MORTGAGE AND SECURITY AGREEMENT
(Illinois – Single‐Parcel, Non-Consumer)
[// GUIDANCE: Adapt for multi-parcel or consumer (residential) transactions as needed. Remove any provisions disallowed for consumer mortgages under federal or state law.]
TABLE OF CONTENTS
- Document Header
- Definitions
- Granting Clause & Secured Obligations
- Representations & Warranties
- Covenants & Restrictions
- Events of Default; Notice & Cure
- Remedies (Including Foreclosure)
- Risk Allocation
- Dispute Resolution & Governing Law
- General Provisions
- Execution & Acknowledgment
- Exhibit A – Legal Description of Property
- Exhibit B – Secured Promissory Note (Reference)
1. DOCUMENT HEADER
THIS MORTGAGE AND SECURITY AGREEMENT (this “Mortgage”) is made as of [EFFECTIVE DATE] (the “Effective Date”), by and between:
• [[BORROWER LEGAL NAME]], a [STATE OF FORMATION & ENTITY TYPE], whose address is [BORROWER ADDRESS] (“Borrower” or “Mortgagor”); and
• [[LENDER LEGAL NAME]], a [STATE OF FORMATION & ENTITY TYPE], whose address is [LENDER ADDRESS] (“Lender” or “Mortgagee”).
RECITALS
A. Borrower has executed, or contemporaneously herewith is executing, that certain Promissory Note dated as of the Effective Date in the original principal amount of [PRINCIPAL AMOUNT] (the “Note”).
B. Borrower desires to secure payment and performance of the Note and all other Obligations (as defined below) by granting Lender a mortgage lien upon the Property (as defined below).
C. The parties intend this Mortgage to constitute (i) a mortgage pursuant to the Illinois Mortgage Foreclosure Law, 735 ILCS 5/15-1101 et seq., (ii) an assignment of rents, and (iii) a security agreement under Article 9 of the Uniform Commercial Code as adopted in Illinois.
NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Borrower and Lender agree as follows:
2. DEFINITIONS
[// GUIDANCE: Alphabetize additional terms as added.]
“Affiliate” means, with respect to a Person, any other Person that directly or indirectly Controls, is Controlled by, or is under common Control with such Person.
“Applicable Law” means all federal, state (including, without limitation, the Illinois Mortgage Foreclosure Law), and local statutes, regulations, ordinances, and judicial decisions now or hereafter in effect and applicable to any Obligation or the Property.
“Borrower” has the meaning set forth in the Preamble.
“Business Day” means any day other than Saturday, Sunday, or a day on which commercial banks in Chicago, Illinois, are authorized or required to close.
“Debt” means the outstanding principal, interest, fees, and other amounts owing under the Note and all other Loan Documents.
“Default” means any event or circumstance that, with notice, lapse of time, or both, would constitute an Event of Default.
“Event of Default” has the meaning specified in Section 6.1.
“Loan Documents” means this Mortgage, the Note, any guaranty, environmental indemnity, and all other instruments executed in connection with the Loan.
“Obligations” means the Debt and every other obligation of Borrower to Lender arising under any Loan Document, whether now existing or hereafter incurred, absolute or contingent.
“Permitted Encumbrances” means (i) real estate taxes and assessments not yet delinquent, (ii) the encumbrances listed on Schedule P-1 attached hereto, and (iii) such other liens as Lender has expressly approved in writing.
“Property” means collectively (a) the real property described in Exhibit A, (b) all buildings and improvements now or hereafter located thereon, (c) all fixtures, appliances, machinery, and equipment now or hereafter affixed thereto, and (d) all Rents, profits, and proceeds of the foregoing.
“Rents” means all rents, issues, income, and profits generated by the Property, including security and advance rental deposits.
“Secured Debt Amount” means, at any time, the then-outstanding amount of the Debt, not to exceed [MAXIMUM SECURED AMOUNT].
[// GUIDANCE: For revolving or future-advance structures, insert a stated maximum to comply with 765 ILCS 905/1 (Illinois Mortgage Act).]
3. OPERATIVE PROVISIONS
3.1 Granting Clause
For the purpose of securing the Obligations, Borrower hereby irrevocably grants, bargains, sells, conveys, mortgages, pledges, assigns, transfers, and sets over to Lender, with mortgage covenants and upon statutory condition, all of Borrower’s right, title, and interest in and to the Property, together with:
a. All easements, rights-of-way, strips, and gores of land;
b. All water and mineral rights;
c. All replacements, additions, substitutions, and accessions to any of the foregoing; and
d. All insurance and condemnation proceeds relating thereto.
3.2 Assignment of Rents
Borrower hereby absolutely and unconditionally assigns to Lender all present and future Rents as further security for the Obligations. Lender grants to Borrower a revocable license to collect and retain Rents until the occurrence of an Event of Default.
3.3 Security Interest in Personal Property
To the extent the Property includes personal property or fixtures, this Mortgage shall constitute a security agreement and financing statement under Article 9 of the Uniform Commercial Code.
3.4 Secured Promissory Note
Payment of the Note is secured by this Mortgage. The Note is incorporated herein by reference.
3.5 Future Advances
This Mortgage secures (i) future advances up to the Secured Debt Amount, (ii) protective advances made by Lender to preserve the Property or its lien priority, and (iii) all renewals, extensions, and modifications of the Obligations.
3.6 Taxes, Recording, and Documentary Fees
Borrower shall pay all documentary, recording, and intangible taxes, if any, imposed in connection with the execution and recordation of this Mortgage.
4. REPRESENTATIONS & WARRANTIES
Borrower represents and warrants to Lender that, as of the Effective Date and continuing thereafter:
4.1 Organization and Authority: Borrower is duly formed, validly existing, and in good standing under the laws of its state of organization, has requisite power to own the Property, and has full authority to execute and perform the Loan Documents.
4.2 Title: Borrower holds good and marketable fee simple title to the Property, free of all liens and encumbrances other than Permitted Encumbrances.
4.3 No Conflicts: Execution and delivery of, and performance under, the Loan Documents do not violate any organizational document, court order, or Applicable Law.
4.4 Consents: All governmental and third-party approvals required for the transactions contemplated hereby have been obtained and are in full force and effect.
4.5 Litigation: No pending or, to Borrower’s knowledge, threatened litigation or proceeding would materially impair Borrower’s ability to perform its Obligations or adversely affect the Property.
4.6 Compliance: The Property and Borrower’s use thereof comply in all material respects with Applicable Law, including zoning and environmental requirements.
Survival: All representations and warranties shall survive the execution of this Mortgage and any foreclosure or deed in lieu thereof.
5. COVENANTS & RESTRICTIONS
5.1 Payment and Performance: Borrower shall punctually pay and perform all Obligations when due.
5.2 Taxes and Assessments: Borrower shall pay, before delinquency, all real estate taxes, assessments, and other charges against the Property.
5.3 Insurance: Borrower shall maintain insurance for the Property in such forms, amounts, and with such insurers as Lender may reasonably require, naming Lender as mortgagee and loss payee pursuant to a standard mortgagee clause (ISO Form 438BFU or its equivalent).
5.4 Maintenance and Repairs: Borrower shall keep the Property in good order and condition and shall not commit or permit waste.
5.5 Compliance with Law: Borrower shall comply with all Applicable Law, including the Illinois Mortgage Foreclosure Law, building codes, and environmental statutes.
5.6 Transfer Restrictions: Without Lender’s prior written consent, Borrower shall not sell, convey, transfer, lease (except bona fide arms-length leases in the ordinary course), or further encumber any interest in the Property.
5.7 Right of Inspection: Upon reasonable notice, Lender and its agents may enter and inspect the Property and examine Borrower’s books and records relating thereto.
5.8 Environmental Matters: Borrower shall not use, generate, or dispose of Hazardous Substances on the Property except in compliance with Applicable Law and shall indemnify Lender for any Losses arising from environmental conditions.
5.9 Notice & Cure: Borrower shall promptly notify Lender in writing of (i) any Event of Default, (ii) any material casualty or condemnation affecting the Property, or (iii) any material litigation concerning Borrower or the Property.
6. EVENTS OF DEFAULT; NOTICE & CURE
6.1 Events of Default
Each of the following shall constitute an “Event of Default”:
a. Payment Default: Failure to pay any amount due under the Note within [NUMBER] days after its due date.
b. Performance Default: Failure to perform or observe any non-monetary covenant within [NUMBER] days after written notice.
c. Misrepresentation: Any representation or warranty proves materially false when made.
d. Voluntary Bankruptcy: Borrower’s initiation of any insolvency or reorganization proceeding.
e. Involuntary Bankruptcy: An involuntary proceeding is instituted against Borrower and remains undismissed or unstayed for [NUMBER] days.
f. Receivership: Appointment of a receiver for Borrower or the Property.
g. Transfer Violation: Any prohibited sale, transfer, or encumbrance of the Property.
h. Material Casualty Without Restoration: Failure to diligently pursue restoration following a casualty covered under Section 5.3.
i. Default Under Other Loan Documents: Any default under any other Loan Document not cured within the applicable cure period.
6.2 Notice & Opportunity to Cure
Except for payment defaults (which require no notice), Lender shall give Borrower written notice of default, and Borrower shall have the applicable cure period specified above.
7. REMEDIES (INCLUDING FORECLOSURE)
7.1 Acceleration: Upon any Event of Default, Lender may declare the entire Debt immediately due and payable.
7.2 Foreclosure Remedies: Lender may foreclose this Mortgage in any Illinois state court of competent jurisdiction pursuant to 735 ILCS 5/15-1101 et seq. and exercise all rights thereunder, including:
a. Judicial Sale of the Property;
b. Appointment of a receiver for the Property; and
c. Entry of a deficiency judgment for any remaining balance of the Obligations, subject to Illinois deficiency rules.
7.3 Statutory Right of Redemption: Borrower’s statutory right of redemption shall be as provided in the Illinois Mortgage Foreclosure Law and is not waived hereby.
[// GUIDANCE: IL redemption periods generally run for 7 months after service or 3 months after judgment, whichever is later, but verify current law.]
7.4 Reinstatement: Borrower may reinstate the Mortgage prior to sale in accordance with Applicable Law.
7.5 Uniform Commercial Code Remedies: With respect to personal property collateral, Lender may exercise any rights and remedies under Article 9 of the UCC.
7.6 Application of Proceeds: Sale proceeds shall be applied (i) to costs of sale, (ii) to the Obligations, (iii) to subordinate lienholders as required by law, and (iv) to Borrower, if any balance remains.
7.7 Cumulative Remedies: All rights and remedies are cumulative and may be exercised concurrently or separately.
7.8 Attorneys’ Fees and Costs: Borrower shall pay Lender’s reasonable attorneys’ fees and costs incurred in enforcing or defending this Mortgage, whether or not litigation is commenced.
8. RISK ALLOCATION
8.1 Indemnification by Borrower
Borrower shall indemnify, defend, and hold harmless Lender and its Affiliates from and against any and all claims, liabilities, losses, damages, and expenses (including reasonable attorneys’ fees) arising out of or related to:
a. Borrower’s ownership, operation, or maintenance of the Property;
b. Violation of Applicable Law; or
c. Environmental Conditions.
This indemnity shall survive foreclosure, deed in lieu, satisfaction, or release of this Mortgage.
8.2 Limitation of Liability
In no event shall Lender’s aggregate liability under the Loan Documents exceed the then outstanding Secured Debt Amount. Under no circumstances shall Lender be liable for punitive, exemplary, or consequential damages.
8.3 Insurance Requirements
Borrower shall name Lender as an additional insured or mortgagee/loss payee, as appropriate, on all policies required under Section 5.3.
8.4 Force Majeure
Performance of non-monetary obligations shall be excused during, and extended for, any period reasonably attributable to acts of God, labor disputes, governmental restrictions, or other events beyond the reasonable control of the affected party; provided, however, that force majeure shall not excuse payment obligations.
9. DISPUTE RESOLUTION & GOVERNING LAW
9.1 Governing Law: This Mortgage and the Obligations shall be governed by and construed in accordance with the laws of the State of Illinois, without regard to conflicts-of-law principles.
9.2 Forum Selection: Exclusive jurisdiction and venue for any action arising out of or relating to this Mortgage shall be in the state courts located in [[COUNTY] County, Illinois]. Borrower consents to such jurisdiction and waives any objection based on forum non conveniens.
9.3 Arbitration: Arbitration is expressly excluded.
9.4 Jury Waiver: [OPTIONAL – FOR COMMERCIAL TRANSACTIONS ONLY] BORROWER AND LENDER HEREBY WAIVE, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY RIGHT TO TRIAL BY JURY.
[// GUIDANCE: For consumer/residential mortgages, omit or adjust to ensure enforceability.]
9.5 Injunctive Relief: Nothing in this Section shall limit Lender’s right to seek injunctive or equitable relief, including foreclosure or appointment of a receiver.
10. GENERAL PROVISIONS
10.1 Amendments and Waivers: No amendment or waiver of any provision shall be effective unless in writing and signed by the party against whom enforcement is sought.
10.2 Assignment: Lender may assign or participate its interest, in whole or in part, without Borrower’s consent. Borrower may not assign this Mortgage without Lender’s prior written consent.
10.3 Successors and Assigns: This Mortgage shall bind and benefit the parties and their respective successors and permitted assigns.
10.4 Severability: If any provision is held 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 achieve its intent.
10.5 Integration; No Oral Agreements: The Loan Documents collectively constitute the entire agreement of the parties concerning the subject matter hereof and supersede all prior understandings. Oral agreements or commitments to loan money, extend credit, or otherwise forbear from enforcing repayment are not enforceable.
10.6 Counterparts; Electronic Signatures: This Mortgage may be executed in multiple counterparts, each of which shall be deemed an original. Electronic signatures and electronic notarization in compliance with Illinois law shall be deemed original signatures.
10.7 Notices: All notices shall be in writing and deemed given (i) upon personal delivery, (ii) one Business Day after deposit with a recognized overnight courier, or (iii) three Business Days after deposit in U.S. certified mail, postage prepaid, return receipt requested, addressed to the party at its address set forth above (or such other address as either party may designate by notice).
10.8 Further Assurances: Borrower shall execute and deliver such further instruments and take such further actions as Lender may reasonably request to carry out the intent of this Mortgage and maintain the lien and security interest hereof.
11. EXECUTION & ACKNOWLEDGMENT
IN WITNESS WHEREOF, Borrower has executed this Mortgage as of the Effective Date.
[Borrower Signature Block]
[[BORROWER LEGAL NAME]]
By: _____
Name: [NAME]
Title: [TITLE]
[Borrower Notary Acknowledgment – Illinois]
State of Illinois )
County of ___) SS.
On this ___ day of _, 20_, before me, the undersigned notary public, personally appeared ___, the ___ of ___, a ____, who acknowledged execution of the foregoing instrument on behalf of said entity.
Notary Public
My Commission Expires: __
[// GUIDANCE: Insert Mortgagee/Lender execution block if local recording customs require. Generally, only the mortgagor signs a mortgage.]
12. EXHIBIT A – LEGAL DESCRIPTION OF PROPERTY
[Insert metes-and-bounds or lot and block legal description]
13. EXHIBIT B – SECURED PROMISSORY NOTE
[Attach or cross-reference the Note secured hereby]
[// GUIDANCE:
1. Record this Mortgage with the recorder of deeds in the county where the Property is located.
2. Verify compliance with Illinois documentary stamp requirements.
3. For fixtures, consider filing a UCC financing statement naming the county recorder as filing office to ensure fixture filing perfection.
4. Confirm requirements for Illinois mortgagee title insurance and endorsement forms.
5. For consumer transactions, review all federal (e.g., TILA, RESPA) and Illinois High-Risk Home Loan Act provisions.]