DEED IN LIEU OF FORECLOSURE AGREEMENT
This DEED IN LIEU OF FORECLOSURE AGREEMENT (“Agreement”) is made as of the ______day of ______, ______, by and between Your Buyer (“Borrower”) and YOUR NAME (“Lender”).
WITNESSETH:
A. Borrower owns fee simple title to the real property and the improvements thereon located in the Your State, being more particularly described on Exhibit A to this Agreement, and being commonly known as YOUR ADDRESS, (“Property”).
B. Lender made a loan to Borrower in the principal amount of Three Hundred Five Thousand Dollars ($305,000.00) (“Loan”). The Loan is evidenced by a Promissory Note dated ______, made by Borrower, as maker in favor of Lender, as payee, in the face principal amount of Three Hundred Five Thousand Dollars ($305,000.00) (“Note”). The Loan is secured by a Deed of Trust dated ______, made by Borrower, as grantor, in favor of Lender, as beneficiary, recorded in the land records of the Clerk’s Office of the Circuit Court of Your State. YOUR ATTORNEY, Trustee, is grantee under the Deed of Trust. (The Note and Deed of Trust are sometimes collectively referred to as the “Loan Documents.”)
C. Borrower covenants, represents, and warrants to Lender that Borrower owns fee simple title to the Property and that there are no liens encumbering the Property other than the Deed of Trust. Lender and Borrower agree that Lender may, at its option and in its sole discretion, unilaterally rescind this Agreement, or any part thereof, if Borrower does not own fee simple title to the Property and/or if there is another lien encumbering the Property other than the Deed of Trust and/or if Borrower has made or makes any misrepresentation, whether material or not, to Lender in connection with this Agreement and/or the Loan Documents. In the event of such rescission, Lender shall be restored to its position as secured creditor under the Loan Documents.
D. The fair market value of the Property does not exceed the entire principal amount of the Loan, together with all accrued and unpaid interest, late charges, and other expenses.
E. With respect to all of Borrower’s obligations under this Agreement and the Loan Documents, TIME IS OF THE ESSENCE.
NOW, THEREFORE, for and in consideration of the foregoing premises and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Borrower and Lender agree as follows:
ARTICLE I
INCORPORATION OF RECITALS
1.01 Incorporation. The foregoing recitals to this Agreement are fully incorporated by this reference with the same force and effect as though restated in full.
ARTICLE II
REPAYMENT
2.01 Repayment of Note. In the event that Borrower shall breach any covenant of the Note or Deed of Trust, this Agreement shall be in full force and effect.
ARTICLE III
PROPERTY TRANSFER IN LIEU OF FORECLOSURE
3.01 Breach of Article II. Articles III, IV, V, VI, and VII of this Agreement shall not be effective unless and until Borrower breaches, whether material or not, Article II of this Agreement. Lender shall be authorized to unilaterally declare such breach and such declaration shall be binding upon Borrower. Lender need not communicate such declaration to Borrower or give any notice of such breach or declaration to Borrower. Upon such declaration, Articles III, IV, V, VI, and VII of this Agreement shall be effective immediately. The Deed and such other documents as are being held in escrow by Lender pursuant to Paragraph 2.04 shall be deemed delivered simultaneously with such declaration. Notwithstanding any other provision in Articles III, IV, V, VI, and VII of this Agreement, upon such declaration and delivery, the transfer of the Property from Borrower to Lender shall be complete and Lender may, at its option and in its sole discretion, dispense with the Closing referenced in Article VI.
3.02 Transfer of Property. Subject to the terms, provisions, conditions, covenants, and agreements contained in this Agreement, Borrower agrees to sell, grant, transfer, assign, and convey to Lender and Lender agrees to acquire from Borrower absolutely and free of any right of redemption or other right or interest of Borrower or anyone claiming by, through, or under Borrower, the following real and personal property (collectively, “Real and Personal Property”):
(a) the Property, as further defined and identified as follows: good, valid, indefeasible, and marketable fee simple title to the real property described on Exhibit A, all buildings, fixtures, and other improvements situated thereon, all of Borrower’s right, title, and interest in and to and all easements, rights, tenements, and appurtenances thereunto belonging or appertaining to the real property and improvements, and all of Borrower’s right, title, and interest in and to any and all streets, alleys, or public ways adjacent to the real property, before or after vacation thereof;
(b) all of Borrower’s right, title, and interest as lessor or lessee in all leases, licenses, and other agreement to occupy all or any part of the Property together with all rents and other sums due, accrued, or to become due under such lease, license, and agreement, all rents that are received and allocable to periods following the Due Date of the Note and all guarantees by third parties of any tenant’s obligations under said leases, and all lease security and other deposits, if any (collectively, “Leases”);
(c) all right, title, and interest of Borrower in and to all plans and specifications relating to the improvements (“Plans and Specifications”) and all unexpired claims, warranties, and guarantees, if any, received in connection with construction or equipping of the Property, if and to the extent assignable (“Warranties”);
(d) all licenses, permits, certificates of occupancy, and franchises issued by any federal, state, county, or other governmental authority relating to the use, maintenance, or operation of the Property (“Licenses and Permits”), running to, or in favor of, either Borrower or the Property or both; and
(e) all other tangible and intangible personal property, equipment, and supplies located at or used in connection with the Property, whether now owned or hereafter acquired by the Borrower in connection with the development, leasing, management, use, and operation of the Property (“Personal Property”).
ARTICLE IV
CONSIDERATION
4.01 Covenant Not to Sue. In consideration for the transfer of the Real and Personal Property by Borrower to Lender subject to the terms, provisions, conditions, covenants, and agreements contained in this Agreement, Lender hereby covenants not to file suit or otherwise attempt collection of any deficiency under the Note, and Lender will cancel the Note and release the Deed of Trust and all other obligations arising under any of the Loan Documents.
4.02 Unilateral Rescission. Lender and Borrower agree that Lender may, at its option and in its sole discretion, unilaterally rescind this Agreement, or any part thereof, if Borrower does not own fee simple title to the Property and/or if there is another lien encumbering the Property other than the Deed of Trust and/or if Borrower has made or makes any misrepresentation, whether material or not, to Lender in connection with this Agreement and/or the Loan Documents. In the event of such rescission, Lender shall be restored to its position as secured creditor under the Loan Documents.
ARTICLE V
TITLE
Deleted
ARTICLE VI
CLOSING
Deleted
ARTICLE VII
COVENANTS
7.01 Cooperation. Commencing on the date of this Agreement, Borrower will reasonably cooperate, upon Lender’s request, with Lender and, without limitation, any management company designated by Lender, to facilitate an orderly transfer of the ownership and management of the Property.
7.02 Rent Collections. Borrower agrees that if Borrower or any affiliate of Borrower receives any rental payment or other payment from any tenant or other occupant or user of the Property following recording of the Deed, Borrower will deliver to Lender, with proper endorsements, such funds not later than two (2) business days following receipt of such funds.
ARTICLE VIII
REPRESENTATIONS AND WARRANTIES
8.01 Representations and Warranties of Borrower. Borrower represents and warrants to Lender as follows:
(a) Organization and Authority. Borrower has the capacity, right, power, and authority to execute this Agreement and to perform its respective obligations hereunder and to consummate the transaction described in this Agreement, including the execution and delivery of all required documentation. The execution of this Agreement has been authorized by all necessary partnership or corporate authorizations of Borrower (if applicable). The execution, delivery, and performance of this Agreement by Borrower does not breach, conflict with, or contravene: (i) Borrower’s articles of incorporation, bylaws, and shareholders’ agreement or like documents; (ii) any agreement, instrument, document, or indenture to which Borrower is a party or by which it or the Property is bound; (iii) any applicable law; or (iv) any judgment, writ, or order directed to Borrower or by which Borrower may be bound.
(b) Bankruptcy. Borrower has not filed a petition in any case, action, or proceeding under the Bankruptcy Code or any similar state law; no petition in any case, action, or proceeding under the Bankruptcy Code or any similar state law has been filed against Borrower that has not been dismissed or vacated; and Borrower has not filed an answer or otherwise admitted in writing insolvency or inability to pay debts or made an assignment for the benefit of creditors or consented to an appointment of a receiver or trustee of all or a material part of its property. The transaction contemplated in this Agreement is not a preference, voidable transfer, fraudulent conveyance, or otherwise in violation of the Bankruptcy Code or any other similar state or federal law.
(c) Absence of Litigation. Borrower has received no written notice and has no knowledge of any pending or threatened litigation or administrative proceeding involving in any manner the Property, its ownership, leasing, operation, management, use, or maintenance, or this transaction.
(d) Arm’s Length Transaction. Borrower has agreed to convey title to the Property in lieu of the exercise of Lender’s remedies pursuant to the Loan Documents, and throughout the negotiation, preparation, and execution of this Agreement, the parties have been, and through the Closing will be, represented by competent legal counsel of their own choosing. This Agreement was entered into out of the free will of Borrower and pursuant to arm’s-length negotiations, and Borrower believes this Agreement is fair. Lender has not taken advantage of Borrower by threats, intimidation, overreaching, unconscionable conduct, or otherwise, and Borrower is proceeding voluntarily in this transaction in what it perceives to be its own best interest.
8.02 Indemnity. Borrower agrees to defend, indemnify, and hold harmless Lender and its successors, assigns, members, officers, employees, agents, and attorneys from and against any losses, damages, costs (including, without limitation, attorneys’ fees, court costs, and costs of appeal), expenses, judgments, liens, decrees, fines, penalties, liabilities, claims, actions, suits, and causes of action
arising, directly or indirectly, from any breach, default, or violation by Borrower of any warranty, representation, covenant, agreement, or provision contained in this Agreement or in the documents executed and delivered by Borrower pursuant to this Agreement.
ARTICLE IX
NO OBLIGATION OF LENDER TO THIRD PARTIES
9.01 No Third-Party Beneficiary. Borrower acknowledges and agrees that the transfer to Lender the Property pursuant to the terms of this Agreement shall not create any obligations on the part of Lender to third parties that have claims of any kind whatsoever against Borrower with respect to the Property, and Lender does not assume or agree to discharge any liabilities pertaining to the Property except as otherwise expressly provided in this Agreement.
ARTICLE X
ABSOLUTE CONVEYANCE
10.01 Absolute Conveyance. The conveyance of the Real and Personal Property to Lender according to the terms of this Agreement is an absolute conveyance of all of Borrower’s right, title, and interest in and to the Real and Personal Property in fact as well as form and was not and is not now intended as a mortgage, trust conveyance, deed of trust, or security instrument of any kind, and the consideration for such conveyance is exactly as recited in this Agreement and Borrower has no further interest (including rights of redemption) or claims in and to the Real and Personal Property or to the rents, proceeds, and profits that may be derived from it, of any kind whatsoever.
ARTICLE XI
NO MERGER
11.01 No Merger. All representations and warranties under this Agreement and performance due herein shall survive closing and shall not be merged in the deed of conveyance.
ARTICLE XII
NOTICES
12.01 Notices. Any notice pursuant to this Agreement shall be given in writing by (a) personal delivery, or (b) reputable overnight delivery service with proof of delivery, or (c) United States mail, postage prepaid, registered or certified mail. Any notice shall be sent to the addressee at the address set forth below or to such other address or to the attention of such other person as the addressee shall have designated by written notice sent in accordance with this Article. If given by personal delivery, all notices shall be deemed effectively given on the date that the notice is received or refused. If given by overnight delivery service of United States mail, all notices shall be deemed effectively given as of the date of first attempted delivery. Unless changed in accordance with the preceding sentence, the addresses for notices given pursuant to this Agreement shall be as follows:
To Borrower: Your Buyer
To Lender: YOUR NAME
ARTICLE XIII
MISCELLANEOUS
13.01 Entire Agreement. This Agreement, the exhibits attached to it, and all other instruments and documents executed and delivered at Closing by either party embody the entire agreement between the parties in connection with the contemplated transaction, and there are no oral or parol agreements, representations, or inducements existing between the parties relating to the contemplated transaction that are not expressly set forth in and covered by this Agreement. This Agreement may not be modified except in writing signed by the parties.
13.02 Successors and Assigns. This Agreement shall be binding upon and shall inure to the benefit of the parties and their respective heirs, administrators, executors, personal representatives, successors, and assigns.
13.03 Waivers. No waiver by any party at any time of a breach of any provision of this Agreement shall be deemed a waiver of a breach of any other provision or a consent to any subsequent breach of the same or any other provision. If any action by any party requires the consent or approval of another party, consent or approval of such action on one occasion shall not be deemed a consent to or approval of any other action on the same or any subsequent occasion.