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SANDELIN <br /> LAW OFFICE <br /> Page 2 <br /> January 29, 2008 <br /> 5. Commence a lawsuit to collect the amount of the default. <br /> 6. Terminate the Development Agreement, which would necessarily result in revocation of <br /> plat approval. <br /> Termination of the Development Agreement would be the most drastic remedy. Given that the <br /> maintenance bond does not meet the requirements of the Development Agreement and that the <br /> bonding company should be aware of the terms of the Development Agreement we could demand <br /> that the bonding company issue a performance bond rather than a maintenance bond. If we are <br /> successful then the City could draw upon the performance bond in order to be reimbursed the <br /> amount due. <br /> At this point my advice, at a minimum, would be to record a Notice of Adverse Claim (similar to a <br /> lien) by the City against the entire plat. This will ensure that upon the sale of a lot/home within <br /> the development that the City would be reimbursed from the sale proceeds. The Developer is <br /> required to reimburse the City for its costs of enforcement so any fees and expenses incurred by <br /> the City collecting the amount due would be added to the final amount to be paid to the City. <br /> Beyond recording the Notice of Adverse Claim we should contact the bonding company and <br /> require the reissuance of the performance bond as opposed to the maintenance bond. The City <br /> may also commence a lawsuit to collect the balance due however I think the recording of the <br /> Notice of Adverse Claim will be equally effective and less expensive. In addition to recording the <br /> Notice of Adverse Claim the City may withhold issuing additional land use permits for the project <br /> until the default is cured. If we can convince the bonding company to reissue a performance bond <br /> that would more than likely be the quickest method to cure the default, however, that assumes <br /> cooperation from the bonding company. <br /> If you have any questions please let me know. Thank you. <br /> Very truly yours, <br /> Paul J. Sandelin <br /> p s andelin(&lakesarealaw.coin <br /> PJS:jdf <br /> S:\LA WET E XT\25000.047\P eine.ltr3.d oc <br />