Security Agreement and Transfer of Lien
(from Condominium Association)
[Tex. Prop. Code § 82.102(f)]
Basic Information
Date:
Borrower/Condominium Association:
Borrower/Condominium Association’s Mailing Address:
Condominium Declaration: [insert recording information, including amendments]
Lender/Secured Party:
Lender/Secured Party’s Mailing Address:
Collateral: All of Condominium Association’s interest in the following personal property and all supporting obligations and proceeds of (1) Condominium Association’s rights to future income, including the right to receive assessments from the owner(s) of the Condominium Units; and (2) Condominium Association’s lien rights under Texas Property Code section 82.113 and the Condominium Declaration (“Lien Rights”).
Property (including any improvements): Each of the individual Condominium Units and their appurtenant common elements (collectively a “Unit”).
Note
Date:
Original principal amount:
Maturity date:
Prior Lien(s): [as stated in the condominium declaration and Texas Property Code section 82.113(b)]
Unit Owners Assessment Obligations: [as set forth in Texas Property Code sections 82.112 and 82.113 and the condominium declaration]
Granting Clause; Transfer of Lien; Subordination of Payment Rights;
Power of Attorney and Indemnification
To secure the Note and all renewals, modifications, and extensions of the Note, Condominium Association (1) grants to Secured Party a security interest in the Collateral and all its proceeds; (2) authorizes Secured Party to file a financing statement describing the Collateral; (3) assigns, transfers, and conveys to Secured Party all amounts due on the Unit Owners Assessment Obligations; and (4) warrants that the Lien Rights are valid against the Property in the priority indicated. Condominium Association expressly subordinates its right to payment from enforcement of Lien Rights to Lender’s right to payment. If a default exists on the Note or any other agreement with Lender related to the Note, Condominium Association assigns to Lender the right to levy assessments against the owners of and the individual condominium Units in the Property to pay the Note.
Condominium Association indemnifies Lender from all claims made against or incurred by Lender from any action in connection with the Unit Owners Assessment Obligations or the Lien Rights documents.
A.Condominium Association Represents the Following:
A.1. Condominium Association’s place of business is located at [select one of the following: the management office identified in Condominium Association’s Management Certificate recorded in the county in which Condominium Association is located/[address, city, state]].
A.2.[Select one of the following: Condominium Association’s state of organization is Texas/Condominium Association is an unincorporated association], and Condominium Association’s name, as shown in any public organic record, as amended, is exactly as set forth above.
A.3.Condominium Association’s records concerning the Collateral are located at [select one of the following: the management office identified in Condominium Association’s Management Certificate recorded in the county in which Condominium Association is located/[address, city, state]].
A.4.No financing statement covering the Collateral is filed in any public office [include if the secured party has prefiled a financing statement or otherwise has a financing statement on file: except any financing statement in favor of Secured Party].
A.5.Condominium Association owns the Collateral and has the authority to grant this security interest, free from any setoff, claim, restriction, security interest, or encumbrance except liens for taxes not yet due and the Prior Liens.
A.6.All information about Condominium Association’s financial condition is or will be accurate when provided to Secured Party.
A.7.If Texas Property Code section 82.102(g) applies to this transaction, the Note and pledge of Collateral have been approved in the manner set forth in Condominium Association’s dedicatory instruments.
A.8.There are no defenses or offsets to the Unit Owners Assessment Obligations.
A.9.The Unit Owners Assessment Obligations represents the valid, legally enforceable obligation of each Condominium Unit owner.
A.10.Secured Party is the holder of the Lien Rights and the sole party with power to appoint a person to exercise the power of sale under the Lien Rights or request such person to act. Any foreclosure action requested by Condominium Association is voidable at the election of Lender.
B.Condominium Association Agrees to—
B.1.Defend the Collateral against all claims adverse to Secured Party’s interest; pay any taxes imposed on the Collateral; keep the Collateral free from liens, except for liens in favor of Secured Party or for taxes not yet due; and keep the Collateral in Condominium Association’s possession and ownership except as otherwise provided in this agreement.
B.2.Pay all Secured Party’s expenses, including reasonable attorney’s fees and legal expenses, incurred to (a) obtain, preserve, perfect, defend, or enforce this agreement; (b) retake, hold, prepare for disposition, dispose of, collect, or enforce the Collateral; or (c) collect or enforce the Note or Lien Rights. These expenses will bear interest from the date of advance at the rate stated in the Note for matured, unpaid amounts and are payable on demand at the place where the Note is payable. These expenses and interest are part of the Note and are secured by this agreement.
B.3.Sign and deliver to Secured Party any documents or instruments that Secured Party considers necessary to obtain, maintain, and perfect this security interest in the Collateral.
B.4.Notify Secured Party immediately of (a) any delay in payment of any Unit Owners Assessment Obligation, (b) any event of default, and (c) any change (i) in the Collateral or claim made in regard to the Collateral, (ii) in Condominium Association’s Name or Mailing Address, (iii) in the location of any Collateral, (iv) in any other representation or warranty in this agreement, or (v) that may affect this security interest.
B.5.Maintain accurate records of the Collateral at the address set forth above, furnish Secured Party any requested information related to the Collateral, and permit Secured Party to inspect and copy all records relating to the Collateral.
B.6.Cause the Unit owners to pay and perform all obligations related to the Unit Owners Assessment Obligations, and preserve (a) the liability of all obligors on the Collateral and (b) the priority of all security for the Collateral.
B.7.On Secured Party’s demand, deposit and hold payments, including instruments, items, and money received as proceeds of the Collateral, separate and in an express trust for Secured Party and deposit all such payments received as proceeds of the Collateral in a special bank account designated by Secured Party, who alone will have power of withdrawal.
B.8.Levy assessments sufficient to pay the Note and all other Condominium Association obligations.
B.9.Apply all proceeds from the Unit Owners Assessment Obligations in excess of funds needed for usual and customary Condominium Association obligations to pay the Note, but if the proceeds exceed the amount due under the Note, Condominium Association may retain the excess.
C.Condominium Association Agrees Not to—
C.1.Sell, transfer, or encumber the Collateral.
C.2.Change its name or jurisdiction of organization, merge or consolidate with any person, or convert to a different entity without notifying Secured Party in advance and taking action to continue the perfected status of the security interest in the Collateral.
C.3.Modify any provision of the Condominium documents relating to the levy of assessments, Condominium Association’s lien to secure payment of assessments, or the enforcement of Condominium Association’s lien.
C.4.Forgive, extend, or modify the Unit Owners Assessment Obligations or grant releases of any part of the property securing the Unit Owners Assessment Obligations.
C.5.Modify any terms of the Unit Owners Assessment Obligations except as may be required by law.
D.Default and Remedies
D.1.A default exists if—
a. Condominium Association fails to timely pay or perform any obligation, covenant, or liability in any written agreement between Secured Party and Condominium Association related to the Note;
b. any representation in this agreement or in any other written agreement between Secured Party and Condominium Association is materially false when made;
c.a receiver is appointed for Condominium Association or any Collateral;
d.any Collateral is assigned for the benefit of creditors;
e.a bankruptcy or insolvency proceeding is commenced by Condominium Association [include if applicable: or any Unit Owner];
f.a bankruptcy or insolvency proceeding is commenced against Condominium Association [include if applicable: or Unit Owner(s) representing [percent] percent ownership interests in the common elements] and the proceeding continues without dismissal for sixty days, the party against whom the proceeding is commenced admits the material allegations of the petition against it, or an order for relief is entered;
g.any of the following parties is terminated, begins to wind up its affairs, is authorized to terminate or wind up its affairs by its governing body or persons, or any event occurs or condition exists that permits the termination or winding up of the affairs of any of the following parties: Condominium Association [include if applicable: or Unit Owner(s) representing [percent] percent ownership interests in the common elements]; or
h.any Collateral or Condominium Unit is impaired by loss, theft, damage, levy and execution, issuance of an official writ or order of seizure, or destruction, unless it is promptly replaced with collateral of like kind and quality or restored to its former condition.
D.2.If a default exists, Secured Party may—
a.demand, collect, convert, redeem, settle, compromise, release, receipt for, realize on, sue for, foreclose on, and adjust any Collateral either in Secured Party’s or Condominium Association’s name, as Secured Party desires, or take control of any proceeds of the Collateral and apply the proceeds against the Note;
b.take possession and control of any Collateral not already in Secured Party’s possession, without demand or legal process, and for that purpose Condominium Association grants Secured Party the right to enter any premises where the Collateral may be located;
c.without taking possession, sell, lease, or otherwise dispose of the Collateral through or at any public or private sale in accordance with law;
d.exercise any rights and remedies granted by law or this agreement;
e.notify obligors on the Collateral to pay Secured Party directly and enforce Condominium Association’s rights against such obligors;
f.as Condominium Association’s agent, make any endorsements in Condominium Association’s name and on Condominium Association’s behalf; or
g.permit Condominium Association to use any Collateral to pay other Association obligations.
D.3.Foreclosure on any Collateral Lien Rights or of this security interest by suit does not limit Secured Party’s remedies, including the right to sell the Collateral under the terms of this agreement. Secured Party may exercise all remedies at the same or different times, and no remedy is a defense to any other. Secured Party’s rights and remedies include all those granted by law and those specified in this agreement.
D.4.Secured Party’s delay in exercising, partial exercise of, or failure to exercise any of its remedies or rights does not waive Secured Party’s rights to subsequently exercise those remedies or rights. Secured Party’s waiver of any default does not waive any other default by Condominium Association. Secured Party’s waiver of any right in this agreement or of any default is binding only if it is in writing. Secured Party may remedy any default without waiving it.
D.5.Secured Party has no obligation to prepare the Collateral for sale.
D.6.At any time Secured Party may contact obligors on the Collateral directly to verify information furnished by Condominium Association.
D.7.Secured Party has no obligation to collect the Collateral and is not liable for failure to collect the Collateral, for failure to preserve any rights pertaining to the Collateral, or for any act or omission on the part of Secured Party or Secured Party’s officers, agents, or employees, except willful misconduct.
D.8.Secured Party has no obligation to satisfy the Note by attempting to collect the Note from any other person liable for it. Secured Party may release, modify, or waive any collateral provided by any other person to secure the Note. If Secured Party attempts to collect the Note from any other person liable for it or releases, modifies, or waives any collateral provided by any other person, that will not affect Secured Party’s rights against Condominium Association. Condominium Association waives any right Condominium Association may have to require Secured Party to pursue any third person for the Note.
D.9.If Secured Party must comply with any applicable state or federal law requirements in connection with a disposition of the Collateral, such compliance will not be considered to adversely affect the commercial reasonableness of a sale of the Collateral.
D.10.Secured Party may sell the Collateral without giving any warranties as to the Collateral. Secured Party may specifically disclaim any warranties of title or the like. This procedure will not be considered to adversely affect the commercial reasonableness of a sale of the Collateral.
D.11.If Secured Party sells the Collateral on credit, Condominium Association will be credited only with payments actually made by the purchaser and received by Secured Party for application to the indebtedness of the purchaser. If the purchaser fails to pay for the Collateral, Secured Party may resell the Collateral and Condominium Association will be credited with the proceeds of the sale.
D.12.If Secured Party purchases any Collateral foreclosed on or being sold, Secured Party may pay for the Collateral by crediting the purchase price against the Note.
D.13.Secured Party has no obligation to marshal any assets in favor of Condominium Association or against or in payment of the Note or any other obligation owed to Secured Party by Condominium Association or any other person.
D.14.If any foreclosure under Lien Rights occurs or any Collateral is sold after default, recitals in the deed, bill of sale, or transfer will be prima facie evidence of their truth and all prerequisites to the sale specified by this agreement and by law will be presumed satisfied.
D.15.Secured Party may elect not to collect the Unit Owners Assessment Obligations, but that election will not prejudice Secured Party’s right to collect the Unit Owners Assessment Obligations subsequently. Secured Party will never be liable for failure to collect the Unit Owners Assessment Obligations but will be accountable for the Unit Owners Assessment Obligations received.
D.16.By exercising rights and remedies under this assignment, Secured Party does not waive the right to enforce the Note or any other agreement.
D.17.Secured Party’s collection of the Unit Owners Assessment Obligations does not relieve Condominium Association of any obligations in the Note or any other agreement.
D.18.Secured Party may exercise its rights and remedies without taking possession of the Collateral or of any Unit after foreclosure.
E.General
E.1.Notice is reasonable if it is mailed, postage prepaid, to Condominium Association at Condominium Association’s Mailing Address at least ten days before any public sale of any Collateral or ten days before the time when the Collateral may be otherwise disposed of without further notice to Condominium Association.
E.2.This security interest will neither affect nor be affected by any other security for the Note. Neither extensions of the Note nor releases of the Collateral will affect the priority or validity of this security interest.
E.3.This agreement binds, benefits, and may be enforced by the successors in interest of Secured Party and will bind all persons who become bound as debtors to this agreement. Assignment of any part of the Note and Secured Party’s delivery of any part of the Collateral will fully discharge Secured Party from responsibility for that part of the Collateral. If such an assignment is made, Condominium Association will render performance under this agreement to the assignee. Condominium Association waives and will not assert against any assignee any claims, defenses, or setoffs that Condominium Association could assert against Secured Party except defenses that cannot be waived.
E.4.This agreement may be amended only by an instrument in writing signed by Secured Party and Condominium Association.
E.5.The unenforceability of any provision of this agreement will not affect the enforceability or validity of any other provision.
E.6.This agreement will be construed according to Texas law, without regard to choice-of-law rules of any jurisdiction. This agreement is to be performed in Texas.
E.7.Interest on the Note secured by this agreement will not exceed the maximum amount of nonusurious interest that may be contracted for, taken, reserved, charged, or received under law. Any interest in excess of that maximum amount will be credited on the principal of the Note or, if that has been paid, refunded. On any acceleration or required or permitted prepayment, any such excess will be canceled automatically as of the acceleration or prepayment or, if already paid, credited on the principal of the Note or, if the principal of the Note has been paid, refunded. This provision overrides any conflicting provisions in this and all other instruments concerning the Note.
E.8.At Condominium Association’s expense, upon payment of the Note and any other obligations to Secured Party, Secured Party will sign a release in recordable form.
E.9.Secured Party does not have or assume any obligations as a condominium association to any Unit owner or occupant of any Unit.
E.10.When the context requires, singular nouns and pronouns include the plural.
E.11.Any term defined in sections 1.101 to 9.709 of the Texas Business and Commerce Code and not defined in this agreement has the meaning given to the term in the Code.
[Name of condominium association]
By:
Printed Name:
Its Authorized Representative
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Include acknowledgement. |