MORTGAGE AND SECURITY AGREEMENT
(Alabama – Single‐Family Residential / Commercial)
[// GUIDANCE: This template is intentionally broad so it may be adapted for either residential or commercial transactions. Remove inapplicable sections and tailor defined terms, representations, and covenants to the particular deal structure.]
TABLE OF CONTENTS
- Document Header
- Definitions
- Granting Clause & Operative Provisions
- Representations & Warranties
- Covenants & Restrictions
- Defaults & Remedies
- Risk Allocation
- Dispute Resolution
- General Provisions
- Execution Block
1. DOCUMENT HEADER
1.1 Title & Parties
This Mortgage and Security Agreement (this “Mortgage”) is made effective as of [EFFECTIVE DATE] (the “Effective Date”) by and between:
• [BORROWER LEGAL NAME], a [STATE OF FORMATION AND ENTITY TYPE OR “individual”] (“Borrower” or “Mortgagor”); and
• [LENDER LEGAL NAME], a [STATE OF FORMATION AND ENTITY TYPE] (“Lender” or “Mortgagee”).
[// GUIDANCE: If using a nominee system such as MERS, insert additional party information here.]
1.2 Recitals
A. Borrower has executed that certain promissory note dated as of the Effective Date in the original principal amount of $[PRINCIPAL AMOUNT] (the “Note”), payable to the order of Lender.
B. Borrower is the fee simple owner of the real property described in Exhibit A (the “Property”).
C. As a condition precedent to making the loan evidenced by the Note (the “Loan”), Lender requires that Borrower secure all Obligations (defined below) by granting Lender a first-priority mortgage lien on, and security interest in, the Property and related collateral as set forth herein.
NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Borrower and Lender agree as follows:
2. DEFINITIONS
Unless otherwise indicated, capitalized terms have the meanings set forth below. Section references are to this Mortgage.
“Affiliate” means, with respect to any Person, any other Person directly or indirectly controlling, controlled by, or under common control with such Person.
“Applicable Law” means all present and future federal, state (specifically, the laws of the State of Alabama), and local statutes, regulations, ordinances, and judicial or administrative orders that are binding upon Borrower, Lender, or the Property.
“Collateral” has the meaning given in Section 3.1.
“Debt” means all principal, interest, late charges, prepayment premiums (if any), protective advances, and any other amounts owing under the Loan Documents.
“Default Interest Rate” means the lesser of (a) [DEFAULT RATE]% per annum above the rate stated in the Note or (b) the maximum lawful rate.
“Event of Default” has the meaning given in Section 6.1.
“Foreclosure Sale” means a sale conducted pursuant to Ala. Code §§ 35-10-1 et seq. or other Applicable Law.
“Governmental Authority” means any federal, state, county, or municipal governmental body having jurisdiction over the Property or the parties.
“Indemnified Parties” has the meaning given in Section 7.1.
“Loan Documents” means this Mortgage, the Note, and all other instruments now or hereafter evidencing, securing, or executed in connection with the Loan.
“Obligations” means the Debt and all other debts, duties, and liabilities of Borrower to Lender arising under the Loan Documents, whether direct or indirect, absolute or contingent, now existing or hereafter arising.
“Permitted Liens” means only those liens, encumbrances, or matters of record approved in writing by Lender.
“Taxes” means all real estate and personal property taxes, assessments, and governmental charges against the Property.
3. GRANTING CLAUSE & OPERATIVE PROVISIONS
3.1 Grant of Mortgage, Assignment of Rents, and Security Interest
To secure the punctual payment and performance of the Obligations, Borrower hereby (a) mortgages and conveys to Lender, with power of sale under Ala. Code §§ 35-10-1 et seq., the Property; (b) assigns to Lender all present and future leases, rents, issues, and profits from the Property (collectively, “Rents”); and (c) grants to Lender a security interest in all fixtures, equipment, and personal property now or hereafter located on, affixed to, or used in connection with the Property (collectively with the Property and Rents, the “Collateral”).
3.2 Consideration & Debt Covenant
Borrower shall pay the Debt in accordance with the Note and Loan Documents.
3.3 Power of Sale
Upon the occurrence and continuance of an Event of Default, Lender may, at its option, invoke the power of sale and any other remedies permitted under Applicable Law. Borrower irrevocably appoints Lender as Borrower’s agent and attorney-in-fact to conduct any such Foreclosure Sale.
3.4 Future Advances
The lien of this Mortgage secures all future advances that Lender, in its discretion, may make to or for the benefit of Borrower, up to the maximum principal amount of $[MAXIMUM SECURED AMOUNT] as permitted by Ala. Code § 35-10-20.
3.5 Maximum Liability
Notwithstanding anything herein to the contrary, Borrower’s aggregate liability under the Loan Documents shall not exceed the Secured Debt Amount (as defined in Section 7.2).
4. REPRESENTATIONS & WARRANTIES
Borrower represents and warrants to Lender, as of the Effective Date and continuing thereafter:
4.1 Organization & Authority
Borrower (a) is duly organized, validly existing, and in good standing under the laws of its jurisdiction of formation, (b) has full power and authority to own the Property and execute the Loan Documents, and (c) has duly authorized, executed, and delivered the Loan Documents.
4.2 Title
Borrower holds fee simple title to the Property, free and clear of all liens except Permitted Liens.
4.3 Compliance
The Property and its current use comply with Applicable Law, including zoning, building codes, and environmental regulations.
4.4 Taxes & Assessments
All Taxes relating to the Property have been paid or are not yet delinquent.
4.5 No Litigation
No pending or threatened litigation or governmental proceeding materially affects Borrower or the Property.
4.6 Financial Statements
All financial statements delivered to Lender are materially accurate and complete.
4.7 Survival
The representations and warranties in this Section 4 shall survive the execution and delivery of this Mortgage.
5. COVENANTS & RESTRICTIONS
Borrower covenants and agrees until the Obligations are paid in full:
5.1 Payment of Debt
Borrower shall timely pay the Debt and perform all Obligations.
5.2 Taxes, Assessments, and Impositions
Borrower shall pay all Taxes before delinquency and, upon request, deliver evidence of payment to Lender.
5.3 Insurance
(a) Casualty. Maintain “all-risk” property insurance on the Property in an amount not less than the full insurable replacement cost.
(b) Liability. Maintain commercial general liability insurance with limits not less than $[CGL LIMIT] per occurrence.
(c) Mortgagee Clause. All insurance policies shall name Lender as mortgagee/loss payee.
5.4 Maintenance & Waste
Borrower shall keep the Property in good repair, free of waste, and shall not commit or permit any waste or impairment of the Collateral.
5.5 Compliance with Laws
Borrower shall comply with all Applicable Law, including environmental laws.
5.6 Due-on-Sale/Transfer
Except with Lender’s prior written consent, Borrower shall not sell, convey, lease (except bona-fide arms-length leases), transfer, or encumber any interest in the Property. Any unauthorized transfer shall constitute an Event of Default and shall permit Lender to accelerate the Debt.
5.7 Books & Records; Inspection
Borrower shall maintain complete books and records relating to the Property and shall permit Lender and its agents to inspect the Property and such records upon reasonable notice.
5.8 Notice of Certain Events
Borrower shall promptly notify Lender of any (a) Event of Default, (b) material damage to or condemnation of the Property, or (c) material litigation involving Borrower or the Property.
5.9 Right of Redemption Disclosure
Borrower acknowledges that, under Ala. Code §§ 6-5-248 et seq., Borrower and certain other persons may possess a statutory right of redemption for a period of one (1) year after a Foreclosure Sale. Nothing herein is intended to waive such statutory right where it cannot lawfully be waived.
6. DEFAULTS & REMEDIES
6.1 Events of Default
Each of the following constitutes an “Event of Default”:
a. Failure to pay any monetary Obligation when due (subject to a [10]-day grace period for regularly scheduled payments);
b. Breach of any non-monetary covenant continuing for 30 days after written notice (or such longer period as Lender may permit if Borrower is diligently pursuing cure);
c. Any representation or warranty proving materially false or misleading;
d. Unauthorized transfer or encumbrance of the Collateral;
e. Insolvency, bankruptcy, or receivership of Borrower; or
f. Any default under another Loan Document which remains uncured beyond any applicable grace period.
6.2 Remedies
Upon an Event of Default, Lender may, at its option and without further demand:
1. Accelerate the Debt and declare the entire unpaid balance immediately due and payable;
2. Invoke the power of sale and conduct a Foreclosure Sale on not less than 30 days’ written notice, all in accordance with Ala. Code §§ 35-10-1 et seq.;
3. Enter and take possession of the Property, collect Rents, and apply Rents to the Obligations;
4. Pursue judicial foreclosure or other remedies available under Applicable Law;
5. Apply any deposits or reserves held by Lender to the Obligations; and
6. Pursue a deficiency judgment to the extent allowed under Alabama law (subject to Section 6.3).
6.3 Deficiency Judgment Rules
If the proceeds of a Foreclosure Sale are insufficient to satisfy the Debt, Lender may seek a deficiency judgment, provided that the amount of any such deficiency shall be reduced by the fair market value of the Property determined as of the date of the Foreclosure Sale, consistent with applicable Alabama law.
6.4 Application of Proceeds
Proceeds of any Foreclosure Sale or other Collateral disposition shall be applied in the following order: (a) costs of sale (including reasonable attorneys’ fees), (b) accrued interest, (c) principal, (d) any other Obligations, and (e) surplus, if any, to the party lawfully entitled thereto.
6.5 Attorneys’ Fees and Costs
Borrower shall pay all reasonable attorneys’ fees and expenses incurred by Lender in enforcing the Loan Documents, whether or not suit is filed, and whether incurred prior to, during, or after foreclosure, bankruptcy, or appeal.
7. RISK ALLOCATION
7.1 Indemnification by Borrower
Borrower shall indemnify, defend, and hold harmless Lender and its Affiliates, and their respective officers, directors, employees, and agents (collectively, the “Indemnified Parties”), from and against any and all losses, liabilities, damages, claims, costs, and expenses (including reasonable attorneys’ fees) arising out of or relating to (a) the Loan Documents, (b) the ownership, operation, or condition of the Property, (c) any breach by Borrower of its representations, warranties, or covenants, and (d) any environmental condition on, under, or about the Property.
7.2 Limitation of Liability
Notwithstanding anything to the contrary, the liability of Lender under the Loan Documents shall in no event exceed the lesser of (a) the aggregate amount actually received by Lender from Borrower or from the disposition of Collateral, or (b) the unpaid secured debt amount then outstanding under the Note (the “Secured Debt Amount”). Lender shall not be liable for consequential, special, or punitive damages.
7.3 Insurance Proceeds and Condemnation Awards
Lender may (a) apply any insurance proceeds or condemnation awards to restoration of the Property or to the Obligations, in its sole discretion, or (b) release such proceeds to Borrower on conditions satisfactory to Lender.
7.4 Force Majeure
Neither party shall be liable for failure to perform non-monetary obligations (other than payment) to the extent such failure is caused by events beyond its reasonable control, including natural disasters, war, terrorism, or governmental actions (“Force Majeure”), provided that the affected party gives prompt notice and resumes performance as soon as practicable.
8. DISPUTE RESOLUTION
8.1 Governing Law
This Mortgage and the Obligations shall be governed by and construed under the laws of the State of Alabama, without regard to conflicts of law principles.
8.2 Forum Selection
Borrower irrevocably submits to the exclusive jurisdiction of the state courts located in [COUNTY], Alabama. Borrower waives any objection to venue or assertion that such forum is inconvenient.
8.3 Arbitration
[INTENTIONALLY OMITTED – Arbitration expressly excluded pursuant to metadata.]
8.4 Jury Trial Waiver
TO THE EXTENT PERMITTED BY APPLICABLE LAW, BORROWER AND LENDER HEREBY KNOWINGLY, VOLUNTARILY, AND INTENTIONALLY WAIVE THE RIGHT TO A TRIAL BY JURY IN ANY ACTION ARISING OUT OF THE LOAN DOCUMENTS.
[// GUIDANCE: Remove this waiver if local counsel advises that Alabama law or public policy renders the waiver unenforceable in a particular transaction.]
8.5 Injunctive Relief Preservation
Nothing herein limits Lender’s right to seek injunctive or equitable relief, including foreclosure and appointment of a receiver.
9. GENERAL PROVISIONS
9.1 Modifications; Waivers
No amendment or waiver of any provision of the Loan Documents is effective unless in writing and signed by Lender (and, for an amendment, by Borrower). A waiver on one occasion is not a waiver on any future occasion.
9.2 Notices
All notices shall be in writing and delivered (a) by certified U.S. Mail (return receipt requested), (b) by nationally recognized overnight courier, or (c) by personal delivery, to the addresses set forth below (or as later designated). Notice is deemed given upon receipt or refusal.
• If to Borrower:
[BORROWER NOTICE ADDRESS]
• If to Lender:
[LENDER NOTICE ADDRESS]
9.3 Assignment
Lender may assign, sell, or transfer its interest in the Loan Documents without Borrower’s consent. Borrower may not assign any rights or delegate any obligations without Lender’s prior written consent.
9.4 Successors & Assigns
The Loan Documents bind and benefit Borrower and Lender and their respective successors and permitted assigns.
9.5 Severability
If any provision is held invalid or unenforceable, the remaining provisions shall remain in full force, and the invalid provision shall be reformed to the minimum extent necessary to render it enforceable while preserving its intent.
9.6 Integration
The Loan Documents collectively constitute the entire agreement between the parties concerning the Loan and supersede all prior or contemporaneous oral or written agreements.
9.7 Counterparts; Electronic Signatures
This Mortgage may be executed in one or more counterparts (including by electronic signature), each of which is deemed an original, and all of which together constitute one instrument.
9.8 Recording & Costs
Borrower shall promptly record this Mortgage in the office of the Judge of Probate in the county where the Property is located and shall pay all recording taxes, fees, and charges.
10. EXECUTION BLOCK
IN WITNESS WHEREOF, the parties have executed this Mortgage as of the Effective Date.
Borrower / Mortgagor:
[BORROWER NAME]
Title (if applicable): ___
Lender / Mortgagee:
[LENDER NAME]
By: ______
Name: ______
Title: _________
Acknowledgment (Borrower)
State of Alabama
County of ________) ss.:
On this _ day of _, 20__, before me, the undersigned Notary Public, personally appeared ________, [personally known to me OR proved to me on the basis of satisfactory evidence] to be the person whose name is subscribed to the foregoing instrument and acknowledged that he/she executed the same on behalf of, and as the act of, said [individual / entity].
Witness my hand and official seal.
Notary Public
My commission expires: ____
[// GUIDANCE: Alabama recording statutes generally require either (a) acknowledgment before a notary public, or (b) execution by two witnesses. Insert witness lines below if not notarizing.]
Witnesses (if applicable):
1. _____
2. _______
Exhibit A – Legal Description of Property
[INSERT FULL METES AND BOUNDS OR LOT-BLOCK-SUBDIVISION LEGAL DESCRIPTION]
[// GUIDANCE: Always conduct a final review to ensure all placeholders are completed, cross-references are accurate, and any state-specific recording taxes (e.g., mortgage recording tax under Ala. Code § 40-22-1) are properly addressed.]