Form 15-4

This sample agreement resulted from conflicting claims to surplus sale proceeds in a foreclosure of a lien on mortgaged property owned by cotenants. Some of the cotenants made claims to proceeds of other cotenants on grounds of having advanced funds to pay other cotenants’ share of the note. Also, federal tax liens and abstracts of judgment were filed against some of the cotenants.

Note: When preparing this form, the attorney should carefully review Tex. Prop. Code §§ 51.0001, 51.0025, and 51.0075 and Tex. Bus. & Com. Code §§ 3.203 and 3.301 to ensure any reference to a per­son accurately describes the role the person holds or performs in the context of a foreclosure proceed­ing, e.g., references to “noteholder,” “beneficiary,” “owner,” “lender,” “obligor of the debt,” “mortgagor,”  “mortgagee,” or “mortgage servicer” as appropriate.

Foreclosure Sales Proceeds Distribution Agreement

State of Texas)

County of)

This Foreclosure Sales Proceeds Distribution Agreement (the “Distribution Agree­ment”) is executed by and between the undersigned persons who at the time of the herein- ref­erenced foreclosure sale were respectively the owner (such of the cotenants who execute a Distribution Agreement are referred to as the “Undersigned Property Interest Owners”) of the herein-identified interest (the “Property Interest”) in the Property herein described and the undersigned person as the Substitute Trustee under the Deed of Trust (as such terms are herein defined) for good and valuable consideration.

A.Recitals

1.Original Lender.      By a Deed of Trust (the “Deed of Trust”) dated [date], recorded in [recording data] of the real property records of [county] County, Texas, [name] (together with heirs, successors, and assigns called the “Mortgagors”) conveyed to [name], as Trustee, certain Property hereinafter described, for the purpose of securing and enforcing pay­ment of the indebtedness and obligations therein described (collectively the “Obligations”) including but not limited to a note described in the Deed of Trust, which was in the original principal sum of $[amount] executed by [name] (the “Note Makers”) and is payable to the order of [name] (the “Original Lender”).

2.Current Lender.      [Name] (the “Noteholder”) is the current owner and holder of the Obligations and is the beneficiary under the Deed of Trust. The note, together with all renewals and extensions, is referred to as the “Note.” The loan transaction and all subsequent dealings between the Original Lender, its successors and assigns, including the Noteholder, is referred to as the “Loan.” All documents (including the Note, the Deed of Trust, the Modifica­tions Agreements, and this Distribution Agreement) executed by all or any of the Original Lender, the Noteholder, Note Makers, the Mortgagors, and/or their respective heirs, succes­sors, and assigns are collectively called the “Loan Documents.”

3.Co-ownership of Mortgaged Property.      By deed dated [date], filed for record in [recording data], [name] conveyed to Property Interest Owners such Property Interests encumbered by the lien of the Deed of Trust, and by such instrument the Property Interest Owner assumed the obligation to pay the Obligations. The deed conveyed the Property to the following persons (the “Cotenants”) in the following undivided shares:

4.Foreclosure Sale.      On [date], the Substitute Trustee at the direction of the Note­holder conducted a Foreclosure Sale of the lien of the Deed of Trust. The property sold included the land described in the Deed of Trust (together with the rights and appurtenances related thereto referred to as the “Property”). [Name] (the “Foreclosure Sale Purchaser”) pur­chased the Property for a cash bid of $[amount] (the “Gross Sales Proceeds”). The Substitute Trustee executed and delivered to the Foreclosure Sale Purchaser the Foreclosure Sale Deed dated [date], which is recorded in [recording data] of the real property records of [county] County, Texas.

5.Surplus Proceeds.      At the time of the Foreclosure Sale, the unpaid balance of principal and interest owing on the Obligations was $[amount] (the “Loan Balance”). The Deed of Trust provides that the Substitute Trustee shall apply the Gross Sales Proceeds as fol­lows: (a) first, to pay the reasonable expense of making the sale including a fee to the Substi­tute Trustee of 5 percent (the “Stipulated Percentage Trustee’s Fee”) of the amount received in cash (the “Trustee’s Fees and Expenses”); (b) the Loan Balance as far as possible, paying first any portion thereof not evidenced by the Note, and the attorney’s fees and expenses incurred by the Noteholder in seeking payment of the obligations and the enforcement of the Noteholder’s rights and remedies (the “Attorney’s Fees of the Noteholder”); and (c) then any remainder (the “Net Sales Proceeds”) to the Mortgagors, including their heirs, successors, and assigns.

6.Payment into Registry of Court.      The Undersigned Property Interest Owners have requested the Substitute Trustee to pay to each Property Interest Owner’s pro rata share (the “Undersigned Property Interest Owner’s Share”) of the Net Sales Proceeds into the Registry of the District Court for determination of who is entitled to such funds.

B.Agreements

To induce the Substitute Trustee to pay such amount to the Undersigned Property Inter­est Owners, the Undersigned Property Interest Owners make the following representations, warranties, agreements, and indemnities:

1.Title.      Each Undersigned Property Interest Owner makes the following represen­tations and warranties to the Substitute Trustee as to each person’s respective Property Inter­est. At the time of the foreclosure sale, each Undersigned Property Interest Owner owned the undivided fee simple title interest to the Property (the “Property Interest”) set forth in the chart above.

The Undersigned Property Interest Owner represents and warrants that at the time of the foreclosure sale, the Undersigned Property Interest Owner owned both record and benefi­cial title to the Property Interest free and clear of all claims by third parties, including the other Cotenants and lien holders.

The Undersigned Property Interest Owner represents and warrants to the Substitute Trustee that there are no outstanding judgments against the Undersigned Property Interest Owner and that the Undersigned Property Interest Owner has received no notice of any claim of entitlement to the Undersigned Property Interest Owner’s Share to be distributed to the Undersigned Property Interest Owner.

The Undersigned Property Interest Owner represents and warrants that as of the fore­closure sale the Undersigned Property Interest Owner had not granted, created, or authorized the undertaking of any work, services, or improvements to the Property by any mechanic or materialman, and there exists no choate or inchoate lien against the Property arising from the actions of the Undersigned Property Interest Owner.

2.Distribution of Foreclosure Sales Proceeds.      Pursuant to the Loan Documents, the Substitute Trustee is making the following distributions:

a.Trustee’s Fees and Expenses.      $[Amount] will be distributed to the Substi­tute Trustee to pay for the expenses incurred by the Substitute Trustee in making the sale, including the preparation of this Distribution Agreement, and that are accepted by the Substitute Trustee in full payment of the Trustee’s Fee and Expenses. Substitute Trustee releases as to the Under­signed Property Interest Owner any claim apportioned to the share of the Undersigned Property Interest Owner for the payment of the Stipulated Per­centage Trustee’s Fee, provided, however, such claim is not released as to any Cotenant who does not execute a Distribution Agreement with the Sub­stitute Trustee, or as to whom, at Substitute Trustee’s election, Net Sales Pro­ceeds are tendered into the Registry of the District Court.

b.Loan Balance and Attorney’s Fees.      $[Amount] will be distributed to Note­holder as the Loan Balance owing on the Note and $[amount] to [name] for the Attorney’s Fees of the Noteholder.

c.Distributed Net Proceeds.      The following amounts will be distributed to the Undersigned Property Interest Owners as the Undersigned Property Interest Owner’s Share of the Net Sales Proceeds:

The Undersigned Property Interest Owner agrees that the amounts paid as Trustee’s Fees and Expenses and Attorney’s Fees out of the Gross Sales Proceeds are just, fair, and rea­sonable.

3.Release.      The Undersigned Property Interest Owner hereby compromises, settles, waives, acquits, fully releases, and forever discharges the Substitute Trustee, the Noteholder, and the Foreclosure Sale Purchaser and all agents, representatives, employees, servants, direc­tors, officers, shareholder’s assigns, predecessors, and successors thereof, as well as all other persons in privity with same including the firm of [name of firm] and its attorneys, sharehold­ers, and employees (the “Attorney Representing Noteholder”) (collectively the “Released Par­ties”) of and from all claims, demands, controversies, actions, or causes of action that the Undersigned Property Interest Owner has held or may now or in the future own or hold for damages, costs, expenses, offsets, breach of any duty, usury, or any other loss, whether known or unknown, arising from the Obligations or any loan of any moneys or other dealings or actions between the Noteholder, its predecessors, with the Note Makers, the Mortgagors, their successors and assigns, including the Undersigned Property Interest Owner, including the actions taken by the attorneys representing Noteholder in the collection of the amounts owing on the Loan, the actions of the Substitute Trustee in the foreclosure sale proceedings and the distribution of the foreclosure sale proceeds.

The Undersigned Property Interest Owner acknowledges that the lien of the Deed of Trust was, as of the foreclosure sale, a valid and first lien against the Property, and Noteholder as the Beneficiary of the Deed of Trust was entitled to foreclose its lien on the Property.

The Undersigned Property Interest Owner understands and agrees that the Share of the Net Sales Proceeds paid by the Substitute Trustee to the Undersigned Property Interest Owner is in full satisfaction of all claims for damages arising on account of the above-described occurrences, and the Undersigned Property Interest Owner will receive no further sums of money or other consideration from any of the Released Parties and agrees not to assert or prosecute any further claims or lawsuits arising therefrom against any of the Released Parties.

4.HOLD HARMLESS.      The Undersigned Property Interest Owner hereby agrees to indemnify, hold harmless, and defend the Released Parties from, and hold each of them harmless against, any claims, demands, cause of action, costs, losses, liabilities, damages, or expenses of any kind or nature whatsoever that may be incurred by or asserted against or involve any of the Released Parties as a result of, arising out of, or in any way related to the representations, warranties, and agreements of such Undersigned Property Interest Owner (but not as to the representations, warranties, or agreements of any of the others of the Undersigned Property Interest Owners) or the payment to such person of the Undersigned Property Interest Owner’s Share of the Net Sales Proceeds.

This instrument may be executed in multiple counterparts; the failure of any of the per­sons listed as an Undersigned Property Interest Owner shall not invalidate this Distribution Agreement as to the persons who execute this instrument.

Dated [date].

   
[Name]
Property Interest Owner

   
[Name]
Substitute Trustee