Mortgage Agreement - Vermont

MORTGAGE DEED, SECURITY AGREEMENT, AND ASSIGNMENT OF RENTS

(State of Vermont – Judicial Foreclosure Form)

TABLE OF CONTENTS

1. Definitions
2. Grant of Mortgage; Security Interest; Assignment of Rents
3. Secured Obligations
4. Representations and Warranties
5. Affirmative and Negative Covenants
6. Insurance and Casualty Proceeds
7. Environmental Matters
8. Events of Default
9. Remedies (Including Vermont-Specific Foreclosure Procedures)
10. Statutory Right of Redemption (Vermont)
11. Deficiency Judgment Rules (Vermont)
12. Indemnification; Liability Cap
13. Governing Law; Forum Selection; Jury Waiver
14. Miscellaneous Provisions
15. Execution; Notary Acknowledgment

1. DEFINITIONS

For purposes of this Mortgage, the following terms have the meanings set forth below. Capitalized terms used but not defined herein have the meanings given in the Note.

“Borrower” – [NAME OF BORROWER], together with any co-mortgagor or surety who signs this Mortgage.

“Business Day” – Any day other than a Saturday, Sunday, or legal holiday in the State of Vermont.

“Default Rate” – The rate specified in the Note to accrue upon an Event of Default.

“Environmental Laws” – All federal, state, and local laws, regulations, and ordinances relating to health, safety, or the environment.

“Governmental Authority” – Any federal, state, county, municipal, or other governmental or quasi-governmental authority, agency, board, or court having jurisdiction.

“Indemnified Parties” – Lender and its successors, assigns, officers, directors, employees, and agents.

“Loan” – The loan evidenced by the Note and secured by this Mortgage.

“Permitted Encumbrances” – (a) real estate taxes not yet delinquent; (b) easements and restrictions of record that do not materially interfere with the use of the Premises; and (c) other items approved in writing by Lender.

“Premises” – The real property described in Exhibit A, together with all Improvements, Fixtures, Appurtenances, and Rents.

“Rents” – All present and future rents, issues, income, royalties, and profits derived from the Premises.

“Secured Obligations” – (a) all amounts now or hereafter owing under the Note; (b) all covenants, duties, debts, and liabilities of Borrower under this Mortgage and the other Loan Documents; and (c) all renewals, extensions, amendments, and replacements of the foregoing.

2. GRANT OF MORTGAGE; SECURITY INTEREST; ASSIGNMENT OF RENTS

2.1 Grant and Covenants. To secure the punctual payment and performance of the Secured Obligations, Borrower hereby mortgages and grants to Lender the Premises, subject only to Permitted Encumbrances. Borrower covenants that Borrower holds the estate described in Exhibit A, has authority to mortgage that estate, has not created or permitted an encumbrance on the Premises other than the Permitted Encumbrances, and will warrant and defend Lender's mortgage interest against lawful claims arising by, through, or under Borrower. These promises are express terms of this Mortgage and do not enlarge the estate Borrower owns.

2.2 Security Interest in Personal Property. Borrower grants to Lender a security interest in all Fixtures and other personal property located on, affixed to, or used in connection with the Premises, together with all proceeds thereof, to the fullest extent permissible under Article 9 of the Uniform Commercial Code as adopted in Vermont (“UCC”).

2.3 Assignment of Rents. Borrower hereby absolutely and unconditionally assigns to Lender all present and future Rents as further security for the Secured Obligations. Until the occurrence of an Event of Default, Borrower may collect and retain the Rents. Upon and after any Event of Default, Lender may, without notice, exercise all rights of collection and enforcement with respect to the Rents.

3. SECURED OBLIGATIONS

This Mortgage secures (a) payment of the indebtedness evidenced by the Note, with interest, late charges, and the Default Rate as applicable; (b) payment of all advances made by Lender to protect the lien or the Premises; and (c) the performance of every agreement of Borrower contained in any Loan Document.

4. REPRESENTATIONS AND WARRANTIES

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

4.1 Authority; Enforceability. Borrower has full power and authority to execute and deliver this Mortgage and to perform its obligations hereunder. This Mortgage is the valid and binding obligation of Borrower, enforceable in accordance with its terms.

4.2 Title. Borrower is the lawful owner in fee simple of the Premises, free and clear of all liens and encumbrances other than Permitted Encumbrances.

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

4.4 Litigation. No pending or threatened litigation, condemnation, or environmental action materially affects the Premises or Borrower’s ability to perform its obligations.

4.5 Homestead; Spousal Joinder. If Borrower is married and the Premises constitutes, in whole or in part, the homestead of Borrower and Borrower’s spouse under 27 V.S.A. Chapter 3, Borrower represents that Borrower’s spouse has joined in the execution and acknowledgment of this Mortgage as required by 27 V.S.A. § 141(a), and, if applicable, has provided written consent to any future advances secured hereby as required by 27 V.S.A. § 141(b). Borrower acknowledges that a mortgage of homestead property not executed and acknowledged by both spouses is inoperative as to the homestead interest of the non-joining spouse.

The foregoing representations and warranties shall survive the execution of this Mortgage and any foreclosure thereof.

5. AFFIRMATIVE AND NEGATIVE COVENANTS

5.1 Payment and Performance. Borrower shall timely pay the Secured Obligations and perform all covenants in the Loan Documents.

5.2 Taxes and Assessments. Borrower shall pay, before the same become delinquent, all taxes, assessments, and charges affecting the Premises.

5.3 Maintenance. Borrower shall keep the Premises in good condition and repair, reasonable wear and casualty excepted.

5.4 Compliance with Law. Borrower shall comply with all laws affecting the Premises and Borrower’s use thereof.

5.5 Insurance. Borrower shall maintain insurance per Section 6.

5.6 Transfers; Encumbrances. Without Lender’s prior written consent, Borrower shall not (a) sell, convey, or transfer any interest in the Premises, or (b) create any lien junior or equal to this Mortgage.

5.7 Books and Records; Inspection. Borrower shall keep adequate books relating to the Premises and permit Lender to inspect the Premises and such books upon reasonable notice.

5.8 Notices. Borrower shall promptly give Lender written notice of (a) any default under any material agreement affecting the Premises, (b) any litigation or governmental action, or (c) any release or threatened release of hazardous substances.

6. INSURANCE AND CASUALTY PROCEEDS

6.1 Required Coverage. Borrower shall maintain, at its expense and for Lender’s benefit, insurance for (a) all-risk property coverage on a replacement-cost basis, (b) liability insurance with minimum limits of not less than [AMOUNT] per occurrence, and (c) such other coverages as Lender may reasonably require.

6.2 Lender as Loss Payee. All property insurance policies shall name Lender as mortgagee and loss payee pursuant to a standard mortgagee endorsement.

6.3 Casualty Proceeds. In the event of loss, insurance proceeds shall be applied at Lender’s discretion to (a) restoration of the Premises, (b) payment of the Secured Obligations, or (c) a combination thereof. Borrower shall cooperate in adjusting all claims.

7. ENVIRONMENTAL MATTERS

7.1 Covenants. Borrower shall (a) comply with Environmental Laws, (b) not permit the Premises to be used for the generation, treatment, storage, or disposal of hazardous substances, and (c) promptly remediate any hazardous condition.

7.2 Environmental Indemnity. Borrower shall defend, indemnify, and hold harmless the Indemnified Parties from and against all claims arising out of any violation of Environmental Laws relating to the Premises.

8. EVENTS OF DEFAULT

Each of the following constitutes an “Event of Default”:

a. Monetary Default – failure to pay any amount under the Note or this Mortgage within [GRACE PERIOD] days after due;
b. Non-Monetary Default – breach of any covenant, representation, or warranty, which is not cured within [CURE PERIOD] days after written notice;
c. Insolvency – Borrower’s insolvency, bankruptcy, or assignment for the benefit of creditors;
d. Transfer – unauthorized sale or encumbrance of the Premises;
e. Attachment – levy or seizure of any material portion of the Premises.

9. REMEDIES (INCLUDING VERMONT-SPECIFIC FORECLOSURE PROCEDURES)

9.1 Acceleration. Upon any Event of Default, Lender may declare the entire unpaid balance of the Secured Obligations immediately due and payable.

9.2 Protective Advances. Lender may make advances to protect its lien or the Premises, all of which shall be secured hereby and bear interest at the Default Rate.

9.3 Foreclosure. Lender may foreclose this Mortgage only through a Vermont judicial foreclosure proceeding brought in the Civil Division of the Superior Court for the county where the Premises is located, by strict foreclosure under 12 V.S.A. § 4941 or by foreclosure and judicial sale under 12 V.S.A. §§ 4945-4954, subject to Borrower’s statutory redemption rights described in Section 10. This Mortgage does not contain, and Lender may not exercise, a nonjudicial power of sale.

9.4 Receivership. Lender shall be entitled to the appointment of a receiver to collect Rents and operate the Premises pending foreclosure.

9.5 Assignment of Rents. Lender may, without further notice, exercise all rights under the Assignment of Rents contained herein.

9.6 Remedies Cumulative. All rights and remedies are cumulative and may be exercised concurrently or successively.

9.7 Attorneys’ Fees. Borrower shall pay all reasonable attorneys’ fees and costs incurred by Lender in enforcing this Mortgage, including in any bankruptcy or appellate proceedings.

10. STATUTORY RIGHT OF REDEMPTION (VERMONT)

10.1 Strict Foreclosure. If, pursuant to 12 V.S.A. § 4941, the court issues a decree of strict foreclosure without a judicial sale (permitted only upon a finding that there is no substantial value in the Premises in excess of the mortgage debt, other lien debt, and assessed but unpaid property taxes), the redemption period shall be six (6) months from the date of the decree, unless the court orders a shorter period or Borrower and Lender agree to a shorter period. The court shall fix the redemption period after considering the value of the Premises, junior lien debt, unpaid taxes, the condition of the Premises, and other equities. Borrower and any junior lienholder of record may redeem by paying the amount found due under the decree, plus accrued interest and costs, before expiration of the redemption period.

10.2 Foreclosure by Judicial Sale. If, pursuant to 12 V.S.A. §§ 4945-4954, the court orders foreclosure by judicial sale, Borrower retains the right to redeem the Premises at any time prior to the sale by paying the full amount due, including costs and expenses, under 12 V.S.A. § 4949. Following the sale, Borrower has no further right of redemption but retains the right to any surplus sale proceeds after satisfaction of Lender's judgment and other lienholders of record, in order of priority, under 12 V.S.A. § 4954(c).

10.3 No Nonjudicial Sale. This Mortgage does not grant, and Lender shall not exercise, a power of nonjudicial sale under 12 V.S.A. §§ 4961-4970. All foreclosure remedies under this Mortgage shall proceed exclusively through the judicial strict-foreclosure or judicial-sale procedures described above.

10.4 Waiver Prohibited. Any agreement purporting to waive the right of redemption prior to foreclosure is void under Vermont public policy; accordingly, no clause herein shall be construed as such a waiver.

11. DEFICIENCY JUDGMENT RULES (VERMONT)

11.1 Limitation on Amount. In the event of foreclosure by judicial sale, Lender may seek a deficiency judgment only for the amount by which (a) the reasonable expenses incurred in making the sale, plus the amount due to Lender at the time of sale, exceed (b) the actual proceeds of the judicial sale, as determined by the court under 12 V.S.A. § 4954(d). Vermont law does not permit a deficiency to be measured against the fair market value of the Premises in lieu of the actual sale price.

11.2 Timing. Lender may request a deficiency judgment in the foreclosure complaint, but in any event any request for a deficiency judgment must be made prior to the court’s issuance of the confirmation order under 12 V.S.A. § 4954(d). Failure to timely request a deficiency judgment before the confirmation order issues constitutes a waiver of any deficiency judgment against Borrower under Vermont law.

11.3 Strict Foreclosure. If the court instead issues a decree of strict foreclosure without sale under 12 V.S.A. § 4941, no judicial sale occurs and no deficiency judgment is available under that procedure.

11.4 Recourse Limited to Secured Debt. Notwithstanding anything herein to the contrary, Borrower’s personal liability for any deficiency shall in no event exceed the Secured Obligations.

12. INDEMNIFICATION; LIABILITY CAP

12.1 Borrower Indemnity. Borrower shall indemnify, defend, and hold harmless the Indemnified Parties from and against all losses, claims, liabilities, damages, and expenses arising out of or related to (a) Borrower’s breach of any Loan Document, (b) the Premises or its operation, or (c) any environmental condition, except to the extent caused by the gross negligence or willful misconduct of the Indemnified Parties.

12.2 Liability Cap. Notwithstanding Section 12.1, Borrower’s total personal liability to Lender shall be limited to the outstanding principal, interest, fees, and costs constituting the Secured Obligations (the “Liability Cap”); provided, however, that the Liability Cap shall not apply to losses arising from fraud, misappropriation of Rents, waste, or environmental matters, all of which shall be fully recourse.

13. GOVERNING LAW; FORUM SELECTION; JURY WAIVER

13.1 Governing Law. This Mortgage and the Note shall be governed by, and construed in accordance with, the laws of the State of Vermont without regard to conflict-of-laws principles.

13.2 Forum Selection. Any action or proceeding arising out of or relating to the Loan Documents shall be instituted exclusively in the state courts sitting in the County where the Premises is located (or, if applicable, the U.S. District Court for the District of Vermont), and Borrower irrevocably submits to the jurisdiction of such courts.

13.3 Arbitration Excluded. The parties specifically decline to arbitrate any dispute relating to the Loan Documents.

13.4 Jury Waiver. TO THE EXTENT NOT PROHIBITED BY LAW, BORROWER AND LENDER KNOWINGLY AND VOLUNTARILY WAIVE TRIAL BY JURY IN ANY ACTION OR PROCEEDING ARISING OUT OF THE LOAN DOCUMENTS.

14. MISCELLANEOUS PROVISIONS

14.1 Amendments. No amendment or waiver of any provision of this Mortgage shall be effective unless in writing and signed by the party against whom enforcement is sought.

14.2 Successors and Assigns. This Mortgage binds Borrower and its successors and assigns and inures to the benefit of Lender and its successors and assigns.

14.3 Severability. If any provision of this Mortgage is held invalid or unenforceable, the remainder shall remain in full force and effect.

14.4 Integration. The Loan Documents collectively constitute the entire agreement between the parties with respect to the subject matter hereof.

14.5 Counterparts; Electronic Signatures. This Mortgage may be executed in counterparts, each of which shall constitute one instrument. Electronically delivered signatures shall be deemed original.

14.6 Notices. All notices shall be in writing and delivered (a) by hand, (b) by nationally recognized overnight courier, or (c) by certified mail, return receipt requested, to the addresses set forth in the header (or to such other address as a party may designate by notice).

14.7 Time of the Essence. Time is of the essence with respect to every provision herein.

15. EXECUTION; NOTARY ACKNOWLEDGMENT

IN WITNESS WHEREOF, Borrower has executed this Mortgage as of the Effective Date.

BORROWER:
[NAME OF BORROWER]
By: _______________________________
Name: [AUTHORIZED SIGNATORY]
Title: [TITLE]

SPOUSAL JOINDER (if the Premises is, or may become, a homestead under 27 V.S.A. Chapter 3):

The undersigned, spouse of Borrower, joins in the execution of this Mortgage solely for the purpose of encumbering and subordinating any homestead interest in the Premises under 27 V.S.A. § 141, and consents to the terms of this Mortgage, including future advances secured hereby, as required by 27 V.S.A. § 141(b).

By: _______________________________
Name: [NAME OF SPOUSE]

☐ Borrower is unmarried, or the Premises is not a homestead of Borrower and Borrower's spouse; spousal joinder is not required.

[LENDER SIGNATURE BLOCK, if desired]

NOTARY ACKNOWLEDGMENT – VERMONT

State of Vermont
County of ____________

On this ____ day of ____________, 20____, before me, the undersigned notary public, personally appeared ______________________________ (name(s) of signer(s), including any joining spouse under 27 V.S.A. § 141), who acknowledged to me that (he/she/they) executed the foregoing instrument for the purposes therein contained, and whose identity I determined from personal knowledge or satisfactory evidence as required by 26 V.S.A. § 5363(a).

Witness my hand and official seal.

_____________________________________
Notary Public
My commission expires: _______________

EXHIBIT A

LEGAL DESCRIPTION OF PREMISES
[INSERT FULL LEGAL DESCRIPTION]