Exam 11: Mortgage Forms and Provisions

A construction loan agreement will generally require that the borrower submit proof that all utilities such as water, electricity, and gas are available to the property.

It is legally permissible for a lender to prohibit the sale of the mortgaged property without the lender's consent.

The "due on sale" provision in a mortgage means that if the mortgage is sold, the debt secured by the mortgage will become due and payable.

The provision in a construction loan agreement that requires that a certain percentage of the loan proceeds be held and not disbursed until completion of construction is known as an escrow provision.

If personal property consists of fixtures, the UCC financing statement must be filed in the county where the real estate is located on which the fixtures are attached.

Construction loan agreements commonly provide that a lender will have a right to take possession of the real property in the event of default and complete the construction.

A cross-default means that a default under one provision of a mortgage will constitute a default under another provision of the mortgage.

When a default under one mortgage loan is a default under another mortgage loan, the loans are cross-defaulted.

An exculpated loan is full recourse to the borrower.

An assignment of rents and leases is generally signed only by the property owner.