55B - RESO - WARNER ASSESSMENT DISTRICT

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PURCHASE PRICE OF APPLICABLE PROPERTY WOULD BE RECEIVED AT THE FORECLOSURE SALE. SEE "SPECIAL RISK FACTORS." NOTWITHSTANDING ANY OTHER PROVISION OF THE FISCAL AGENT AGREEMENT, THE CITY IS NOT OBLIGATED TO ADVANCE AVAILABLE FUNDS FROM THE CITY TREASURY TO CURE ANY DEFICIENCY IN THE REDEMPTION FUND OR RESERVE FUND ESTABLISHED UNDER THE FISCAL AGENT AGREEMENT. The 1913 Act provides that the court in a foreclosure proceeding has the power to order property securing delinquent assessment installments to be sold for an amount not less than all assessment installments, interest, penalties, cost, fees and other charges that are delinquent at the time the foreclosure action is ordered and certain other fees and amounts as provided in the 1913 Act. The court may also include subsequent delinquent assessment installments and all other delinquent amounts. If the property to be sold fails to sell for the minimum price described above, the City may petition the court to modify the judgment so that the property may be sold at a lesser price or without a minimum price. In certain circumstances, the court may modify the judgment after a hearing if the court makes certain determinations, including, but not limited to, a determination that the sale at less than the minimum price will not result in an ultimate loss to the owners of the bonds or a determination that the owners of at least 75% of the principal amount of the bonds outstanding have consented to the petition and the sale will not result in an ultimate loss to the non - consenting bondowners. Neither the property owner nor any owner of a security interest in the property nor any defendant in the foreclosure action nor any agent thereof may purchase the property at the foreclosure sale for less than the minimum price. Prior to July 1, 1983, the right of redemption from foreclosure sales was limited to a period of one year from the date of sale. Under legislation effective July 1, 1983, the statutory right of redemption from such foreclosure sales has been repealed. However, a period of 140 days must elapse after the date notice of levy of the interest in real property was served on the judgment debtor before the sale of such lot or parcel can be made. Furthermore, if the purchaser at the sale is the judgment creditor (e.g., the City), an action may be commenced by the delinquent property owner within 90 days after the date of sale to set aside such sale. The constitutionality of the aforementioned legislation which repeals the one year redemption period has not been tested and there can be no assurance that, if tested, such legislation will be upheld. (Section 701.680 of the Code of Civil Procedure of the State.) Sales of Tax Defaulted Property Generally Property securing delinquent Assessment Installments which is not sold pursuant to the judicial foreclosure proceedings described above may be sold, subject to redemption by the property owner, in the same manner and to the same extent as real property sold for nonpayment of general County property taxes. On or before June 30 of the year in which such delinquency occurs, the property becomes tax defaulted. This initiates a five year period during which the property owner may redeem the property. At the end of the five year period the property becomes subject to sale by the County Treasurer and Tax Collector. Except in certain circumstances, as provided in the 1915 Act, the purchaser at any such sale takes such property subject to all unpaid Assessments, interest and penalties, costs, fees and other charges which are not satisfied by application of the sales proceeds and subject to all public improvement assessments which may have priority. See "SECURITY FOR THE BONDS — Covenant to Commence Superior Court Foreclosure Proceedings" for the circumstances under which the City is required to take action to foreclose the lien of delinquent Assessments. Delinquency Resulting in Ultimate or Temporary Default on Bonds If a temporary deficiency occurs in the Redemption Fund with which to pay Bonds which have matured, past due interest or the principal and interest on Bonds coming due during the current tax year, but it does not appear to the Treasurer of the City that there will be an ultimate loss to the Bondowners, the Treasurer shall, pursuant to the 1915 Act, direct the Fiscal Agent to pay the principal of Bonds which have matured as presented 13 55B -83