[DRAFT] MORTGAGE AGREEMENT

(Arkansas Real Property – Secured Transaction)

[// GUIDANCE: This template is designed for fee-simple residential or commercial mortgage transactions governed by Arkansas law. Carefully review and customize all bracketed placeholders before execution.]

TABLE OF CONTENTS

1. Document Header
2. Definitions
3. Grant of Mortgage & Secured Obligations
4. Representations and Warranties
5. Covenants
6. Events of Default
7. Remedies
8. Risk Allocation
9. Dispute Resolution
10. General Provisions
11. Execution Block

1. DOCUMENT HEADER

Mortgage Agreement (this “Mortgage”) dated as of [EFFECTIVE DATE], by and between:

1. [BORROWER LEGAL NAME], a [STATE] [entity type/individual], having an address at [ADDRESS] (“Borrower”); and
2. [LENDER LEGAL NAME], a [STATE] [entity type], having an address at [ADDRESS] (“Lender”).

RECITALS
A. Borrower is indebted to Lender pursuant to that certain [Promissory Note] dated [DATE] in the original principal amount of [AMOUNT] (the “Note”).
B. Borrower desires to secure the Obligations (defined below) by granting a first-priority mortgage lien on the Property (defined below).
C. Lender is willing to make or continue the Loan on the condition, inter alia, that Borrower execute and deliver this Mortgage.

NOW, THEREFORE, in consideration of the foregoing and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:

2. DEFINITIONS

For purposes of this Mortgage, capitalized terms have the meanings set forth below:

“Affiliate” – Any Person controlling, controlled by, or under common control with a party.

“Collateral” – Collectively, the Property, Rents, Fixtures, and all other security interests granted herein.

“Default Rate” – The rate of interest specified in the Note applicable upon the occurrence of an Event of Default.

“Environmental Laws” – All federal, state, and local statutes, regulations, ordinances, and common-law doctrines governing or relating to hazardous substances or environmental protection.

“Event of Default” – Any event described in Section 6.1.

“Fixtures” – As defined in Ark. Code Ann. § 4-9-102(a)(41), together with replacements and additions.

“Loan” – The indebtedness evidenced by the Note and all related instruments.

“Obligations” – All indebtedness, liabilities, and duties of Borrower to Lender arising under the Loan Documents, whether now existing or hereafter arising.

“Permitted Encumbrances” – Those items listed on Schedule 1 and any other liens approved in writing by Lender.

“Person” – Any natural person, corporation, partnership, limited liability company, trust, or other legal entity.

“Property” – The real property described in Exhibit A, together with all appurtenances, improvements, and Fixtures thereon.

“Rents” – All present and future rents, income, revenues, issues, and profits of the Property.

[// GUIDANCE: Add or revise definitions to conform to the Loan structure.]

3. GRANT OF MORTGAGE & SECURED OBLIGATIONS

3.1 Grant of Lien. Borrower hereby mortgages, grants, bargains, sells, assigns, transfers, and conveys to Lender, with power of sale, all of Borrower’s right, title, and interest in and to the Collateral, to secure prompt payment and performance of the Obligations.

3.2 Secured Obligations. This Mortgage secures (a) principal, interest, fees, advances, and other amounts under the Note; (b) all obligations under this Mortgage and the other Loan Documents; (c) all renewals, extensions, modifications, and substitutions thereof; and (d) all future advances that Lender may make to protect or further secure the Collateral, whether or not evidenced by a separate note (collectively, the “Secured Obligations”). The maximum aggregate amount of indebtedness secured hereby is capped at the outstanding principal, accrued interest, and enforceable charges under the Note (the “Liability Cap”).

3.3 Future Advances. This Mortgage shall secure future advances up to the Liability Cap without the need for additional recordings, pursuant to Ark. Code Ann. § 18-40-104.

3.4 Fixture Filing. This Mortgage constitutes a financing statement filed as a fixture filing under Article 9 of the Uniform Commercial Code, Arkansas, and shall serve as notice that Lender has a security interest in the Fixtures.

4. REPRESENTATIONS AND WARRANTIES

Borrower represents and warrants to Lender as of the date hereof and continuing thereafter:

4.1 Organization; Authority. Borrower is duly organized, validly existing, and in good standing under the laws of its jurisdiction of formation and is qualified to do business in Arkansas.

4.2 Title. Borrower holds good and marketable fee simple title to the Property, free and clear of all liens and encumbrances except Permitted Encumbrances.

4.3 Validity and Enforceability. This Mortgage and the other Loan Documents constitute legal, valid, and binding obligations of Borrower, enforceable against Borrower in accordance with their terms.

4.4 Compliance with Law. The Property and Borrower’s use thereof comply in all material respects with applicable zoning, building, fire, health, and Environmental Laws.

4.5 Litigation. No pending or threatened litigation, arbitration, proceeding, or governmental investigation materially affects Borrower or the Property, except as disclosed in Schedule 2.

4.6 Financial Information. All financial statements delivered to Lender are true, complete, and fairly present Borrower’s financial condition.

4.7 Survival. The representations and warranties herein shall survive the execution and delivery of this Mortgage.

5. COVENANTS

5.1 Payment and Performance. Borrower shall punctually pay and perform all Secured Obligations.

5.2 Maintenance of Property. Borrower shall keep the Property and Fixtures in good repair and condition, ordinary wear excepted, and shall not commit or suffer waste.

5.3 Taxes and Assessments. Borrower shall pay, prior to delinquency, all taxes, assessments, and governmental charges affecting the Collateral.

5.4 Insurance. Borrower shall maintain insurance covering the Property against fire, extended coverage, liability, and such other risks, in amounts and with carriers reasonably acceptable to Lender. Policies shall name Lender as mortgagee and loss payee under a standard mortgagee clause.

5.5 Compliance with Law. Borrower shall comply with all laws, ordinances, and regulations applicable to the Collateral.

5.6 Negative Covenants. Without Lender’s prior written consent, Borrower shall not:
(a) Transfer, lease (except bona fide arms-length leases), or further encumber any interest in the Collateral;
(b) Permit any additional lien, security interest, or encumbrance other than Permitted Encumbrances;
(c) Alter or demolish any improvements on the Property outside the ordinary course of maintenance.

5.7 Inspection. Upon reasonable notice, Lender and its representatives may enter and inspect the Property.

5.8 Books and Records. Borrower shall keep adequate books and records and permit Lender to examine same upon request.

5.9 Further Assurances. Borrower shall execute and deliver such additional instruments and take further actions as Lender may reasonably request to effectuate the purposes of this Mortgage.

6. EVENTS OF DEFAULT

6.1 Events of Default. Each of the following shall constitute an “Event of Default”:

(a) Payment Default: Failure to pay any amount when due under the Note or other Loan Document.
(b) Covenant Default: Failure to perform any covenant or obligation herein within thirty (30) days after written notice.
(c) False Representation: Any representation or warranty proved materially false when made.
(d) Insolvency: Borrower’s bankruptcy, insolvency, or assignment for the benefit of creditors.
(e) Unauthorized Transfer: Sale, assignment, or transfer of the Property or any interest therein without Lender’s prior written consent.

6.2 Notice and Cure. Except for payment defaults and those Events of Default which under applicable law cannot be cured, Borrower shall have the cure period stated above.

7. REMEDIES

7.1 Acceleration. Upon an Event of Default, Lender may declare all Secured Obligations immediately due and payable.

7.2 Arkansas Foreclosure Procedures. Subject to Ark. Code Ann. § 18-50-101 et seq., Lender may elect:

(a) Non-Judicial Foreclosure (Power of Sale): After giving the statutory Notice of Default and Intention to Sell, Lender may conduct a public sale of the Property.
(b) Judicial Foreclosure: Lender may file suit in an appropriate Arkansas court for foreclosure and sale.

7.3 Right of Redemption. Borrower’s equitable right of redemption shall exist until (i) entry of a judicial foreclosure decree or (ii) completion of a statutory non-judicial sale, whichever is applicable and earlier. Borrower waives any statutory right of redemption that may exist post-sale to the maximum extent permitted by Ark. law.

7.4 Deficiency Judgment Rules. If the foreclosure proceeds are insufficient to satisfy the Secured Obligations, Lender may seek a deficiency judgment in accordance with Ark. Code Ann. § 18-50-112, provided that (a) Lender commences the action within twelve (12) months after the foreclosure sale, and (b) the deficiency is limited to the difference between the Secured Obligations and the fair market value of the Property as determined under such statute.

7.5 Appointment of Receiver. Lender shall be entitled to appointment of a receiver for the Property upon an Event of Default, without notice and without regard to the adequacy of the Collateral.

7.6 Application of Proceeds. Proceeds of any foreclosure sale or other disposition shall be applied: (i) first, to costs of sale and expenses (including reasonable attorney fees); (ii) second, to accrued interest; (iii) third, to principal; (iv) fourth, to any other Secured Obligations; and (v) any remainder to Borrower or other parties entitled thereto.

7.7 Rights Cumulative. The rights and remedies of Lender are cumulative and may be exercised concurrently or separately.

8. RISK ALLOCATION

8.1 Indemnification by Borrower. Borrower shall indemnify, defend, and hold harmless Lender, its Affiliates, and their respective officers, directors, employees, and agents (each an “Indemnitee”) from and against any and all claims, damages, losses, liabilities, penalties, fines, costs, and expenses (including reasonable attorney fees) arising out of or relating to: (a) Borrower’s breach of any covenant, representation, or warranty; (b) ownership, operation, or condition of the Property; (c) Environmental Matters; or (d) enforcement of this Mortgage.

8.2 Limitation of Liability. Notwithstanding anything herein to the contrary, the personal liability of Borrower is limited to the outstanding amount of the Secured Obligations; provided, however, that such limitation shall not apply to Borrower’s willful misconduct, fraud, or misapplication of insurance or condemnation proceeds.

8.3 Insurance Proceeds and Condemnation Awards. All insurance proceeds and condemnation awards are hereby assigned to Lender and shall be applied in accordance with Lender’s reasonable discretion, subject to applicable law.

8.4 Force Majeure. Neither party shall be liable for failure to perform non-monetary obligations to the extent such failure is due to causes beyond such party’s reasonable control, including acts of God, war, terrorism, civil unrest, governmental action, or natural disasters; provided that this Section shall in no event relieve Borrower of timely payment obligations.

9. DISPUTE RESOLUTION

9.1 Governing Law. This Mortgage and the other Loan Documents shall be governed by and construed in accordance with the laws of the State of Arkansas, without regard to conflicts of law principles.

9.2 Forum Selection. Borrower irrevocably submits to the exclusive jurisdiction of the state courts of Arkansas sitting in [COUNTY] (and the federal courts located in the Eastern or Western Districts of Arkansas, to the extent federal jurisdiction exists).

9.3 Arbitration. The parties expressly agree that NO arbitration provisions apply.

9.4 Jury Waiver. To the fullest extent permitted by law, each party hereby knowingly and voluntarily waives trial by jury in any action or proceeding arising out of or relating to this Mortgage. If such waiver is deemed unenforceable under Arkansas law, the parties agree to bifurcate equitable and legal claims to preserve enforceability.

9.5 Injunctive Relief. Nothing herein shall limit Lender’s right to seek equitable relief, including specific performance, temporary restraining orders, or injunctions to prevent waste or impairment of the Collateral.

10. GENERAL PROVISIONS

10.1 Amendments and Waivers. No amendment or waiver of any provision of this Mortgage shall be effective unless in writing signed by the party against whom enforcement is sought. A waiver on one occasion shall not constitute a waiver on any subsequent occasion.

10.2 Assignments. Lender may assign or transfer this Mortgage and the Note, in whole or in part, without Borrower’s consent. Borrower may not assign any of its rights or delegate any of its obligations without Lender’s prior written consent.

10.3 Successors and Assigns. This Mortgage shall bind and inure to the benefit of the parties and their respective successors and assigns.

10.4 Severability. If any provision of this Mortgage is held to be invalid or unenforceable, the remaining provisions shall remain in full force and effect, and the invalid provision shall be reformed to the minimum extent necessary to render it enforceable.

10.5 Entire Agreement. This Mortgage, together with the other Loan Documents, constitutes the entire agreement of the parties and supersedes all prior agreements, understandings, and negotiations, whether written or oral.

10.6 Notices. All notices required or permitted under this Mortgage shall be in writing and delivered (a) by hand, (b) by recognized overnight courier, or (c) by certified mail (return receipt requested), addressed to the parties at their respective addresses set forth above (or such other address as a party may designate by notice). Notices are effective upon receipt.

10.7 Counterparts; Electronic Signatures. This Mortgage may be executed in counterparts, each of which is deemed an original and all of which together constitute one instrument. Signatures delivered electronically shall be deemed originals.

10.8 Recording. Borrower authorizes Lender to record this Mortgage and all related instruments in the real property records of [COUNTY] County, Arkansas.

11. EXECUTION BLOCK

IN WITNESS WHEREOF, the parties have executed this Mortgage as of the date first written above.

Borrower:

[NAME & TITLE]
[Entity Name / Individual]

[Seal, if applicable]

Lender:

[NAME & TITLE]
[Entity Name]

[Corporate Seal, if applicable]

Acknowledgment (Arkansas – Individual)

STATE OF ARKANSAS )
COUNTY OF __ ) ss.

On this ___ day of ____, 20__, before me, the undersigned Notary Public, duly commissioned, qualified, and acting within and for said county and state, personally appeared [BORROWER NAME], to me known (or satisfactorily proven) to be the person(s) whose name(s) is/are subscribed to the within instrument, and acknowledged that he/she/they executed the same for the purposes therein contained.

IN WITNESS WHEREOF, I hereunto set my hand and official seal.

Notary Public
My Commission Expires: ____

[// GUIDANCE: Insert corporate acknowledgment for entity Borrower/Lender if applicable.]

EXHIBIT A – LEGAL DESCRIPTION OF PROPERTY

[Insert full metes-and-bounds or platted description]

SCHEDULE 1 – PERMITTED ENCUMBRANCES

1. [e.g., Easement recorded at Book , Page ]
2. [...]

SCHEDULE 2 – LITIGATION DISCLOSURES

1. [...]

[END OF DOCUMENT]