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18 <br /> If neither Orange County nor the sponsoring non-profit organization advises the Buyer <br /> in a timely fashion of wits intent to purchase the Property, then the Buyer shall <br /> be free to transfer the property in accordance with the Equity Sharing subsection of this <br /> policy. <br /> C. Equity Sharing <br /> • All financial contributions provided by the County will be provided as a deferred second loan secured by a forty <br /> (40)year Deed of Trust and Promissory Note,forgivable at the end of 40 years. [CASA instead recommends <br /> forgiving the debt over the life of the loan (Durham does this—i.e. 1140th forgiven each year), or after the first 10 year! <br /> on an accelerated basis like HUD does (I.e. 1130th forgiven in years 11-40). This offsets the impact of depreciation on <br /> the value of the asset.] <br /> • This Deed of Trust and Promissory Note shall constitute a lien on the <br /> Property; subordinate only to private construction financing or permanent first <br /> second?l mortgage financing._ <br /> The 99 year period of affordability for each individual housing unit will be <br /> secured by a declaration of restrictive covenants that will inc0lporate a right of first <br /> refusal that may be exercised by a sponsoring non-profit organization and/or <br /> Orange County. This declaration of restrictive covenants will be further secured by a <br /> deed of trust. <br /> The non-profit organization and/or the County as applicable retains full <br /> responsibility for compliance with the affordability requirement for assisted units <br /> throughout the term of affordability, unless affordability restrictions are terminated due to <br /> the sale of the Property to a non-qualified buyer. <br /> If the buyer no longer uses the Property as a principal residence or is unable to <br /> continue ownership, then the buyer must sell, transfer, or otherwise dispose of their <br /> interest in the Property only to a qualified homebuyer, i.e., a low-income household, one <br /> whose combined income does not exceed 80% of the area median household income <br /> by family size, as determined by the U.S. Department of Housing and Urban <br /> Development at the time of the transfer,to use astheir principal residence. <br /> However, if the property is sold during the term of affordability to a non-qualified <br /> homebuyer to be used as their principal residence, the net sales proceeds (sales price <br /> less: 1) selling cost, 2) the unpaid principal amount of the original first mortgage and <br /> 3) the unpaid principal amount of the initial County contribution and any other initial <br /> government contribution secured by a deferred payment promissory note and deed <br /> of trust, or "equity" will be divided 50/50 by the seller of the Property and the County. <br /> [Two comments: 1 ) This is a bit confusing and would benefit from an <br /> example. 2) What's the logic for giving a seller who violates the <br /> covenant 50% of profits? Seems it could incentivize sales if rising <br /> market prices make it financially attractive.11f the initial County contribution <br /> does not have to be repaid because the sale occurs more than forty years after the <br /> County contribution is made, then the seller of the Property and the County will divide <br /> the entire equity realized from the sale. [First, this equity sharing language here does <br />