Mortgage Agreement - Arizona

MORTGAGE AND SECURITY AGREEMENT

(Arizona Real Property)

TABLE OF CONTENTS

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

1. DOCUMENT HEADER

THIS MORTGAGE AND SECURITY AGREEMENT (this “Mortgage”) is made and entered into as of [EFFECTIVE DATE] (the “Effective Date”) by and between:

• [BORROWER LEGAL NAME], a [state & entity type], with an address at [BORROWER ADDRESS] (the “Borrower”); and
• [LENDER LEGAL NAME], a [state & entity type], with an address at [LENDER ADDRESS] (the “Lender”).

Recitals

A. Borrower is indebted to Lender under that certain Promissory Note dated the Effective Date, in the principal amount of [LOAN AMOUNT] (the “Note”).
B. Borrower is the fee-simple owner of the real property more particularly described in Exhibit A (the “Land”) and all Improvements and fixtures thereon (collectively with the Land, the “Property”).
C. Borrower desires to secure the Obligations (defined below) by granting this Mortgage on the Property, and Lender is willing to accept such security, all upon the terms contained herein.

NOW, THEREFORE, in consideration of the foregoing Recitals (which are incorporated herein), the mutual covenants herein, and other good and valuable consideration, the receipt and sufficiency of which are acknowledged, the parties agree as follows:

2. DEFINITIONS

Alphabetically-listed defined terms used throughout this Mortgage:

“A.R.S.” means the Arizona Revised Statutes.
“Collateral” has the meaning given in Section 3.1.
“Default Rate” means the rate equal to [___]% per annum above the rate stated in the Note.
“Environmental Laws” means all federal, state, and local statutes, regulations, ordinances, and common-law pertaining to health, safety, or the environment.
“Event of Default” has the meaning given in Section 6.
“Improvements” means all buildings, structures, fixtures, and appurtenances now or hereafter located on the Land.
“Obligations” means (i) the indebtedness evidenced by the Note; (ii) all renewals, extensions, modifications, or replacements thereof; and (iii) all other debts, liabilities, and obligations of Borrower to Lender, present or future, arising under any Loan Documents.
“Permitted Exceptions” means those encumbrances listed in Exhibit B.
“Secured Debt Amount” means, at any time, the then-outstanding principal, accrued interest, and all other amounts owing under the Note and Loan Documents, not to exceed [DOLLAR AMOUNT].

3. GRANT OF MORTGAGE AND SECURITY INTEREST

3.1 Grant. Borrower hereby MORTGAGES, grants, bargains, sells, conveys, assigns, pledges, and transfers to Lender, as security for the Secured Obligations, all of Borrower’s right, title, and interest, now or hereafter acquired, in and to:

a. the Property;
b. all easements, rights-of-way, and appurtenances thereto;
c. all fixtures, goods, equipment, and tangible and intangible personal property now or hereafter located on, affixed to, or used in connection with the Property; and
d. all proceeds and products of the foregoing (collectively, the “Collateral”).

3.2 Purpose. This conveyance secures payment and performance of the Obligations, as well as all future advances (whether obligatory or discretionary) made by Lender with respect to the Property.

3.3 Duration. This Mortgage shall remain in full force until all Obligations are indefeasibly paid and performed in full, after which Lender shall execute and deliver a satisfaction for recording.

4. REPRESENTATIONS AND WARRANTIES

Borrower represents and warrants to Lender that, as of the Effective Date and continuing thereafter:

4.1 Existence and Authority. Borrower is duly organized, validly existing, and in good standing under the laws of its jurisdiction of formation and is duly qualified to transact business in Arizona. Borrower has full power and authority to execute and deliver this Mortgage and to perform its obligations hereunder.

4.2 Title. Borrower holds marketable fee-simple title to the Property, free of all liens and encumbrances other than the Permitted Exceptions.

4.3 Enforceability. This Mortgage constitutes a legal, valid, and binding obligation of Borrower, enforceable in accordance with its terms.

4.4 Compliance With Laws. The Property and Borrower’s use thereof comply in all material respects with applicable laws, including zoning, building codes, and Environmental Laws.

4.5 No Litigation. Except as disclosed in Schedule 4.5, there is no pending or threatened litigation or governmental proceeding affecting Borrower or the Property that could materially impair Borrower’s ability to perform its Obligations.

4.6 Survival. Each representation and warranty shall survive execution of this Mortgage and any foreclosure hereof.

5. COVENANTS

Borrower covenants and agrees with Lender that until the Obligations are paid and performed in full:

5.1 Payment. Borrower shall punctually pay the Obligations when due.

5.2 Taxes and Assessments. Borrower shall pay, before delinquency, all real estate taxes, assessments, and governmental charges on or against the Property, subject to reasonable contest rights with appropriate reserves.

5.3 Maintenance of Property. Borrower shall keep the Property in good condition and repair, free of waste, and shall not commit or permit any act that would materially impair the value of the Property.

5.4 Insurance. Borrower shall maintain insurance of such types, in such amounts, and with such insurers as Lender may reasonably require, including hazard, liability, and if applicable, flood insurance.

5.5 Compliance With Laws. Borrower shall comply with all laws, ordinances, regulations, covenants, and restrictions applicable to the Property.

5.6 Environmental Matters. Borrower shall (a) comply with all Environmental Laws; (b) promptly remediate any Hazardous Substances on the Property in accordance with law; and (c) indemnify Lender as provided in Section 8.1.

5.7 Negative Covenants. Without Lender’s prior written consent, Borrower shall not (a) create or permit any lien on the Property (other than Permitted Exceptions), (b) transfer any interest in the Property, or (c) materially alter or demolish Improvements.

5.8 Further Assurances. Borrower shall execute, acknowledge, and deliver any documents and take such actions as Lender reasonably requests to perfect, continue, or evidence the lien of this Mortgage.

6. EVENTS OF DEFAULT

The occurrence of any one or more of the following shall constitute an Event of Default:

a. Borrower fails to pay any monetary Obligation when due;
b. Any representation or warranty proves materially false or misleading;
c. Borrower breaches or fails to perform any non-monetary covenant and such failure continues for thirty (30) days after written notice (or such longer period as is reasonably necessary so long as Borrower diligently pursues cure);
d. Borrower becomes insolvent, makes an assignment for the benefit of creditors, or files (or has filed against it) a petition in bankruptcy not dismissed within ninety (90) days;
e. A receiver is appointed for Borrower or the Property; or
f. Any default under any other Loan Document beyond applicable cure periods.

7. REMEDIES

Upon the occurrence and during the continuance of an Event of Default, Lender may, in its sole discretion, exercise any or all of the following remedies, cumulatively and concurrently:

7.1 Acceleration. Declare all Obligations immediately due and payable.

7.2 Judicial Foreclosure. Commence an action to foreclose this Mortgage in accordance with A.R.S. §§ 33-721 et seq., obtain a decree of foreclosure and order of sale, and bid at such sale.

7.3 Appointment of Receiver. Seek appointment of a receiver for the Property pursuant to A.R.S. § 12-1241, the Uniform Commercial Real Estate Receivership Act (A.R.S. §§ 33-2601 et seq., where the Property qualifies as commercial real property), or other applicable law, without notice or bond to the extent permitted.

7.4 Entry and Operation. Enter upon and take possession of the Property, complete construction, make repairs, or operate the same.

7.5 UCC Remedies. Exercise any rights of a secured party under the Uniform Commercial Code as adopted in Arizona with respect to Personal Property and fixtures.

7.6 Application of Proceeds. Apply proceeds of any sale or other disposition first to costs and expenses of sale (including attorneys’ fees), then to accrued interest, then to principal, and finally to any other Obligations, with surplus paid as required by law.

7.7 Statutory Right of Redemption. Because this instrument is a mortgage (not a deed of trust) and is therefore foreclosed only by judicial action under A.R.S. §§ 33-721 et seq., Borrower acknowledges the statutory right of redemption applicable to judicial foreclosure and execution sales under A.R.S. §§ 12-1281 to 12-1289. Pursuant to A.R.S. § 12-1282 (as applied to mortgage foreclosures by A.R.S. § 12-1283), Borrower or Borrower's successor in interest may redeem the Property within six (6) months after the date of sale, or within thirty (30) days after the date of sale if the court determines, as part of the foreclosure judgment, that the Property was both abandoned and not used primarily for agricultural or grazing purposes, upon payment of the sale price plus eight percent (8%) interest as provided in A.R.S. § 12-1285. The parties agree that the time periods and procedures of A.R.S. §§ 12-1281 to 12-1289 shall govern. Any contractual waiver of redemption shall be effective only to the extent permitted by statute.

7.8 Deficiency Judgment. A.R.S. § 33-729 provides purchase-money anti-deficiency protection to a borrower whose mortgage secures the purchase price (in whole or part) of a parcel of real property of two and one-half acres or less that is limited to and utilized for a single one-family or single two-family dwelling, subject to the voluntary-waste exception in § 33-729(B) and the exclusions in § 33-729(C) (for mortgages originated after December 31, 2014, securing builder-owned or never-completed/never-utilized dwellings). If the Property qualifies for this statutory protection, Lender's judgment lien shall not extend to Borrower's other property and no deficiency may be collected from Borrower's other assets, notwithstanding any provision of the Loan Documents to the contrary, except as provided in § 33-729(B)-(C). If the Property does not qualify for this statutory protection (or to the extent an exclusion under § 33-729(C) applies), Borrower shall remain liable for any deficiency following foreclosure to the extent permitted by law. Nothing in this Section 7.8 waives, or shall be construed to waive, any anti-deficiency protection to which Borrower is statutorily entitled, as such a waiver would be unenforceable.

8. RISK ALLOCATION

8.1 Indemnification. Borrower shall indemnify, defend, and hold Lender and its affiliates, officers, directors, employees, and agents harmless from and against all claims, losses, liabilities, damages, costs, and expenses (including reasonable attorneys’ fees) arising out of or relating to (a) the Property, (b) the Loan Documents, or (c) any Event of Default, except to the extent caused by Lender’s gross negligence or willful misconduct. This indemnity shall survive satisfaction of this Mortgage.

8.2 Limitation of Liability. Lender’s aggregate liability to Borrower in connection with the Loan Documents shall in no event exceed the Secured Debt Amount. Borrower’s liability hereunder shall be full recourse, provided that nothing in this section shall limit Borrower’s statutory protections against deficiency judgments where applicable.

8.3 Insurance Proceeds. Insurance proceeds shall be applied at Lender’s option to restoration of the Property or to reduction of the Obligations.

8.4 Force Majeure. Deadlines for performance (other than payment obligations) are tolled during acts of God, civil unrest, governmental orders, or other events beyond the reasonable control of the party whose performance is affected.

9. DISPUTE RESOLUTION

9.1 Governing Law. This Mortgage and the Obligations shall be governed by and construed in accordance with the laws of the State of Arizona, without regard to conflicts-of-law principles.

9.2 Forum Selection. Borrower irrevocably submits to the exclusive jurisdiction of the state courts located in [COUNTY WHERE PROPERTY IS LOCATED] County, Arizona for any action arising out of or relating to this Mortgage.

9.3 Arbitration. The parties expressly exclude arbitration; all disputes shall be resolved in the designated state court.

9.4 Jury Waiver. TO THE EXTENT PERMITTED BY APPLICABLE LAW, EACH PARTY HEREBY WAIVES TRIAL BY JURY IN ANY ACTION RELATING TO THIS MORTGAGE OR THE OBLIGATIONS. If a court determines this waiver is unenforceable under Arizona law, the clause shall be automatically severed without affecting the remaining provisions.

9.5 Injunctive Relief. Nothing herein shall impair Lender’s right to seek injunctive or equitable relief, including foreclosure or appointment of a receiver.

10. GENERAL PROVISIONS

10.1 Notices. All notices must be in writing and delivered by (i) certified U.S. mail, return receipt requested, (ii) nationally-recognized overnight courier, or (iii) personal delivery, to the addresses set forth in the Document Header (or as later designated). Notice is effective on receipt or refusal.

10.2 Amendments and Waivers. No amendment or waiver is effective unless in a writing signed by Lender (and by Borrower if amendment). No waiver is deemed a continuing waiver unless expressly stated.

10.3 Assignment. Lender may assign or participate its interest in the Loan Documents without Borrower’s consent. Borrower may not assign any rights without Lender’s prior written consent.

10.4 Successors and Assigns. This Mortgage binds and benefits the parties and their respective successors and permitted assigns.

10.5 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 achieve its intent.

10.6 Integration. The Loan Documents constitute the entire agreement between the parties with respect to the subject matter and supersede all prior or contemporaneous understandings.

10.7 Counterparts; Electronic Signatures. This Mortgage may be executed in multiple counterparts, each of which is an original, and all of which constitute one instrument. Signatures transmitted electronically or by facsimile are deemed originals.

10.8 Recording. Borrower shall pay all recording fees and charges required to record this Mortgage. Arizona imposes no real estate transfer or mortgage recording tax (Arizona conveyances of, or encumbrances on, real property are constitutionally exempt from any new transfer tax, fee, or stamp under Ariz. Const. art. IX, § 24); this Mortgage shall, however, be accompanied by any affidavit of property value or exemption documentation required under A.R.S. § 11-1133 and § 11-1134 and shall otherwise comply with the instrument form requirements of A.R.S. § 11-480. Promptly after execution, this Mortgage shall be recorded in the Office of the County Recorder of [RECORDING COUNTY] County, Arizona, in accordance with A.R.S. § 33-411.

10.9 Construction. Headings are for convenience only and shall not affect interpretation. The singular includes the plural and vice versa. “Including” means “including, without limitation.”

11. EXECUTION BLOCK

IN WITNESS WHEREOF, the parties have executed this Mortgage as of the Effective Date.

BORROWER:

[BORROWER LEGAL NAME]
By: _______________________________
Name: _____________________________
Title: ______________________________

LENDER:

[LENDER LEGAL NAME]
By: _______________________________
Name: _____________________________
Title: ______________________________

NOTARY ACKNOWLEDGMENT

State of Arizona )
County of _____________ ) ss.

On this ____ day of __________, 20__, before me, the undersigned Notary Public, personally appeared ____________________, who 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 for the purposes therein contained.

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

_________________________________
Notary Public
My Commission Expires: ___________

12. EXHIBITS

Exhibit A – Legal Description of the Land
Exhibit B – Permitted Exceptions
Exhibit C – Form of Promissory Note (if attached)

Drafted for use by licensed attorneys. User must tailor bracketed items, verify statutory citations, and ensure compliance with current Arizona law and local recording requirements before final execution.