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Summary Description
Broadmead Purchase Plan

This summary sets forth the terms and conditions of the Broadmead Housing Purchase Plan. Tenured members of the Faculty of the University, Administrative Staff Members Grade 7 and above, and all other employees with employment ranks equivalent to a tenured position are eligible to participate in this plan.

The purchase price of a Broadmead property is established as follows: The University obtains a value from a qualified appraiser who determines the unrestricted fair market appraised value of the property. This value is reduced by 20% to reflect the restrictions, options and special terms described below to establish the purchase price of the property. The University conveys the property to the eligible employee in fee simple, subject to restrictive covenants that the property may be used only for a principal personal residence; that University approval of major changes in the structure or exterior of the house is required; and including other similar use covenants set forth in all Broadmead deeds. Owners are solely responsible for all costs associated with carrying the property after closing of title, including maintenance, utilities, insurance and payment of all real estate taxes.

As part of the transaction, the Purchaser grants to the University two assignable options. Option A provides that the University may repurchase the property upon the occurrence of any of the following events: The death of both the employee and his/her spouse; the employee leaves the employ of the University (other than by retirement); the employee ceases to make the home his/her personal residence; or there is a change in title to the property. Option B provides that the University may repurchase the property upon three years written notice to the Owner based upon factors related to academic or other University expansion purposes.

The price for the University's repurchase of the property under the conditions of either Option A or Option B is as follows: The Owner obtains an appraisal from a qualified real estate appraiser who determines the unrestricted fair market value of the property. This value is reduced by 20% to reflect the restrictions, the options and other terms of the Broadmead Purchase Plan. The University will have 60 days in which to exercise or assign its option to purchase the property. If the University does not exercise or assign its option to purchase the property within the 60-day period, the Owner of the property may sell the property to any person at any price.

The purchase of a home under the Broadmead Purchase Plan is normally financed by a University mortgage loan. The University's Office of Real Estate Finance administers the University Mortgage Loan Program and should be consulted regarding the financing available to eligible employees to assist them in the purchase of a Braodmead property. Owners are not guaranteed that the resale price of a home will equal or exceed the original price of the property or the outstanding principal balance of their mortgage when the house is sold.

The University has obtained a Ruling from the Internal Revenue Service regarding the formula outlined above. In general, this Ruling provides that the Plan will not be challenged by the IRS in regard to its legal framework. The IRS will not, however, commit itself to accept factual assertions by taxpayers. Therefore, the correctness of appraisals obtained under the plan described above are subject to challenge by the IRS (generally speaking, for a three-year period after the year of purchase). If the IRS determines an employee paid too little for a home, the "underpayment" might be treated as taxable income to the employee by the IRS.

This is a summary description of the Broadmead Purchase Plan. The deed and mortgage documents should be reviewed for full details. The University will not be liable for any tax or other consequences that may result from changed circumstances in the future, such as changes in the law, changes in position on the part of the IRS, or the like. Those who wish to pursue the possibility of a purchase under the Plan should, therefore, obtain their own legal advice. The University's Office of General Counsel will provide copies of all relevant documents and other related information available to potential purchasers and to their attorneys upon request.