How do Third-Party Fee Owner loan documents address the relationship between Borrower & TPFO?
Section H.18 of the Loan Agreement (section placement may differ based on order particulars) defines the Mortgage Obligations of the Borrower and Third-Party Fee Owner (TPFO) in a non-standard vesting scenario:
H.18. MORTGAGE OBLIGATIONS OF BORROWER. As set forth in detail in the Mortgage, Borrower acknowledges and agrees that the covenants, representations, warranties, promises and/or agreements to which Borrower expressly is made a party pursuant to the terms and conditions of the Mortgage shall be (a) binding and enforceable against Borrower, and (b) incorporated herein by reference as if set forth herein. In addition, and not by way of limitation, Borrower acknowledges and agrees that an Event of Default by Borrower under this Agreement or any of the other Loan Documents shall constitute an Event of Default under the Mortgage, and any Event of Default by Mortgagor under the Mortgage shall constitute an Event of Default under this Agreement and the other Loan Documents.
Further reference to the relationship between the Borrower and TPFO are found in Sections V. and NN of the Security Instrument (section placement may differ based on order particulars):
V. RELATIONSHIP BETWEEN BORROWER AND MORTGAGOR. Mortgagor acknowledges and agrees that Mortgagor has or will grant to Lender a first lien encumbrance against the Mortgaged Property and the Mortgaged Property UCC Collateral as collateral for the Loan to Borrower, and Mortgagor will execute the Mortgage in favor of Lender to secure Borrower's repayment of the Indebtedness. Regardless of whether Mortgagor executes any of the other Loan Documents, Mortgagor acknowledges and agrees that (a) Mortgagor has reviewed and approves of the terms and conditions of the Loan Documents to the extent applicable to Mortgagor, (b) Mortgagor is subject to and bound by all agreements, obligations, and responsibilities capable of being performed or required to be performed by Mortgagor as if Mortgagor had executed the Loan Documents, (c) any Event of Default by Borrower under the Loan Documents shall constitute an Event of Default under this Mortgage, and (d) any Event of Default by Mortgagor under this Mortgage shall constitute an Event of Default under the other Loan Documents.
NN. NON-BORROWER MORTGAGOR(S).
NN.1. Authority of Lender. If any party comprising "Mortgagor" hereunder is not Borrower (hereinafter for this section NN, "Non-Borrower Mortgagor"), Non-Borrower Mortgagor hereby authorizes Lender to perform any of the following acts at any time and from time to time, all without notice or demand to Non-Borrower Mortgagor and without affecting Lender's rights or Non-Borrower Mortgagor's obligations under this Mortgage:
(a) Alter any terms of the Note or any part of it, including renewing, compromising, extending, or accelerating, or otherwise changing the time for payment of, or increasing or decreasing the rate of interest on, the Note or any part of it.
(b) Accept new or additional documents, instruments, or agreements relative to the Note, the Indebtedness, or the Indebtedness.
(c) Consent to the change, restructure, or termination of the individual, partnership, or corporate structure or existence of Borrower, Non-Borrower Mortgagor, or an affiliate of Borrower or Non-Borrower Mortgagor and correspondingly restructure the Indebtedness or the Indebtedness.
(d) Accept partial payments on the Note, the Indebtedness, or the Indebtedness.
(e) Assign the Note, and with it the Mortgage, in whole or in part.
(f) Take and hold security for the Note, accept additional or substituted security or guaranties for the Note, and subordinate, exchange, enforce, waive, release, compromise, fail to perfect, sell, or otherwise dispose of any such security.
(g) Apply any security now or later held for the Note in any order that Lender in its sole discretion may choose, and direct the order and manner of any sale of all or any part of it and bid at any such sale.
(h) Release the Borrower of its liability for the Note or any part of it.
(i) Settle, release, compound, compromise, collect, or otherwise liquidate the Note or the Obligation and/or the collateral or any guaranty therefor in any manner, whether in liquidation, reorganization, receivership, bankruptcy, or otherwise.
(j) Substitute, add, or release any collateral or one or more guarantors or endorsers of the Note.
NN.2. Suretyship Waivers. Non-Borrower Mortgagor is not intended to be, and shall not be construed to be, a guarantor of the Loan including, without limitation, any of the Indebtedness, the Indebtedness, or other covenants by Borrower as set forth in the Loan Documents. Notwithstanding the intent of the parties hereto that the Non-Borrower Mortgagor is not a guarantor of the Loan, Non-Borrower Mortgagor hereby waives:
(a) Any right it may have to require Lender to proceed against the Borrower, proceed against or exhaust any security held from the Borrower, or pursue any other remedy in Lender's power to pursue, including any such right or any other right set forth under applicable law.
(b) Any defense based on any legal disability of the Borrower, any discharge or limitation of the liability of the Borrower to Lender, whether consensual or arising by operation of law or any bankruptcy reorganization, receivership, insolvency, or debtor-relief proceeding, or from any other cause, or any claim that Non-Borrower Mortgagor's obligations exceed or are more burdensome than those of the Borrower.
(c) All presentments, demands for performance, notices of nonperformance, protests, notice of protest, notices of dishonor, notices of acceptance of this Mortgage, and of the existence, creation, or incurring of new or additional indebtedness of the Borrower, and demands and notices of every kind.
(d) Any defense based on or arising out of any defense that the Borrower may have to the payment or performance of the Indebtedness or the Indebtedness or any part thereof.
(e) Any defense based on the modification, renewal, extension, or other alteration of the Indebtedness or the Indebtedness.
(f) Any defense based on Lender's negligence, including the failure to record an interest under the Mortgage, the failure to protect any security interest, or the failure to file a claim in any bankruptcy of Borrower, Non-Borrower Mortgagor, or of any other person.
(g) Any defense based on Lender's delay in enforcing the Mortgage.
(h) All rights of subrogation, reimbursement, indemnification, and contribution (contractual, statutory or otherwise), including any claim or right of subrogation under Title 11 of the United States Code entitled "Bankruptcy" as now or hereafter in effect, or any successor thereto or any other present or future bankruptcy or insolvency statute (the "Bankruptcy Code"), any other rights that may become available to Non-Borrower Mortgagor under applicable law, all rights to enforce any remedy that the Lender may have against the Borrower, and all rights to participate in any security now or later held by Lender for the Note, including any such right or any other right set forth under applicable law, and any defense based on the impairment of any subrogation rights that Non-Borrower Mortgagor may have.
(i) To the fullest extent permitted by law, all rights, and benefits under applicable law purporting to reduce a guarantor's obligations in proportion to the principal obligation.
(j) To the fullest extent permitted by law: (i) any defense arising as a result of Lender's election, in any proceeding instituted under the Bankruptcy Code, of the application of the Bankruptcy Code § 1111(b)(2); (ii) any defense based on any borrowing or granting of a security interest under the Bankruptcy Code § 364; and (iii) without limiting the generality of the foregoing or any other provision hereof, all rights and benefits which might otherwise be available to the undersigned under applicable law.
(k) The benefit of or any defense based on any statute of limitations affecting the liability of Non-Borrower Mortgagor, including, without limitation, any rights arising under applicable law.
(l) Any defense based on or related to Non-Borrower Mortgagor's lack of knowledge of Borrower's financial condition or any failure by Lender to inform Non-Borrower Mortgagor of any facts Lender may now or hereafter know about the Borrower, obligors under the Note, the Loan Documents, or the transactions contemplated by the Loan Agreement.
(m) Any defense based on the death, incapacity, lack of authority, or termination of existence or revocation by any persons or entities, or the substitution of any party to this Mortgage.
(n) Any defense based on the inability to recover a deficiency judgment after a nonjudicial sale of real or personal property, and any defense based on or arising under applicable law or based on or arising from Division 9 or any other applicable division of the Uniform Commercial Code.
(o) All rights and defenses arising out of any election of remedies by Lender, even though that election of remedies, such as nonjudicial foreclosure with respect to security for a guaranteed obligation or the acceptance by Lender or an affiliate of Lender of a deed in lieu of foreclosure, has destroyed Non-Borrower Mortgagor's rights of subrogation and reimbursement against the obligors under the Note by operation of applicable law or otherwise. Non-Borrower Mortgagor understands that if Lender forecloses by trustee's sale on any other deed of trust (other than this Mortgage) securing the Indebtedness or the Indebtedness, Non-Borrower Mortgagor would then have a defense preventing Lender from thereafter enforcing Lender's rights and remedies against the Non-Borrower Mortgagor. This defense arises because the trustee's sale under such other deed of trust would eliminate Non-Borrower Mortgagor's right of subrogation, and therefore Non-Borrower Mortgagor would be unable to obtain reimbursement from the Borrower. Non-Borrower Mortgagor specifically waives this defense.
(p) Mortgagor expressly acknowledges and agrees pursuant to the Loan Agreement that the covenants, representations, warranties, promises and/or agreements to which Borrower expressly is made a party pursuant to the terms and conditions of this Mortgage shall be (i) binding and enforceable against Borrower, and (ii) incorporated in the Loan Agreement and other Loan Documents, as applicable, by reference as if Borrower had executed this Mortgage. In addition, and not by way of limitation, Mortgagor expressly acknowledges and agrees that the covenants, representations, warranties, promises and/or agreements to which Mortgagor expressly is made a party pursuant to the terms and conditions of this Loan Agreement and any of the other Loan Documents shall be (A) binding and enforceable against Mortgagor, and (B) incorporated herein by reference as if Mortgagor had executed such Loan Documents. Mortgagor acknowledges and agrees that an Event of Default by Borrower under any of the Loan Documents shall constitute an Event of Default under this Mortgage, and any Event of Default by Mortgagor under this Mortgage shall constitute an Event of Default under the other Loan Documents.
NN.3. Waiver of Real Property Security Defenses. As expressly provided in, and to the fullest extent permitted under applicable law, Non-Borrower Mortgagor hereby waives all rights and defenses that Non-Borrower Mortgagor may have because the obligations under the Loan Documents are secured by real property. This means, among other things: (a) Lender may collect from Non-Borrower Mortgagor without first foreclosing on any real or personal property collateral pledged by the Borrower; and (b) if Lender forecloses on any real property collateral pledged by the Borrower: (i) the amount of the obligations under the Loan Documents may be reduced only by the price for which the collateral is sold at the foreclosure sale, even if the collateral is worth more than the sale price; and (ii) Lender may exercise its rights and remedies against the Property and collect from Non-Borrower Mortgagor even if Lender, by foreclosing on any real property collateral pledged by the Borrower, has destroyed any right Non-Borrower Mortgagor may have to collect from the Borrower. This is an unconditional and irrevocable waiver of any rights and defenses Non-Borrower Mortgagor may have because the obligations under the Loan Documents are secured by real property.
NN.4. Knowledge and Financial Condition of the Borrower. Non-Borrower Mortgagor assumes full responsibility for being and keeping informed of the financial condition and business operations of the Borrower and all other circumstances bearing on the risk of nonpayment of the Indebtedness or the Indebtedness or affecting the ability of the Borrower to pay and perform the Indebtedness or the Indebtedness, and agrees that Lender shall have no duty to disclose to Non-Borrower Mortgagor any information which Lender may receive about the financial condition and business operations of the Borrower or any other circumstances bearing on the Borrower's ability to perform. Credit may be granted or continued from time to time by Lender to Borrower without notice to or authorization from Non-Borrower Mortgagor, regardless of the financial or other condition of any such obligor at the time of any such grant or continuation. Lender shall not have any obligation to disclose or discuss with Non-Borrower Mortgagor its assessment of the financial condition of Borrower. Non-Borrower Mortgagor acknowledges that no representations of any kind whatsoever have been made by Lender. Non-Borrower Mortgagor, by execution of this Mortgage, represents to Lender that the relationship between Non-Borrower Mortgagor and Borrower is such that Non-Borrower Mortgagor has access to all relevant facts and information on the Indebtedness or the Indebtedness and on Borrower, and that Lender can rely on Non-Borrower Mortgagor's having such access. Non-Borrower Mortgagor waives and agrees not to assert any duty of Lender to disclose to Non-Borrower Mortgagor any facts that it may now know or later learn about Borrower, regardless of whether Lender has reason to believe that any such facts materially increase the risk beyond that which Non-Borrower Mortgagor intends to assume, has reason to believe that such facts are unknown to Non-Borrower Mortgagor, or has a reasonable opportunity to communicate such facts to Non-Borrower Mortgagor.
NN.5. Notices. Non-Borrower Mortgagor acknowledges and agrees that: (a) any notices to be delivered to Borrower hereunder shall be deemed conclusively delivered when delivered to Borrower; and (b) Lender shall be entitled to rely on any and all notices, consents, and other communications from Borrower hereunder as the notice, consent, or communication of Borrower. Non-Borrower Mortgagor waives demand, protest, and notice of any kind, including, without limiting the generality of the foregoing, notice of the existence, creation, or incurring of new or additional indebtedness, or of any action or nonaction by Borrower, Lender, any endorser, any creditor of Borrower or Non-Borrower Mortgagor under this Mortgage or any other instrument, or in connection with any Indebtedness or the Indebtedness secured by this Mortgage.
NN.6. Independent and Limited Indebtedness. Non-Borrower Mortgagor's obligations under this Mortgage are independent of those of any other person; provided, however, that except as otherwise provided in this Mortgage, Lender’s recovery against Non-Borrower Mortgagor under this Mortgage and the other Loan Documents shall be limited solely to the Mortgaged Property and the Mortgaged Property UCC Collateral pledged by Non-Borrower Mortgagor under this Mortgage as security for the Loan. Lender may bring a separate action against Non-Borrower Mortgagor under this Mortgage, and Non-Borrower Mortgagor waives any right to require Lender to proceed against Borrower or any other person, firm, or corporation or to proceed against or exhaust any other security held by it at any time or to pursue any other remedy in its powers, and Non-Borrower Mortgagor agrees that Lender shall not be obligated to resort to any other security, including security given by Borrower, with any priority, in any particular order, or at all, even if such action destroys, alters, or otherwise impairs Non-Borrower Mortgagor's subrogation rights or the Non-Borrower Mortgagor's right to proceed against Borrower for reimbursement, or both.
NN.7. Choice of Remedy. Upon an Event of Default, Lender may elect to foreclose nonjudicially or judicially against any real or personal property security it holds for the Indebtedness or the Indebtedness or any part of it or exercise any other remedy. No such action by Lender shall release or limit the liability of Non-Borrower Mortgagor, even if the effect of that action is to deprive Non-Borrower Mortgagor of the right to collect reimbursement from Borrower or any other person for any sums paid to Lender, or to obtain reimbursement by means of any security held by Lender for the Indebtedness or the Indebtedness, or to impair any subrogation right Non-Borrower Mortgagor may have.
NN.8. Borrower's Relationship with Mortgagor. The Indebtedness owed by Borrower to Lender is secured by, among other things, this Mortgage and reference is made to the Mortgage for other rights of Lender as to collateral for the Indebtedness. In the Loan Documents, Borrower agrees to be bound by all provisions pertaining to Borrower in the Mortgage and agrees to perform all covenants and agreements of Borrower set forth in the Mortgage.