proceeding to resolve such dispute, the prevailing party in such proceeding shall be entitled to receive its reasonable attorneys’ fees, expert witness fees and out-of-pocket costs incurred in connection with such proceeding, in addition to any other relief to which it may be entitled, including but not limited to equitable relief such as restraining orders and injunctions.
F) Notices:
All notices, requests and other communications required to be given under this Agreement must be in writing, and must be mailed by registered or certified mail, postage prepaid and return receipt requested, or delivered by hand to the party to whom such notice is required or permitted to be given. Any such notice will be considered to have been given when received, or if mailed, five (5) business days after it was mailed, as evidenced by the postmark. The mailing address for notice to any party will be the Real Property. Any party may change its mailing address by notice as provided by this Section.
G) Severability:
Should any term, condition, or provision herein be determined to be unenforceable, such determination shall not impair, limit, or otherwise affect the enforceability of the remaining terms of this Agreement.
IN WITNESS WHEREOF, the parties to this Homeowners Agreement execute this Homeowner Agreement as of the day and year first above written.
Dated: _______________, 199___ ____________________________________
STEWART KEVIN HESTER
Dated: _______________, 199___ ____________________________________
KENNETH MARK MAXHAM
Dated: _______________, 199___ ____________________________________
DAVID LAWRENCE EVANS
EXHIBIT A
Initial Renters:
Allocation of space ("virtual rent"):
25% Mark Maxham
25% Dave Evans
25% Kevin Hester
25% Renter
Dated: _______________, 199___ ____________________________________
STEWART KEVIN HESTER
Dated: _______________, 199___ ____________________________________
KENNETH MARK MAXHAM
Dated: _______________, 199___ ____________________________________
DAVID LAWRENCE EVANS
EXHIBIT B
Minimum insurance coverage:
Fire
(More details to be taken from our initial Farmers insurance coverage)
$400,00 plus adequate funds for six months of temporary living expenses.
Earthquake
$400,000 plus adequate funds for six months of temporary living expenses.
Dated: _______________, 199___ ____________________________________
STEWART KEVIN HESTER
Dated: _______________, 199___ ____________________________________
KENNETH MARK MAXHAM
Dated: _______________, 199___ ____________________________________
DAVID LAWRENCE EVANS