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held by the California Housing Finance Agency, and provided that the City has received timely notice of such purchase option event (which notice could include a notice of default recorded pursuant to California Civil Code Section 2924 or successor provisions), then this Option shall automatically terminate if title to the Property is transferred by foreclosure or deed -in -lieu of foreclosure, or if the insured mortgage is assigned to the Secretary. 15. Voidable Transfers. As long as the Option has not been abandoned pursuant to Section 6(e), any actual or attempted sale, conveyance, transfer or other disposition of the Property, or of any estate or interest therein, in violation of the terms and conditions of this Agreement, shall be voidable at the election of the City. 16. Permitted Transfers. The following transfers ("Permitted Transfers") of title to the Property, or of any estate or interest therein, shall not be subject to the City's prior approval, shall not trigger the exercise of the Option, and shall not be considered Option Events: (a) taking of title by a surviving joint tenant; and (b) any good faith transfer to an Eligible Household. The following inheritances are not unconditionally permitted, but do allow a compassion period: (c) inheritance of the unit by a Non -Eligible child or step child (at which time the City will allow a one-year compassion period between the time the estate is settled and the time when the property must be sold to an Eligible Household); and inheritance by any other Non -Eligible person (at which time the City shall require resale to an Eligible Household within 180 days). 17. Permitted Encumbrances and Refinances. This Option shall not become exercisable as the result of Owner's encumbering the Property for the purpose of securing financing to purchase the Property pursuant to the Program, or to refinance existing indebtedness incurred to purchase the Property pursuant to the Program. The maximum amount (the "Permitted Encumbrance Amount") of any refinancing permitted by this section shall not exceed an amount equal to ninety percent (90%) of the Base Resale Price calculated as provided in Section 11, as modified by this section. The Permitted Encumbrance Amount shall be the Base Resale Price calculated as if the City has received notification of an Option Event on the earlier of (a) the date on which the deed of trust or mortgage securing the refinancing indebtedness is filed for record in the Office of the recorder of the County of Alameda, or (b) the date the City receives Notice of Intent to Transfer pursuant to Section 6(a) above. 18. Subordination. This Agreement and the Promissory Note shall be secured by a deed of trust on the Property (the "City Deed of Trust"). The City Deed of Trust shall be subordinate to the liens of the senior deeds of trust to be recorded against the Property, and any deed of trust held by the California Housing Finance Agency." 19. Obligation of Owner After Option Abandonment. If the City records a notice of abandonment of the Option, then the Property may be sold by Owner to a third party without restriction as to price; however, upon such sale, Owner shall pay to City an amount ("City's Share") equal to eighty-five percent (85%) of the difference between (a) the actual sales price net of reasonable and customary real estate commissions paid (such commissions not to exceed six percent (6%) of the actual sales price), and (b) the Adjusted Resale Price. The City's Share shall be paid to the City upon close of escrow on the sale of the Property, or upon execution of a contract of sale, whichever shall first occur. Owner shall not receive any proceeds from the sale unless and until the City has been paid the full amount of the City's Share