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Shared Appreciation Loan Agreement
LOAN AGREEMENT (Agreement), made on [date] by and between [name], of
[address] (Borrower) and [name], of [address] (Lender).
WHEREAS, Borrower will be acquiring as of [date] (the Closing
Date) condominium unit No. ---------- (the Unit) in the [name]
Condominium (the Condominium) located at [address]; and
WHEREAS, Lender hereby agrees to loan Borrower the amount of
.... dollars ($....) (the Loan) in order to finance the acquisition
of the Unit; and
WHEREAS, Borrower and Lender desire to set forth herein the
repayment terms and conditions of the Loan.
1. Amount of Loan. Borrower hereby requests to borrow, and
Lender hereby agrees to loan to Borrower, the principal amount of ....
dollars ($....) (the Loan), the proceeds of which Borrower represents
and warrants to Lender shall be applied to purchase and acquire the Unit.
Security for repayment of the Loan shall be as set forth in Paragraph 2
below, and the repayment terms for the Loan shall be in accordance with
the provisions of Paragraphs 3 through 5 below.
2. Security. In order to secure the Loan, Borrower shall
grant Lender a first mortgage on Borrower's fee simple interest in and
to the Unit. Each party acknowledges and agrees that such first mortgage
shall solely secure repayment of the Loan.
3. Maturity Date. The loan maturity date shall be the
earliest to occur of (a) [date]; (b) the date of sale or other
transfer of the Unit by Borrower; or (c) prepayment in full of the Loan.
4. Amortization Period. No principal amortization shall be
required during the term of the Loan.
5. Interest Rate. Interest only at the rate of ----------
percent (----------%) per annum on the unpaid principal balance of the
Loan, payable monthly (the Fixed Interest), plus Final Additional
Interest as defined in Paragraph 9 below, shall be paid on the Loan.
6. Right of Prepayment. Borrower may prepay the Loan at any
time and from time to time without premium or penalty.
7. Loan Closing Date. The Closing Date shall be [date] or
such other date as shall be mutually agreed on by Lender and Borrower.
8. Disbursements of Loan Proceeds. The proceeds of the Loan
shall be disbursed by Lender to Borrower or on behalf of Borrower in
accordance with such disbursement procedures as may be agreed on by
Lender and Borrower prior to the Loan Closing.
9. Final Additional Interest. In addition to the principal
and Fixed Interest provided for in this Loan Agreement, Borrower agrees
to pay on the Maturity Date additional contingent interest accruing from
the Closing Date in an amount equal to (a) ---------- percent
(----------%) of the Net Sales Proceeds of the Unit, in the event of a
bona fide arm's-length sale to an independent third party occurring on
or prior to the Maturity Date of the Loan, or (b) ---------- percent
(----------%) of the Fair Market Value of the Unit, first subtracting
therefrom an amount equal to the original purchase price of ----------
dollars ($----------) in the event that no bona fide arm's-length sale
of the Unit to an independent third party occurred on or prior to the
As used herein, "Net Sales Proceeds" shall mean the gross proceeds
derived from the sale of the Unit minus the original purchase price of
---------- dollars ($----------) and minus all reasonable costs incurred
by Borrower in connection with the sale.
As used herein, "Fair Market Value" shall mean the value
determined in writing by an appraiser acceptable to both parties;
provided, however, if the written appraisal proves unsatisfactory to
Lender, Lender may then appoint a second appraiser. If the second
appraiser and the original appraiser do not agree on the appraised value
of the Unit within [number] days of the appointment of the second
appraiser, then a third appraiser shall be appointed by the first two
(2) to prepare a third appraisal. The Fair Market Value shall be the
arithmetic average of the three written appraisals. The cost of such
appraisal(s) shall be borne by Borrower.
10. Representation and Warranties of Borrower. Borrower
hereby represents and warrants to Lender that (a) the entire proceeds of
the Loan will be applied to the purchase of the Unit; (b) the Unit is
residential property and will be occupied by Borrower as his principal
residence throughout the term of the Loan; (c) Borrower shall pay from
his own funds, on a timely basis, all real estate taxes, insurance
premiums, condominium assessments, and all other charges relating to the
ownership of, or assessed against, the Unit; and (d) Lender shall have
no liability for any decrease in the value of the Unit.
11. Right of Borrower to Sell, Transfer, and So Forth. Lender
agrees that Borrower shall, at all times, have the right to sell,
transfer, encumber, improve, or otherwise make use of the Unit, subject,
however, to all terms and conditions of the first mortgage in favor of
12. Debtor/Creditor Relationship. It is expressly understood
and agreed by the parties that nothing contained in this Agreement shall
be construed to create a joint venture, partnership, association, or
other affiliation or like relationship between the parties or a
relationship of landlord and tenant, it being specifically agreed that
their relationship is and shall remain that of debtor and creditor.
13. No Violation of Usury Law. It is not intended that Lender
charge interest at a rate in excess of the maximum rate of interest
permitted to be charged to Borrower under applicable law, but if,
notwithstanding, interest in excess of said maximum rate shall be paid
hereunder, the excess shall be, at the option of the Lender, either (a)
retained by Lender as additional cash collateral for the payment of said
principal sum, or the amount thereof outstanding, or (b) returned to
14. Legal Representations. Borrower acknowledges that the law
firm of [name] has represented Lender in connection with the loan
transaction described herein and further acknowledges that he has
presented a copy of this Agreement and the related Note and Mortgage to
his counsel for review.
15. Survival of Provisions. The provisions of this Agreement,
to the extent applicable following the funding of the Loan, shall
survive the Loan Closing.
16. Counterparts; Governing Law. The agreement may be
executed in one or more counterparts, each of which shall be deemed to
constitute an original. This Agreement shall be governed by and
interpreted and construed in accordance with the laws of [state].
WITNESS, their hands and seals as of the date first set forth above.
*** If Required By State Law ***
This Section for Notary:
State of _________
County of ________ [County]
On [Date] before me, [Name of Notary], notary, personally appeared [Name of Person(s) Involved], personally known to me (or proved to me on the basis of satisfactory evidence) to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.
Witness my hand and official seal.
My commission expires: _____