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Construction Mortgage Takeout Agreement
(With Long-Term Lender)
[name and address of construction lender]
1. Description of Construction Loan Agreement. We understand that you have entered into a Construction Loan Agreement with [borrower or owner], dated [date], pursuant to which you will make advances, not to exceed a total of ---------- dollars ($----------), to finance the construction of a [description] on premises located at [address] upon the terms and conditions set forth in the Construction Loan Agreement, a copy of which is attached and marked "Exhibit A" [omitted].
2. Sale of Note and Mortgage. Your loan, when the final advance has been made, will be evidenced by a promissory note, and secured by a first mortgage in the form that you have submitted to us. We have reviewed the proposed form of note and mortgage and of the title policy to be issued by [title insurance company], a copy of which is attached and marked "Exhibit B" [omitted]. We agree to purchase from you for the principal sum of ---------- dollars ($----------) (or whatever amount less than that sum is still unpaid at that time), and you agree to sell to us the note and mortgage upon the following terms and conditions:
a No Event of Default. The terms and conditions set forth in Exhibit A shall have been complied with, and there shall exist at the time of the transfer to us no condition or event that constitutes an event of default as defined in the mortgage or that, after notice or lapse of time or both, would constitute an event of default.
b. Delivery of Title Policy. We shall receive the title policy of [title insurance company], insuring our title as assignee of the mortgage in the amount of ---------- dollars ($----------) (or such lesser amount as may be unpaid at that time), with only the exceptions to title that are set forth in Exhibit B.
c. Compliance With Laws and Regulations. We shall have been furnished with a plot of survey showing that the exterior walls of the building are within the property lines and satisfactory proof of compliance with any and all laws, regulations, and zoning requirements applicable to the construction of the building. The proof of compliance will be deemed satisfactory if it takes the form of a certificate of a member of the architectural firm of [name], which is supervising construction, to the effect that the building has been completed in accordance with the plans and specifications approved by us, and that all laws, regulations, and zoning requirements have been complied with.
d. Approval of Plans. We have approved the plans for a [description of building and basement]. Copies of the plans and specifications bearing our stamp are delivered to you herewith. The building, including basement, shall have been completed substantially in accordance with these plans and specifications, shall contain approximately [number] cubic feet, and shall cost (excluding land, architect's fees, and furnishings) not less than ---------- dollars ($----------), and shall have been completely furnished and equipped and in operation prior to [date].
e. Insurance Policies. We shall have been furnished with fire insurance policies in duly incorporated companies authorized to do business in [state] and approved by us in an amount not less than ---------- dollars ($----------) with Mortgagee clause in our favor attached [omitted].
f. Validity of Transaction With Borrower. We shall have received certified copies of the Articles of Incorporation and Bylaws of [borrower or owner], a list of its officers, certified copies of the proceedings of the Shareholders and Directors of the corporation authorizing the execution of the note and mortgage, and the opinion of counsel for the corporation that the note is a valid and enforceable obligation of the corporation in accordance with its terms and that the mortgage is a valid and enforceable first lien on the real estate of the corporation, subject only to the exceptions noted on the title policy issued by [title insurance company].
g. Assignment of Note and Mortgage. We shall have received an assignment of the note and mortgage duly executed by you in recordable form.
3. Binding Agreement. If the foregoing is acceptable to you, will you please sign and return to us the enclosed copy of this letter, which shall then become a binding agreement between us.
[name of long-term lender]