City Council
MEETING DATE: 5/27/2015
TITLE:
Title
Agreement to Reconvey Deed of Trust in Consideration or General Release of Liability
End
FROM:
Charles R. Green, City Attorney
RECOMMENDATION:
Recommendation
To approve the attached Agreement to Reconvey Deed of Trust in Consideration of General Release of Liability.
Body
BACKGROUND:
The City is currently in discussions with a certain developer to develop certain real property located in the Rio Vista/Verano area. In performing its due diligence, a recent preliminary title report shows that certain City-owned parcels are encumbered by a $35 million Deed of Trust.
On or about February 3, 2004, Vestin ("Vestin"), as defined in the attached Agreement, made a construction loan (the "Loan") in the amount of THIRTY FIVE MILLION AND NO/100 DOLLARS ($35,000,000.00) to Rio Vista Nevada, LLC a Nevada limited liability company ("Rio Vista"). The Loan was secured by, among other things, that certain Construction Deed of Trust, Assignment of Leases and Rent and Security Agreement dated on or about February 3, 2004 (the "Deed of Trust"), which was given by Rio Vista, as trustor, to First American Title Company, as trustee, for the benefit of Vestin, as beneficiary. The Deed of Trust was recorded in the Official Records of Riverside County (the "Official Records") on February 3, 2004 as Document Number 2004-0075872. The Deed of Trust encumbered all that certain real property consisting of fourteen (14) separate tax parcels (the "Property"). Subsequent to the recordation of the Deed of Trust, certain beneficial interests in the Deed of Trust were transferred from Vestin to the other Vestin Companies (as defined in the attached Agreement). In lieu of foreclosure, Rio Vista transferred the Property to PSRV pursuant to that certain Grant Deed dated October 2, 2006 and recorded in the Official Records on July 11, 2007, as Document Number 2007-0450576.
On or about October 4, 2011, the City filed a Complaint in Judicial Foreclosure of Delinquent Community Facilities District No. 2000-1 Special Taxes in the Indio Branch of the Riverside Superior Court, Case Number INC 1108104 ("Complaint") seeking to collect on delinquent special taxes with respect to the Property. The Complaint named PSRV and the Vestin Companies, among others, as Defendants. On or about September 10, 2012, the City successfully foreclosed on the Property. On or about August 4, 2014, the Riverside County Sheriff held a Sheriff's Sale Under Foreclosure ("Sale") for thirteen (13) of the fourteen (14) parcels included in the Property. The City was the winning bidder of the thirteen (13) parcels sold at the August 4, 2014 Sale, as evidenced in the Sheriff's Deed recorded in the Official Records on August 4, 2014 as Document Number 2014-0292884.
Due to a legal description error committed by Lawyers Title Company in preparation of the litigation guarantee, the City filed a Motion for an Order to Correct Clerical Error in Judgment and Amend Judgment Nunc Pro Tunc, pursuant to CCP Section 473(d) for the portion of the Property bearing Assessor's Parcel Number ("APN") 677-551-032-8 ("Motion to Correct"). On December 23, 2013, the court entered the order in the City's favor on the Motion to Correct, thereby including and correcting the legal description of the fourteenth (14th) parcel (i.e. the portion of the Property bearing APN 677-551-032-8). Currently, the Sheriff's Sale Under Foreclosure of the fourteenth (14th) parcel, the portion of the Property bearing APN 677-551-032-8, is currently set for June 11, 2015. Despite the Judgment in foreclosure, a current preliminary title report obtained on the portion of the Property bearing APN 677-050-031-9 reveals that the lien of the Deed of Trust remains as a lien on title to the Property.
DISCUSSION:
The Agreement requires that Vestin reconveys the Deed of Trust and relinquishes its right, title and interest in and to the Property. In exchange, the City would forgive, acquit, and release the Vestin Companies and PSRV from any and all liability arising from or in any way connected with the Judgment or the Property.
FISCAL IMPACT:
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ATTACHMENTS:
Release and Reconveyance Agreement