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A. An owner shall not encumber a unit with debt, including by means of refinancing, exclusive of interest, in any form which exceeds at any time, 100% of the maximum resale price.

B. Condition of Unit at Resale. Each owner shall be responsible for ensuring that the unit is in good condition at the time of resale, with reasonable wear and tear acceptable. This obligation includes all matters which are in the control and responsibility of an owner, and includes, but is not limited to:

1. Cleaning the unit and making necessary repairs, maintain plumbing, mechanical fixtures, appliances, carpet or other flooring, roofs, painting and other similar items in good working order and condition.

2. The unit must contain all of the appliances that originally came with the unit, of similar standard.

3. The owner must comply with the Town code and there must be no outstanding Town code violations.

C. In no event shall a unit be sold for an amount in excess of the Maximum Resale Price.

1. The Maximum Resale Price is determined in accordance with the following formula:

a. Initial Purchase price plus:

b. Appreciation: 2% of the initial purchase price per year from the acquisition to the date of an owner’s resale date (pro-rated at the rate of .167 percent for each whole month for any part of a year), which percentage shall be calculated annually without compounding, plus

c. Allowance for Capital Improvements: At the time of resale, the seller/owner may add permitted capital improvements that were made to the Unit by that seller/owner. The amount that may be added into the resale calculation is capped at ten percent (10%) of the original purchase price paid by the first buyer to the developer or to the Town as established in the original Promissory Note, plus

d. Additional Maintenance Incentives. In addition to the permitted capital improvements, deed restricted properties with an appreciation cap are entitled to increase the sale price of their property for the purpose of approved maintenance items. All owners must submit the cost of the qualified maintenance items to the Town prior to the sale of the property. Because many deed restricted neighborhoods were developed before these rules and regulations were established there are formulas specific to different neighborhoods that have been created to allow a maintenance incentive without negatively impacting affordability over time. Owners in the existing neighborhoods may opt into the maintenance incentive, but are required to execute an amended and restated restrictive covenant in order to do so. The formula for each neighborhood as well as the current standard for maintenance is listed in Exhibit E, attached hereto. The maximum allowance for maintenance incentive that can be added is 3% of the sellers purchase price.

e. Real estate sales commission and closing costs. Except as otherwise provided in an existing recorded restrictive covenant, the maximum real estate costs that may be added to the price is 2%. For sale by owner is not authorized to include any real state commission unless the owner is a real estate broker licensed according to the laws of the State of Colorado. The 2% includes real estate commission and closing costs actually incurred by the seller in connection with the sale of the unit.

f. No Additional Consideration. The Owner shall not accept any other consideration which would cause an increase in the purchase price above the Maximum Resale Price so as to induce the Owner to sell to such prospective buyer. An Appreciation Limiting Promissory Note and an Appreciation Limiting Deed of Trust are required as part of the sale for all appreciation capped unit. The Note and Trust is required to affirm that the sale price does not exceed the Maximum Sale Price. The seller and buyer may be required to also execute a notice of lien and /or confirm that the sale was not contingent upon the sale of any other personal property and that no other compensation was required from the buyer.