Leasehold Deed of Trust
Notice of confidentiality rights: If you are a natural person, you may remove or strike any or all of the following information from any instrument that transfers an interest in real property before it is filed for record in the public records: your Social Security number or your driver’s license number.
Basic Information
Date:
Grantor:
Grantor’s Mailing Address:
Trustee:
Trustee’s Mailing Address:
Lender:
Lender’s Mailing Address:
Obligation
Note
Date:
Original principal amount:
Borrower:
Lender:
Maturity date:
Other Debt: [include optional clauses from form 8-6 in this chapter or describe other debt]
Property (including any improvements): The Leasehold Estate.
Lease
Date:
Landlord:
Tenant: Grantor
Premises:
Amendments (if applicable):
Leasehold Estate: All of Tenant’s rights under the Lease.
Prior Lien: [include recording information]
Other Exceptions to Conveyance and Warranty:
A. Granting Clause
For value received and to secure payment of the Obligation, Grantor conveys the Property to Trustee in trust. Grantor warrants and agrees to defend the title to the Property, subject to the Other Exceptions to Conveyance and Warranty. On payment of the Obligation and all other amounts secured by this deed of trust, this deed of trust will have no further effect, and Lender will release it at Grantor’s expense.
B.Grantor agrees to—
B.1.perform all of Tenant’s obligations under the Lease and deliver, on Lender’s written request, satisfactory evidence of timely payment of all rents and other charges due under the Lease;
B.2.enforce Landlord’s obligations under the Lease;
B.3.within [number] days after receipt, deliver a copy of each notice received by Grantor from Landlord to Lender;
B.4.timely exercise each option to extend the term of the Lease as long as the Obligation remains unpaid and concurrently deliver to Lender a copy of the notice doing so. If Grantor does not exercise an option to extend the term of the Lease, Lender may, at its option, exercise the option on behalf of Grantor. Grantor appoints Lender its attorney-in-fact to execute and deliver all instruments necessary to extend the term of the Lease or to exercise any other rights, powers, or privileges under the Lease; this power, being coupled with an interest, is irrevocable as long as the Obligation remains unpaid;
B.5.use commercially reasonable efforts to deliver to Lender, within twenty days after written request by Lender, an estoppel certificate from Landlord setting forth (a) that the Lease has not been modified or, if it has been modified, the date of each modification (together with copies of each modification), (b) the date to which all rent has been paid by Tenant under the Lease, and (c) whether there are any defaults of Tenant under the Lease and, if there are, setting forth the nature of the default(s) in reasonable detail;
B.6.execute and deliver on the request of Lender any instruments required to permit Lender to cure any default under the Lease or preserve the interest of Lender in the Leasehold Estate;
B.7.defend title to the Property subject to the Other Exceptions to Conveyance and Warranty and preserve the lien’s priority as it is established in this deed of trust;
B.8.obey all laws, ordinances, and restrictive covenants applicable to the Property;
B.9.if the lien of this deed of trust is not a first lien, pay or cause to be paid all prior lien notes and abide by or cause to be abided by all prior lien instruments; and
B.10.notify Lender of any change of address.
C. Grantor agrees not to—
C.1.do or permit anything to be done that will impair the security of this deed of trust or will be grounds for terminating the Lease; or
C.2.consent, without Lender’s prior written consent, to (a) any waiver, cancellation, or amendment of any provision of the Lease or (b) the subordination of the Lease to any mortgage of the fee interest of Landlord in the Premises.
D. Grantor represents that—
D.1.the Lease is enforceable;
D.2.except as set forth above, there are no amendments to the Lease; and
D.3.Grantor is not in default under the Lease and, to the best of Grantor’s knowledge, Landlord is not in default under the Lease, and no event exists that, with the passage of time or the giving of notice, or both, would constitute a default under the Lease.
E. Lender’s Rights
E.1.Lender or Lender’s mortgage servicer may appoint in writing a substitute trustee, succeeding to all rights and responsibilities of Trustee.
E.2.If the proceeds of the Obligation are used to pay any debt secured by prior liens, Lender is subrogated to all the rights and liens of the holders of any debt so paid.
E.3.Notwithstanding the terms of the Note to the contrary, and unless applicable law prohibits, all payments received by Lender from Grantor with respect to the Obligation or this deed of trust may, at Lender’s discretion, be applied first to amounts payable under this deed of trust and then to amounts due and payable to Lender with respect to the Obligation, to be applied to late charges, principal, or interest in the order Lender in its discretion determines.
E.4.If Grantor fails to perform any of Grantor’s obligations, Lender may perform those obligations and be reimbursed by Grantor on demand for any amounts so paid, including attorney’s fees, plus interest on those amounts from the dates of payment at the rate stated in the Note for matured, unpaid amounts. The amount to be reimbursed will be secured by this deed of trust.
E.5.COLLATERAL PROTECTION INSURANCE NOTICE
In accordance with the provisions of section 307.052(a) of the Texas Finance Code, the Beneficiary hereby notifies the Grantor as follows:
(A)the Grantor is required to:
(i)keep the collateral insured against damage in the amount the Lender specifies;
(ii)purchase the insurance from an insurer that is authorized to do business in the state of Texas or an eligible surplus lines insurer; and
(iii)name the Lender as the person to be paid under the policy in the event of a loss;
(B)the Grantor must, if required by the Lender, deliver to the Lender a copy of the policy and proof of the payment of premiums; and
(C)if the Grantor fails to meet any requirement listed in Paragraph (A) or (B), the Lender may obtain collateral protection insurance on behalf of the Grantor at the Grantor’s expense.
E.6.If a default exists in payment of the Obligation or performance of Grantor’s obligations and the default continues after any required notice of the default and the time allowed to cure, Lender may—
a.declare the unpaid principal balance and earned interest on the Obligation immediately due;
b.exercise Lender’s rights with respect to rent under the Texas Property Code as then in effect;
c.direct Trustee to foreclose this lien, in which case Lender or Lender’s agent will cause notice of the foreclosure sale to be given as provided by the Texas Property Code as then in effect; and
d.purchase the Property at any foreclosure sale by offering the highest bid and then have the bid credited on the Obligation.
E.7.Lender may remedy any default without waiving it and may waive any default without waiving any prior or subsequent default.
E.8.If Grantor fails to perform any of its obligations, covenants, or agreements under the Lease, Lender may do any act it deems necessary to cure such failure. Lender may enter the Premises with or without notice and to do anything that Lender deems necessary or prudent to do.
E.9.If Lender elects to make any payments or do any act or thing required to be paid or done by Grantor as Tenant under the Lease, Lender will be fully subrogated to the rights of Landlord, and any sums advanced by Lender are a part of the Obligation.
F. Trustee’s Rights and Duties
If directed by Lender to foreclose this lien, Trustee will—
F.1.either personally or by agent give notice of the foreclosure sale as required by the Texas Property Code as then in effect;
F.2.sell and convey all or part of the Property “AS IS” to the highest bidder for cash with a general warranty binding Grantor, subject to the Prior Lien and to the Other Exceptions to Conveyance and Warranty and without representation or warranty, express or implied, by Trustee;
F.3.from the proceeds of the sale, pay, in this order—
a.expenses of foreclosure, including a reasonable commission to Trustee;
b.to Lender, the full amount of principal, interest, attorney’s fees, and other charges due and unpaid;
c.any amounts required by law to be paid before payment to Grantor; and
d.to Grantor, any balance; and
F.4.be indemnified, held harmless, and defended by Lender against all costs, expenses, and liabilities incurred by Trustee for acting in the execution or enforcement of the trust created by this deed of trust, which includes all court and other costs, including attorney’s fees, incurred by Trustee in defense of any action or proceeding taken against Trustee in that capacity.
G.General Provisions
G.1.If any of the Property is sold under this deed of trust, Grantor must immediately surrender possession to the purchaser. If Grantor fails to do so, Grantor will become a tenant at sufferance of the purchaser, subject to an action for forcible detainer.
G.2.Recitals in any trustee’s deed conveying the Property will be presumed to be true.
G.3.Proceeding under this deed of trust, filing suit for foreclosure, or pursuing any other remedy will not constitute an election of remedies.
G.4.This lien will remain superior to liens later created even if the time of payment of all or part of the Obligation is extended or part of the Property is released.
G.5.If any portion of the Obligation cannot be lawfully secured by this deed of trust, payments will be applied first to discharge that portion.
G.6.Grantor assigns to Lender all amounts payable to or received by Grantor from condemnation of all or part of the Property, from private sale in lieu of condemnation, and from damages caused by public works or construction on or near the Property. After deducting any expenses incurred, including attorney’s fees and court and other costs, Lender will either release any remaining amounts to Grantor or apply such amounts to reduce the Obligation. Lender will not be liable for failure to collect or to exercise diligence in collecting any such amounts. Grantor will immediately give Lender notice of any actual or threatened proceedings for condemnation of all or part of the Property.
G.7.Grantor collaterally assigns to Lender all present and future rent from the Property and its proceeds. Grantor warrants the validity and enforceability of the assignment. Grantor will apply all rent to payment of the Obligation and performance of this deed of trust, but if the rent exceeds the amount due with respect to the Obligation and the deed of trust, Grantor may retain the excess. If a default exists in payment of the Obligation or performance of this deed of trust, Lender may exercise Lender’s rights with respect to rent under the Texas Property Code as then in effect. Lender neither has nor assumes any obligations as lessor or landlord with respect to any occupant of the Property. Lender may exercise Lender’s rights and remedies under this paragraph without taking possession of the Property. Lender will apply all rent collected under this paragraph as required by the Texas Property Code as then in effect. Lender is not required to act under this paragraph, and acting under this paragraph does not waive any of Lender’s other rights or remedies.
G.8.Interest on the debt secured by this deed of trust 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 debt or, if that has been paid, refunded. On any acceleration or required or permitted prepayment, any excess will be canceled automatically as of the acceleration or prepayment or, if already paid, credited on the principal of the debt or, if the principal of the debt has been paid, refunded. This provision overrides any conflicting provisions in this and all other instruments concerning the debt.
G.9.In no event may this deed of trust secure payment of any debt that may not lawfully be secured by a lien on real estate or create a lien otherwise prohibited by law.
G.10.When the context requires, singular nouns and pronouns include the plural.
G.11.The term Note includes all extensions, modifications, and renewals of the Note and all amounts secured by this deed of trust.
G.12.This deed of trust binds, benefits, and may be enforced by the successors in interest of all parties.
G.13.If Grantor and Borrower are not the same person, the term Grantor includes Borrower.
G.14.Grantor and each surety, endorser, and guarantor of the Obligation waive all demand for payment, presentation for payment, notice of intention to accelerate maturity, notice of acceleration of maturity, protest, and notice of protest, to the extent permitted by law.
G.15.Grantor agrees to pay reasonable attorney’s fees, trustee’s fees, and court and other costs of enforcing Lender’s rights under this deed of trust if this deed of trust is placed in the hands of an attorney [include if the transaction is a secondary mortgage loan: who is not an employee of Lender] for enforcement.
G.16.If any provision of this deed of trust is determined to be invalid or unenforceable, the validity or enforceability of any other provision will not be affected.
G.17.As long as the Obligation remains unpaid, unless Lender otherwise consents in writing, the fee title to the Premises and the Leasehold Estate will not merge but will always remain separate, notwithstanding a union of the estates.
G.18.This deed of trust does not constitute an assignment of the Lease, and Lender has no liability or obligation under the Lease by reason of its acceptance of this deed of trust. Lender is liable for the obligations of Tenant arising out of the Lease for only that period of time after Lender has acquired, by foreclosure or otherwise, and is holding Grantor’s interest in the Leasehold Estate.
G.19.The term Lender includes any mortgage servicer for Lender.
G.20.Grantor represents that this deed of trust and the Note are given for the following purposes: [list specific purposes].
[Name of grantor]