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Contracts & Agreements_101-2005
PURCHASE AND SALE AGREEMENT AND JOINT ESCROW INSTRUCTIONS THIS PURCHASE AND SALE AGREEMENT AND JOINT ESCROW INSTRUCTIONS ("Agreement"), dated June 7, 2005 (the "Agreement Date"), is entered into between Standard Pacific Corp , a Delaware corporation ("Buyer"), and the City of Redlands, a municipal corporation ("jr")Sele RECITALS A Seller owns the real property located in San Bernardino County, California described on Exhibit "A" attached to this Agreement (the "Real Property"). B Buyer desires to purchase from Seller and Seller desires to sell to Buyer the Real Property, together with all appurtenances and other rights associated with the Real Property,u on the terms and conditions set forth in this Agreement p Agreement 1 Purchase and Sale of Property Subject to the terms and conditions set forth in this Agreement, Seller hereby agrees to sell to Buyer and Buyer hereby agrees to purchase from Seller the Real Property, together with all of Seller's nghts, title and interest in(a)allrights, and easements appurtenant to the Real Property, privileges p rty, (b) any and all improvements and fixtures located on the Real Property, and (c) any and all intangible personal property now or hereafter owned by Seller that is solely related to Real Property (collectively referred to as the "Property") 2 Purchase Price a Amount The purchase pace for the Property shall be One Hundred Thirty -Five Thousand and no/100 Dollars ($135,000) per acre for a total purchase pnce of Eight Hundred Ten Thousand and no/100 Dollars ($810,000) ("Purchase Price"). b Deposit. Concurrently with the Opening of Escrow (as defined below), Buyer shall deposit with the Escrow Holder (as defined below) Six Thousand and no/100 Dollars ($6,000) ("Deposit"). The Deposit shall be held in an interest bearing account until it is released to Seller On or before June 15, 2005, Buyer shall notify Escrow Holder in writing that Buyer in its sole and absolute discretion either (1) elects to proceed with the escrow, in which case the Deposit shall become non-refundable to Buyer and immediately released to Seller or (2) elects to cancel the escrow, in which case the Escrow Holder shall return to Buyer the Deposit plus any interest accrued thereon less any cancellation fees of the Escrow Holder If Buyer fails to deliver such written notice, Buyer shall be deemed to have elected to cancel escrow. In no event shall the Deposit be credited against the Purchase Price at the Close of Escrow (as defined below) c. Extension Payments If the Close of Escrow does not occur on or before December 15, 2005 ("Closing Date"), Buyer may extend the Closing Date one time to June 15, UG III- City- Purchase 2 (2).doc 1 2006, a second time to December 15, 2006 and a third time to June 15, 2007, in each case by delivering a written extension notice to Buyer and Escrow Holder at least five (5) days prior to the then current Closing Date accompanied by the following payment in each case to Escrow Holder (each, an "Extension Payment") (z) for the first (1st) extension, the sum of Twelve Thousand and no/100 Dollars ($12,000), (n) for the second (2nd) extension, the sum of Eighteen Thousand and no/100 Dollars ($18,000), and (iii) for the third (3rd) extension, the sum of Twenty Four Thousand and no/100 Dollars ($24,000) Escrow Holder shall immediately release each Extension Payment to Seller upon receipt Except as expressly provided herein, each Extension Payment shall be non-refundable to Buyer and shall not be credited against the Purchase Price at the Close of Escrow d Cash at Closing Prior to the Close of Escrow, Buyer shall deposit with the Escrow Holder, in immediately available funds, an amount equal to the Purchase Price, plus Buyer's share of closing costs and prorations provided herein. 3 Opening of Escrow. a Opening of Escrow Within three (3) business days after both Buyer and Seller execute this Agreement, the parties shall open an escrow ("Escrow") by depositing a fully executed copy of this Agreement with First American Title Insurance Company, 323 Court Street, San Bernardino, California 92401 (the "Escrow Holder"), for consummation of the purchase and sale of the Property Escrow shall be deemed opened (the "Opening of Escrow") on the date this Agreement is countersigned by the Escrow Holder. b Escrow Instructions This Agreement shall constitute joint escrow instructions to the Escrow Holder Subject to the provisions of this Agreement, Buyer and Seller agree to execute and deliver to the Escrow Holder such additional and supplemental instructions as the Escrow Holder may require in order to clanfy or fulfill the Escrow Holder's duties under this Agreement 4 Buyer's Investigation of the Property, Indemnity Upon the Opening of Escrow and continuing until the Close of Escrow, Buyer, together with its agents and invitees, shall have the right to enter the Real Property and all improvements and fixtures located on the Real Property for any purpose including without limitation (a) clearing and/or demolishing any structures, vegetation, and/or toxic materials in compliance with the requirements of all governmental entities having applicable jurisdiction, (b) placing a construction trailer on the Real Property, (c) clearing and/or grading any portion of the Property, and/or (d) performing any and all work related to Buyer's intended development of the Real Property, including without limitation the construction of walls and barriers on the Real Property All expenses of Buyer's due diligence shall be paid by Buyer and Buyer shall keep the Real Property free and clear of any mechanics' liens and/or materialmen's hens arising out of Buyer's activities on the Real Property Seller shall, at no cost to Seller, reasonably and in good faith cooperate in Buyer's Property investigation and development efforts Buyer shall indemnify, defend and hold Seller harmless from and against any and all loss, liability, damage, cost or expense incurred by Seller that is directly related to Buyer's and its invitees' access to the Real Property CTG HE City Purchase 2 (2) doc 2 5. Condition of Title. Seller shall convey title to the Property to Buyer in fee simple absolute, subject only to current general and special taxes and assessments and any other exceptions expressly approved by Buyer ("Permitted Exce tions") At the Close of Escrow, Seller shall pay for First American Title Insurance Company (the "_Title Company") to issue to Buyer a standard coverage ALTA Owner's Policy of Title Insurance reasonably acceptable to Buyer ("Title Policy") 6. Close of Escrow a Closing Date Unless this Agreement is terminated as permitted below, Escrow shall close and the Escrow Holder is instructed to close Escrow on the earlier to occur of (i) the thirtieth (301) day after Buyer receives final approval of the Tentative Tract Map (as defined below) and any period to appeal or judicially challenge such final approval shall have lapsed without an appeal or challenge, or if there is an appeal or challenge, such appeal or challenge shall have been finally resolved without any material modifications to the original approval(s) deemed unacceptable by Buyer, (n) the Closing Date, or (iii) upon such other date as Buyer and Seller shall, by written notice to the Escrow Holder, mutually agree By closing Escrow, the Escrow Holder shall be deemed to have irrevocably committed to cause the Title Company to issue the Title Policy The term "Close of Escrow" shall mean the time when the Escrow Holder records the Grant Deed (as defined below) b Deliveries to Escrow Holder (i) By Seller Before the Close of Escrow, Seller shall deposit with the Escrow Holder the following (collectively, the "Seller's Deliveries"). (1) The Title Company's standard form of grant deed (the "Grant Deed"), prepared by Escrow Holder, executed by Seller and acknowledged, (2) A nonforeign transferor declaration ("Nonforeign Transferor Declaration") prepared by Escrow Holder and executed by Seller, (3) Any affidavits or documents required by the Title Company to issue the Title Policy, (4) A California Franchise Tax Board Form 593-C ("Withholdin Exemption Certificate") prepared by Escrow Holder and executed by Seller, and (5) Such other documents and instruments as may be reasonably required to consummate the purchase and sale of the Property (n) By Buyer Before the Close of Escrow, Buyer shall deposit with the Escrow Holder the following (collectively, the "1133"). UG III- City Purchase 2 (2).doc 3 (1) Immediately available funds in the amount described in Section 2(d) above, (2) A Preliminary Change of Ownership Report completed and executed by Buyer, and (3) Such other documents and instruments as may be reasonably required to consummate the purchase and sale of the Property c Escrow Holder's Instructions When Buyer's and Seller's conditions precedent have been satisfied or waived, the Escrow Holder shall (i) Date, as of the Close of Escrow, all instruments calling for a date, (n) Record the Grant Deed m the Office of the County Recorder of San Bernardino County, California; (iii) Submit to the Office of the County Recorder of San Bernardino County, California, the Prelimmary Change of Ownership Report, concurrently with the submission of the Grant Deed for recordation; (iv) Notify Buyer and Seller telephonically that closing of Escrow has occurred and obtain Seller's instructions as to the manner in which the Purchase Price deposited by Buyer, less Seller's share of proration and costs, shall be disbursed and delivered to Seller, (v) Deliver to each of Buyer and Seller the final Escrow closing statement on the Close of Escrow or by the following business day, (vi) Deliver the Title Policy to Buyer, and (vii) Prepare and submit to the Internal Revenue Service the information return and statement concerning the closing of Escrow required by Section 6045(e) of the Lnternal Revenue Code of 1986, unless the same is not required under tree regulations promulgated thereunder d. Cancellation of Escrow If Escrow does not close on or before the Closing Date and neither party is in Default, then either party may cancel the Escrow by written notice to the other party and to the Escrow Holder In such event, Buyer shall bear the cancellation fees of the Escrow Holder and the Title Company e Post -Closing Matters When the recorded Grant Deed is returned to Escrow Holder by the County Recorder's Office, Escrow Holder shall deliver to Buyer (1) the original of each of the recorded Grant Deed, the Nonforeign Transferor Declaration and the Withholding UG III City- Purchase 2 (2).doc 4 Exemption Certificate, and (ii) and a copy of the Preliminary Change of Ownership Report, with copies of all such documents to Buyer's counsel 7 Conditions Precedent to Closing It shall be a condition precedent to Buyer's obligation to close Escrow that, on the Close of Escrow, Seller shall not be in default under this Agreement It shall be a condition precedent to SeIler's obligation to close Escrow that, on the Close of Escrow, Buyer shall not be in default under this Agreement It shall be a condition precedent to the Close of Escrow for the benefit of both Buyer and Seller, which condition may not be waived by either party, that the conveyance of the Real Property to Buyer will not violate the Subdivision Map Act 8 Covenants a Seller Covenants Unless this Agreement and Escrow are terminated, Seller shall not (i) sell, convey, grant, lease, assign, mortgage, hypothecate, encumber or otherwise transfer (on or off record) the Property or any interest m the Property without Buyer's prior written consent, or (n) take any action which could materially and adversely affect the Property or the future development thereof without Buyer's written consent, including without limitation any action which could affect the zoning, land use or entitlements applicable to the Property b Buyer Covenants (i) Buyer shall use commercially reasonable efforts to process and obtain approval of one or more tentative tract maps covenng the Real Property with reasonably acceptable conditions of approval and otherwise m form and substance sufficient to permit Buyer's contemplated residential development of the Real Property, as reasonably determined by Buyer (collectively, the "Tentative Tract Map") All of Buyer's work to obtain the Tentative Tract Map shall be done at Buyer's sole cost and expense Seller shall reasonably and in good faith cooperate in Buyer's efforts to obtain the Tentative Tract Map (n) On or about each calendar quarter, Buyer shall deliver to Seller a brief status report regarding Buyer's efforts to process the Tentative Tract Map (iii) Buyer intends to negotiate purchase and sale agreements that will close on or before the Closing Date for certain land immediately adjacent to the Property ("Adjacent Land Purchase Agreements") If the per acre purchase price in any Adjacent Land Purchase Agreement exceeds $135,000 per acre, then the per acre purchase pnce set forth in Section 2fa) of this Agreement shall automatically increase to the per acre purchase price agreed to m said Adjacent Land Purchase Agreement For example, if an Adjacent Land Purchase Agreement has a purchase price of $137,000 per acre, then the Purchase Price for this Agreement shall be $137,000 per acre The per acre purchase price of an Adjacent Land Purchase Agreement may be verified by referencing the documentary transfer tax (at $1 10 per $1,000 of purchase price) reflected on the pertinent grant deed recorded in the San Bernardino County Recorder's Office UG 111 City Purchase 2 (2).doc 5 9 Costs and Prorations a Prorations The Escrow Holder shall prorate all real and personal property taxes, assessments, municipal taxes, utilities, standby charges and other items of expense between Buyer and Seller as of the Close of Escrow. b Costs Paid by Seller Seller shall pay the following costs (i) the premium for the Title Policy (mcluding the cost of the mechanics' lien endorsement), (ii) documentary transfer taxes, (iii) fees for recording the Grant Deed, and (iv) one-half (1/2) of the Escrow fee c Costs Paid by Buyer Buyer shall pay the following costs. (i) one-half (1/2) of the Escrow fee, and (u) any additional premium for an extended coverage Title Policy that is not Seller's obligation. 10 Delivery of Possession Possession of the Property shall be delivered to Buyer on the Close of Escrow, free and clear of all nghts of third parties to possession or use of the Property except for the nghts held by third parties under the Permitted Exceptions, if any 11 Default and Remedies a Default The failure of either party to perform any act required under this Agreement or to refrain from performing any act prohibited by this Agreement, respectively, shall be a "Default" by such party b. Remedies (i) Default by Seller Upon the occurrence of any Default by Seller, Buyer may seek any or all of the following remedies. (1) bring an action for damages against Seller for breach of contract, (2) file and maintain a suit agamst Seller for specific performance of the Agreement, or (3) pursue any other legal remedy against Seller as may be allowed at law or in equity (n) Default by Buyer IF BUYER FAILS TO CLOSE ESCROW AND PURCHASE THE PROPERTY, SUCH FAILURE IS A DEFAULT BY BUYER HEREUNDER, AND BUYER DOES NOT CURE SUCH DEFAULT WITHIN TEN (10) BUSINESS DAYS AFTER RECEIVING WRITTEN NOTICE OF SUCH DEFAULT FROM SELLER, THEN SELLER SHALL, AS ITS SOLE AND EXCLUSIVE REMEDY FOR SUCH DEFAULT, BY WRITTEN NOTICE TO BUYER AND THE ESCROW HOLDER, TERMINA IE THIS AGREEMENT AND SELLER SHALL RETAIN THE DEPOSIT AND ANY EXTENSION PAYMENTS THEN MADE AS SELLER'S LIQUIDATED DAMAGES FOR BUYER'S DEFAULT, IT BEING EXPRESSLY UNDERSTOOD AND AGREED BETWEEN BUYER AND SELLER THAT SELLER'S ACTUAL DAMAGES RESULTING FROM BUYER'S DEFAULT WOULD BE UG111 City Purchase 2 (2).doc 6 SUBSTANTIAL BUT EXTREMELY DIFFICULT TO ASCERTAIN AND THAT SUCH LIQUIDATED AMOUNT IS A REASONABLE SUM CONSIDERING ALL OF THE CIRCUMSTANCES EXISTING AS OF THE AGREEMENT DATE Initials of Seller c447 Initials of Buyer 12 Miscellaneous a Further Documents and Acts From time to time pnor to the Close of Escrow, each party shall take, or cause to be taken, all reasonable actions and shall execute and deliver such documents as may be reasonably requested by the other party to carry out the purpose and intent of this Agreement. b Notices All notices or other communications provided for or permitted under this Agreement shall be made m wntmg by hand -delivery or pre -paid first-class mail If to Seller If to Buyer Mr Douglas Headrick, P E Chief of Water Resources City of Redlands, Municipal Utilities Department P.O Box 3005 Redlands, CA 92373 Standard Pacific Corp 255 East Rincon Street, Suite 200 Corona, CA 92879-1330 Attention Mr Marty Langpap All such notices and communications shall be deemed to have been duly given when delivered by hand, if personally delivered and two (2) business days after being deposited in the mail, postage pre -paid, if mailed pre -paid first-class mail Any party may from time to time, by wntten notice to the other, designate a different address which shall be substituted for that specified above c General, Final Agreement, Amendments, Waiver Each of the parties to this Agreement has the full capacity, nght, power and authority to execute and deliver this Agreement and to consummate the transactions contemplated hereby This Agreement shall inure to the benefit of and be binding upon the successors and assigns of each of the parties This Agreement can only be amended by an amendment in writing signed by all the parties, and any term herein can be waived only by a wntten waiver signed by the party against whom such waiver is to be asserted Any and all prior letters of intent, understandings and/or agreements between Buyer and Seller are hereby terminated and this Agreement supersedes and any and all other pnor restnctions, promises, representations, warranties, agreements, understandings and undertakings between the parties, and there are no restnctions, promises, representations, warranties, agreements, understandings or undertakings other than those set forth or referred to herein This UG III City- Purchase 2 7 Agreement is intended to be the final expression of the parties' agreement and supersedes any and all prior restrictions, promises, representations, warranties, agreements, understandings and undertakings between the parties with respect to the within subject matter There are no restrictions, promises, representations, warranties, agreements, understandings or undertakings with respect to such subject matter other than those set forth or referred to herein d Interpretation and Governing Law, Severability This Agreement shall be governed by and construed in accordance with the internal laws of the State of California applicable to agreements made and to be performed within the California. The provisions of this Agreement shall not be construed in favor of or against either party, but shall be construed as if both parties prepared this Agreement. The provisions of this Agreement shall be interpreted in a reasonable manner to affect the purpose of the parties and this Agreement In the event that any one or more of the provisions contained herein, or the application thereof m any circumstances, is held invalid, illegal or unenforceable in any respect for any reason, the validity, legality and enforceability of any such provision m every other respect and of the remaining provisions hereof shall not be in any way impaired or affected, it being intended that all other nghts and privileges shall be enforceable to the fullest extent permitted by law e Attorneys' Fees In any action or proceeding brought to enforce or interpret any provision of this Agreement, or where any provision of this Agreement is validly asserted as a defense, the prevailing party shall be entitled to recover actual attorneys' fees and all other litigation costs f No Third Party Beneficiaries. Nothing expressed or mentioned m this Agreement is intended or shall be construed to give any person, other than the parties hereto and their respective successors and assigns, any legal or equitable right, remedy or chain under or in respect of this Agreement or any provisions herein contained, this Agreement and any conditions and provisions hereof being intended to be and being for the sole and exclusive benefit of the parties hereto and their respective successors and assigns, and for the benefit of no other person g Performance of Acts on Business Days Unless specifically stated to the contrary, alI references to days herein shall be deemed to refer to calendar days In the event that the final date for payment of any amount, performance of any act, or the end of any other period hereunder falls on a Saturday, Sunday or holiday, such payment may be made, such act may be performed, or such period shall end, as the case may be, on the next succeeding business day. h Joint and Several, Counterparts, Captions and Headings The obligations of the Seller shall be joint and several obligations of each person executing this Agreement on behalf of Seller This Agreement may be executed in any number of counterparts and by the parties hereto in separate counterparts, each of which when so executed shall be deemed to be an ongmal and alI of which taken together shall constitute one and the same agreement. The captions and headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the Agreement's meaning UG IIi- City- Purchase 2 (2).doc 8 FIN 46 Compliance In order to assist Buyer in complying with FASB Interpretation No. 46 (Consolidation of Variable Interest Entities, "FIN 46"), Seller agrees to provide Buyer with all information reasonably requested from time to time by Buyer to assist it m the preparation of its quarterly and annual financial statements and compliance with FIN 46 This information will generally mclude information relating to the legal structure of the owner of the property being optioned or purchased, the nature and amount of assets (including the property) owned by such owner and the nature and amount of indebtedness securing the assets of such owner An initial questionnaire to be completed by Seller is attached hereto as Exhibit "B " UG 1Ii City Purchase 2 (2).doc [Signatures on next page] 9 IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by their duly authorized representatives as of the Agreement Date. "Seller" City of Redlands, By Nam../...-/ Susan P er Title Mayor Attest By J L. rie Poyzr,(/ Cjity Clerk UG m- City Purchase 2 10 "Buyer" Standard Pacific Corp , a Delaware corporation By _CASLI August Belmont Authorized Representative By Allm Michael J White Authorized Represe . ve ACCEPTANCE BY ESCROW HOLDER First American Title Insurance Company hereby acknowledges that it has received a fully executed copy of the Purchase and Sale Agreement and Joint Escrow Instructions and agrees to act as the Escrow Holder thereunder and to be bound by and perform the terms thereof as such terms apply to the Escrow Holder. DATE , 2005 First American Title Insurance Company UG 111- City Purchase 2 (2).doc By Name. Title 11 Exhibit "A" Legal Description of Real Property All that certain real property situated in the City of Redlands, County of San Bernardino, State of California, more particularly described as follows Parcel No 1 The South 66 feet of the West 66 feet of the West 1/2 of the West V2 of the Northeast '/a of the Northwest 'A of Section 24, Township 1 South, Range 3 West, San Bernardino Base and Meridian, in the City of Redlands, County of San Bernardino, State of California, according to the Official Government Survey thereof Parcel No 2. All that portion of the West 1/2 of the West 1/2 Northeast %a of the Northwest 'A of Section 24, Township 1 South, Range 3 West, San Bernardino Base and Meridian, in the City of Redlands, County of San Bernardino, State of California, according to the Official Government Survey thereof, described as follows. Beginning at a point 232 38 feet west of the Northeast corner of the said West 1/2 of the West 1/2 of the Northeast %a of the Northwest 'A of said Section, being the Northwest corner of that certain property deeded to Wm M Moore and Susie Moore, by Deed recorded on December 1, 1928 in Book 440 of Official Records, page 366 of records of San Bernardino County, thence South 374.92 feet; thence West 30 feet, more or less, to a point 66 feet East of the West line of the said West %2 of the West %2 of the Northeast 'A of the Northwest 'A of said Section, thence North 374 92 feet to the North line of said Section, thence East to the point of beginnmg Parcel No 3 The west 1/2 of the west 1/2 of the northeast % of the northwest %4 of Section 24, Township 1 South, Range 3 West, San Bernardmo Base and Meridian, in the City of Redlands, County of San Bernardmo, State of California, according to the official government survey thereof Excepting therefrom the north 374.92 feet of the east 262 38 feet thereof Also Excepting therefrom the west 66 feet thereof Exhibit "B" FIN 46 Questionnaire FASB Interpretation No 46 Questionnaire for Land Option Contracts and Non -Refundable Land Purchase Contracts In connection with complymg with FASB Interpretation No 46, "Consolidation of Variable Interest Entities" ("FIN 46"), the following questionnaire must be completed by the seller m order for Standard Pacific Corp or its subsidiaries ("Standard Pacific") to determine whether or not the seller's entity which the subject property is being purchased/optioned from is a variable interest entity and/or whether Standard Pacific is required to consolidate the entity, or a portion of the assets and liabilities within the entity, in accordance with FIN 46 1 Land seller's legal entity name 2 Land seller's legal structure (e.g., corporation, LLC, limited partnership, general partnerslup, or individual) 3 Are there multiple assets within the seller's legal entity9 (Yes or No) If yes, what percentage of the total assets of the entity did Standard Pacific's asset represent at the date the purchase/option agreement was entered into? (This calculation should be calculated on a fair value basis If fair values are not readily available, then calculate based on historical values) * Please indicate whether the calculation above was derived based on fair values or histoncal values Also, if other assets are/were included in the seller's legal entity at the initial transaction date, please descnbe (r e , other real estate assets, cash, receivables, PP&E, other, etc.)* 4 Does the seller have any project specific debt or other liabilities related solely to the asset that Standard Pacific has contracted to purchase9 (Yes or No) If yes, how much project specific debt and/or liabilities was associated with the specific asset that Standard Pacific was or has purchased at the time the purchase/option agreement was entered into? * The undersigned has read this disclosure questionnaire and the related responses included herewith and acknowledges that the information provided herein is accurate and complete to the best of his or her knowledge By [Name] Its [Title] * If applicable, please attach appropriate support/documentation C 11135 YAP IS LOC ENL P URA OSE Dr AD YAMEN 1AKATI-014 ONLY 1 EIAY k989 N.1/2, N W 1/4, Sec 24, T1 S, R3 W, SBM E—S kfl Mil -D He - 0 9.03 AC Redlands Ciiy Tax Rafe Area 5000 Ds 1.75 AC 07 }5 212.34 La AC 7.35 AC 5.35 AC. Ptn N W 1/4 Sec 24 T1 S R3 W — 411 -B1 -11F II 1.35 AC Skr 5 b 2000E Assessor's Map Book 0168 Page 12 San Bernardino County 0168 — 1 2 IEOISE9 I5J24/a9 BL8 93/29/93 PSP 94r10/11 PE 00/0312/00 PE First American Title Company 1250 Corona Pointe Court, Suite 200, Corona, CA 92879 (951) 256-5811 Fax - (951) 256-5900 City of Redlands Attn Mr Douglas Headrick Municipal Utilities Department P 0 Box 3005 Redlands, CA 92373 Re , Redlands, CA Dear Valued Customer. June 30, 2005 File No RCO-1971353 (SC) Congratulations on the sale of your property referenced above. First American Title Company will be handling your transaction Your escrow officer is Shanna Crutchfield and can be reached at (951) 256-5811 The fax number is (951) 256-5900 Please do not hesitate to call at any time during your transaction PLEASE SIGN AND RETURN, retain the copy for your records • Escrow Instructions COMPLETE IN FULL, SIGN AND RETURN the enclosed items • Seller Information Request • California Withholding Information Package • Firpta SIGN AND ACKNOWLEDGE BEFORE A NOTARY PUBLIC the enclosed items All documents should be signed Exacttyas your name(s) appear, if your names appear incorrectly, please make the necessary correction then sign • Owners Affidavit ENCLOSED are the following for your records. • Privacy Policy Notice • General Provisions for First American Title Company • Copy of Purchase Contract Should you have any questions or need further assistance, please contact the undersigned. We appreciate the opportunity to serve you Sin rely, ansa Crutchfi Escrow Officer scrutchfield©firstam.com SC/km/US Mail Page 1 of 1 u - 5 2005 MUNICIPAL UTILITIES OFPARTMENT • The First American Corporation Privacy Policy We Are Comnutted to Safeguarding Customer Information In order to better serve your needs now and in the future, we may ask you to provide us with certain information We understand that you may be concerned about what we will do with such information — particularly any personal or financial information We agree that you have a right to know how we will utilize the personal information you provide to us Therefore, together with our parent company, The First American Corporation we have adopted this Privacy Policy to govern the use and handling of your personal information Applicability This Privacy Policy governs our use of the information which you provide to us It does not govern the manner in which we may use information we have obtained from any other source, such as information obtained from a public record or from another person or entity First American has also adopted broader guidelines that govern our use of personal information regardless of its source First American calls these guidelines its Fair Information Values, a copy of which can be found on our website at www firstam com Types of Information Depending upon which of our services you are utilizing, the types of nonpublic personal information that we may collect include • Information we receive from you on applications, forms and in other communications to us, whether in writing, in person, by telephone or any other means, • Information about your transactions with us, our affiliated companies, or others, and • Information we receive from a consumer reporting agency Use of Information We request information from you for our own legitimate business purposes and not for the benefit of any nonaffiliated party Therefore we will not release your information to nonaffiliated parties except (1) as necessary for us to provide the product or service you have requested of us, or (2) as permitted by law We may, however, store such information indefinitely, including the period after which any customer relationship has ceased Such information may be used for any internal purpose, such as quality control efforts or customer analysis We may also provide all of the types of nonpublic personal information listed above to one or more of our affiliated companies Such affiliated companies include financial service providers, such as title insurers, property and casualty insurers, and trust and investment advisory companies, or companies involved in real estate services, such as appraisal companies, home warranty companies, and escrow companies Furthermore, we may also provide all the information we collect, as described above, to companies that perform marketing services on our behalf, on behalf of our affiliated companies or to other financial institutions with whom we or our affiliated companies have joint marketing agreements Former Customers Even if you are no longer our customer, our Privacy Policy will continue to apply to you Confidentiality and Security We will use our best efforts to ensure that no unauthorized parties have access to any of your information We restrict access to nonpublic personal information about you to those individuals and entities who need to know that information to provide products or services to you We will use our best efforts to train and oversee our employees and agents to ensure that your information will be handled responsibly and in accordance with this Privacy Policy and First American's Fair Information Values We currently maintain physical, electronic, and procedural safeguards that comply with federal regulations to guard your nonpublic personal information © 2001 The First American Corporation AH Rights Reserved 11 S ralifnrnia Pnvary Pnliry itnv (7/17I7nn41 F:1- rd.. nrn 1n7s)t First American Title Compare 1250 Corona Pointe Court, Suite 200, Coron (951) 256-5811 Fax - (951) 256-5900 ESCROW INSTRUCTIONS T0• First American Title Company ("First American") Attn Shanna Crutchfield (Escrow Officer) Property. APN: 0168-121-13 Redlands, CA Date June 27, 2005 File No.. RCO-1971353 (SC) This escrow has been opened pursuant to that certain real estate purchase agreement entitled "Purchase and Sale Agreement and Joint Escrow Instructions" dated as of June 7, 2005 ("Purchase Agreement") by and between City of Redlands ("Seller") and Standard Pacific Corp ("Buyer") with regard to that certain real property commonly described as Vacant Land, in the City of Redlands, County of San Bernardino State of California ("State") as further legally described on Exhibit 'A' attached hereto and incorporated herein by reference (the "Real Property"). The terms and conditions of the Purchase Agreement are incorporated herein by reference. First American has been requested to act as escrow agent for the Buyer and Seller (jointly referred to as the "Parties" and individually as a "Party") under the Purchase Agreement First American is willing to act as escrow agent ("Escrow Agent") for the parties pursuant to the Purchase Agreement subject to the following terms and conditions J. Obligations of Escrow Agent Escrow Agent shall be responsible only for the applicable portions of Purchase Agreement dealing with financing, escrow, allocation of costs, title and vesting, prorations, property taxes, title insurance, delivery of documents and Seller's assignment of proceeds to pay the broker commission, if any 2 Satisfaction of Executory Terms Pursuant to the Purchase Agreement, the consummation of the escrow is subject to satisfaction of certain executory terms and provisions which are not the responsibility of Escrow Agent The Parties shall be solely responsible for determining such satisfaction and shall notify Escrow Agent in writing in a form reasonably satisfactory to Escrow Agent when such executory terms have been fully satisfied or are otherwise waived Escrow Agent's receipt of such written acknowledgment shall constitute a direction to Escrow Agent to close the Escrow 3 General Provisions Escrow Agent's duties and responsibilities in this escrow are subject to the General Provisions. To the extent that the Purchase Agreement is inconsistent with the General Provisions, the terms of the General Provisions shall control as to Escrow Agent's rights, duties and responsibilities 4 Clarification of Purchase Agreement Terms: (a) Sales Price: The sales puce of the Real Property is $510,000 00 (b) Opening Date: The opening date is deemed to be June 16, 2005 Page 1 of 5 First American Title Company File No RCO-1971353 (SC ) (c) Close of Escrow Escrow shall close on the earlier to occur of 1) the thirtieth (30th) day after Buyer receives final approval of the Tentative Tract Map and any period to appeal or judicially challenge such final approval shall have lapsed without an appeal or challenge, or if there is an appeal or challenge, such appeal or challenge shall have been finally resolved without any material modifications to the original approval(s) deemed unacceptable to Buyer, 2) the Closing Date of December 15, 2005 or 3) upon such a date as Buyer and Seller, shall by written notice to Escrow Holder, mutually agree (d) Extensions to Close of Escrow: If the close of escrow does not occur on or before the scheduled "Closing Date", Buyer may deposit a written request for each extension to Seller and Escrow Holder to extend the close of escrow, at least five (5) days prior to the then current closing date, accompanied by the Extension Payment. The dates for said extensions shall be as follows. First Extension: The close of escrow shall be extended to occur on or before June 15, 2006 Buyer shall deposit the sum of twelve thousand dollars ($12,000) with Escrow Holder Upon clearance of good funds, Escrow Holder is authorized and instructed to release said funds to Seller, with no further instructions from Buyer The First Extension Deposit shall be non-refundable and NOT applicable towards the Purchase Price Second Extension The close of escrow shall be extended to occur on or before December 15, 2006. Buyer shall deposit the sum of eighteen thousand dollars ($18,000) with Escrow Holder Upon clearance of good funds, Escrow Holder is authorized and instructed to release said funds to Seller, with no further instructions from Buyer. The Second Extension Deposit shall be non- refundable and NOT applicable towards the Purchase Price Third Extension The close of escrow shall be extended to occur on or before June 15, 2007 Buyer shall deposit the sum of twenty-four thousand dollars ($24,000) with Escrow Holder Upon clearance of good funds, Escrow Holder is authorized and instructed to release said funds to Seller, with no further instructions from Buyer. The Third Extension Deposit shall be non-refundable and NOT applicable towards the Purchase Price Closing Funds: Funds to close escrow must be received in a form sufficient to satisfy applicable good funds laws of the State All funds in excess of $100,000 must be wire transferred to Escrow Agent Requirements for Interest Bearing Accounts In the event that Escrow Agent is requested to deposit funds in an interest-bearing account, Escrow Agent shall not be obligated to open such account until Escrow Agent has received an executed Form W-9 with appropriate taxpayer information from the Party to whose benefit the interest will accrue The Parties acknowledge receipt of a form entitled "Notice of Opportunity to Earn Interest" delivered concurrently with this Escrow Instruction. The Parties acknowledge that Escrow Agent shall be entitled to a fee of $50 00 for opening any interest bearing account Funds Held Fee: If the event that funds remain in escrow for any reason more than 90 days after the close of escrow, or if escrow has not dosed 90 days after the estimated closing date set forth in the existing escrow instructions to Escrow Holder ("Dormancy Period"), Escrow Holder will make reasonable efforts to notify the parties regarding same If funds remain in escrow beyond the Dormancy Period, a monthly "funds held fee" of $25 00 shall accrue for each month or fraction of a month thereafter that the funds, or any portion thereof, remain in escrow Escrow Holder is instructed to deduct the monthly funds held fee directly from the funds held in escrow on a monthly or other periodic basis (i e quarterly, semi-annually, etc ). The parties agree to pay these sums to compensate Escrow Holder for administering, monitoring, accounting, reminders and other notifications and processing of the funds so held in accordance with this provision Document/Funds Delivery: After close of escrow, all documents, funds and statements are to be sent to the undersigned at the addresses provided to Escrow Agent Page 2 of 5 First American Title Company File No RCO 1971353 (SC ) Escrow Fees Escrow Agent shall allocate fees and costs between the Parties in accordance with the Purchase Agreement The Parties understand that in the event of cancellation of this Escrow, Escrow Agent shall be entitled to a cancellation fee and reimbursement of any direct costs incurred at the request of a Party. Documentary Transfer Tax: Escrow Holder is instructed to cause the documentary transfer tax on Grant Deed to be paid and filed as a separate declaration and not to be made a part of the public record Property Disclosure Report: As required by the "Natural Hazard Disclosure Law, California AB1195", Seller has agreed to provide the Buyer with a Property Disclosure Report regarding Natural Hazard Zones Escrow Holder is instructed to pay the fee for the report from proceeds due the Seller at the close of this escrow from the billing statement to be handed to Escrow Holder from the service provider of the report issued In the event Escrow Holder is handed the original report upon the issuance of same, then Escrow Holder is instructed to deliver the report to the Seller or Seller's Agent and Escrow Holder has no further responsibility in connection with the report Escrow Holder is specifically instructed not to concern itself with the contents of the report and has no responsibility for information contained therein The following prorations and/or adjustments are to be made as of close of escrow [X] [] [] Real Property Taxes based on latest available tax bills Prorate Homeowner's Association Dues and charge Seller to bring current based on the statement received from the Homeowner's Association or its representative Rent and/or Deposits based on a rent statement to be handed to Escrow Holder by Seller and approved by Buyer Debit Seller and Credit Buyer with any security or key deposits as disclosed on statement SELLER. City of Redlands 4'6y S san Peppier, Mayor -ct..a.--L—Pe-.p+L._..__) BUYER: Page 3 of 5 Attest By Lorne Pirip ) ity Clerk First American Title Company File No RCO-1971353 (SC ) Standard Pacific Corp , a Delaware Corporation By August Belmont, Authorized Representative By Michael J White, Authorized Representative Page 4 of 5 First American Title Company File No RCO-1971353 (5C ) EXHIBIT 'A' To be determined upon receipt of the Preliminary Title Report. Page 5 of 5 Escrow General Provisions The parties understand and acknowledge• 1. SPECIAL DISCLOSURES: A. DEPOSIT OF FUNDS & DISBURSEMENTS Unless directed in writing to establish a separate, interest bearing account together with all necessary taxpayer reporting information, all funds shall be deposited in general escrow accounts in a federally insured financial institution including those affiliated with Escrow Holder ("depositories") All disbursements shall be made by Escrow Holder's check or by wire transfer unless otherwise instructed in writing The Good Funds Law (California Insurance Code 12413 1) mandates that Escrow Holder may not disburse funds until the funds are, in fact, available in Escrow Holder's account. Wire transfers are immediately disbursable upon confirmation of receipt Funds deposited by a cashier's or certified check are generally available on the next banking day following deposit Funds deposited by a personal check and other types of instruments may not be available until confirmation from Escrow Holder's bank which can vary from 2 to 10 days B. DISCLOSURE OF POSSIBLE BENEFITS TO ESCROW HOLDER As a result of Escrow Holder maintaining its general escrow accounts with the depositories, Escrow Holder may receive certain financial benefits such as an array of bank services, accommodations, loans or other business transactions from the depositories ("collateral benefits") All collateral benefits shall accrue to the sole benefit of Escrow Holder and Escrow Holder shall have no obligation to account to the parties to this escrow for the value of any such collateral benefits C MISCELLANEOUS FEES Escrow Holder may incur certain additional costs on behalf of the parties for services performed by third party providers The fees charged by Escrow Holder for services such as wire transfers or overnight delivery/courier services may include a mark up over the direct cost of such services to reflect the averaging of direct, administrative and overhead charges of Escrow Holder for such services which shall, in no event, exceed $10 for each item D METHOD To DELIVER PAYOFF To LENDERS/LIENHOLDERS To minimize the amount of interest due on any existing loan or lien, Escrow Holder will deliver the payoff funds to the lender/lienhofder in an expeditious manner as demanded by the lender/Itenholder using (a) personal delivery, (b) wire transfer, or (c) overnight delivery service, unless otherwise directed in writing by the affected party 2. PRORATIONS & ADJUSTMENTS The term "close of escrow" means the date on which documents are recorded All prorations and/or adjustments shall be made to the close of escrow based on the number of actual days, unless otherwise instructed in writing 3. CONTINGENCY PERIODS Escrow Holder shall not be responsible for monitoring contingency time periods between the parties The parties shall execute such documents as may be requested by Escrow Holder to confirm the status of any such periods. 4 REPORTS As an accommodation, Escrow Holder may agree to transmit orders for inspection, termite, disclosure and other reports if requested, in writing or orally, by the parties or their agents Escrow Holder shall deliver copies of any such reports as directed Escrow Holder is not responsible for reviewing such reports or advising the parties of the content of same 5 INFORMATION FROM AFFILIATED COMPANIES Escrow Holder may provide the parties' information to and from its affiliates in connection with the offering of products and services from these affiliates 6 RECORDATION OF DOCUMENTS Escrow Holder is authorized to record documents delivered through escrow which are necessary or proper for the issuance of the requested title insurance policy(ies) Buyer will provide a completed Preliminary Change of Ownership Report form ("PCOR") If Buyer fails to provide the PCOR, Escrow Holder shall close escrow and charge Buyer any additional fee incurred for recording the documents without the PCOR Escrow Holder is released from any liability in connection with same 7. PERSONAL PROPERTY TAXES No examination, UCC search, insurance as to personal property and/or the payment of personal property taxes is required unless otherwise instructed in writing S. REAL PROPERTY TAXES Real property taxes are prorated based on the most current available tax statement from the tax collector's office Supplemental taxes may be assessed as a result of a change in ownership or completion of construction Adjustments due either party based on the actual new tax bill issued after dose of escrow or a supplemental tax bill will be made by the parties outside of escrow and Escrow Holder is released of any liability in connection with such adjustments. The first installment of California real property taxes is due November 1St (delinquent December 10th) and the second installment is due February 1 (delinquent April 10th) If a tax bill is not received from the County at least 30 days prior to the due date, buyer should contact the County Tax Collector's office and request one Escrow Holder is not responsible for same 9 CANCELLATION OF ESCROW Any party desiring to cancel this escrow shall deliver written notice of cancellation to Escrow Holder Within a reasonable time after receipt of such notice, Escrow Holder shall send by regular mail to the address on the escrow instructions, one copy of said notice to the other party(ies) Unless written objection to cancellation is delivered to Escrow Holder by a party within 10 days after date of mailing, Escrow Holder is authorized, at its option, to comply with the notice and terminate the escrow If a written objection is received by Escrow Holder, Escrow Holder is authorized, at its option, to hold all funds and documents in escrow (subject to the funds held fee) and to take no other action until otherwise directed by either the parties' mutual written instructions or a final order of a court of competent jurisdiction. If no action is taken on this escrow within 6 months after the closing date specified in the escrow instructions, Escrow Holder's obligations shall, at its option, terminate Upon termination of this escrow, the parties shall pay all fees, charges and reimbursements due to Escrow Holder and all documents and remaining funds held in escrow shall be returned to the parties depositing same 10. CONFLICTING INSTRUCTIONS & DISPUTES If Escrow Holder becomes aware of any conflicting demands or claims concerning this escrow, Escrow Holder shall have the right to discontinue all further acts on Escrow Holder's part until the conflict is resolved to Escrow Holder's satisfaction Escrow Holder has the right at its option to file an action in interpleader requiring the parties to litigate their claims/rights If such an action is filed, the parties jointly and severally agree (a) to pay Escrow Holder's cancellation charges, costs (including the funds held fees) and reasonable attorneys' fees, and (b) that Escrow Holder is fully released and discharged from all further obligations under the escrow If an action is brought involving this escrow and/or Escrow Holder, the party(ies) involved in the action agree to indemnify and hold the Escrow Holder harmless against liabilities, damages and costs incurred by Escrow Holder (including reasonable attorneys' fees and costs) except to the extent that such liabilities, damages and costs were caused by the nel, or willful misconduct of Escrow Holder Nr,-. THIS COMPANY CONDUCTS ESCROW BUSINESS UNDER CERTIFICATE OF AUTHORITY ISSUED BY THE STATE OF CALIFORNIA DEPARTMENT OF INSURANCE. 02005 First American Title Insurance Company Page 1 of 2 Pages (1/1/2005) Escrow General Provisions 11. USURY Escrow Holder is not to be concerned with usury as to any loans or encumbrances in this escrow and is hereby released of any responsibility and/or liability therefore 12 AMENDMENTS TO ESCROW INSTRUCTIONS Any amendment to the escrow instructions must be in writing, executed by all parties and accepted by Escrow Holder Escrow Holder may, at its sole option, elect to accept and act upon oral instructions from the parties If requested by Escrow Holder the parties agree to confirm said instructions in writing as soon as practicable The escrow instructions as amended shall constitute the entire escrow agreement between the Escrow Holder and the parties hereto with respect to the subject matter of the escrow 13. INSURANCE POLICIES In all matters relating to insurance, Escrow Holder may assume that each policy is in force and that the necessary premium has been paid Escrow Holder is not responsible for obtaining fire, hazard or liability insurance, unless Escrow Holder has received specific written instructions to obtain such insurance prior to close of escrow from the parties or their respective lenders 14 COPIES OF DOCUMENTS; AUTHORIZATION TO RELEASE Escrow Holder is authorized to rely upon copies of documents, which include facsimile, electronic, NCR, or photocopies as if they were an originally executed document If requested by Escrow Holder, the originals of such documents shall be delivered to Escrow Holder Escrow Holder may withhold documents and/or funds due to the party until such originals are delivered. Documents to be recorded MU.STcontain original signatures Escrow Holder may furnish copies of any and all documents to the lender(s), real estate broker(s), attorney(s) and/or accountant(s) involved in this transaction upon their request Delivery of documents by escrow to a real estate broker or agent who is so designated in the purchase agreement shall be deemed delivery to the principal 15 EXECUTION IN COUNTERPART The escrow instructions and any amendments may be executed rn one or more counterparts, each of which shall be deemed an original, and all of which taken together shall constitute the same instruction 16 TAX REPORTING, WITHHOLDING & DISCLOSURE The parties are advised to seek independent advice concerning the tax consequences of this transaction, including but not limited to, their withholding, reporting and disclosure obligations Escrow Holder does not provide tax or legal advice and the parties agree to hold Escrow Holder harmless from any loss or damage that the parties may incur as a result of their failure to comply with federal and/or state tax laws WITHHOLDING OBLIGATIONS ARE THE EXCLUSIVE OBLIGATIONS OF THE PARTIES ESCROW HOLDER IS NOT RESPONSIBLE TO PERFORM THESE OBLIGATIONS UNLESS ESCROW HOLDER AGREES IN WRITING. A TAXPAYER IDENTIFICATION NUMBER REPORTING Federal law requires Escrow Holder to report seller's social security number or tax identification number (both numbers are hereafter referred to as the "TIN"), forwarding address, and the gross sales price to the Internal Revenue Service ("IRS') To comply with the USA PATRIOT Act, certain taxpayer identification information (including, but not limited to, the TIN) may be required by Escrow Holder from certain persons or entities involved (directly or indirectly) in the transaction prior to closing Escrow cannot be closed nor any documents recorded until the information is provided and certified as to its accuracy to Escrow Holder The parties agree to promptly obtain and provide such information as requested by Escrow Holder B. State Withholding & Reporting Linder California law (Rev & Tax Code §18662), a buyer may be required to withhold and deliver to the Franchise Tax Board (FTB) an amount equal to 3 33% of the sales price in the case of disposition of California real property interest ("Real Property") by either 1) a seller who is an individual, trust or estate or when the disbursement instructions authorize the proceeds to be sent to a financial intermediary of seller, OR 2) a corporate seller that has no permanent place of business in California immediately after the transfer of title to the Real Property Buyer may be subject to a penalty (equal to the greater of 10% of the amount required to be withheld or $500) for failing to withhold and transmit the funds to FTB in the time required by law Buyer is not required to withhold any amount and will not be subject to penalty for failure to withhold if a) the sales price of the Real Property does not exceed $100,000, b) the seller executes a written certificate under penalty of perjury certifying that the seller is a corporation with a permanent place of business in California, OR c) the seller, who is an individual, trust, estate or a corporation without a permanent place of business in California, executes a written certificate under penalty of perjury certifying one of the following (i) the Real Property was the seller's or decedent's principal residence (as defined in IRC §121), (11) Real Property being conveyed was last used by the seller as sellers principal residence within the meaning of IRC §121 (even if the seller did not meet the two out of the last five years requirement or one of the special circumstances in IRC §121), (iii) the Real Property is or will be exchanged for property of like kind (as defined in IRC §1031) and that the seller intends to acquire property similar or related in service or use so as to be eligible for nonrecognition of gain for California income tax purposes under IRC §1031, (iv) the Real Property has been compulsorily or involuntarily converted (as defined in IRC §1033) and the seller intends to acquire property similar or related in service or use so as to be eligible for nonrecognition of gain for California income tax purposes under IRC §1033, or (v) the Real Property sale will result in a loss (or net gain not required to be recognized) for California income tax purposes Seller is subject to penalties for knowingly filing a fraudulent certificate for the purpose of avoiding the withholding laws Contact FTB. For additional information regarding California withholding, contact the Franchise Tax Board at (toll free) 888 792 4900), by e-mail nrws©ftb ca gov, or visit their website at www ftb ca gov C FEDERAL WITHHOLDING & REPORTING Certain federal reporting and withholding requirements exist for real estate transactions where the seller (transferor) is a non-resident alien, a non domestic corporation, partnership, or limited liability company, or a domestic corporation, partnership or limited liability company controlled by non-residents, or non resident corporations, partnerships or limited liability companies D TAXPAYER IDENTIFICATION DISCLOSURE Federal and state laws require that certain forms include a party's TIN and that such forms or copies of the forms be provided to the other party and to the applicable governmental authorities Parties to a real estate transaction involving seller -provided financing are required to furnish, disclose, and include the other party's TIN in their tax returns Escrow Holder is authorized to release a party's TINs and copies of statutory forms to the other party and to the applicable governmental authorities in the foregoing circumstances The parties agree to hold Escrow Holder harmless against any fees, costs, or judgments incurred and/or awarded because of the release of their TIN as authorized herein THIS COMPANY CONDUCTS ESCROW BUSINESS UNDER CERTIFICATE OF AUTHORITY ISSUED BY THE STATE OF CALIFORNIA DEPARTMENT OF INSURANCE ©2005 First American Title Insurance Company Page 2 of 2 Pages (1/1/2005) First American Title Company 1250 Corona Pointe Court, Suite 200, Corona, CA 92879 (951) 256-5811 Fax - (951) 256-5900 To. First American Title Company Shanna Crutchfield, Escrow Officer Re , Redlands, CA 1st Loan Lender Name* Loan No • 2nd Loan Lender Name. Loan No • Private Party Loan Lender Name Address SELLER INFORMATION REQUEST (complete, sign and return) File No.: RCO-1971.353 (SC) N/A Phone No • Fax No Line of Credit Lender Name Loan No Master Association: Name. Address Monthly Dues Phone No NlA MIA Fax No Management Company (for Master Association) Name. Address t4/A Phone No.. Fax No Page 1 First Amerrcan Title Company File No RCO-1971353 (SC ) Homeowners Assoc Name. Address Monthly Dues Phone No Management Co. Name Address. N /A Fax No. Phone No Fax No Proceeds. The undersigned instructs you to deliver proceeds due, if any, in the manner set forth on Page 3 of this form. Authorization The undersigned authorize First American Title Company to obtain statements, comply with the instructions, and pay fees (for example statement fees, transfer fees, late fees) from the above mentioned companies Fees are to be paid from the undersigned's proceeds, at close of escrow In the event one of the above loans is an equity line, we authorize the lender to immediately "FREEZE" our account and acknowledge that the equity line will be closed upon receipt of payment. City of Redlands Auth Signature. Auth. Sig (Print Name) Title TIN Home Phone Business Phone. Spouse's Bus Phone Email Address Alt Email Address. Other Forwarding Address Phone L, -)D Swan Peppier Attest I_. r Povz Mayor City Clerk (909) 79$--7698 Page 2 First American Title Company File No RCO-1971353 (SC ) Please indicate below the manner in which you wish to receive proceeds, if any, due you after closing (absent a box being checked, proceeds will be mailed to Seller's last known mailing address). Hold check for pick-up Wire proceeds to Bank below Bank Name. Address Name on Acct Account No Routing No Phone No.. Type of Account. Mail check to Forwarding Address Overnight Mail to Forwarding Address Checking Savings Any further instructions If you choose to have your proceeds wired Please note that the ABA/Routing number located at the bottom of your checks, may NOT be the federal wire routing number. Please contact your bank directly for this information Your bank may charge a fee for the receipt of wired funds First American Title Company may charge a $15 00 fee to wire funds If you choose to have your proceeds delivered (using a service other than regular mail) First American Title Company may charge a $15 00 fee to deliver the funds. City of Redlands By S, san Peppier, Mayor Attest Page 3 2005 California Forms 593-C, 593-L, and Instr Form 593-C, Real Estate Withholding Certificate Form 593-L, Real Estate Withholding — Computation of Estimated Gain or Loss Use this booklet for real estate sales or transfers closing in 2005. (For individual and non -individual sellers) What's New Due to passage of AB 1338, Stats 2004, Ch 04-528, effective January 1, 2005 • The waiver process for a non -individual is replaced with a self -certification process Non -individuals will now use Form 593-C instead of Form 593-W Non -individuals may no longer request reduced withholding on small gains They can self -certify on Form 593-C that they are exempt from withholding if they will have a loss on the sale, are doing an IRC Section 1031 exchange, or the property is being involuntarily converted and the seller intends to replace it to meet the requirements of IRC Section 1033. • The exemption for the sale of a principal residence is expanded to include sellers who last used the property as their principal residence even though they do not meet the "two out of the last five years" requirement or one the special circumstances • The exemption for the sale of a principal residence is also expanded to include sales by estates when the property was the decedent's principal residence • There is no longer an exemption for estates when the decedent was a California resident • There is no longer an exemption for irrevocable trusts that have a California resident trustee • Both individuals and non -individuals will use the 2005 Form 593-C/Form 593-L Booklet Purpose When California real estate is sold, 3 1/3 percent of the total sales price must be withheld from the seller and sent to the California Franchise Tax Board (California Revenue and Taxation Code Section 18662) Withholding of 3 1/3 percent is not required if the total sales price is $100,000 or less, the property is being foreclosed upon, the transferor is a bank acting as a trustee other than a trustee of a deed of trust, or the seller meets certain requirements. If you are a seller • Use Form 593-C, Real Estate Withholding Certificate for Individual Sellers, to determine whether you qualify for a full or partial withholding exemption • Use Form 593-L, Real Estate Withholding — Computation of Estimated Gain or Loss, to determine if you will have a loss or zero gain on the sale Who must withhold? Although the law requires the buyer to withhold, the buyer can request the escrow person to do the withholding We use the term withholding agentthroughout these instructions to refer to either the escrow person or the buyer, whoever is taking responsibility for withholding. Form 593 C/Form 593 L Booklet 2004 Page 1 What is Real Estate Withholding? Real estate withholding is • A prepayment of estimated income tax due from the gain on a sale of California real estate If the amount withheld is more than the income tax liability, we will refund the difference when you file a tax return after the end of the year • Not an additional tax on the sale of real estate Why do we withhold' We withhold to • Ensure payment of income tax owed on the taxable gain from the sale • Reduce the likelihood of penalties charged to the seller for underpayment of estimated tax. Withholding Agent Instructions • Unless the sale qualifies for an automatic exclusion (sales price is $100,000 or less, the transferor is a bank acting as a trustee other than a trustee of a deed of trust or the property is being foreclosed upon), provide Forms 593-C and 593-L with instructions to each seller as soon as escrow opens We update our forms and instructions annually, so please make certain you use the correct form The year on the form should be the year that escrow will dose • Instruct the seller to complete and sign Form 593-C, then return it to you by the close of escrow Incomplete or improperly completed forms may not exempt the seller from withholding ❑ If the seller checked "YES" to any item in Part II, the seller is exempt from withholding You are relieved of the real estate withholding requirements if you rely in good faith on the completed and signed form, certifying an exemption from withholding u If the seller checked "YES" to any item in Part III, the seller may qualify for a partial or complete withholding exemption Read the specific line instructions to determine the amount to withhold and any additional requirements ❑ If the seller checked "NO" to all of the items in Part II and Part III, you must withhold 3 1/3 percent of the total sales price ❑ If the seller does not return the completed Form 593-C by the close of escrow, you must withhold 3 1/3 percent of the total sales price • If you must withhold, complete Form 593-B, Real Estate Withholding Tax Statement, for each seller that was withheld upon Give two copies of Form 593-B to the seller We suggest that, after the close of the month, you attach one copy of all of the Forms 593-B completed during the month to Form 593, Real Estate Withholding Remittance Statement, and mail it to us with the total amount withheld for all transactions that closed during the month However, you have the option to send in one payment and one Form 593 with the related Forms 593-B for each escrow instead of sending one total payment for all escrows that closed during the month Regardless of whether you send one payment for the month or one payment for each escrow, Forms 593 and 593-B, and the withholding payment are due to the Franchise Tax Board by the 20th day of the month following the month that escrow closed • Do not send Forms 593-C or 593-L to the Franchise Tax Board You should retain Form 593-C for five years following the close of the transaction You must furnish the form the Franchise Tax Board upon request Usually the seller will retain Form 593-L However, if the seller gives you Form 593-L, you should also retain it for five years Page 2 Form 593 C/Form 593-L Booklet 2004 Contacting the Franchise Tax Board TO ORDER CALIFORNIA TAX FORMS By Internet You can view, download, and print California income tax forms and publications from our Website at www.ftb.ca.gov By automated phone service: Use this service to order California tax forms and current year federal forms Have a paper and pencil ready to take notes From within the United States (800) 338-0505 From outside the United States (not toll-free) (916) 845-6600 Follow the recorded instructions This service is available 24 hours a day, seven days a week By mail. Please allow two weeks to receive your order If you live outside California, please allow three weeks to receive your order Write to TAX FORMS REQUEST UNIT FRANCHISE TAX BOARD PO BOX 307 RANCHO CORDOVA CA 95741-0307 In person: Many libraries and post offices provide free California tax booklets during the filing season Most libraries and some quick -print businesses have forms and schedules for you to photocopy (a nominal fee may apply) Note Employees at libraries, post offices, banks, and quick -print businesses cannot provide tax information or assistance CONTACT US WITH REAL ESTATE WITHHOLDING QUESTIONS (888) 792 4900 or (916) 845 4900 (not toll-free) Telephone assistance is available from 8 a m until 5 p m Monday through Friday We may modify these hours without notice to meet operational needs. TELEPHONE AND INTEREST ASSISTANCE (For state income tax issues unrelated to real estate withholding) From within the United States (800) 852-5711 From outside the United States (not toll-free) (916) 845 6500 Website at www ftb ca qov Assistance for persons with disabilities. We comply with the Americans with Disabilities Act Persons with hearing or speech impairments, please call TTY/TDD (800) 822-6268 ASISTENCIA TELEFONICA Y EN EL INTERNET Dentro de los Estados Unidos, Flame al (800) 852-5711 Fuers de los Estrados Unidos, (Fame al (cargos aplican) (916) 845 6500 Sitio en el Internet www.ftb.ca.gov Asistencia para personas discapacitadas• Nosotros estamos en conformidad con el Acta de Americanos Discapacitados. Personas con problemas auditivos pueden Ilamar al TTY/TDD (800) 822-6268 Form 593-C/Form 593-L Booklet 2004) Page 3 YEAR 2005 Real Estate Withholding Certificate CALIFORNIA FORM 593-C Part I Seller's Information Name (including spouse, if jointly owned see instructions type or print) City of Redlands SSN, FEIN or CA Corporation no Spouse's SSN (if jointly owned) Address (number and street) Attn• Mr Douglas Headrick Municipal Utilities Department P 0 Box 3005 Private Mailbox no Note. If you do not furnish your tax ID number this certificate is void City, State, ZIP Code Redlands, CA 92373 Daytime number Property address (if no street address, provide parcel number and county) , Redlands, CA Ownership percentage % Read the following and check the appropriate box (See line by line notes in the instructions ) Part II - Certification which fully exempt the sale from withholding. 1. Does the property qualify as the seller's (or decedent's, if being sold by the decedent's estate)principal residence within the meaning of Internal Revenue Code (IRC) Section 121? 2 Did the seller (or decedent, if being sold by the decedent's estate) last use the property as the seller's (decedent's) principal residence within the meaning of IRC Section 121 without regard to the two year time period? 3 Will the sellers have a lass or zero gain for California income tax purposes on this sale? (To check "YES", you must complete Form 593 L Real Estate Withholding — Computation of Estimated Gain or Loss, and have a loss or zero gain on line 16) 4- Is the property being compulsorily or involuntarily converted and does the seller intend to acquire property that is similar or related in service or use to qualify for nonrecognition of gain for California income tax purposes under IRC Section 1033? 5 Will the transfer qualify for nonrecognition treatment under IRC Section 351 (transfer to a corporation controlled by the transferor) Or IRC Section 721 (contribution to a partnership in exchange for a partnership interest)? 6 Is the seller a corporation (or an LLC classified as a corporation for federal and California income tax purposes) that is either qualified through the California Secretary of State or has a permanent place of Business in California? 7 Is the seller a partnership (or an LLC that is not a disregarded single member LLC and is classified as a partnership for federal and California income tax purposes) with recorded title to the property in the name of the partnership or LLC? (If yes, the partnership or LLC must withhold on nonresident partners or members as required) YES NO x ❑ o a Is the seller a tax exempt entity under either California or federal law? Irl 9 Is the seller an insurance company, individual retirement account, qualified pension/profit sharing plan, or charitable remainder of ❑ IXtrust? Part III - Certifications which may partially or fully exempt the sale from withholding. Escrow Officer See instructions for amounts to withhold 10 Will the transfer qualify as a simultaneous like kind exchange within the meaning of IC Section 10317 11 Will the transfer qualify as a deferred like kind exchange within the meaning of IRC Section 1031? 12 Will the transfer of this property be an installment sale that you will report as such for California tax purposes and has the buyer agreed to withhold on each principal payment instead of withholding the full amount at the time of transfer? Part IV — Seller's Signature Under penalties of perjury I hereby certify that the information provided above is, to the best of my knowledge, true and correct If conditions change, I will promptly inform the withholding agent I understand that completing this form does not exempt me from filing a California income or franchise tax return to report this sale 1 Nib Seller's name (type or print) Susan Peppier Seller's signature WI .._ •_ • �• Date 7 / 7 / 0 5 XpliattOMPAg Attesti— Lorne Poyzer signature L�» i Date 7 /7±0 5 Seller If you checked "YES" to any question in Part II, you are exempt from real estate withholding If you checked "YES" to any question in Part III, you may qualify for a partial or complete withholding exemption If you checked "NO" to all of the questions in Part II and Part III, the withholding will be 3 1/3 percent of the total sales price If you are withheld upon, the withholding agent should give you two copies of Form 593-B, Real Estate Withholding Tax Statement Attach one copy to the lower front of your California income tax return and keep the other copy for your records For Privacy Act Notice, get form FTB 1131 (Individual only) Form 593 C C2 2004 Instructions for Form 593-C Real Estate Wlthhol ding Certificate What's New Due to passage of AB 1338, Stats 2004, Ch 04-528, effective January 1, 2005 • The waiver process for a non -individual is replaced with a self certification process Non -individuals will now use Form 593-C instead of Form 593-W Non -individuals may no longer request reduced withholding on small gains They can self -certify on Form 593 C that they are exempt from withholding if they will have a loss on the sale, are doing an IRC Section 1031 exchange, or the property is being in voluntanly converted and the seller intends to replace it to meet the requirements of IRC Section 1033 • The exemption for the sale of a principal residence is expanded to include sellers who last used the property as their principal residence even though they do not meet the "two out of the last five years" requirements or ane of the special circumstances. The exemption for the sale of a principal residence is also expanded to include sales by estates when the property was the decedent's principal residence • There is no longer an exemption for estates when the decedent was a California resident • There is no longer an exemption for irrevocable trusts that have a California resident trustee • Both individuals and non individuals will use the 2005 Form 593 C Booklet/Form 593 L Booklet. Purpose Use this form to determine if you meet any of the exemptions to withholding For sales closing in 2005, this form is to be used for both individual and non individual sellers Note: Qualifying for an exemption from withholding ;orbeing withheld upon does not relieve you of your obligation to file a -`California tax return and pay any tax due on the sale of the California real estate Part I — Seller's Information Name, Address, and Taxpayer Identification Number Enter the name, address, and tax identification number of the seller or other transferor If the seller is an individualenter the Social Security number (SSN) If the sellers are husband and wife and plan to file a joint return, enter the name and SSN for each spouse Otherwise, do not enter information for more than one seller Instead, complete a separate Form 593-C for each seller If the seller is a revocable trust enter the grantor's individual name and SSN For tax purposes, the revocable trust is transparent and the individual seller must report the sale and claim the withholding on their individual tax return If the seller is an irrevocable trust, enter the name of the trust and the trust's federal employer identification number (FEIN) Do not enter trustee information. If the seller is a single member, disregarded LLC, enter the name and tax identification number of the single member Escrow Officer. If you choose to provide a copy of Form 593-C to the buyer, you may delete the seller's tax identification number of the buyer's copy Ownership Percentage Enter your ownership percentage rounded to two decimal places g 66 67%) If you are on title for incidental purposes and you have no financial ownership, enter 0 00 and skip to Part IV You will not be withheld upon Examples of sellers who are on title for incidental purposes are Co signors on title (e g , parents co signed to help their child qualify for the loan.) Family members on title to receive property upon the owner's death Part II Certifications That Fully Exempt Withholding Line 1 - Principal Residence To qualify as your principal residence under Internal Revenue Code (IRC) Section 121, you (or the decedent) generally must have owned and lived in the property as your main home for at least two years during the five-year period ending on the date of sale Military and Foreign Service, see FTB Pub 1032, Tax Information for Military Personnel You can only have one main home at a time If you have two homes and live in both of them, the main home is the one you lived in most of the time There are exceptions to the two-year rule if the primary reason you are selling the home is for a change in the place of employment, health, or unforeseen circumstances such as death, divorce, or loss of job, etc For more information about what qualifies as your principal residence or exceptions to the two-year rule, get IRS Publication 523, Selling Your Home You can get this publication by accessing the Internal Revenue Service's Website at www irs.gov, or by calling the IRS at (800) 829 3676 Note. If only a portion of the property qualifies as your principal residence, insert the percentage allocated to the principal residence in the space above line 1 and inform the escrow person The allocation method should be the same as the seller used to determine depreciation Line 2 — Property last used a your principal residence If the property was last used as the seller's or decedent's principal residence within the meaning of IRC Section 121 without regard to the two-year time period, no withholding is required If the last use of the property was as a vacation home, second home or rental, you do not qualify You must have lived in the property as your main home. If you have two homes and live in both of them, the main home is the one you lived in most of the time Line 3 — Loss or Zero Gain You have a loss or zero gain for California income tax purposes when the amount realized is less than or equal to your adjusted basis You must complete Form 593-L, Real Estate Withholdnng — Computation of Estimated Gain or Loss, and have a loss or zero gain on line 16 to certify that you have a loss or zero gain on this sale You may not certify that you have a net loss or zero gain just because you do not receive any proceeds from the sale or because you feel you are selling the property for less than what it is worth Line 4 — Involuntary Conversion The property is being involuntarily or compulsorily converted when • The California real property is transferred because it was (or threatened to be) seized, destroyed, or condemned within the meaning of IRC Section 1033, and Form 593 C/Form 593 L Booklet 2004 Page 5 • The transferor (seller) intends to acquire property that is similar or related in service or use in order to be eligible for nonrecognition of gain for California income tax purposes Get IRS Publication 514, Sales and Other Disposition of Assets, for more information about involuntary conversions Line 5 — Non -recognition Under IRC Sections 351 or 721 The transfer must qualify for nonrecognition treatment under IRC Section 351 (transferring to a corporation controlled by transferor) or IRC Section 721 (contributing to a partnership in exchange for a partnership interest) Line 6 — Corporation A corporation has permanent place of business in California if • It incorporated in California; • It is qualified to transact business in California through the California Secretary of State; or • It will maintain and staff a permanent office in California immediately after the sale Line 7 — Partnership or Limited Company (LLC) Withholding is not required if the recorded title to the property being transferred is in the name of partnership However, partnerships must withhold on nonresident partners (Get FTB Pub 1017, Nonresident Withholding Partnership Guidelines, for more information ) Withholding is not required if the recorded title to the property is in the name of an LLC that. • Is not a single member LLC that is disregarded for federal and California income tax purposes, and • Is classified as a partnership for federal and California income tax purposes If the LLC meets these conditions, the LLC must still withhold on nonresident members (Get FTB Pub 1017, Nonresident Withholding Partnership Guidelines, for more information ) Note. If the LLC is a single member LLC that is disregarded for federal and California income tax purposes, then that single member is considered to be the seller and the one on title for withholding purposes If the member is an individual, complete the form as that individual If the member is a corporation, complete the form as that corporation If the member is a partnership or LLC, complete the form as that partnership or LLC, etc Note. When completing Form 593 C as the single member of a disregarded LLC, indicate on the bottom of the form that the information on the form is for the single member of the LLC so that your escrow officer will understand why it is different from the recorded title holder If the LLC is classified as a corporation for federal and California income tax purposes, then the seller is considered to be a corporation for withholding purposes Refer to Line 6 Line 8 — Tax -Exempt Entity Withholding is not required if the seller is tax exempt under either California or federal law (e g , religious, charitable, educational, not for profit organizations, etc ) Line 9 — Insurance Company, Individual Retirement Account, Qualified Pension or Profit -Sharing Plan, or Charitable Remainder Trust Withholding is not required when the seller is an insurance company, individual retirement account, qualified pension or profit-sharing plan or a charitable remainder trust Part III Certifications That May Partially or Fully Exempt Withholding Complete Part III only If you did not meet any of the exemptions in Part II If you met an exemption in Part II, skip to Part N Line 10 — Simultaneous Exchange If the California real property is part of a simultaneous like kind exchange within the meaning of IRC Section 1031, the transfer is exempt from withholding However, if the seller receives proceeds (boot) exceeding $1,500 from the sale, the withholding agent must withhold on all proceeds Line 11— Deferred Exchange If the California real property is part of a deferred like -kind exchange within the meaning of IRC Section 1031, the sale is exempt from withholding at the time of the initial transfer However, if the seller receives proceeds (boot) exceeding $1,500 from the sale, the withholding agent must withhold on all proceeds The intermediary or accommodator must withhold on all cash or cash equivalent (boot) if distributes to the seller if the amount exceeds $1,500 If the exchange does not take place or if the exchange does not qualify for nonrecognition treatment, the intermediary or accommodator must withhold 3 1/3 percent of the total sales price Line 12 — Installment Sale Withholding is required on the total sales price even if the sale is being completed as an installment sale However, the buyer may agree to withhold on each principal payment instead of withholding the full amount at the time of sale The buyer must complete Form 593-I, Real Estate Withholding Installment Sale Agreement. to defer any of the withholding Form 593-I must be attached to Form 593-B, Real Estate Withholding Tax Statement, when the withholding on the down payment is sent to the Franchise Tax Board Note. If you do not wish to defer withholding, do not ask the buyer to complete Form 593-I Part IV Seller's Signature You must sign this form and return it to your escrow officer by the close of escrow for it to be valid Otherwise, the withholding agent must withhold the full 3 1/3 percent of the total sales price Any transferor (seller) who, for the purpose of avoiding the withholding requirements, knowingly executes a false certificate is liable for a penalty of $1,000 or 20 percent of the required withholding amount, whichever is greater. Page 6 Form 593 C/Form 593-L Booklet 2004 YEAR Real Estate Withholding — CALIFORNIA FORM 2005 Computation of Estimated Gain or Loss 593-L (You are required to complete this form only if you think you may certify a loss on Form 593-C.) Property address (if no street address, provide parcel number and county) 1 Selling price 2 Selling expenses (optional) 3 Amount You Will Realize for withholding purposes Subtract line 2 from line 1 4 Enter the price you paid to purchase the property (If you acquired the property other than by purchase, see page 8, Table 1 to determine your ha'is ) 5 Seller -paid points 5 6 Depreciation 6 7 Other decreases to basis 7 8 Total Decreases to basis Add line 5 through 7 9 Subtract line 8 from line 4 10 Cost of additions and improvements (optional) 10 11 Other increases to basis (optional) 12 Total Increases to Basis Add line 10 and hne 11 13 Adjusted Basis for withholding purposes Add line 9 and line 12 14 Enter any suspended passive activity losses from this property (optional) 15 Add line 13 and line 14 11 16 If line 3 is less than line 15, subtract line 3 from line 15 If line 3 is equal to line 15, enter zero You have a loss or zero gain for withholding purposes Skip line 17 Complete the Seller's Signature area below and check the "YES" box on Form 593 C, line 3 17 If line 3 is more than line 15, subtract line 15 from hne 3 You have a gain for withholding purposes You must check the "NO" box on From 593 C, line 3 Escrow will withhold 3 113 percent of the total sales price Seller's Signature 4 8 9 12 13 14 1 2 3 15 16 17 Under penalties of perjury, I hereby certify that the information provided above is, to the best of my knowledge, true and correct in that any estimated loss calculated is no greater than the loss that I will recognize on my California tax return for this tax year If conditions change, I will promptly inform the withholding agent I understand that completing this form does not exempt me from filing a California income tax return to report this sale Seller's name (type or print) Seller's signature Spouse's name (if applicable) Date Spouse's signature (if applicable) Date For Privacy Act Notice, get form FTB 1131 (individuals only) 593L04203 1 Form 593 L C2 2004 Instructions for Form 593-L Real Estate Withholding - Computation of Estimated Gain or Loss Purpose Use this form if you believe you may have a loss on the sale of your property for California income tax purposes This form is used for sales closing in 2005 and can be used by both individual and non individual sellers It allows you to make either a detailed or a simplified calculation of your gain or loss for withholding purposes The lines shown as "(optional)" do not need to be completed If you first complete the form without using the optional fields and show a small gain, if may be to your benefit to complete the "optional" fields Caution* You may use estimates when you complete this form, but the estimates must not result in the calculation of a loss when actually your have a gain Any transferor (seller) who, for the purpose of avoiding the withholding requirements, knowingly executes a false certificate is liable for a penalty of $1,000 or 20 percent of the required withholding amount, whichever is greater Note The computations on Form 593-L are strictly for the limited purpose of calculating withholding only Who can complete this form? The seller should complete this form Do not ask your title company, escrow officer, real estate licensee, or exchange accommodator to complete this form You are strongly advised to contact a tax professional if you need help completing this form How can you get IRS publication? Internet www.irs.00v Phone (800) 829 1040 Mail Western Area Distribution Center Rancho Cordova, CA 95743 0001 Line -by -Line Instructions Line 1— Selling Price The selling price is the total amount you will receive for your property It includes money, as well as, all notes, mortgages, or other debts assumed by the buyer as part of the sale, plus the fair market value of any other property or any services you receive Line 2 — Selling Expenses (optional) Selling expenses include commissions, advertising fees, legal fees, and loan charges that will be paid by the seller, such as loan placement fees or points Line 3 — Amount Realized The amount realized is the selling price minus the selling expenses Line 4 - Purchase Price If you acquired this property by purchase, enter your purchase price Your purchase price includes the down payment and any debt you incurred, such as a first or second mortgage or promissory notes you gave the seller in payment for the property If you acquired the property by gift, inheritance, exchange, or any way other than purchase, see Table 1 Line 5 — Seller -Paid Points Points are charges paid to obtain a loan They may also be called loan origination fees, maximum loan charges, loan discount, or discount points If the seller paid points for you when you acquired the property, enter the amount paid by the seller on your behalf on line 5, unless you already subtracted this item to arrive at the amount for line 4 Line 6 — Depreciation Enter the amount of depreciation you deducted, or could have deducted, on your California income tax returns for business or investment use of the property under the method of depreciation you chose If you took less depreciation on your tax return than you could have under the method chosen you must enter the amount you could have taken under that method If you did not take a depreciation deduction, enter the full amount of depreciation you could have taken Get IRS Publication 946, How to Depreciate Property, if you need more information Depreciation Option — If you do not know how much depreciation you deducted or were allowed, you can make an estimate of the amount of depreciation (for withholding purposes only) To estimate the depreciation, divide the purchase price plus the cost of additions and improvements by 27 5 and multiply that by the number of years you used the property for business use (up to 27 5 years) Example* Mary bought a house 20 years ago for $150,000 and has used it as a rental property for the last 18 years Prior to renting the house, she added a pool which cost her $25,000 Mary's depreciation is estimated as follows Cost Plus additions Total Divided by 27 5 = Multiply by 18 years = $150,000 25,000 175,000 6,364 $114,552 Mary's estimated depreciation to enter on line 6 would be $114,552 Line 7 - Other Decreases to Basis Include any other amounts that decrease your basis, such as • Casualty or theft loss deductions and insurance reimbursements, • Energy credits claimed for the cost of energy improvements added to your basis, or • Payments received for granting an easement or right of way Line 10 — Additions and Improvements (optional) These add to the value of your property, prolong its useful life, or adapt it to new uses Examples include room additions, landscaping new roof, insulation, new furnace or air conditioner, remodeling, etc The cost of repairs may not be included unless they are part of an extensive remodeling or restoration project Do not include any additions or improvements on line 10 that were included on line 4 Line 11— Other Increases to Basis (optional) Include the amounts paid for any other items that increase the basis of the property, such as • Settlement fees and closing costs you incurred when you bought the property, • The amount you paid for special assessments for items such as water connections, paving roads, and building ditches, or, • The cost of restoring damaged property from a casualty loss, or cost of extending utility service lines to the property Line 14 — Passive Activity Losses (optional) You may only use suspended passive activity losses that directly relate to the property being sold Other losses such as net operating losses, capital loss carry forwards, stock losses, and passive activity losses from other properties cannot be used Page 8 Form 593 C/Form 593 L Booklet 2004 Line 16 — Loss For Withholding Purposes If the amount you will realize (line 3) is less than line 15, the difference is your loss on the sale for withholding purposes (If line 3 is equal to line 15, you have a zero gain) Check the "YES" box on Form 593-C, line 3 Complete and sign Form 593 C and give it to your escrow officer You will not be subject to withholding on this sale Keep Form 593-L for 5 years to document your calculations Form 593-L must be furnished to the FTB if requested Line 17 — Gam For Withholding Purposes If the amount you will realize (line 3) is more than the amount on line 15, the difference is your gain on the sale for withholding purposes You must check the "NO" box on Form 593-C, line 3 You will be subject to the full 3 1/3 percent withholding on the total selling price Table 1 How to Complete Form 593-1 When You Did Not Purchase the Property The cost or purchase price of property is usually its basis for figuring gain or loss from its sale or other disposition However, if you acquired the property by gift, inheritance, exchange or in some way other than purchase, you must use a basis other than its cost (Note. These procedures only reflect the general rules Exceptions may apply Get IRS Publication 551, Basis of Assets, for more information on these or other special situations ) Property was received as a gift Usually, your basis is the donor's adjusted basis at the time of the gift Enter the donor's adjusted basis on line 4 Then complete the rest of the form (except line 5) with your information after you received the property Note If the fair market value of the property at the time of the gift was less than the donor's adjusted basis, get IRS Publication 551 to determine your basis Property was inherited from someone other than your spouse Usually, your basis is the fair market value at the date of the individual's death You can get that valuation from probate documents, or if there was no probate, use the appraised value at the date of death Enter the fair market value on line 4 Then complete the rest of the form (except line 5) with your information after you received the property Note If you or your spouse originally gave the property to the decedent within one year of the decedent's death, get IRS Publication 551 to determine your basis You owned the property (as community property) with your spouse who died Your basis is the fair market value of the total property at the date of your spouse's death Enter the fair market value on line 4 Then complete the rest of the form (except line 5) with your information after the date of death You owned the property (in joint tenancy) with your spouse who died Your basis is the sum of 1) the fair market value of your spouse's half of the property at the date of your spouse's death, and 2) the existing basis of your half of the property at the date of your spouse's death Enter the sum on line 4 Then complete the rest of the form (except line 5) with your information after the date of death Property received from your spouse incident to your divorce Usually, your basis is the same as it would have been without this transfer Complete Form 593 L as if you had been the only owner before and after the transfer Note• If your spouse transferred the property to you before July 18, 1984, get IRS Publication 551 to determine your basis Property received in exchange for other property Your basis will depend on whether you received the property in a nontaxable, taxable, or partially taxable exchange Get IRS Publication 551 to determine your basis Enter your basis on line 4 Then complete the rest of Form However, do not include any amounts on line 5 through line 10 that you included on line 4 You built the house (or other improvements) on the property being sold Add the purchase price of the land and the cost of the building Enter the total on line 4 and complete the rest of the form Note If you deferred the gain from a previous home to this property, get IRS Publication 551 You received the property in a foreclosure Enter your basis in the property after the foreclosure on line 4 (You may need to get a tax professional to help you with this calculation ) Then complete the rest of the form (except for line 5) with your information after the foreclosure Form 593 C/Form 593 L Booklet 2004 Page 9 OWNER'S AFFIDAVIT STATE OF } COUNTY OF } ss Mayor Susan Peppier and City Clerk Lorne Poyzer, , individually and as the on behalf of City of Redlands (company name of the Property as defined below) ("Declarant") is of legal age, being first duly sworn, deposes and states under penalty of perjury under the laws of the State of . 1 That certain real property (the "Property") as described in that certain Commitment for Title Insurance/Preliminary Report No RCO-1971353 dated as of ("Commitment/Report") issued by or on behalf of ("First American") is improved by the following (check all that apply) 0 Single family residences One -to -four family residences !__J Apartment building Commercial building Industrial building Office building Combination office/commercial building 0 Other 2 For the period of ( ) days prior to the date of this Affidavit, no repairs or work of improvement has been conducted on, nor any materials supplied to, the Property except as follows (Enter "None" if such is true ) a That the work of improvement, if any, described above was Started on , 20 11 Completed on , 20 ral Will be completed on , 20 b There are no unpaid bills for labor or material because of any improvements made to the Property except (Enter "None" if such is true.) 3. No one is in possession of, or has any right to possession of, the Property except jt Declarant as owner L Tenants based only on month-to-month rental agreements Tenants based upon existing leases as listed on the Rent Roll attached hereto as Exhibit A and incorporated herein by reference Other. Page 1 4 No person(s) or entities other than those set forth in Paragraph 3 above have any options, rights of first refusal, easements, licenses, agreements or other rights allowing them to use, encroach on, or access to the Property except (1) as shown in the Commitment/Report, and (ii) (Enter "None" if such is true ) 5 Those certain lease(s) shown as exception number(s) in the Commitment/Report have either (a) expired by their own terms, or (b) if they have not expired, the lessee(s) have vacated the Property and Declarant has been notified of the vacation of the Property either by correspondence from the lessee or by physical inspection of the Property 6 To the best of Declarant's knowledge, there are no unrecorded real property taxes or assessments against the Property The undersigned is not aware of any release reports of commitment statements which have been issued under California Civil Code 850, et seq. 7 This Affidavit is given for the purpose of inducing First American and its agents to issue policy(ies) of title insurance which may provide coverage with respect to all matters set forth herein If First American elects, in its discretion, to (a) accept this Affidavit, and (b) issue title insurance policy(ies) to third parties, First American will do so in material reliance on this Affidavit and the representation and covenants in this Affidavit 8 Declarant acknowledges that he/she has read this Affidavit, that all the statements made in this Affidavit are true and correct of his/her own actual knowledge, and fully understands the legal aspects of any misrepresentations or untrue statements made in this Affidavit Declarant, both personally and on behalf of Owner, covenants and agrees to defend, indemnify, and hold First American harmless from and against any and all claims, actions, suits (including arbitration), liabilities, losses, damages, costs, charges, attorney's fees and other expenses of every nature and character as a result of its reliance on this Affidavit. Executed on July 7, 2005 ,20_ , at Redlands , California (City) (State) Attest y Clerk "Declarant" Individually (must be signed individually) On Behalf of Owner City of Redlands Page 2 usan Peppier, Maor e/ ALL-PURPOSE ACKNOWLEDGMENT STATE OF CALIFORNIA ) COUNTY OF SAN BERNARDINO ) SS CITY OF REDLANDS ) By the authority granted under Chapter 4, Article 3, Section 1181, of the California Civil Code, and Chapter 2, Division 3, Section 40814, of the California Government Code, on July 7, 2005, before me, Beatnce Sanchez, Deputy City Clerk, on behalf of Lome Poyzer, City Clerk of the City of Redlands, California, personally appeared Susan Peppier and Lome Poyzer { X} personally known to me - or - { } proved to me on the basis of satisfactory evidence to be the persons whose names) are subscnbed to the within instrument and acknowledged to me that they executed the same in their authonzed capacities and that by their signatures on the instrument the persons, or the entity upon behalf of which the persons acted, executed the instrument of Ro palgionPore4„, s. m Fa. 1888 •� AT, , PO RN` WITNESS my hand and official seal LORRIE POYZER, CITY CLERK By Beatrice Sanchez, Deputy City Clerk (909)798-7531 I1�FtiJP'��Ni1IP�JP�J/"�J�VNIVrVf1f//Y��Vi1JP'ti/e1Jl1J/��FVN/1JI"��1!'�IAJNNIVI'`�rVP��N/�INNN�V/t�rVI11f1� CAPACITY CLAIMED BY SIGNER(S) { } Individual(s) signing for oneself/themselves { } Corporate Officer(s) Title(s) Company { } Partner(s) Partnership { } Attorney -In -Fact Pnncipal(s) { } Trustee(s) Trust { x } Other Title(s) Mayor and City Clerk Entity Represented. City of Redlands, a municipal corporation f'��NNi1J/11��/t�rVr4!'��(��Nr'BJP' IP'JPrJP'�JIVfV/'t/f1�Nl��1ti��"SIF'�JNI�INl�Jf1/rVNr'�J!'�Ji1J!'r�f'�I/tiJfVr-Jp- "»f`� THIS CERTIFICATE MUST BE ATTACHED TO THE DOCUMENT DESCRIBED BELOW Title or Type of Document Owener's Affidavit Date of Document. July 7, 2005 Signer(s) Other Than Named Above None SELLER'S CERTIFICATION UNDER `' ; FOREIGN INVESTMENT IN REAL PROPERTY TAX ACT ("FIR (26 U.S C 1445) File No RCO-1971353 June 30, 2005 THIS SECTION FOR INDIVIDUAL TRANSFEROR: Section 1445 of the Internal Revenue Code provides that a transferee (buyer) of a U S real property interest must withhold tax if the transferor (seller) is a foreign person To inform the transferee (buyer) that withholding of tax is not required upon my disposition of a U.S. real property interest, I, , hereby certify the following 1 I am not a nonresident alien for purposes of U S income taxation; 2 My U.S. taxpayer identification number (Social Security Number) is 3 My home address is I understand that this certification may be disclosed to the Internal Revenue Service by the transferee and that any false statement I have made here could be punished by fine, imprisonment, or both Under penalties of perjury I declare that I have examined this certification and to the best of my knowledge and belief it is true, correct, and complete. Date Signature Typed or Printed Name THIS SECTION FOR ENTITY TRANSFEROR: Section 1445 of the Internal Revenue Code provides that a transferee of a U.S. real property interest must withhold tax if the transferor is a foreign person. For U S tax purposes (including Section 1445), the owner of a disregarded entity (which has legal title to a U.S. real property interest under local law) will be the transferor of the property and not the disregarded entity To inform the transferee that withholding of tax is not required upon the disposition of a U.S. real property interest by [name of transferor] ("Transferor"), the undersigned hereby certifies the following on behalf of Transferor 1 Transferor is not a foreign corporation, foreign partnership, foreign trust, or foreign estate (as those terms are defined in the Internal Revenue Code and Income Tax Regulations), 2, Transferor is not a disregarded entity as defined in Section 1.1445-2(b)(2)(iii)„ 3 Transferor's U S employer identification number is 4. Transferor's office address is Transferor understands that this certification may be disclosed to the Internal Revenue Service by transferee and that any false statement contained herein could be punished by fine, imprisonment, or both Under penalties of perjury I declare that I have examined this certification and to the best of my knowledge and belief it is true, correct, and complete, and further decl-tlaatT have authority to sign this document on behalf of Transferor July 7, 2005 Date igna re Susan PPpp1 Pr Typed or Printed Name Attest Loryfe Poyzer, y Clerk U S._Caiifornia _FIRPTA Seller Affidavit Open/Draw_Rev (7/12/09) Page 1 of 1 Pages $250,000 00 and authorized the Mayor to execute, and the City Clerk to attest to, the document on behalf of the City Contract - Fencing Project - On motion of Councilmember Gilbreath, seconded by Councilmember George, the City Council unanimously approved a contract with Alcorn Fence Company for the installation of barrier fencing to comply with the guidelines of the United States Fish and Wildlife Service to protect the San Bernardino Kangaroo Rat prior to removing the trees outside of the conservation area with a total cost to be $99,406 25 and authorized the Mayor to execute, and the City Clerk to attest to, the document on behalf of the City Bear Valley Mutual Water Company Stock Leases - On motion of Councilmember Peppier, seconded by Councilmember Gil, the City Council unanimously approved leases for Bear Valley Mutual Water Company stock from San Bernardino Valley Municipal Water Distnct (10,000 shares), David Knight (1,000 shares), and Arnold and Margaret Wright (918 shares) for the 2005-06 water delivery season A second item relating to Crafton Heights Pipeline Company stock was continued to the June 21, 2005, meeting as it was not properly noticed on the agenda Mutual Water Company Stock Leases - The request for approval to enter into mutual water company stock leases with San Bernardino Valley Municipal Water District for the 2005-06 water deliver season was withdrawn from the agenda Purchase and Sale Agreement - Standard Pacific Homes - On motion of Councilmembei Gilbreath, steonded by Councilmember George, the City Council unanimously appi oved the purchase and sale agi eement and joint esci ow instructions with Standar d Pacific Homes for Assessor's Parcel No. 168-121-13 and authorized the Mayor to execute, and the City Clerk to attest to, the document on behalf of the City Truck Purchase - Municipal Utilities Department - On motion of Councilmember Gilbreath, seconded by CounciImember George, the City Council unanimously authonzed the purchase of a one -ton Ford F353 truck from Sunrise Ford of Fontana, California, for the City's domestic water and wastewater systems Backhoe Purchase - On motion of Councilmember Gilbreath, seconded by Councilmember George, the City Council unanimously authorized the purchase of a 420D Caterpillar Backhoe from Johnson Machinery of Riverside, California, for the City's dourest c water and wastewater systems Tekmar Purge and Trap Concentrator Purchase - On motion of Councilmember Gilbreath, seconded by Councilmember George, the City Council unanimously June 7, 2005 Page 4