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Real Estate Financing Agreement template
Real Estate Financing Agreement sample


What is Real Estate Financing Agreement?

Real Estate Financing Agreement An agreement securing financing for real estate transactions, specifying loan terms, interest rates, collateral, and repayment schedules.



Sample template:



Real Estate Financing Agreement


This Real Estate Financing Agreement (the "Agreement") is entered into and made effective as of [DATE], by and between Pacific Capital Group, a [STATE] corporation ("Lender"), and Sunrise Properties, LLC, a [STATE] limited liability company ("Borrower").

1. Loan and Purpose

1.1. Loan Amount


The Lender hereby agrees to provide to Borrower a loan in the amount of $[LOAN AMOUNT] (the "Loan"). The Loan, together with all accrued and unpaid interest and all other charges and amounts payable under this Agreement, shall be evidenced by a Promissory Note executed by Borrower in favor of Lender (the "Note").



1.2. Purpose of Loan


Borrower shall use the Loan proceeds solely to acquire, develop, and operate the commercial property located at [PROPERTY ADDRESS] (the "Property") in accordance with the terms and conditions of this Agreement and for no other purpose.



2. Loan Terms

2.1. Interest Rate


The Loan shall bear interest at an annual rate equal to [INTEREST RATE]% (the "Interest Rate").



2.2. Loan Term


Subject to Section 7, the Loan, together with any accrued and unpaid interest and any other sums payable under this Agreement or the Note, shall mature on [MATURITY DATE].



2.3. Repayment Schedule


Borrower shall make monthly payments of principal and interest on the Loan, commencing on the first day of the calendar month immediately following the date of this Agreement, and continuing on the first day of each calendar month thereafter until the Maturity Date. The amount of each monthly payment shall be calculated by applying the Interest Rate to the outstanding principal balance of the Loan and amortizing the remaining principal balance over the remaining Loan Term, in accordance with the amortization schedule attached hereto as Schedule A.



2.4. Prepayment


Borrower may prepay the Loan in whole or in part, without premium or penalty, at any time prior to the Maturity Date, provided that Borrower gives Lender written notice of its intent to prepay at least [NUMBER OF DAYS] days prior to the date of prepayment.



3. Collateral

3.1. Grant of Security Interest


To secure the payment and performance of the Loan, Borrower hereby grants to Lender a security interest in the Property (the "Collateral"), subject to the terms and conditions of a Mortgage, Assignment of Leases and Rents, Security Agreement and Fixture Filing executed by Borrower in favor of Lender (the "Security Documents"). The Security Documents, together with this Agreement and the Note, shall constitute the "Loan Documents".



3.2. Additional Collateral


If at any time during the Loan Term, Lender determines, in its sole discretion, that the value of the Collateral is insufficient to fully secure the payment and performance of the Loan, Borrower shall, upon Lender's request, provide additional collateral satisfactory to Lender.



4. Covenants and Guarantees

4.1. Affirmative Covenants


Borrower covenants that, during the Loan Term, it shall (a) maintain the Collateral in good repair; (b) obtain and maintain all required licenses, permits, and approvals for the Property; (c) timely pay all taxes, assessments, and other charges levied upon the Property; (d) maintain insurance on the Property in such amounts and coverages as Lender may require; and (e) comply with all applicable laws, regulations, and ordinances affecting the Property.



4.2. Negative Covenants


Borrower covenants that, during the Loan Term, it shall not (a) transfer, sell or otherwise dispose of the Collateral, or any interest therein, without Lender's prior written consent; (b) encumber the Collateral with any lien or security interest, other than as provided in the Security Documents, without Lender's prior written consent; or (c) change the use of the Property without Lender's prior written consent.



4.3. Guarantees


The obligations of Borrower under this Agreement and the other Loan Documents shall be personally guaranteed by [GUARANTOR NAME(S)] (the "Guarantor(s)") in accordance with the terms and conditions of a Guaranty Agreement executed by the Guarantor(s) in favor of Lender (the "Guaranty").



5. Events of Default

Any of the following shall constitute an event of default under this Agreement (an "Event of Default"): (a) Borrower fails to make any payment required under this Agreement or the other Loan Documents when due; (b) Borrower breaches any covenant or warranty in this Agreement or the other Loan Documents; (c) any representation or warranty made by Borrower in this Agreement or the other Loan Documents proves to be false or misleading in any material respect when made; (d) any Guarantor dies, becomes insolvent, or breaches any obligation under the Guaranty; or (e) a default occurs under any other loan agreement, promissory note, or other financing arrangement to which Borrower or any Guarantor is a party.



6. Remedies

Upon the occurrence of an Event of Default, Lender may, at its option, declare the entire unpaid principal balance of the Loan, together with all accrued and unpaid interest and all other sums payable under this Agreement or the other Loan Documents, immediately due and payable without presentment, protest, or notice of any kind, all of which are hereby expressly waived by Borrower, and exercise all rights and remedies available to Lender under the Loan Documents, at law, or in equity.



7. Governing Law

This Agreement shall be governed by and construed in accordance with the laws of the United States and the State of [GOVERNING STATE], without regard to principles of conflicts of law.



8. Miscellaneous

8.1. Entire Agreement


This Agreement, together with the other Loan Documents, constitutes the entire agreement between the parties with respect to the subject matter hereof and supersedes all prior agreements and understandings, both oral and written, between the parties with respect to the subject matter hereof.



8.2. Amendments and Waivers


This Agreement may be amended, and any provision of this Agreement waived, only by a written instrument signed by the parties hereto.



8.3. Notices


All notices, demands, requests, or other communications required or permitted hereunder shall be in writing and shall be deemed to have been duly given if delivered personally or mailed by certified mail, return receipt requested, to the respective parties hereto at their addresses set forth below, or at such other addresses as shall be specified in writing by either party to the other party hereto:


If to Lender: Pacific Capital Group, [LENDER ADDRESS]


If to Borrower: Sunrise Properties, LLC, [BORROWER ADDRESS]



IN WITNESS WHEREOF, the parties hereto have executed this Real Estate Financing Agreement as of the date first above written.



Pacific Capital Group


By:____________________________


Name: [LENDER SIGNATORY NAME]


Title: [LENDER SIGNATORY TITLE]



Sunrise Properties, LLC


By:____________________________


Name: [BORROWER SIGNATORY NAME]


Title: [BORROWER SIGNATORY TITLE]

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Main Sections of a Real Estate Financing Agreement


In this Real Estate Financing Agreement, you will see the following sections:

  1. Loan and Purpose
  2. Loan Terms
  3. Collateral
  4. Covenants and Guarantees
  5. Events of Default
  6. Remedies
  7. Governing Law
  8. Miscellaneous


About each Section - Analysis and Summary:

  1. Loan and Purpose : This section outlines the loan amount and its purpose. The lender agrees to provide the borrower with a specific loan amount, which will be used solely for acquiring, developing, and operating a commercial property. The loan will be evidenced by a Promissory Note.

  2. Loan Terms : This section details the interest rate, loan term, repayment schedule, and prepayment conditions. The loan will have a fixed interest rate and will mature on a specific date. The borrower must make monthly payments, and they can prepay the loan without penalty if they provide proper notice.

  3. Collateral : The borrower grants the lender a security interest in the property as collateral for the loan. If the lender determines the collateral is insufficient, the borrower must provide additional collateral. The collateral is subject to the terms and conditions of the Security Documents.

  4. Covenants and Guarantees : This section lists the borrower's affirmative and negative covenants, which are promises to do or not do certain things during the loan term. The borrower's obligations are also personally guaranteed by one or more guarantors, as outlined in a Guaranty Agreement.

  5. Events of Default : This section defines what constitutes an event of default, such as failure to make payments, breach of covenants, or false representations. If an event of default occurs, the lender has the right to take action.

  6. Remedies : If an event of default occurs, the lender can declare the entire unpaid loan balance due immediately and exercise all rights and remedies available under the Loan Documents, as well as any legal or equitable remedies.

  7. Governing Law : This section states that the agreement will be governed by and construed in accordance with the laws of a specific state, without regard to principles of conflicts of law.

  8. Miscellaneous : This section covers various miscellaneous provisions, such as the entire agreement, amendments and waivers, and notices. It states that the agreement, along with the other Loan Documents, constitutes the entire agreement between the parties and can only be amended in writing. Notices must be in writing and sent to the specified addresses.

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