MORTGAGE (DEED OF TRUST) AND SECURITY AGREEMENT
District of Columbia
[// GUIDANCE: This template is drafted to comply with District of Columbia real-property law (see D.C. Code Title 42) and to incorporate the user-specified metadata. All bracketed items must be customized before execution and recordation.]
TABLE OF CONTENTS
- Document Header
- Definitions
- Granting Clause & Secured Obligations
- Representations & Warranties of Borrower
- Covenants
- Insurance, Taxes, and Impounds
- Events of Default
- Remedies; Foreclosure; Right of Redemption
- Deficiency Judgment
- Indemnification & Expenses
- Limitation of Liability
- Governing Law; Forum; Jury Waiver
- Miscellaneous Provisions
- Execution & Notarization
1. DOCUMENT HEADER
THIS MORTGAGE (DEED OF TRUST) AND SECURITY AGREEMENT (this “Security Instrument”) is made as of [EFFECTIVE DATE] (the “Effective Date”), by and among:
• [NAME OF BORROWER], a [ENTITY TYPE / STATE OF FORMATION], having an address at [ADDRESS] (“Borrower”);
• [NAME OF LENDER], a [ENTITY TYPE / STATE OF FORMATION], having an address at [ADDRESS] (“Lender”); and
• [NAME OF TRUSTEE], a [ENTITY TYPE / STATE OF FORMATION], having an address at [ADDRESS] (“Trustee”).
RECITALS
A. Borrower is indebted to Lender pursuant to that certain Promissory Note dated as of the Effective Date in the original principal amount of $[PRINCIPAL] (as amended, restated, extended, or otherwise modified, the “Note”).
B. Borrower desires to secure (i) payment and performance of the Note and all other Secured Obligations (defined below) and (ii) Borrower’s covenants herein.
NOW, THEREFORE, in consideration of 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
For purposes of this Security Instrument, the following terms have the meanings set forth below. Defined terms appear alphabetically and are applicable throughout this document unless the context clearly requires otherwise.
“Advance” means each disbursement made by Lender to or for the benefit of Borrower under the Loan Documents.
“Collateral” has the meaning given in Section 3.1.
“Default Rate” means [RATE]% per annum or, if lower, the maximum rate permitted by applicable law.
“Environmental Law” means any federal, District of Columbia, or local statute, ordinance, regulation, or order relating to environmental matters, including hazardous substances.
“Event of Default” has the meaning set forth in Section 7.1.
“Loan Documents” means collectively the Note, this Security Instrument, and any other document now or hereafter evidencing, securing, or relating to the Secured Obligations.
“Obligor” means Borrower and any guarantor, surety, or other person liable for any Secured Obligation.
“Permitted Encumbrances” means (a) real-property taxes and assessments not yet delinquent, (b) easements of record that do not materially impair the value or intended use of the Property, and (c) other encumbrances approved in writing by Lender.
“Property” has the meaning given in Section 3.1.
“Secured Obligations” means (a) the principal of, interest on, and all other amounts owing under the Note; (b) all other indebtedness, obligations, and liabilities of Borrower to Lender, present or future, direct or indirect, absolute or contingent; and (c) all renewals, extensions, modifications, consolidations, and substitutions of any of the foregoing.
3. GRANTING CLAUSE & SECURED OBLIGATIONS
3.1 Grant of Security. Borrower hereby irrevocably grants, bargains, sells, conveys, assigns, and transfers to Trustee, in trust for the benefit of Lender, with power of sale, all of Borrower’s right, title, and interest in and to the following (collectively, the “Property”):
a. The real property located in the District of Columbia and described on Exhibit A attached hereto (the “Land”);
b. All buildings, structures, improvements, fixtures, and appurtenances now or hereafter situated on the Land;
c. All easements, rights-of-way, air rights, water rights, mineral rights, development rights, and hereditaments appurtenant to the Land;
d. All leases, rents, issues, and profits derived from the Land; and
e. All proceeds and products of the foregoing (collectively, the “Collateral”).
3.2 Secured Obligations. This Security Instrument secures the performance of the Secured Obligations.
3.3 Future Advances. Pursuant to D.C. Code § 42-813, this Security Instrument shall secure future advances up to the maximum principal amount of $[MAXIMUM SECURED AMOUNT] outstanding at any one time.
[// GUIDANCE: Insert an optional “open-end” cap if the instrument will secure revolving or construction advances.]
4. REPRESENTATIONS & WARRANTIES OF BORROWER
Borrower represents and warrants to Lender and Trustee that, as of the Effective Date 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 qualified to transact business in the District of Columbia. Borrower has the power and authority to execute and deliver the Loan Documents and to perform its obligations thereunder.
4.2 Binding Obligation. The Loan Documents constitute the valid and binding obligations of Borrower, enforceable against Borrower in accordance with their terms, subject to applicable bankruptcy, insolvency, or similar laws.
4.3 Title. Borrower is the lawful owner of the Property in fee simple, free and clear of all liens and encumbrances except Permitted Encumbrances.
4.4 Compliance with Laws. The Property and its present use comply in all material respects with applicable zoning, building, environmental, and other laws.
4.5 Litigation. No litigation, arbitration, or administrative proceeding is pending or, to Borrower’s knowledge, threatened that would materially and adversely affect the Property or Borrower’s ability to perform under the Loan Documents.
4.6 Financial Statements. All financial statements delivered to Lender are true, correct, and complete in all material respects and fairly present Borrower’s financial condition.
4.7 Foreign Assets Control. Borrower is not (i) a person listed on any OFAC-published list, (ii) a person or entity prohibited by U.S. sanctions laws, or (iii) located, organized, or resident in a country subject to comprehensive U.S. sanctions.
4.8 Survival. Each representation and warranty shall survive execution and continue until all Secured Obligations are paid in full.
5. COVENANTS
5.1 Payment and Performance. Borrower shall timely pay and perform all Secured Obligations.
5.2 Maintenance. Borrower shall keep the Property in good order, repair, and condition (ordinary wear and tear excepted) and in compliance with all applicable laws.
5.3 Taxes and Assessments. Borrower shall pay when due all taxes, assessments, and other governmental charges levied against the Property. Evidence of payment (or escrow) shall be furnished to Lender upon request.
5.4 Insurance. Borrower shall maintain insurance in such types and amounts, and with such insurers, as Lender may reasonably require, including at minimum:
a. All-risk property insurance for 100% replacement cost;
b. Commercial general liability insurance; and
c. Flood insurance if the Property is in a Special Flood Hazard Area.
Lender shall be named as mortgagee or loss payee, and each policy shall provide for 30 days’ prior written notice to Lender of cancellation or material modification.
5.5 Negative Covenants. Borrower shall not, without Lender’s prior written consent:
a. Create or permit any lien on the Property other than Permitted Encumbrances;
b. Transfer, convey, or encumber any interest in the Property or in Borrower; or
c. Change the Property’s zoning, use, or occupancy.
5.6 Books and Records; Inspection. Borrower shall keep accurate books and records and permit Lender to inspect the Property and such records upon reasonable notice.
5.7 Notice of Certain Matters. Borrower shall promptly give written notice to Lender of: (i) any Event of Default or prospective Event of Default; (ii) any material damage to or condemnation of the Property; or (iii) any litigation involving Borrower or the Property that could materially affect Lender’s interests.
5.8 Further Assurances. Borrower shall execute and deliver such further instruments and do such further acts as may be reasonably required to carry out the intent of this Security Instrument.
6. INSURANCE, TAXES, AND IMPOUNDS
6.1 Impound Account. At Lender’s option following an Event of Default, Borrower shall deposit with Lender, monthly, one-twelfth (1/12) of annual amounts estimated by Lender for taxes, assessments, and insurance premiums (the “Impound Account”).
6.2 Application of Impounds. Lender may apply Impound Account funds to payment of the items for which they were deposited or, after an Event of Default, to any Secured Obligation. No interest shall accrue on the Impound Account unless required by applicable law.
7. EVENTS OF DEFAULT
7.1 Definition. Any of the following shall constitute an “Event of Default”:
a. Failure to pay any amount due under the Note within [GRACE PERIOD] days after the due date;
b. Failure to perform any other covenant under the Loan Documents within 30 days after written notice;
c. Any representation or warranty proves materially false when made;
d. Borrower becomes insolvent, makes an assignment for benefit of creditors, or a petition for relief is filed under any bankruptcy or insolvency law by or against Borrower and not dismissed within 60 days;
e. Attachment, levy, or seizure of any portion of the Property or of Borrower’s interest therein; or
f. Occurrence of any default (however defined) under any other Loan Document.
7.2 Notice and Cure. Except as otherwise provided, Lender shall give written notice of default to Borrower and Trustee. If the default is curable but not one for failure to pay money, Borrower shall have a 30-day cure period (extended to 60 days if cure cannot reasonably be completed within 30 days and Borrower is diligently pursuing cure).
8. REMEDIES; FORECLOSURE; RIGHT OF REDEMPTION
8.1 Acceleration. Upon an Event of Default, Lender may declare all Secured Obligations immediately due and payable.
8.2 Power of Sale. Trustee, at the written direction of Lender, may foreclose by power of sale, at public auction, in accordance with D.C. Code §§ 42-815 et seq., as the same may be amended. Trustee may postpone any sale by public proclamation at the time and place previously noticed.
8.3 Judicial Foreclosure. Lender may alternatively or concurrently foreclose by judicial action in the Superior Court of the District of Columbia.
8.4 Receiver. Lender, as a matter of right and without notice, may apply to any court of competent jurisdiction for appointment of a receiver to collect rents and manage the Property.
8.5 Application of Proceeds. Foreclosure sale proceeds shall be applied (i) to expenses of sale, including Trustee’s commission and reasonable attorneys’ fees; (ii) to Secured Obligations in such order as Lender determines; and (iii) the surplus, if any, to the person lawfully entitled thereto.
8.6 Borrower’s Right of Redemption. Borrower may cure the monetary default and redeem the Property by tendering all amounts required under D.C. Code § 42-815(b) at any time before the foreclosure sale is completed. Borrower acknowledges that redemption rights terminate upon final acceptance of the highest bid at such sale.
[// GUIDANCE: Adjust Section 8.6 if the parties agree to permit post-sale statutory or contractual redemption periods; DC law does not presently provide a post-sale statutory redemption right.]
9. DEFICIENCY JUDGMENT
9.1 Liability for Deficiency. If the proceeds of any foreclosure sale are insufficient to satisfy the Secured Obligations, Borrower shall remain liable for the unpaid balance (the “Deficiency”), subject to Section 11 (Limitation of Liability). Lender may recover the Deficiency in a separate action to the extent permitted by law.
9.2 Waiver. To the fullest extent permitted by law, Borrower waives any defense against a Deficiency claim, including any requirement that the Property be appraised or that the foreclosure sale price be adjudicated fair.
[// GUIDANCE: DC permits deficiency judgments absent contractual prohibition. Remove Section 9 or insert waiver of deficiency if the parties wish to limit Borrower’s post-foreclosure liability.]
10. INDEMNIFICATION & EXPENSES
10.1 Borrower Indemnity. Borrower shall indemnify, defend, and hold harmless Lender, Trustee, and their respective officers, directors, employees, agents, and affiliates (each an “Indemnitee”) from and against all claims, losses, liabilities, damages, and expenses (including reasonable attorneys’ fees) arising out of or relating to:
a. The ownership, use, operation, or condition of the Property;
b. The Loan Documents or the transactions contemplated thereby; or
c. Any breach of representation, warranty, or covenant of Borrower.
10.2 Defense. Indemnitee may elect to conduct its own defense with counsel of its choice at Borrower’s expense.
10.3 Survival. The indemnity obligations shall survive repayment of the Secured Obligations and any foreclosure or conveyance in lieu thereof.
11. LIMITATION OF LIABILITY
11.1 Liability Cap. The aggregate liability of Borrower to Lender for monetary damages under the Loan Documents (other than for fraud, willful misconduct, or the indemnity in Section 10) shall not exceed the Secured Obligations outstanding from time to time, including interest and enforcement costs (the “Liability Cap”).
11.2 Exculpation of Non-Recourse Parties. No member, partner, shareholder, officer, director, or employee of Borrower (each, a “Non-Recourse Party”) shall have personal liability for repayment of the Secured Obligations except to the extent such person (i) signs a separate written guaranty, or (ii) commits fraud or willful misconduct.
12. GOVERNING LAW; FORUM; JURY WAIVER
12.1 Governing Law. This Security Instrument and the other Loan Documents shall be governed by and construed in accordance with the internal laws of the District of Columbia (the “Governing Law”), without regard to conflicts-of-law rules.
12.2 Forum Selection. Borrower irrevocably submits to the exclusive jurisdiction of the Superior Court of the District of Columbia and the United States District Court for the District of Columbia (collectively, the “Chosen Courts”) in any action arising out of or relating to the Loan Documents.
12.3 Arbitration. Arbitration is expressly excluded.
12.4 Jury Waiver. TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, EACH PARTY KNOWINGLY, VOLUNTARILY, AND INTENTIONALLY WAIVES ANY RIGHT TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING ARISING OUT OF THE LOAN DOCUMENTS. [If the waiver is unenforceable under Governing Law, this Section 12.4 shall be of no force.]
12.5 Injunctive Relief. Nothing in this Section shall limit Lender’s right to seek equitable relief, including specific performance or injunctive relief (such as foreclosure or appointment of a receiver).
13. MISCELLANEOUS PROVISIONS
13.1 Amendments and Waivers. No amendment or waiver of any provision of the Loan Documents shall be effective unless in writing and signed by the party against whom enforcement is sought.
13.2 Successors and Assigns. The Loan Documents shall bind and benefit the parties and their respective successors and assigns; provided, however, Borrower may not assign any right or delegate any duty without Lender’s prior written consent.
13.3 Severability. If any provision of the Loan Documents is held invalid or unenforceable, the remaining provisions shall remain in full force and effect and shall be construed to best effectuate the parties’ intent.
13.4 Integration. The Loan Documents constitute the entire agreement among the parties with respect to the subject matter and supersede all prior oral or written agreements.
13.5 Counterparts; Electronic Signatures. The Loan Documents may be executed in counterparts, each of which shall be deemed an original and all of which together constitute one instrument. Signatures delivered by facsimile, email (PDF), or other electronic means shall be deemed originals for all purposes.
13.6 Notices. Any notice required or permitted shall be in writing and delivered (i) in person, (ii) by nationally recognized overnight courier, or (iii) by certified mail, return receipt requested, postage prepaid, addressed to the respective party at its address first set forth above (or such other address as a party may designate by notice). Notices shall be effective upon receipt or refusal.
13.7 Attorneys’ Fees. Borrower shall pay all reasonable attorneys’ fees and costs incurred by Lender or Trustee in connection with the enforcement of the Loan Documents, including any appeal or bankruptcy proceeding.
13.8 Recording. This Security Instrument shall be recorded in the land records of the District of Columbia. Borrower shall pay all recordation taxes, fees, and charges.
14. EXECUTION & NOTARIZATION
IN WITNESS WHEREOF, Borrower has executed this Mortgage (Deed of Trust) and Security Agreement as of the Effective Date.
[PLACE BORROWER SIGNATURE BLOCK HERE]
[NAME OF BORROWER]
By: _______
Name:
Title:
[If entity borrower, add officer’s title and authority language.]
[PLACE LENDER SIGNATURE BLOCK HERE]
[NAME OF LENDER]
By: _______
Name:
Title:
[PLACE TRUSTEE ACKNOWLEDGMENT HERE]
[NAME OF TRUSTEE]
By: _______
Name:
Title:
[NOTARY ACKNOWLEDGMENT]
District of Columbia, ss:
On this _ day of _, 20__, before me, the undersigned notary public, personally appeared ______, who acknowledged [himself/herself] to be the [TITLE] of [ENTITY], and that [he/she] as such officer, being authorized to do so, executed the foregoing instrument for the purposes therein contained.
IN WITNESS WHEREOF I hereunto set my hand and official seal.
Notary Public
My commission expires: ____
EXHIBIT A – LEGAL DESCRIPTION OF LAND
[INSERT METES AND BOUNDS OR LOT AND SQUARE DESCRIPTION]
[// GUIDANCE: Attach the full legal description exactly as it appears on the title commitment or last deed of record.]