THIS AGREEMENT, made and entered into this [date], by and between [name] whose principal address is [address] (hereinafter Applicant) and [bank], a financial institution duly organized and existing under and by virtue of the laws of the United States of America, with its principal offices located at [address] (hereinafter the Bank).
WITNESSETH:
WHEREAS, Applicant is the owner in fee of certain real estate located at [address] (hereinafter the Premises);
WHEREAS, Applicant is in the process of submitting a completed Loan Application to Bank for purposes of obtaining financing for the construction of a certain building on said Premises (said construction hereinafter the Improvements); and
WHEREAS, Applicant has submitted drawings, plans, or specifications relative to said Improvements, said drawings, plans, or specifications being attached hereto, made a part hereof and designated as Exhibit A [omitted]; and
WHEREAS, any applications for financing for the completion of said Improvements to be considered by the Bank shall be subject to and contingent on the completion by Applicant of all of the terms and conditions hereinafter set forth; and
WHEREAS, the Bank desires to notify, in advance, the Applicant of the terms and conditions by which Applicant will be bound in the event the Bank decides, in its sole discretion, to provide said financing.
NOW, THEREFORE, in consideration by the Bank's review of the Application for financing to be submitted simultaneously herewith, the Applicant hereby agrees to comply with the following terms and conditions should this application for financing be approved by the Bank:
1. Applicant shall submit an application for financing simultaneously herewith, which application shall
be reviewed by the Bank and, in the event the same is approved by the Bank, the Bank shall loan and advance to Applicant a sum not to exceed [$ amount], with interest at the rate of [percent] per annum, payable in [number] equal monthly installments of principal and interest. Nothing contained in this Agreement shall be deemed as an obligation, on behalf of the Bank, to approve said application, which decision shall be made independently by the Bank after consideration of this Agreement, all relevant information submitted in conjunction with the application submitted by Applicant, and such other documents or criteria as, in the sole discretion of the Bank, may be relevant.
2. In the event said financing is approved by the Bank, Applicant shall cause to be delivered to the Bank a Note in the amount as aforesaid, or in such other amount as may be approved by the Bank, and accepted by Applicant, and as collateral therefore, Applicant, as owner of the Premises, shall deliver a First Mortgage to the Bank covering the Premises and Improvements.
3. Applicant hereby agrees that no materials shall be delivered and no labor performed on the Premises until such time as the First Mortgage to the Premises has been executed by the Applicant, and filed of record. In addition thereto, Applicant agrees to obtain and submit to the Bank a Stipulation Against Liens executed in such form as may be reasonably required by the Bank, and filed of record in the Office of the Prothonotary in and for [county, state].
4. In the event the total cost of Improvements shall exceed the amount of any loan to be approved by the Bank, Applicant agrees that the difference between the loan proceeds and the total costs of construction for the Improvements shall be used by Applicant prior to any obligation on behalf of the Bank to advance moneys under any construction mortgage granted to Applicant. Applicant agrees to provide to the Bank such verification as may be required by the Bank that said payments have been made by Applicant.
5. In the event the construction loan is approved by the Bank, Applicant shall:
a. Proceed with the erection on the Premises of the Improvements in a diligent, safe, reasonable, and professional fashion.
b. Provide suitable assurances to the Bank against any loss, damage, or liability arising from any defect in the materials or workmanship furnished in conjunction with the construction of the Improvements.
c. Maintain, during the period of construction, and continue throughout the period in which the loan from the Bank to Applicant is outstanding, a suitable fire and extended insurance policy and other insurance as may be reasonably required by the Bank, in such form and amounts as are suitable to the Bank, and naming the Bank as mortgagee.
6. Applicant agrees that the Bank's obligation to make any advances from such funds as may have been approved for the construction of the Improvements in contingent on the following items having been supplied to the Bank by Applicant: a. A title certificate shall be submitted to the Bank insuring that the Premises are unencumbered and subject only to such exceptions as shall be agreeable to the Bank, in the sole discretion of the Bank, and that the Mortgage granted to the Bank by Applicant shall create a first lien on the Premises.
b. Within [number] days after written notice is given by the Bank to Applicant, Applicant shall pay or discharge any mechanic's lien or other encumbrances that may be filed or recorded against the Premises and that have or may have a priority of lien or distribution over the mortgage of the Bank.
c. Upon request from the Bank, Applicant shall verify that the work performed on the Improvements has been done in a good and professional fashion, and that the work has reached the percentage of completion required prior to any distribution.
7. The Bank reserves unto itself the right to withhold any distribution of loan proceeds until such time as all contractors, subcontractors, and materialmen have executed a Release of Liens in a form satisfactory to the Bank, acknowledging by the contractor, subcontractor, or materialmen that all payments to which they are entitled have been made to them in accordance with the schedule of payments entered into between Applicant and a contractor, subcontractor, or materialman.
8. All distributors by the Bank shall be made on a draft made payable to Applicant and the contractor or other payee. Execution and negotiation of the draft by Applicant shall constitute an acknowledgment by Applicant that the distribution of loan proceeds is in accordance with the provisions of this Agreement and the payment schedule entered into between Applicant and the individual payee.
9. The Bank assumes no responsibility for the completion of the Improvements either in accordance with the plans and specifications or for the contract price, nor shall it be liable for any acts other than gross negligence or malfeasance in disbursement of the construction funds.
10. Applicant does hereby release and discharge the Bank of and from any such liability and further agrees to indemnify and save harmless the Bank from and against any and all liability, damages, costs, and expenses that the Bank may sustain by reason of its application of said funds in good faith for the purposes hereinabove set forth.
11. In the event construction does not proceed in a diligent fashion, or is discontinued prior to completion, or in the event Applicant fails to otherwise comply with any of the terms and conditions set forth either in this Agreement, or in such other documents as may be executed relative to this loan, and in the event the same is necessary to preserve the Bank's collateral, Applicant agrees that the Bank may, in its sole discretion, take such steps as are necessary to complete the Improvements and protect the improvements from depreciation, and the expenses incurred by the Bank in so doing shall be deducted from the construction funds in the possession of the Bank, or in the event the construction funds available are insufficient to complete the Improvements, any funds further distributed by the Bank to complete the Improvements shall constitute a further advance by the Bank to Applicant, and shall be subject to the same terms and conditions as the original construction loan. In the event construction is not completed within the initial [number] month period authorized under the Construction Loan approval, any moneys so remaining shall be transferred into an escrow account, which transfer shall constitute the termination of the construction loan period, and shall commence the permanent financing portion of the combined loan. Moneys held in escrow shall earn interest at the prevailing rate for a statement savings account at the Bank, shall be released only upon a draft by the Bank, and all distributions shall be subject to the terms of this Agreement, and any subsequent Agreement entered into between the Bank and Applicant. All interest earned on the escrow account shall be credited to Applicant.
12. The occurrence of any one or more of the following shall, at the option of the Bank, and on written notice from the Bank to Applicant, constitute an event of default hereunder, and all further obligations on behalf of the Bank to distribute loan proceeds shall, if the Bank so elects cease and terminate, and all sums advanced by the Bank, which are then unpaid, together with all interest due thereon, shall become immediately due and payable: a. A petition shall have been filed by Applicant under any of the provisions of the Federal Bankruptcy Act or any other federal or state insolvency or similar law, or such petition shall have been filed against Applicant.
b. Any execution shall have been levied against the Premises and shall continue unstayed and in effect for a period of [number] days.
c. Work on the construction of the Improvements shall have been discontinued for any reason whatsoever, except causes beyond the control of Applicant and/or the contractors employed by Applicant, if any.
d. Applicant shall have made any material amendment in any contract with any contractor or architect engaged by Applicant concerning any changes in the Plans and Specifications, without the prior written consent of the Bank.
e. Applicant shall have failed to observe and perform each and every one of the terms, covenants, and promises on the part of Applicant to be observed and performed under this Agreement, the Note, First Mortgage, or any of the other documents delivered to the Bank in connection with the loan, or any representation or warranty made by Applicant shall appear to be false or incorrect in any material respect.
f. The Improvements shall be materially damaged or destroyed by fire or any other casualty.
13. This Agreement may not be assigned by Applicant, without the prior written consent of the Bank.
14. Applicant agrees that, in the event Applicant's loan is approved by the Bank, which approval is within the sole discretion of the Bank, Applicant will execute any and all documents necessary and required by the Bank, including, but not limited to, a Note, a First Mortgage, and a Construction Loan Rider.
15. This Agreement shall extend to and bind the parties hereto, and their respective heirs, executors, administrators, and permitted assigns.
16. The validity and affect of this Agreement shall be determined by reference to the law of [state].
IN WITNESS WHEREOF, the parties hereto have executed this Agreement the day and year first above written.
[Signatures,
dates]
This legal form, letter, or template should not be used without consulting an attorney first. It may not be valid in your state, country or jurisdiction.
| If you can't find what you need in our free forms, templates, and letters, over 25,000 forms covering almost every topic can be found here or even more here. These forms cost a few dollars, but generally are available in customized versions for various states and are usually more complete. |
Back to Real Estate Development and Financing Agreements and Contracts
|
