Fillable Printable Multistate Construction Loan Agreement Form

Multistate Construction Loan Agreement Form

MULTISTATE CONSTRUCTION LOAN AGREEMENT – Single-Family—Fannie Mae HOMESTYLE MODEL DOCUMENT Form 3735 11/01

(page 1 of 16 pages)

[LENDER]

CONSTRUCTION LOAN AGREEMENT

THIS IS A MODEL DOCUMENT FOR USE IN HOMESTYLE LOAN TRANSACTIONS. THIS

FORM IS PROVIDED AS AN EXAMPLE AND IS NOT VALID AND ENFORCEABLE IN ALL

JURISDICTIONS. LENDERS SHOULD CONSULT WITH LEGAL COUNSEL TO ENSURE

THAT ALL FORMS USED TO ORIGINATE LOANS ARE APPROPRIATE, AND THAT ALL

LEGAL INSTRUMENTS ARE COMPLETED CORRECTLY AND IN COMPLIANCE WITH

APPLICABLE LAW.

THIS CONSTRUCTION LOAN AGREEMENT (“Loan Agreement”) dated ______________, _____,

is made by and between: ________________________________________________________________

(“Borrower”, “I”, “me” or “my”), and _____________________________________________________,

a ______________________________________ having a principal place of business at

___________________________________________________ (“Lender”).

1.ABOUT THIS LOAN AGREEMENT

1.1.Certain Terms of This Loan Agreement. The terms of this Loan Agreement preceded

by a “

” are part of this Loan Agreement only if the box is checked.

1.2.Lender’s Loan to Me. I have signed a Promissory Note payable to Lender (“Note”).

The Note is for the loan by Lender to me in the principal amount of

$_________________ (“Loan”). The purpose of the Loan is:

to purchase the real property described in Exhibit “A” to this Loan Agreement

(“Property”);

to pay in full any outstanding liens on the Property;

to pay for labor and materials to construct certain improvements (“Improvements”) on

the Property (“Work”).

“Property” includes the Improvements. The Work is described in the Schedule of

Advances attached as Exhibit “B” to this Loan Agreement. I also have executed a

Mortgage, Open-end Mortgage, Deed of Trust, Credit Line Deed of Trust or Trust

Indenture (“Security Instrument”) granting Lender a

first second priority lien on the

Property. In this Loan Agreement, “Loan Documents” means the Note, the Security

Instrument, and this Loan Agreement. All terms defined in the Note and the Security

Instrument shall have the same meaning in this Loan Agreement.

2.MY AGREEMENTS

2.1.The Work.

2.1.1.My Contractor. I will enter into a written agreement (“Construction Contract”)

with _____________________________________________________________

with offices at _____________________________________________________

(“Contractor”) for all the Work. The Construction Contract will state the total

amount that I will pay Contractor for the Work (“Contract Price”), and will

include (i) the blueprints, shop drawings, plans and specifications for the Work

(“Plans”); (ii) a written itemization of the Work and the Contract Price

(“Construction Budget”); and (iii) an itemized description of each segment of the

MULTISTATE CONSTRUCTION LOAN AGREEMENT – Single-Family—Fannie Mae HOMESTYLE MODEL DOCUMENT Form 3735 11/01

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Work (each a “Stage”) that sets the timetable for completing the Work, and the

corresponding payments for the Work (“Work and Payment Schedule”). I will

give Lender a copy of the Construction Contract. I will have no other

agreements for the Work. The Contractor will give Lender the name, address

and telephone number of each person that has a contract with Contractor to

supply materials or labor for the Work (each, a “Supplier”). I will give

Contractor a copy of this Loan Agreement.

2.1.2.Permits. I will get, and keep in force, all approvals of the Work (each, a

“Permit”) that are required by any federal, state, county, or local government

agency (each, a “Government Authority”). I will comply with all applicable laws

of any Government Authority (“Government Regulations”). Contractor will have

any license required by any Government Authority. I will get from Contractor

and give Lender copies of all licenses and Permits required by Government

Authorities.

2.1.3.Change Orders. Any change in the Contract Price, the Work or the Work and

Payment Schedule must be in a written agreement signed by me and Contractor

and approved by Lender (“Change Order”).

2.1.4.Care of the Property. If Lender requests, I will provide Lender with a certified

report that the Property is free of wood-boring insects. I will comply with all of

the recommendations of any engineer making any soil report for the Property. I

will notify Lender immediately of any fire or other casualty relating to the

Property or the Work.

2.1.5.Completing the Work. The Work will begin promptly after I sign the Loan

Documents. The Work will continue diligently and in a good and workmanlike

manner in strict accordance with the Construction Contract and all Government

Regulations. The Work will not violate any of the conditions, covenants or

restrictions on the Property.

I will notify Lender immediately in writing if (i) I think that the Work does not

comply with the Construction Contract or this Loan Agreement; (ii) any notice of

lien on the Property is served on me or Contractor; or (iii) any Government

Authority issues any notice or claim relating to the Property.

I promise the Work will be completed on or before _________________

(“Completion Date”). Lender will accept the Work as completed when I satisfy

all of the conditions in Section 2.8.4.8 of this Loan Agreement (“Substantial

Completion”).

2.1.6.Inspections. Lender has the right to enter the Property to inspect the Work,

without notice to me, during normal business hours, or any other times that

Lender arranges with me. I will pay for all inspections performed at the request

of Lender or any Government Authority. Each inspection will cost

$___________________.

Lender inspections are for Lender’s benefit only. Lender’s inspections create no

liability or responsibility to me, Contractor, any Suppliers, or any third parties.

Lender is not obligated to inspect the Property or the Work.

2.1.7.I Am Responsible for the Work. I have full and sole responsibility to make

sure that the Work complies with the Plans and all Government Regulations.

Lender has no liability, obligation or responsibility for the Work. Lender is not

liable for any failure to construct, complete, protect, or insure the Work. Lender

MULTISTATE CONSTRUCTION LOAN AGREEMENT – Single-Family—Fannie Mae HOMESTYLE MODEL DOCUMENT Form 3735 11/01

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is not liable for any costs of the Work. Nothing Lender does (including

inspecting the Work or making an advance) will be a representation or warranty

by Lender that the Work complies with the Construction Contract, this Loan

Agreement, the Permits or any Government Regulations. If Lender asks, I will

repair or replace at my expense any Work that does not comply with the Plans. I

have no right to assert or claim any offset, counterclaim or defense against

Lender because of any claim I may have against Contractor or any Suppliers.

2.2.Costs and Expenses. I will pay all costs and expenses required to satisfy the conditions

of this Loan Agreement, including any Change Orders.

2.3.No Other Financing. Until paid in full, the Loan will be my only financing for the

Work

the Property and the Work.

2.4.My Title to the Property.

I will get a title report as described in Section 2.4.1 of this Loan Agreement.

I will get title insurance as described in Section 2.4.2 of this Loan Agreement.

2.4.1.Title Report. I will get a title report, prepared by a title company or an attorney

admitted to practice in the jurisdiction where the Property is located, certified to

Lender (“Title Report”). The Title Report must show that the lien of the Security

Instrument will be a valid

first second priority lien on my interest in the

Property, and that the title to my interest in the Property is free and clear of all

defects and encumbrances except those Lender approves in writing.

2.4.2.Title Insurance. I will get and keep in force a mortgagee’s or lender’s policy of

title insurance (“Title Policy”). The Title Policy will insure: (i) that the total

amount of the lien of Lender’s Security Instrument is a valid

first second

priority lien on my interest in the Property; and (ii) that the title to my interest in

the Property is free and clear of all defects and encumbrances except those

Lender approves in writing.

At or prior to the closing of the Loan, I will provide Lender with the commitment

of the Title Company to issue the Title Policy (“Title Commitment”). When the

Work is completed, I will provide Lender with endorsements to the Title Policy

insuring Lender to the full amount of the Loan disbursed.

2.5.Survey. If Lender requests, I will provide and certify to Lender to the Title

Company

a survey of the Property a final as-built survey of the Property and the

Improvements, including dimensions and locations of all completed Improvements and

all easements or other rights or restrictions (each, a “Survey”). Each Survey must be

satisfactory to Lender

and to the Title Company.

2.6.Appraisal. If Lender requests, I will get an appraisal of the Property and the

Improvements. I will get the appraisal

before Lender disburses any part of the Loan

(“Initial Appraisal”)

before the final advance of the Loan (“Final Appraisal”). The

appraisal will show the value of the Property and the Improvements, using the

“as

built”

“drive-by” property value estimate tax assessment method. I Lender

will choose the appraiser. Each appraisal shall reflect an appraised value and be in form

and substance satisfactory to Lender.

2.7.Hazard Insurance.

2.7.1.The Contractor’s Insurance. The Contractor must get and keep in force the

following insurance policies (“Contractor’s Insurance”): (i) a builder’s all risk

MULTISTATE CONSTRUCTION LOAN AGREEMENT – Single-Family—Fannie Mae HOMESTYLE MODEL DOCUMENT Form 3735 11/01

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insurance policy (with a mortgagee’s loss payable clause in favor of Lender and

with a physical loss form endorsement), without co-insurance, in an amount not

less than one hundred percent (100%) of the replacement cost of the

Improvements, with the standard conditions; (ii) public liability insurance with

limits of liability equal to at least $500,000 per occurrence; (iii) workers’

compensation insurance as required by applicable state law; and (iv) automobile

liability insurance with limits of liability equal to at least $300,000 per

occurrence. The Contractor’s Insurance will be in force until I accept the

Improvements.

2.7.2.My Insurance. I will get a standard hazard insurance policy as required by the

Security Instrument. This insurance will be effective when the Contractor’s

Insurance terminates.

2.8.The Loan.

2.8.1.Administration. Lender shall disburse the Loan proceeds (“Loan Proceeds”):

on the date the Loan closes (“Closing Date”), in escrow, to a federally insured

interest bearing account (“Escrow Account” or “Account”), to be disbursed by

Lender, or Lender’s escrow agent, as provided in Section 2.8.4.4 of this Loan

Agreement.

on the Closing Date, to me in the form of one or more checks, payable jointly

to me and Contractor or one or more Suppliers.

directly to me and Contractor, as provided in Section 2.8.4.4 of this Loan

Agreement.

2.8.2.Use of the Loan Funds.

2.8.2.1.Advances. “Advance” means Lender’s advance of any part of the

Loan under this Loan Agreement, or my endorsement and delivery of

any Loan Proceeds check to Contractor or a Supplier.

2.8.2.2.Loan Commitment Amount. As of the Closing Date, Lender

commits to disburse Loan principal in the total amount of the Loan

(“Loan Commitment Amount”). After the Closing Date, the Loan

Commitment Amount will equal the principal amount of the Loan

less the total amount of Advances made to date. Any Loan

Commitment Amount that remains after all Advances have been

made will be credited as a partial prepayment of the principal amount

of the Loan at the time of the final Advance. The partial prepayment

will reduce the

amount of number of my monthly payments. If,

at any time, the Loan Commitment Amount is not enough to pay the

amount scheduled for any Advance, I will pay the difference from

my own funds.

2.8.2.3.No Changes. Unless Lender agrees in writing first, I will not change

the Plans or the Construction Contract, or permit any part of any

Advance to be paid except as specified in the Schedule of Advances,

or in a Request for Advance.

2.8.2.4.Trust Fund. I will receive all Advances in trust. I will apply the

Advances first to the payment of the cost of the Work before using

any part for any other purpose.

MULTISTATE CONSTRUCTION LOAN AGREEMENT – Single-Family—Fannie Mae HOMESTYLE MODEL DOCUMENT Form 3735 11/01

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2.8.3.The Escrow Account. If the Loan will be disbursed from an Escrow Account,

all interest on the Account will be paid to me. If Lender is a depository

institution that offers Escrow Accounts, the Account must be with Lender.

2.8.4.Advances; Conditions To Advances. Each of the promises I make in this Loan

Agreement shall be considered made again as of the time (i) Lender, or Lender’s

escrow agent, receives any request from me and Contractor for an Advance

(“Request for Advance”); or (ii) I endorse any Loan Proceeds check to

Contractor or a Supplier.

Lender will hold ______ percent of each Advance

for the Work (“Holdback”). Lender will disburse Holdback only as part of the

final Advance. Advances will be made as shown in the Schedule of Advances

(Exhibit “B”), but only if all the following conditions are satisfied:

2.8.4.1.Plans Approved. I have reviewed the Plans; the Plans are

satisfactory and have been approved by all Government Authorities

having jurisdiction over the Property and the Work.

2.8.4.2.Work Completed; Invoices and Lien Waivers.The Work for

which an Advance is requested has been completed in a good and

workmanlike manner, and complies with the Construction Contract,

the Plans, the Permits, and all Government Regulations.

2.8.4.3.My Financial Condition; No Defaults. There is no material

adverse change in my financial condition or employment status since

the time I applied for the Loan. I am not in default under any of the

Loan Documents or the Construction Contract. I have complied

completely with all of my promises about the Work (including the

promises in Section 2.1.5 of this Loan Agreement).

2.8.4.4.Request for Advance. If the Loan will be disbursed from an Escrow

Account, or directly by Lender, Contractor will deliver to Lender or

Lender’s escrow agent (i) a Request for Advance, in the form set

forth in Exhibit “C,” properly completed, and signed by me and

Contractor; (ii) the invoices for the Work; (iii) unconditional

construction lien waivers from Contractor and from Suppliers for all

Work covered by the Request for Advance and (iv) all other required

information described in the Request for Advance. Lender may rely

on my statements and Contractor’s statements in the Request for

Advance and on the invoices and lien waivers submitted by

Contractor. Lender does not have to verify any of that information.

The funds obtained with the Requestfor Advance will be used to pay

for the Work described in the Request for Advance.

2.8.4.5.Interest Reserve Account. If I elect to establish an Interest Reserve

Account, Lender shall make Advances to pay interest during the

Construction Phase. If the amount in the Interest Reserve Account is

not enough to pay interest that is due prior to the Permanent

Mortgage Date, I will pay those amounts directly to Lender from my

own funds. Unless and until Interest Reserves are paid into an

Escrow Account, no interest shall be paid by Lender on the Interest

Reserve Account.

2.8.4.6.Monthly Payment Reserve. My Loan is a Renovation Mortgage.

I elect Lender requires me to pay from the Loan Commitment

MULTISTATE CONSTRUCTION LOAN AGREEMENT – Single-Family—Fannie Mae HOMESTYLE MODEL DOCUMENT Form 3735 11/01

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Amount the first __ monthly payments of principal and interest and

Escrow Items on the dates those payments become due. These

payments designated by Lender are called the “Monthly Payment

Reserve Account.”

If the amount in the Monthly Payment Reserve Account is not

enough to pay in full a payment of principal and interest or Escrow

Item, I will pay those amounts directly to Lender from my own

funds.

2.8.4.7.Loan Commitment Amount. The Loan Commitment Amount

remaining after each Advance will be enough to complete all the

Work.

2.8.4.8.Completion of Improvements. The Work will be completed as

required by this Loan Agreement.

Before the final Advance, I will deliver to Lender a copy of the

final inspection report,

the final title endorsement, a completion

certificate signed by me and Contractor,

the final, unconditional

certificate of occupancy issued by the Government Authority, if

required by law.

Within six months after the Work is completed, I will deliver to

Lender a copy of

the final inspection report, the final title

endorsement,

a completion certificate signed by me and

Contractor,

the final, unconditional certificate of occupancy issued

by the Government Authority, if required by law.

3.DEFAULT AND REMEDIES

3.1.Events of Default. I will be in default under this Loan Agreement and the other Loan

Documents if any of the following events (“Events of Default”) occurs:

3.1.1.Nonpayment. I fail to make any payment due under any Loan Document.

3.1.2.Other Broken Promises. I fail to keep any promise in this Loan Agreement or

any other Loan Document.

3.1.3.False Statements. Any statement of fact, representation or warranty I make to

Lender in my loan application, this Loan Agreement or in any other Loan

Document is false, inaccurate, or incomplete.

3.2.Lender’s Rights and Remedies. Subject to my right to notice of default and right to

cure the default(s), to the extent required by law, if an Event of Default occurs, Lender

has the following rights and remedies (“Rights and Remedies”):

3.2.1.Declare a Default. Lender may declare the Note, the Security Instrument, or

both, in default.

3.2.2.Finish the Construction and Protect the Property. Lender may take

possession of the Property. Lender may do every act and thing I or any

subsequent owner of the Property might or could do for the protection,

construction, repair, operation, maintenance and leasing of the Property.

I authorize Lender, as my attorney-in-fact, to exercise any right I may have in or

under the Construction Contract or any Permit. I irrevocably authorize and direct

each party to any Permits and Construction Contracts to provide Lender the

MULTISTATE CONSTRUCTION LOAN AGREEMENT – Single-Family—Fannie Mae HOMESTYLE MODEL DOCUMENT Form 3735 11/01

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benefits of the Permits and the Construction Contracts upon Lender’s written

notice. I agree that any such party shall have the right to rely upon any written

notice from Lender without any obligation or right to inquire as to whether an

Event of Default actually exists and notwithstanding any notice from me or claim

by me to the contrary. I will have no right or claim against any such party for any

benefit provided to Lender by such party. If I cure the Event of Default, or if

Lender reinstates the Loan in good standing, Lender will give written notice of

reinstatement to each such party and authorize each such party to render such

benefits to me.

3.2.3.Take the Escrow Account. Lender may take any funds in the Escrow Account,

if any, to apply to any amounts I owe under the Loan Documents.

3.2.4.Indemnity. I will indemnify and hold Lender and Lender’s affiliates, and the

officers, directors, employees and agents of Lender and its affiliates

(“Indemnified Parties”), harmless from any liability, claim, loss, cost, legal

expenses (including suits, claims, proceedings, damages, and costs arising from

or relating to any third-party claim), incurred by or alleged against any of the

Indemnified Parties arising from or related to (i) the Property, (ii) the Work, or

(iii) my default under this Loan Agreement.

3.2.5.Lender’s Fees, Costs, and Expenses. I shall promptly pay to Lender all

attorney’s fees, costs, and other expenses paid or incurred by Lender in enforcing

or exercising Lender’s Rights and Remedies under this Loan Agreement. Interest

will accrue on these amounts at the rate in the Note from the date the expense is

incurred. The expense plus interest will be secured by Lender’s Security

Instrument.

3.2.6.Remedies Cumulative. Lender may (but is not required to) exercise any or all

of the rights under this Loan Agreement. All of Lender’s Rights and Remedies

contained in this Loan Agreement are cumulative and are in addition to any other

Rights and Remedies created in any other Loan Document or existing at law or in

equity.

4.GENERAL

4.1.My Cooperation. I will, at my own cost and expense, sign any other instruments or

documents, and supply any information and data that Lender considers necessary to

accomplish the purposes of this Loan Agreement. If, in Lender’s opinion, a material

modification of the terms of this Loan Agreement is required, or occurs, I will execute an

appropriate Construction Loan Modification Agreement. All documents delivered to

Lender by me shall become Lender’s property.

4.2.Credit Information. I will provide Lender with updated financial or credit information

when Lender requests it. Lender may get consumer reports from consumer reporting

agencies when Lender reviews my Loan.

4.3.No Waivers. Lender may choose to delay enforcing any of Lender’s rights or waive any

of Lender’s rights under this Loan Agreement. Lender may delay enforcing or waive any

of Lender’s rights without affecting Lender’s other rights. If Lender waives a right,

Lender can still enforce the same right later.

4.4.Entire Agreement. This Loan Agreement and the other Loan Documents are the entire

understanding between Lender and me about the Loan, the Improvements, and the Work,

and may not be modified, amended, or terminated except by written agreement signed by

Lender and me.

MULTISTATE CONSTRUCTION LOAN AGREEMENT – Single-Family—Fannie Mae HOMESTYLE MODEL DOCUMENT Form 3735 11/01

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4.5.Binding Agreement; Assignment. This Loan Agreement is for the benefit of Lender

and Lender’s successors and assigns, and binds me, my heirs, executors, administrators,

successors and assigns. I may not assign this Loan Agreement without Lender’s prior

written consent, which Lender may withhold in Lender’s sole discretion.

4.6.Survival of Representations. Any promise I make shall survive the termination of this

Loan Agreement and the repayment of the Loan.

4.7.Joint and Several Liability. Each person executing this Loan Agreement as a Borrower

has joint and several liability.

4.8.Notices. Any communication required by this Loan Agreement shall be in writing and

addressed to the addressee at the address indicated on the first page of this Loan

Agreement.

4.9.No Third Party Beneficiary. This Loan Agreement is for the sole benefit of Lender and

me, and is not for the benefit of anyone else. All conditions to Lender’s obligation to

make any Advance are solely for Lender’s benefit. No other person or entity shall have

standing to require satisfaction of those conditions or be deemed to be the beneficiary of

those conditions.

4.10.Governing Law. This Loan Agreement is entered into in the state where the Property is

located (the “State”) and shall be controlled and interpreted by the laws of the United

States and the State.

4.11.Exhibits. The following exhibits are attached to and a part of this Loan Agreement.

Exhibit “A” - Description of the Property

Exhibit “B” - Schedule of Advances

Exhibit “C” - Request for Advance

MULTISTATE CONSTRUCTION LOAN AGREEMENT – Single-Family—Fannie Mae HOMESTYLE MODEL DOCUMENT Form 3735 11/01

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IN WITNESS WHEREOF, Borrower and Lender have executed this Loan Agreement as of the date

first set forth on page one.

LENDER:

[LENDER] ________________________________BY: __________________________________

NAME: ________________________________ITS: __________________________________

_______________________________________ (SEAL)

Borrower #1

______________________________________________________________________________

Printed NameWitness

_______________________________________ (SEAL)

Borrower #2

______________________________________________________________________________

Printed NameWitness

_______________________________________ (SEAL)

Borrower #3

______________________________________________________________________________

Printed NameWitness

_______________________________________ (SEAL)

Borrower #4

______________________________________________________________________________

Printed NameWitness

STATE OF _________________________)

) ss.:

COUNTY OF _______________________)

On this _____ day of _______________________ , ______ , before me the subscriber personally

appeared _________________________________ (and) _________________________________ to me

known and known to me to be the same person(s) described in and who executed the foregoing

instrument, and (s)he/they duly (jointly and severally) acknowledged to me that (s)he/they executed the

same.

Notary Signature

Notary Printed Name

Notary Public; State of __________________________

Qualified in the County of

My commission expires:

Official Seal:

MULTISTATE CONSTRUCTION LOAN AGREEMENT – Single-Family—Fannie Mae HOMESTYLE MODEL DOCUMENT Form 3735 11/01

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EXHIBIT A

LEGAL DESCRIPTION OF PROPERTY

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EXHIBIT B

SCHEDULE OF ADVANCES

Borrower’s Name & Property AddressLender’s Name & Address

Construction Item

Total Cost

Borrower

Equity

Loan

Commitment

AmountHoldback

Advance

Amount

First Advance – Stage 1 Closing

Purchase of Property

Payoff lien(s) on Property

Closing Costs

Interest Reserve (to be disbursed as provided

in the Construction Loan Rider to Note)

Monthly Payment Reserve (to be disbursed as

provided in Section 2.8.4.6 of this Agreemen.)

Prior Work

First Advance Total

Second Advance – Stage 2

Site Prep and Utility Service

Drilling and Installation of water well or

hookup to public water supply

Installation of private septic system or hookup

to public sewer system

Grading of Property

Install electric service

Install gas service

Excavation of basement

Construction of foundation

Driveways

Walks

Other site improvements (specify):

OR:

[ ] Work is % complete

Second Advance Total