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HomeMy WebLinkAbout1996-06-10 City CouncilCity of Palo Alto City Manager’s Report TO:HONORABLE CITY COUNCIL FROM:CITY MANAGER DEPARTMENT: ADMINISTRATIVE SERVICES AGENDA DATE: JUNE 10, 1996 CMR:267:96 SUBJECT:DISPOSITION OF THE MEADOWS WELL SITE AT 3896 DUNCAN PLACE AND APPROVAL OF REQUEST FOR BID PROPOSALS FOR THE SALE OF THE SITE REQUEST This report transmits a proposed Request for Bid Proposals (RFBP) for the sale of the Meadows Well site located at 3896 Duncan Place, Palo Alto, and requests Council approval prior to solicitation. RECOMMENDATIONS Staffrecommends that Council approve the attached RFBP package and direct staffto solicit proposals for sale of the site. POLICY IMPLICATIONS The RFBP and sale of surplus property do not represent any change to existing City policies. BACKGROUND In 1988, Council approved a Utilities Department recommendation to abandon and dispose of four of the City’s ten well sites: the Park Boulevard, Seale, Tower and Middlefield well sites. In October 1992, upon Council direction, staff distributed an RFBP for the sale of the Middlefield Well site, and no bids were received. The site was left on the market pending a more favorable real estate market (CMR: 109:92). On February 5, 1996, Council approved delaying sale of the Middlefield Well site and the reinstatement of payment of rental charges from the Water Utility to the General Fund, until the Utilities Department concludes its study to determine if the site should be used for constructing a new emergency water well. At the same time, Council approved the abandonment of the Meadows Well site and the return of CMR:267:96 ..Page 1 of 3 the property to the General Fund, due to its history of low water production mad the expense of refurbishing the site with no assurance for improved capacity or earthquake survival (CMR:489:95). The Santa Clara Valley Water District (SCVWD) issued a permit to the City’s well sealing contractor directing the contractor to seal the well according to the SCVWD Well Sealing Standards. The SCVWD’s inspector has inspected the sealing of the well and has issued a report to the City stating that the well has now been properly sealed. Information on sealing the well and a letter written in response to the Walnut Grove Homeowners Association’s concerns were addressed by staff and provided to Council on February 5, 1996 (CMR:128:96)I DISCUSSION The Meadows Well site is a pie-shaped parcel of approximately 0.18 acres. The site is zoned R-1 with an overlay zone. The overlay requires development be single-story to match the surrounding single-story single family homes. Staff evaluated possible uses for the site and determined that, due to the zoning and residential neighborhood environment, selling the site would produce the most favorable return. Upon completion of a market analysis, staff determined that a minimum bid price of $250,000 is realistic. In accordance with Government Code Section 54222, notices of the availability of the Meadows Well site were sent to the following public agencies: County of Santa Clara Parks Department, Mid- Peninsula Regional Open Space District, State Resources Agency, and Housing Authority of Santa Clara County and the Palo Alto Housing Corporation (PAHC). These agencies have all indicated they have no need for the property. In anticipation of selling the site, staff has prepared an RFBP which, upon approval by Council, will be advertised in local newspapers. The RFBP consists of an Information Flyer which will be sent to interested persons and groups. The Information Flyer provides information on the location, size and zoning of the site; the date proposals are due, September 10, 1996; the minimum bid price and instructions on how to obtain and submit the bid package. The .proposal package contains detailed information on submitting the bid and the Offer and Agreement to Purchase. Major terms of the RFBP are: 1.Minimum bid of $250,000. Sealed written bids, accompanied by a good faith deposit in the amount of $2,500, will be accepted until 3:00 p.m. on September 10, 1996. Following opening of the written bids, oral bids will be accepted, beginning at 5 percent above the highest written bid. Only those submitting written bids will be allowed to participate in the oral bidding. CMR:267:96 Page 2 of 3 Within seven days following notification from the City that a bidder was the qualified high bidder, the bidder is to pay the City the .d.ifference between the $2,500 good faith deposit and 20 percent of the total amount bid. Following acceptance of the bid by the City Council, escrow is to be opened, and the buyer is to pay the balance of the purchase price, with escrow closing within 90 days therea£ter. o ° Buyer is to pay all title and escrow costs. Buyer is to be responsible for the demolition and removal of any remaining well equipment and any other facilities on-the site.- FISCAL IMPACT The minimum bid amount is set at $250,000. An oral bid will begin at 5 percent above the highest written bid received. Proceeds from the sale will go to the General Fund Budget Stabilization Reserve. ENVIRONMENTAL ASSESSMENT Authorization of the sale of City property does not constitute a project under the California Environmental Quality Act; therefore, no environmental impact assessment is necessary. ATTACHMENTS Exhibit 1 - Request for Bid Proposals package PREPARED BY: Martha Miller, Financial Analyst DEPARTMENT HEAD APPROVALS-"- Emil-~UHarrison Deputy City Mana)g~ #A~lministrative S~’v,~e~ CC:Elizabeth Indergand Walnut Grove Homeowners Association CMR:267:96 Page 3 of 3 EXHIBIT i INFORMATION FLYER 3896 Duncan Place, Palo Alto INFORMATION FLYER SALE OF SURPLUS PROPERTY MEADOWS WELL SITE WHAT IS THE NATURE OF THE PROPERTY?The subject City-owned property is a parcel formerly used as a municipal well. The well has been sealed; some facilities remain. The property is being sold "AS IS". Buyer will be responsible for removal of any and all remaining facilities. WHERE IS IT? "The site is located at 3896 Duncan Place, Palo Alto. See attached map. WHAT IS THE ZONING?Single family residential with single story overlay [R-1(650)(S)]. ¯ WHAT IS THE SIZE? IS THE PARCEL SUBDIVIDABLE? The parcel is pie-shaped and consists of approximately 0.18 acres/7,840 square feet. No. R-1(650) requires a minimum lot size of 7,000 sq.ft. IS THERE A MINIMUM BID?Yes - The minimum bid for this parcel is $250,000. WHERE AND WHEN WILL BIDS BE OPENED?Sealed wdtten bids will be opened by the Manager, Contract Administration on: September 10, 1996 at 3:00 p.m. City Council Conference Room, 250 Hamilton Avenue - First Floor, Palo Alto, CA. Written bids MUST be accompanied by a $2,500.00 deposit in the form of a Cashier’s or Certified check, made payable to the City of Palo Alto. WILL THERE BE ORAL BIDDING? HOW DO I GET A COPY OF THE PROPOSAL PACKAGE? Bids will- not be accepted-after 3:00 P.M. on September10, 1996. Yes - Oral bidding will begin at 5% above the highest written bid. In order to participate in the oral bidding, you must submit a written bid with deposit, by the deadline date and time stated above. Write or Call:Martha Miller or Donna Hartman Real Estate Division City of Palo Alto 250 Hamilton Avenue Palo Alto, CA 94303 (415) 329-2677 No Finder’s Fees or Commissions Paid: The City of Palo Alto does not pay finder’s fees or commissions. Any such payment must be negotiated between the proposer and his or her agent or broker, if any. I LOCATION MAP 3896 Duncan Place to, CA PALO ALTO CI’TY L~AAIT,5 ALTOS HILL.~ L PROPOSAL PACKAGE 3896 Duncan Place, Palo Alto PROPOSAL PACKAGE Surplus Property - Meadows Well Site PROPOSAL REQUIREMENTS & PROCEDURES In order to submit a proposal you must: 1.Complete the attached Offer and Agreement to Purchase Real Property, including your bid amount, requested title vesting, and your signature. 2.Attach a $2,500 proposal deposit in the form of a Cashier’s or Certified check made payable to: The City of P.alo Alto. 3.Place the above into the Bid Envelope provided and seal it. 4.Deliver the sealed Bid Envelope to: Manager, Contract Administration City of Palo Alto 250 Hamilton Avenue - First Floor Palo Alto, CA 94301 BID OPENING Sealed bids will be opened on Tuesday, September 10, 1996 at 3:00 P.M. in the City Council Conference Room at the above address. In order to be considered, your bid must be received prior to that time and must include the proposers deposit. No bids will be accepted after 3:00 P.M. on Tuesday, September 10, 1996. ORAL BIDS Once all written bids have been opened, oral bids will be accepted beginning at 5% above the highest wdtten bid amount. In order to participate in the oral bidding, you must submit a written bid by the deadline stated above. Only those who have submitted written bids wig be allowed to participate in the oral biddding. MINIMUM BID The minimum bid has been set at $25Q,000. PROPSALS TO BE UNCONDITIONAL The terms and conditions of the sale are fixed except for the purchase price. The intent of this proposal format is to allow the proposers to examine in detail all the terms and conditions of the offering. Since the purchase price is the only variable item, the amount you are willing to bid for the purc~]ase price should reflect your reaction to the terms and conditons set forth in the Offer and Agreement to Purchase Real Property. Any condition or qualification attached to a proposal will be sufficient cause for the rejection of the proposal at the discretion of the City. INFORMATION AND QUESTIONS If you desire further information’~r have questions regarding this offering, write or call: REAL ESTATE DIVISION, City of Palo Alto, P.O. BOX 10250, Palo Alto, CA 94303,(415) 329-2677. The City of Palo Alto will not pay a sales commission on this offering. The minimum bid is set to reflect this. Any commission must be arranged between the Buyer and his or her broker or real estate representative. PARCEL NO: 147-25-039 PROJECT: Meadows Well Site OFFER AND AGREEMENT TO PURCHASE REAL PROPERTY (Full Cash Payment) SELLER: CITY OF PALO ALTO BIDDER: In consideration of SELLER’S proposal to sell the real property described and shown on the form of Grant Deed labeled Exhibit A, attached hereto, by competitive bids to be received September 10, 1996, BIDDER agrees to purchase said real property for the sum of: (Amount in words) (Amount in numbers) and herewith, in accordance with subparagraph 7 below, gives SELLER a good faith deposit (Proposal Deposit) inthe amount of $ 2,500.00. This bid is conditioned upon and made with the understanding that: Upon notice from SELLER’S Real Estate Division that BIDDER is the qualified high bidder, BIDDER shall ~.within..7 days. after, said notice pay SELLER an additional sum equal to the difference between the good faith deposit and 20% of the total amount bid. Should BIDDER, for any reason whatsoever, fail to pay to SELLER said additional amount, said good faith deposit shall be retained by. SELLER as set forth in subparagraph 7 below. Within twenty-four (24) days after BIDDER has paid SELLER the additional sum referred to in Paragraph 1 above, SELLER shall consider this bid and accept or reject it. Should this bid be rejected by SELLER or should SELLER fail to accept or reject this bid within the, t.im.e period set forth in Paragraph 2 above, BIDDER may withdraw this bid and all money paid to SELLER by BIDDER shall be refunded to BIDDER. o If this bid be accepted by SELLER, said good faith deposit and the additional sum paid to SELLER as provided in Paragraph 1 above shall constitute a portion of the o agreed purchase price paid to SELLER outside of escrow, with the balance to be paid through escrow as set forth below. If this bid is accepted bySELLER, SELLER’S Real Estate Division shall open an escrow with North American Title Company, 431 Florence Street, Palo Alto, Ca. The opening date of escrow shall be the date upon which the escrow holder named above receives written authorization from SELLER’S Real Estate Division to open said escrow. The balance of the purchase price shall be paid through escrow and the escrow period shall run for a period of ninety (90) days from the opening date of escrow. SELLER shall deliver to said escrow a Grant Deed in the form of Exhibit A and such other documents as are required to transfer title subject only to those exceptions shown in the attached Preliminary Report No. 4103042, dated March 19, 1996, labeled Exhibit B and made a part hereof, and any reservations, covenants and conditions, if any, set forth in the Grant Deed referred to above. Prior to the date set for close of escrow, BIDDER shall deposit into escrow the difference between the total purchase price and the total sum paid to SELLER outside of escrow. The close of escrow may occur prior to the time period set forth above if it is mutually desirable to SELLER’S Real Estate Division and BIDDER. However, said time periods shall not be extended unless authorized in writing by SELLER’S Real Estate Division staff. Close of escrow shall be the.date.that.the documents.are filed, for recordation with the County Recorder. The good faith deposit and the additional sum referred to in Paragraph 1 above shall be in the form of a cashier’s or certified check made payable to the City of Palo Alto. The good faith deposit must be submitted together with this Agreement. Said good faith deposit shall be held by the SELLER as a guarantee securing the obligations BIDDER agrees to assume in this Agreement. BIDDER agrees that in the event that this Offer and Agreement to Purchase Real Property is accepted by SELLER and BIDDER fails to meet the terms hereof, said good faith deposit and the additional sum referred to in Paragraph 1 represent a fair and reasonable estimate of SELL,ER’S costs in connection with this transaction, and BIDDER further agrees that~said sum shall be retained by SELLER as compensation for said costs. Title insurance on the subject property shall be supplied by North American Title Company at Buyer’s expense. Title shall.be vested as specified in Paragraph 10 below and shall be subject to the exceptions shown in Preliminary Report No. 4103042, and any reservations, conditions or covenants, if any, set forth, in the Grant Deed referred to in Paragraph 6 above. If SELLER is unable to deliver title as specified herein prior to the date set for close of escrow, BIDDER shall have the option to: Accept title in the condition in which it exists. Acceptance of such title by BIDDER shall constitute full satisfaction of the terms of this Agreement as they relate to title, and SELLER shall in no way be liable for its failure to deliver title as set forth herein, or B.Terminate this Agreement by delivering written notice thereof to SELLER’S REAL ESTATE DIVISION 250 Hamilton Avenue Palo Alto, CA 94301 o 10. and to the escrow holder. Thereupon, all monies paid by BIDDER hereunder shall be refunded to BIDDER, and SELLER and BIDDER shall be relieved of further obligations to one another. In the event of termination as provided in this subparagraph, all escrow and title fees incurred shall be paid by SELLER, and BIDDER shall not be liable therefor. Neither Subparagraph 8A nor 8B hereinabove shall apply if SELLER delivers better title than that set out in Paragraph 6 above. In addition to the amount specified in Paragraph 6 above, BIDDER shall deposit into escrow a sum sufficient.to pay the.total.cost of.title insurance, escrow.fees, Real Property Transfer Tax, and all recording fees applicable to this transaction. Title to the real property conveyed pursuant to this Agreement shall be vested in BIDDER as set forth below. (Please type or print clearly. An example of one of the several ways title may be vested is: John Doe and Jane Doe, husband and wife, as joint tenants.). 11. 12. 13. This Offer and Agreement to Purchase Real Property may be withdrawn at any time prior to the time set for opening bids except as provided under Paragraph 3 above may not be withdrawn after the time set for such opening. SELLER reserves the right to reject any or all bids and to accept that bid which will, in its opinion, best serve the public interest. All documents, correspondence, and communications concerning this transaction shall be directed as follows: TO: BIDDER TO: SELLER (Name) (Address) CITY OF PALO ALTO c/o Real Estate Division 250 Hamilton Avenue P.O. Box 10250 Palo Alto, CA 94301 Attn: Martha Miller Telephone: Time is of the essence of this Agreement. SELLER’s Representations and Warranties 1. Excepting any matters shown in the Preliminary Report, no leases, occupancies, tenancies, or licenses exist that affect the property. 2. To the best of SELLER’s knowledge, there are not presently any actions, suits, or proceedings pending or threatened against or affecting the property or SELLER’s interest in the property or its use or that would affect SELLER’s ability to perform under this agreement. 3. The property shall be purchased by BIDDER "AS IS," and BIDDER shall purchase the property solely upon the basis of BIDDER’s own investigation and not in reliance upon any representations by SELLER or SELLER’s agents that are not contained in the agreement. Without modifying the generality of the foregoing, SELLER specifically disclaims any knowledge of the condition of the well or well seal located on the property, and BIDDER shall conduct such investigations of the well and well seal as BIDDER deems necessary or advisable to ascertain their condition and suitability for development. BIDDER hereby submits this offer with full cognizance of the terms and conditions contained herein. SIGNATURE(S) OF BIDDER(S) SELLER has considered and accepts this offer: Date SELLER: CITY OF PALO ALTO By. MAYOR, CITY OF PALO ALTO APPROVED AS TO FORM: CITY ATTORNEY By ATTEST: CITY CLERK By APPROVED AS TO AUDIT: CITY AUDITOR By RECOMMENDED FOR APPROVAL: DEPUTY CITY MANAGER By MANAGER, REALPROPERTY 5 EXHIBIT A of OFFER AND AGREEMENT TO PUE Recorded at no charge in accordance Government Code Section 6103 at the request of, and when record- ed return to: City of Palo Alto/Real Estate 250 Hamilton Avenue PO Box 10250 Palo Alto, CA 94303 SPACE ABOVE THIS LINE FOR RECORDER’S USE ONLY A.P. No.: 147-25-039 Project No.: CF 23/17-95/14 Project: Meadows Well Sale of Surplus Property IG R A N D E DI FOR A VALUABLE CONSIDERATION, receipt of which is hereby acknowledged, THE CITY OF PALO ALTO, a municipal corporation, does hereby grant to: the real property in the City of PaID Alto-, County of Santa Clara, State of Ca!ifornfa, described as: See Exhibit A attached hereto and made a part hereof for legal description. Excepting therefrom an easement and right of way for construction and maintenance of public utilities and improvements together with the right of ingress and egress thereon and the right to pass and repass over, along, across, under, and upon said easement whenever and wherever grantee desires for the purposes set forth herein, in plrpetuity, in, over, under, across, along, and upon that certainproperty more particularly described as Parcel 2 and Parcel 3 in Exhibit A, as shown on the map in Exhibit B, attached hereto and by this reference incorporated herein. GRANTOR:" City of Palo Alto, a Municipal Corporation Dated:By: ALL-PURPOSE ACKNOWLEDGMENT STATE OF CALIFORNIA COUNTY OF SANTA CLARA On , 1996,before me, (NOT~Y) personally appeared SIGNER (S) __-personal!y known to me -or- proved to me on the basis of satisfactory evidence to be the~person(s) whose name is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. WITNESS my hand and official seal. NOTARY ’ S SIGNATURE Approved as to Form Sr. Asst. City Attorney APPROVALS Approved as to Content ASD/Real Property Division B~ Approved as to Description Public Works/Engineering By Approved as to Content. Utilities/Electric By By A.P.NO. 147-25-39 MARCH 26, 1996 REQUESTED BYi MARTHA MILLER PREPARED BY: JAMES T. BOURQUIN CHECKED BY: JAY E. REMLEY, SR. APPROVED BY: JAMES D. KIEHL PARCEL 1 All that certain real property situated in the City of Palo Alto, County of Santa Clara, State of California more particularly described as follows;. All of Lot 7 of Block 2 as shown on that certain map entitled "Tract No. 1128 THE MEADOWS UNIT NO. 1", recorded March 16th, 1953 in Book 41 of Maps, at Page 56 of Santa Clara County Official Records. Said Parcel 1 contains 8,307 square feet (0.1907 acres) more or less. PARCEL 2 PUBLIC UTILITY EASEMENT A portion of real property situated in the City of Palo Alto, County of Santa Clara, State of California more particularly described as follows; Beginning at the most northeasterly comer of Lot 7 of Block 2 as shown on that certain map entitled "Tract No. 1128 THE MEADOWS UNIT NO. 1’% recorded March 16th, 1953 in Book 41 of Maps, at Page 56 of Santa Clara County Official Records; THENCE, along the easterly line of said Lot 7, South 2° 41’ 13" East 100.82 feet to Northwesterly line of a 20 foot wide drainage easement as shown on said Tract No. 1128; THENCE, along the northwesterly line of said drainage easement, South 58° 43’ 35" West 27.98 feet to the northeasterly line of a 5.00 foot wide Public Utility Easement as described in the "RESOLUTION 2474, Book 2727 Page 218" on file with the City of Palo Alto Clerks office, and as shown on said Tract No. 1128; THENCE, along the northeasterly line of said 5.00 foot Public Utility Easement, North 51 ° 36’ 25" West 18.13 feet; i. THENCE, North 58° 43’ 35" East 32.15 feet; THENCE, northwesterly and parallel with the easterly line of said Lot 7, North 2° 41’ 13" West 1 of 2 87.63 feet to the southerly right-of-way line of Duncan Place (formerly Oliver Place), said point being on a non-tangent curve, concave northerly having a radius of 70.00 feet and a radial bearing of South 5° 31’ 40" West; THENCE, easterly 10.03 feet along said curve through a central angle of 8° 12’ 48" to the Point Of Beginning. Said Parcel 2 contains 1453 square feet more or less. PARCEL 3 PUBLIC UTILITY EASEMENT A portion of real property situated in the City of Palo Alto, County of Santa Clara, State of California more particularly described as follows; Beginning at the most northwesterly comer of Lot 7 of Block 2 as shown on that certain map entitled "Tract No. 1128 THE MEADOWS UNIT NO. 1", recorded March 16th, 1953 in Book 41 of Maps, at Page 56 of Santa Clara County Official Records; THENCE, along the northwesterly line of said Lot 7, South 33 ° 02’ 06" West 6.00 feet; THENCE, South 56° 57’ 54" East 6.00 feet; THENCE, North 33° 02’ 06" East 6.26 feet; to a point on the southerly right-of-way line of Duncan Place (formerly Oliver Place), said point being on a non-tangent curve, concave northerly having a radius of 70.00 feet and a radial bearing of South 28° 06’ 57" West; THENCE, northwesterly 6.00 feet along said curve through a central angle of 4°55’ 01" to the Point Of Beginning. Said Parcel 3 contains 36.15 square feet more or less. Said Parcels 1, 2 and 3 are shown on attached map Exhibit "B" and made a part hereof. END OF DESCRIPTION EXHIBIT "A" JDK:jtb LEGAL: 1472539 PLAT: 1472539.DWG 2 of 2 A.P.NO. 147-25-37 TRACT THE UNIT NO. 11"~28 \ MEADOWS NO. 1 14 S 28" 06’ 57" S SEE = 45’ L = 54.72’ DELTA = 69" 40’ 69" 40’a = 91.!92~ S 5" 31’ 40" W ML "A" / 151.74’ R = 70’ 1241!’ 56" P.0.B. 3 PARCEL = 20’ L = 9,52’ DELTA = 27" 15’ 58" L = 10.57’ DELTA = 8"38’55" 9 "RESOLUTION 2474"x~ BOOK 2727 PAGE 218" -..,,,,..~ lO.O o-L--i~ ~ PARCEL 1 A.P.NO. 147-25-39 3896 DUNCAN PLACE R = 70" L S A.P.NO. 147-25-40 PLAT TO ACCOHPANY DESCRIPTION] P.U.E.L = PUBLIC UTILITY EASENENT LINE EXHIBIT "B" BRAVN BY: J, KIEHL CHECKED BY: J. BDURQUIN CHECKED BY: J. REMLEY LEGAL FILENAME~ 1472539 DRAVING FILENAME: 1472539.D~4G LOT T BLOCK 2 TRACT NO. 1128 THE MEADOWS UNIT NO. 1 CITY OF PALO ALTO, CALIFORNIA SCALE: 1" = 40’ P,L.S, 7158 APPROVED: REVISION, (4) 3126/96 of OFFER American Title Com[ 431 FLORENCE STREET, #i00 PALO ALTO, CALIFORNIA 94301 (415) 325-0330 " ny DATE MARCH 19, 1996 CITY OF PALO ALTO 250 HAMILTON AVE. 4TH PALO ALTO, CA 94301 ATTN: MARTHA MILLER FL. ORDER NO. PROPERTY A.DDRESS: 3896 DUNCAIq PLACE PALO ALTO, CA 4103042 PRELIMINARY REPORT- IN RESPONSE TO THE ABOVE REFERENCED APPLICATION FOR A POLICY OF TITLE INSURANCE, NORTH AMERICAN TITLE COMPANY, INC. HEREBY REPORTS THAT IT IS PREPARED TO ISSUE, OR CAUSE TO BE ISSUED, AS OF THE DATE HEREOF, A POLICY OR POLICIES OF TITLE INSURANCE FROM COMMONWEALTH LAND TITLE INSURANCE COMPANY, A PENNSYLVANIA CORPORATION, DESCRIBING THE LAND AND THE ESTATE OR INTEREST THEREIN HEREINAFTER SET FORTH, INSURING AGAINST LOSS WHICH MAY BE SUSTAINED BY REASON OF ANY DEFECT, LIEN OR ENCUMBRANCE NqT SHOWN OR REFERRED TO AS ANEXCEPTION BELOW OR NOT EXCLUDED FROM COVERAGE PURSUANT TO THE PRINTED SCHEDULES, CONDITIONS AND STIPULATIONS OF SAIDPOLICY FORM. THE PRINTED EXCEPTIONS AND EXCLUSIONS FROM THECOVERAGE OF SAID POLICY OR POLICIES ARE SET FORTH. IN EXBIBII "A" ATTACHED. COPIES OF THE POLICY FORMS SHOULD BE READ. THEY ARE AVAILABLE FROM THE OFFICE WHICH ISSUED THIS REPORT. THIS REPORT (AND ANY SUPPLEMENTS OR AMENDMENTS THERETO) IS ISSUED SOLELY FOR THE PURPOSE OF FACILITATING THE ISSUANCE OF A POLICY OF TITLE INSURANCE AND No LIABILITY IS ASSUMED HEREBY. IF IT IS DESIRED THAT LIABILITY BE ASSUMED PRIOR TO THE ISSUANCE OF A POLICY OF TITLE INSURANCE, A BINDER OR COMMITMENT SHOULD BE REQUESTED. PLEASE READ THE EXCEPTIONS SHOWN OR REFERRED TO BELOW AND THE EXCEPTIONS AND EXCLUSIONS SET FORTH IN EXHIBIT A OF THIS REPORT CAREFULLY.THE EXCEPTIONS AND EXCLUSIONS ARE MEANT TO PROVIDE YOU WITH NOTICE OF MATTERS WHICH ARE NOT COVERED UNDER THE TERMS OF THE TITLE INSURANCE POLICY AND SHOULD BE CAREFULLY CONSIDERED. IT IS IMPORTANT TO NOTE THAT THIS PRELIMINARY REPORT IS NOT A WRITTEN REPRESENTATION AS TO THE CONDITION OF TITLE AND MAY NOT LIST ALL LIENS,DEFECTS,AND ENCUMBRANCES, AFFECTING TITLE TO THE LAND. EFFECTIVE M_ARCH i, 1996 AS OF 7:30 A.M. A!qNAMARIE CREAL (ESCROW OFFICER) No, h American Title Com- ny THE FORM OR FORMS OF POLICY OF TITLE INSURANCE CONTEMPLATED BY THIS REPORT IS: American Land Title Association Loan Policy - 1992 THE ESTATE OR INTEREST IN THE LAND HEREINAFTER TO COVERED BY THIS REPORT IS: FEE SIMPLE DESCRIBED OR REFERRED TITLE TO SAID ESTATE OR INTEREST AT THE DATE HEREOF IS VESTED IN: THE CITY OF PALO ALTO, A ~ICIPAL CORPOP~qTION Page 2 of I0 4103042 "h American Title Corr--any THE LAND REFERRED TO HEREI~ IS SITUATED IN THE STATE OF CALIFORNIA, COUNTY OF SANTA CLARA, CITY OF PALO ALTO, AND IS DESCRIBEDAS FOLLOWS: LOT 7 IN BLOCK 2 AS SHOWN UPON THAT CERTAIN MAP ENTITLED, "TRACT NO. 1128, THE MEADOWS, UNIT NO. i" WHICH MAP WAS FILED FOR RECORD IN THE OFFICE OF THE RECORDER OF THE COUNTY OF SA!qTA CLARA, STATE OF CALIFORNIA, ON MARCH 16, 1953 IN BOOK 41 OF MAPS,PAGE 56. ASSESSOR’S PARCEL ~BER: 147-25-039 Page 3 of I0 4103042 Nor*h American Title ComF-’ny ON THE DATE HEREOF EXCEPTIONS TO COVERAGE IN ADDITION TO THE PRINTED EXCEPTIONS AND EXCLUSIONS CONTAINED IN SAID POLICY WOULD BE AS FOLLOWS: o o o Property taxes, including any assessments collected with taxes, to be levied for the fiscal year 1996-1997 which are a lien not yet payable. The lien of supplemental taxes, if any, assessed pursuant to the provisions of Chapter 3.5 (commencing with Section 75) of the Revenue and Taxation Code of the State of California. TAXES FOR THE FISCAL YEAR 1995-96 WERE NOT ASSESSED. AN EASEMENT FOR THE PURPOSES SHOWN BELOW AND RIGHTS INCIDENTAL THERETO AS SHOWN OR AS OFFERED FOR DEDICATION ON THE RECORDED MAP SHOWN BELOW: EASEMENT P~POSE: AFFECTS : PUBLIC UTILITIES EASEMENT SOUTHWESTERLY I0 FEET EASEMENT PURPOSE: AFFECTS : DRAINAGE EASEMENT MOST SOUTHERLY 20 FEET Any adverse claim based upon the assertion that some portion of said land has been brought within the boundaries thereof by an avulsive movement of the ADOBE CREEK, or has been formed by accretion to any such portion. "S~ch rights and easements for navigation, fishery or recreation which may exist over that portion of the above described property lying beneath the waters of Lake ADOBE CREEK." Covenants, conditions and restrictions (deleting therefrom any restrictions based on race, co!or or creed) as set forth in the document Recorded, Official Records : APRIL 20, 1953 Book : 2623 Page : 357 Said covenants, conditions and restrictions provide that a violation thereof shall not defeat the lien of FIRST mortgage or deed of trust made in good faith and for value. Page 4 of i0 4103042 American Title CorP-any o o An easement for .the purpose shown below and rights incidental thereto as set forth in a document Granted To : SANTA CLARA COUNTY FLOOD CONTROL AND WATER CONSERVATION DISTRICT Purpose : FLOOD CONTROLAND/OR STORM WATER DRAINAGE Recorded, Official Records : JANUARY 7, 1958 Book :3977 Page :564 Instrument No.:1423099 Affects :SOUTHERLY 20 FEET An easement for the purpose shown below and rights incidental thereto as reserved in a document. Purpose : SANITARY SEWER AND PUBLIC UTILITY Recorded, Official Records : JANUARY 7, 1958 Book :3977 Page :564 Instrument No.:1423099 Affects :SOUTHERLY 20 FEET Page 5 of i0 4103042 No’*h.American Title Corn any There are no conveyances affecting said land recorded within SIX MONTHS of the date of this report. NOTES: CALIFORNIA ASSEMBLY BILL 512 ("AB5i2") IS EFFECTIVE ON JANUARY I, 1990. UNDER AB 512, NORTH AMERICAN TITLE COMPANY, INC. ("NATC") MAY ONLY MAKE FUNDS AVAILABLE FOR MONETARY DISBURSAL IN ACCORDANCE WITH THE FOLLOWING RULES: I. SAME DAY AVAILABILITY - DISBURSEMENT ON THAT DATE OF DEPOSIT IS ALLOWED ONLY WHEN FUNDS ARE DEPOSITED TO NORTH AMERICAN TITLE COMPANY ("NATC") IN CASH OR BY ELECTRONIC TRANSFER (WIRE). BEAR IN MIND THAT CASH WILL BE ACCEPTED FROM CUSTOMERS ONLY UNDER SPECIAL CIRCUMSTANCES AS INDIVIDUALLY APPROVED BY MANAGEMENT. 2. NEXT DAY AVAILABILITY - IF FUNDS ARE DEPOSITED TO NATC BY CASHIER’S CHECKS, CERTIFIED CHECKS, OR TELLER’S CHECKS, DISBURSEMENT MAY BE ON THE NEXT BUSINESS DAY FOLLOWING DEPOSIT. A "TELLER’S CHECK" IS ONE DRAWN BY AN INSURED FINANCIAL INSTITUTION AGAINST ANOTHER INSURED FINANCIAL INSTITUTION (E.G., A SAVINGS AND LOAN FUNDING WITH A CHECK DRAWN AGAINST AN FDIC INSURED BANK). 3. 3-7 DAY AVAILABILITY (REGULATION CC). IF THE DEPOSIT IS MADE BY CHECKS OTHER THAN THOSE DESCRIBED IN PARAGRAPHS 1 AND 2 ABOVE, DISBURSEMENT MAY OCCUR ON THE DAY WHEN FUNDS MUST BE MADE AVAILABLE TO DEPOSITORS UNDER FEDERAL RESERVE REGULATION CC. THIS REQUIRES A "HOLD" ON SOME CHECKS OF 2-5 DAYS OR LONGER IN SOME INSTANCES. PERSONAL CHECKS, DRAFTS, PRIVATE CORPORATION AND COMPANY CHECKS, AND FUNDING CHECKS FROM MORTGAGE COMPANIES THAT ARE NOT TELLER’S CHECKS ARE AMONG THOSE CHECKS SUBJECT TO SUCH HOLDS. (FOR FURTHER DETAILS, CONSULT CHAPTER 598, STATUTES OF 1989.) NOTE: THE ABOVE GUIDELINES ARE IN CONFORMITY WITH THOSE ISSUED BY THE DEPARTMENT OF INSURANCE FOR ALL CALIFORNIA TITLE INSURANCE AND CALIFORNIA TITLE COMPANIES. NOTE: ON OR AFTER JULY I, 1985, THE COUNTY RECORDER’S OFFICE WILL CHARGE, IN ADDITION TO THE REGULAR CHARGES, AN EXTRA $20.00 RECORDING FEE, UNLESS A DOCUMENT EVIDENCING A CHANGE OF OWNERSHIP IS ACCOMPANIED BY A PRELIMINARY CHANGE OF OWNERSHIP REPORT. IN LIEU OF SAID REPORT, SIGNED BY THE TRANSFEREE, THE RECORDER WILL ACCEPT AN AFFIDAVIT THAT THE TRANSFEREE IS NOT A RESIDENT OF CALIFORNIA. TITLE BILLINGS WILL BE ADJUSTED TO REFLECT SUCH .ADDITIONAL FEES WHEN APPLICABLE. THE CHARGE FOR A POLICY OF~ TITLE INSURANCE, WHEN ISSUED THROUGH THIS TITLE ORDER WILL BE BASED ON THE BASIC (NOT SHORT TERM) TITLE INSURANCE RATE. Page 6 of I0 4103042 No- h American Title Com,-any IF ANY OF THE DEEDS OF TRUST SHOWN IN THIS PRELIMINARY REPORT SECURES A REVOLVING CREDIT LOA!q, THIS COMPANY WILL REQUIRE PRIOR TO CLOSING THAT: (A) THE BORROWER PROVIDE AUTHORIZATION TO THE LENDER TO FREEZE THE LOAN FROM FURTHER DISBURSEMENTS AND THAT WE BE PROVIDED WITH PROOF THAT THE ACCOUNT HAS BEEN FROZEN AND THE EFFECTIVE DATE OF THE FREEZE; AND, (B)THERE ARE NO OUTSTANDING CHECKS UNPAID; AND, (C)SHOULD THE COMPANY BE UNABLE TO ASCERTAIN THAT ONE OR MORE OF THE ABOVE HAVE NOT BEEN COMPLIED WITH, WE WILL W~THHOLD FROM THE PROCEEDS THE MAXIMUM AMOUNT OF THE LOAN OBLIGATION UNTIL SUCH TIME AS WE MAY VERIFY THAT THE PAYOFF WAS SUFFICIENT TO OBTAIN A FULL RECONVEYANCE. THIS REPORT IS SUBJECT TO A CANCELLATION CHARGE AND OR MINIMUM CHARGE AS REQUIRED BY SECTIONS 12404, ET. SEQ., OF THE INSURANCE CODE OF THE STATE OF CALIFORNIA AND RULE NO. 2 OF DEPARTMENT OF INSURANCE BULLETIN NO. NS. 35 E. THIS IS A NOTICE OF A WITHHOLDING REQUIREMENT (CALIFORNIA REVENUE AND TAXATION CODE SECTIONS 18662) ON SALESOF REAL PROPERTY. BEFORE THE TRANSACTION CONTEMPLATED BY THIS REPORT CAN BE CLOSED, THE SELLER/BORROWER MUST FURNISH A TAXPAYER IDENTIFICATION NUMBER TO US SO THAT WE CAN FILE AN IRS FORM 1099, OR ITS EQUIVALENT, WITH THE INTERNAL REVENUE SERVICE. THIS PROCEDURE IS REQUIRED BY SECTION 6045 OF THE INTERNAL REVENUE SERVICE. IN ACCQRDANCE WITH SECTION 18662 OF THE REVENUE AND TAXATIONCODE,A BUYER MAY BE REQUIRED TO WITHHOLD AN AMOUNT EQUAL TO 3-1/3PERCENTOF THE SALES PRICE, IN THE CASE OF A DISPOSITION OFCALIFORNIA REAL PROPERTY INTEREST BY EITHER: i.A SELLER WHO IS AN INDIVIDUALWITH A LAST KNOWN STREET ADDRESS OUTSIDE OF CALIFORNIA OR WHEN THEDISBURSEMENT INSTRUCTIONS AUTHORIZE THE PROCEEDS BE SENT TOA FINANCIAL INTERMEDIARY OF THE SELLER, OR 2. A CORPORATE SELLER WHICH HAS NO PERMANENT PLACE OF BUSINESS IN CALIFORNIA, OR FOR FAILURE TO WITHHOLD, THE BUYER MAY BECOME SUBJECT TO A PENALTY IN AN AMOUNT EQUAL TO THE GREATER OF i0 PERCENT OF THE AMOUNT REQUIRED TO BE WITHHELD OR~FIVE HUNDRED DOLLARS ($500). HOWEVER, NOTWITHSTANDING AI4Y OTHER PROVISION INCLUDED IN THE CALIFORNIA STATUTES REFERENCED ABOVE, NO BUYER WILL BE REQUIRED TO WITHHOLD ~ AMOUNT OR BE SUBJECT TO PENALTY FOR FAILURE TO WITHHOLD IF: i.THE SALES PRICE OF THE CALIFORNIA REAL PROPERTY CONVEYED DOES NOT EXCEED ONE HUNDRED THOUSAND DOLLARS ($i00,000),OR Page 7 of I0 4103042 North American Title ComF-’ny 2. THE SELLER EXECUTES A WRITTEN CERTIFICATE, UNDER PENALTY OF PERJURY, CERTIFYING THAT THE SELLER IS A RESIDENT OF CALIFORNIA, OR IF A CORPORATION, HAS A PERMA!qENT PLACE OF BUSINESS IN CALIFORNIA OR 3. THE SELLER, WHO IS AN INDIVIDUAL, EXECUTES A WRITTEN CERTIFICATE, UNDER PENALTY OF PERJURY, THAT THE CALIFORNIA REAL PROPERTY BEING CONVEYED IS THE SELLER’S PRINCIPAL RESIDENCE (AS DEFINED IN SECTION 1034 OF THE INTERNAL REVENUE CODE). THE SELLER IS SUBJECT TO PENALTY FOR KNOWINGLY FILING A FRAUDULENT CERTIFICATE FOR THE PURPOSE OF AVOIDING THE WITHHOLDING REQUIREMENT. THE CALIFORNIA STATUTES REFERENCE ABOVE INCLUDE PROVISIONS WHICH AUTHORIZE THE FRANCHISE TAX BOARD TO GRANT REDUCED WITHHOLDING AND WAIVERS FROM WITHHOLDING ON A CASE-BY-CASE BASIS. Page 8 of I0 4103042 N ’-th American Title Company IN THE EVENT THE BUYER REQUIRESWITHHOLDING OF THE 3-1/3 PERCENT OF S;zLES PRICE FROM THE SELLERSPROCEEDS, THE BUYER IS REQUIRED TO FILE COPY A OF FORM FTB597 WITHTHE FRANCHISE TAX BOARD ALONG WITH THE WITHHOLDING AMOUNT DUE NO LATER THAN THE 20TH DAY OF THE MONTH FOLLOWING THE MONTH IN WHICH THE WITHHOLDING OCCURRED, UNLESS THE SELLER HAS REQUESTED A WAIVER. IF THE SELLER HAS REQUESTED A WAIVER, THE FRANCHISE TAX BOARD, WITHIN 45 DAYS, WILL EITHER AUTHORIZE A REDUCED AMOUNT, OR NO AMOUNT, OR DENY THE REQUEST, AT WHICH TIME THE AMOUNT WITHHELD ALONG WITH COPY A OF FORM FTB 597 MUST BE SENT TO THE FRANCHISE TAX BOARD, AT THE FOLLOWING ADDRESS: FRANCHISE TAX BOARD WITHHOLDING AT SOURCE UNIT P.O. BOX 651 SACRAMENTO, CA 95812-0651 (916)369-4900 LENDERS SUPPLEMENTAL REPORT THE A.L.T.A. POLICY, WHEN ISSUED, WILL INCLUDE C.L.T.A. ENDORSEMENT NUMBER i00 AND ENDORSEMENT 116OR 116.2. SAID LAND IS KNOWN AS 3896 DUNCAN PLACE, PALO ALTO, CA, COUNTY OF SANTA CLARA, STATE OF CALIFORNIA. Page 9 of i0 4103042 NORTH AMERICAN TITLE COMPANY INFORMATIONAL NOTE : PROBLEM AREAS FOR TITLE COMPANIES ONGOING CONSTRUCTION:" THE TITLE COMPANY WILL REQUIRE, AS A MINIMI/M, THE FOLLOWING PRIOR TO INSURING: Ao Bo VALID NOTICE OF COMPLETION VERIFIED BY INSPECTION AND EXPIRATION OF 60 DAYS FROM RECORDATION OF SAID NOTICE OR; APPROVED INDEMNITIES FROM BORROWER/SELLER, APPROVED FINANCIAL STATEMENT NOT OVER ONE YEAR OLD A~rD A WAIVER OF LIEN RIGHT~ FROM GENERAL CONTRA.CTOR. THE TITLE COMPANY MAY ALSO REQUIRE PROOF OF PAYMENT OF SUBCONTRACTORS, INDEMNITY AND FINANCIAL STATEMENT FROM THE GENERAL CONTRACTOR, A COPY OF THE CONTRACT . ~ THE WITH HOLDING OF A SUM OF MONEY, TO COVER THE CONTRACT I!NTILTHE MECHANICS LIEN PERIOD IgAS EXPIRED, WITH WHICH TO PAY FILED MECHANICS LIENORS, OR OTHER ASSD-RANCES TO BE DETERMINED ON A CASE BY CASE BASIS. BANKRUPTCY: THE TITLE COMPANY WILL REQUIRE, AS A MINIMUM, THE FOLLOWING PRIOR TO INSURING: A. THE BANKRUPTCY CASE BE CLOSED OR;" B.AN ORDER FROM THE BANKRUPTCY COURT VERIFYING THE TRANS- ACTION, WITH A DEMAND PLACED INTO ESCROW BY THE TRUSTEE. ESCROW FiAY NOT CLOSE UNTIL 15 DAYS HAVE ELAPSED FROM THE ORDER AND THE FILE HAS BEEN CHECKED TO "VERIFY THAT THERE ARE NO OBJECTIONS TO SAID ORDER. 3.ABSTRACTS OF JUDGMENT, LIENS, TAX LIENS: THE TITLE COMPAIqY WILL REQUIRE, AS A MINIMUM, PRIOR TO INSIYRING: A.PROOF THAT THE BUYER/SELLERARE NOT THE SAME PARTIES AS ON THE RECORDED LIENS. I.THIS IS ACCOMPLISHED BY THE BUYER/SELLER/BORROWER COMPLETELY FILLING 0UTANDSIGNING A STATEMENT OF INFORMATION. B.THE ITEMS ARE TO BE ~AID OFF IN ESCROW. C..TH~ ITEMS ARE TO BE SUBORDINATED TO THE NEW TRANSACTION. 4.COMMUNITY PROPERTY: CALIFORNIA IS A COMMI/NI.TY PROPERTY STATE. Ao Bo A QUITCLAIM FROM oNE SPOUSE TO ANOTHER MUST SPECIFICALLY QUITCLAIM A!qY Cd~[UNITY PROPERTY INTEREST. AN INTERLOCUTORY DECREE OF DIVORCE,SPECIFICALLY GRA2qTING THE PROPERTY TO ONE SPOUSE IS SUFFICIENT IF’A FINAL DECREE IS ISSUED AND RECORDED IN THE COUNTY. North Americon Title Company, Inc,740 Technology Drive, Suite 150, Son Jose, CA 95110 (408) 453-0300 EXtIIBIT "A" LIST OF .EPRINTED POLICY EXCLUSIONS ANXCEPTIONS CALII:ORNIA LAND TITLE ASSOCIATION STANDARD COVERAGE POLICY -1990 EXCLUSIONS FROM COVERAGE The I’ollowing re.tiers ~re expressly excluded from the covcrag-" o1" thh policy and the Company will not pay loss or damage, cosls, atiomcys’ Ices or expends which by reason o1": 1. (a) Any law, ordinance or governmental r~gulation ([including but not lim]ttd to building and zonlng laws, ordlnanccs, or rcguh6ons) rcslHc6ng, ~guhlJng. prohibhlr or rdatlng Io (i) the occupancy, use, or enjoyment of the land; (il) th," character, dimensions or location of any improvement now or hcrcaflcr .rectcd on the land; (ill) separ,qion ~n owncrship or a ch.nge In th," dimcnslons or arc,, of the land or any p-.rcd of which the had Is or was a part; or ([iv) environmental pcotcction, or the of any vioht~on of these laws, ordinances or governmental rcguhtions, except to the extent thai ,, nol~cc of th," ,’nl’orccmcnt thereof or a notice o1" a detect, llcn or encumbrance" rcsul6ng from a v]ohlion or alleged v]ohlJon aff~cLing the land has Ix:on recorded in the public records at Date of Policy. Co)Any govcrnmcnlal police power not excluded by (a) above, except to the ,’xtcnt that a notice o1" the excrclsc thcrco[ or a nolicc o[ a dcl’cc[, lien or encumbr~n~ resuIling from a violation or alleged ,,’iolation affec6ng the land has bccn recorded in the public records at Dat~ of Policy. 2. R~ghts of eminent domain unless notice o1" the cxcrchc therco[ h’~s 5¢cn recorded in the public records at Date of Policy, but not excluding from coverage any ta3dng whJch has occurred prior to Dat,~ of Policy which would I:~ binding on the right~ of ,, purchaser I’or value without knowledg,-. 3. Defects, llcns, encumbrances, adverse claims or other mailers: (a) whether or not recorded in the public r~ords at Dat,’ of Policy, but crea~ed, sul’fered, assumed or agreed to by th," insured c]~mant; Co) not known to th," Company, not recorded in ,.h,~ public r~cords at Date of Policy, but known to the insured claimant and not disclos~l in wHIJng to the Company the insured claimant prior to the date the insurc.d claimant b¢came an lnsun:d under thls policy; (c) resulting in no loss or damage to the insured claimant; (d) attaching or created subsequent to Dale o1" Policy or;, (e) rcsultlng in loss or damage which would not have b~cn suslalncd if the.insured ctain~ant had pa~d value for the insured mortgage o~: for the estate or interest insure by this policy. 4. Unenforceability of the llcn of the insured mortgage b,’causc o1" th~ inability or l’ailurc of the insured at Dat~- o[ Policy, or the inability or failure of any st~bsequcnt owner of the indebtedness, to comply whh the applicable do~ng business laws of th," state in which the land is situated. 5. Invalidity or unent’orceability of the lien o[ the insured mortgage, or claim thereof, which arises out o[ the transacL~on evldcnccd by the insured morlgage and is based upon usury or any consumer credit protection or truth in lending law. 6.Any claim, which adEes out of the transaction vestlng in the insured the estate or interest insured by this policy or the transaction cmaL~ng the interest o[ the insur~:1 lender, by reason of the ol~raLion of federal bankruptcy, state insolvency or similar creditors’ ~ght~ laws. EXCEptIONS FROM COVERAGE (SCHEDULE B - PART I) Th~s policy dc~s not insure against loss or damage (and the Company will not pay costs, attorneys’ lees or expenses) which arise by reason of: I. Taxes or assessments which are not shown as ~xisl~ng H~ns by ~e ~ords of any laxing authority that l~vies I~ or ass~ssmen~ on real pro~y orby ~e public r~ord~. ~ings by a public ~gency which may ~sult in ~xes or assessment, or notices of such pr~ed~ngs, whe~er or not shown by th~ r~ords of such agency or by ~ public r~ords. ~ Any fac~, dgh~, int~ms~ or chims which ar~ not shown by the public r~cords but which could b~ ascc~ncd by an ins~cdon of $$ had o~ which may ~ assc~cd ~ ~ons in ~ss~sslon " 3. ~mcnts, liens o~ cncumb~nc~s, or chims ~of, whi~ am not shown by ~ pubffc ~cords. 4. Discrcpanci~s, conflic~ in ~und~ lln~s, sho~g~ in area, encroachment, or any other fac~ which a co~t su~y wou~d disclose, and which arc no~ shown by ~public ~o~s. 5.(a) Unpat~nl~ mining clai~; ~) ~se~at;ons or cxccptions in pa[~n~ or in Acts au~o~zing ~ issuanc~ ~r~of; (c) water ggh~, chlms or fi~I~ to wa~r, wh~cr or not ~ malt~ ~xccptcd under (a), ~) or (c) arc shown by ~he public records. AMERICAN LAND TITLE ASSOCIATION OWNER’S POLICY (i0-17-92) AND AMERICAN LAND TITLE ASSOCIATION LEASEHOLD OWNER’S POLICY (10-17-92) EXCLUSIONS I~ROM COVERAGE The following matters a.r= expressly excluded f~om the coverage of th~s policy and the Company will not pay loss or damage, costs, altomeys’ fees or ¢icpcnses which by ~on of: I.(~) Any law. o~inanc~ or g~vcmm~n~l regulation (~nclud;n~ bu~ not llm~cd Io building and zoning laws, ordinances, or ~gulal~ons) r~s~c~ng, regulating, prohlb~i or rcla~ing ~o (i) ~ ~upancy, use, o~ cn~oymcn~ o[ ~ land; (it) th~ chancier, dimcnslons or l~o~ion of any improvcmcn~ now or h~rcaf~r =~c~cd on ~ land; (ill) separation in own=nhlp or = change in th~ dimcnslons or area o[lh= had or any pa~=l o[ whlch the had is or was a pa~; or (iv) environment1 pro(~tlon, or o[~ny vlohtlon o[ ~cs~ laws, ordinances or go~;cmmcnlol rcguhtlons, =xccp~ Io the cx~cni thai a no~icc o[ the cnForccm~n~ ~crco[ o~ a nollcc o[~ d~[~(, llcn encumbrance rcsuhing [~m ~ vioh~ion or ~1Icz=d vlolatlon affcc6ng ~ land has 5ccn recorded in ~= public records at Dat~ of Pollcy. ~)Any governmental ~licc ~wcr not excluded by (~) a~vc, cxccpl ~o the =xl~n[ thai a nolic~ o[ thc cxcrclsc thereof or a no~icc o[ ~ ~[cc[, llcn or cncumb~nc= ~sul6ng from ~ vloh~ion or ~llcgcd violation affecting th= hnd has ~cn recorded in ~= public records ~t D~i= of 2. Righ~ o[ cmlncn( dora=in unless no~ic= o[ the cxc~isc thcrco[ h~s ~cn recorded in the publlc ~cords ~t Da(c of Policy, but not excluding from covc~g= ~ny ~hich has ~cu~cd prior to Da~= of Poilcy which would ~ blnding on ~ Hgh~s o[ a purchaser for value whhou( knowledge. 3. ~fccis, liens, encumbrances, ~dvcnc claims or other ma(17~: ~ (a) c~a~=d, suffered, assumed or agreed ~o 5~ ~= insured claimant: ~) nol ~own Io ~c Company, no( recorded in 1~ public records a~ Da~= or Polic~, but ~own Io the insu~d clalmant ~nd not disclosed in w~ing Io ~c Company ~= insur~ chlmant ~Eor Io ~hc dale the insu~d clalman~ ~camc an insured under this pollcy. (c) rcsuiling in no loss or damag ~o Ih= insured clalmani; (d) aHaching or c~atcd subscqucnl 1o Date of Pollcy; or (c) rcsul6ng in loss or damage ~hlch would not hay= ~cn suslolncd iflh~ insured chimanl had paid value for the cslalc or in,crest insur~ by this ~licy. 4. Any claim ~hlch ~scs ou~ o[thc iransoclion vcsllng in the inn,red th~ csl=~c or inlcrcsl insured by this ~licy. by reason o[~c o~r~lion o[ ~cdcr~l 5ank~picy, insoh’cnc~, or similar crcdilors’ Hgh~s laws, thai is based on: (a) the Iransaciion crcoHng ~ cslalc orinterest inn,red b~ this ~Hcy 5clng 4c~mcd a ffaudulcnl conveyance or ffaudulcnl ~ansfcr; or ~) the Ir~nsacilon crc~ling the cslo~c o~ inlcrcsl insured by the ~licy ~ing dccmcd ~ prcrcrcn~hl lr~ns[cr =xccpl where ih~ p~fcrcnlial ~ns[cr rcsul~ from the (i) Io llmcl7 record th~ ins~mcnt or ffansfcr; or (it) o[ {u~h rccordaiion ~o impa~ no6c~ ~o a purchaser ~or value or a judgmcnl or llcn crcdilor. Form 2210-6 (9-94)