Commitment Letter Template For Construction Mortgage Loan With Variable Interest Rate printable pdf download

FORM 3A.10 COMMITMENT LETTER FOR CONSTRUCTION MORTGAGE LOAN WITH VARIABLE

INTEREST RATE

[Identification of property]

Dear [name]:

We are pleased to inform you that our loan committee has approved your application for a first mortgage construction

loan in the amount of ____ Dollars ($___) on your fee interest in the above captioned premises, and the improvements to be

erected thereon consisting of [description of project]. The loan is to bear interest at the rate of ____ percent (___%) above

our prime rate, but is no event less than ____ percent (___%) per annum, in effect from time to time, payable monthly, and

shall mature ____, but in no event later than thirty (30) days prior to the expiration of the permanent commitment hereinafter

referred to. Interest shall be computed for the actual number of calendar days from the date of each advance calculated on

the basis of a 360-day year.

This loan is further subject to the following terms and conditions:

Term. This commitment will, at our option, terminate unless the loan is closed by [date]. Such closing will be held

at our offices at [address].

Loan expenses. Your acceptance of this commitment letter shall constitute your unconditional agreement to pay all

out-of-pocket expenses incurred by us with respect to the transaction herein contemplated, whether or not this

transaction is consummated. Such expenses incurred to date of closing will be payable at the closing, with any

additional expenses thereafter to be paid immediately upon your receipt of an invoice from us.

Brokerage fee and commission. We will not be required to pay any brokerage fee or commission arising from this

transaction, and you agree to defend, indemnify, and hold us harmless against such claims against this loan.

Guarantee. [Names] Shall jointly and severally guarantee payment of this loan.

Title insurance. You shall provide us with a report of title or certificate of title, the expense of which will be for

your account. The policy shall contain a metes and bounds description of the premises, and shall insure our

mortgage to be a valid first lien on your fee title to the premises. The title policy shall be issued by a title insurance

company satisfactory to us, and the policy itself shall be satisfactory in all respects to the bank and its attorneys.

Survey. You shall provide us with an ALTA/ASCM survey of the premises satisfactory to us and our counsel,

which survey shall be certified to the title company and to us. Upon completion of the foundations, you shall

provide us with a revised survey showing the locations of foundations and an affidavit from the surveyor that

setbacks are in conformity with current zoning restrictions. The expense of such survey shall be for your account.

Insurance. You shall provide us with evidence, at closing, of fire, extended coverage, and vandalism and

malicious mischief coverage on the property in the form of a builder’s risk, one hundred percent (100%),

nonreporting policy in an amount to be determined by our engineers as the insurable value of the building. The

policy shall be converted to a standard fire and extended coverage policy upon completion of construction, the

amount to be determined by the permanent lender hereinafter referred to and us. The policies shall be issued by a

company or companies satisfactory to us, and shall name us as first mortgagee and shall contain the standard

mortgagee clause. The original policies shall be delivered to us when issued.

Approval of plan and specifications. You shall furnish final plans and specifications to our engineers [name and

address], which plans and specifications shall be satisfactory to them and shall be acknowledged, in writing, as

satisfactory to the permanent lender hereinafter referred to. The plans and specifications shall also be

acknowledged, in writing, as satisfactory to the hereinafter referred lessees.

Supervising architect. The improvements under construction shall be subject to the supervision and approval of

[name of architect] and the improvements and their proposed use shall comply with the zoning and building

requirements. All zoning amendments and variances shall have been procured duly, and certificate of occupancy

shall be obtained upon completion of construction.

10. Advances on percentage of completion basis. Advances under the building loan agreement shall be made on a

percentage of completion basis with each advance subject to inspections and certifications by [name of architect].

Advances will also be contingent upon a clear continuation of title to the date of each advance.

11. Cost breakdown. You will be required to submit a detailed cost breakdown of the cost of the project for

verification by [name of architect], and an itemization of nonconstruction and land costs for verification by us. If

the direct construction costs, in the sole judgment of [name of architect], plus the estimated land and

nonconstruction costs, in our sole judgment, exceed the base loan, you will be required to invest the amount of the

difference in the project prior to any loan advances.

12. Security agreement. You shall execute and deliver to us additional security such security agreement or chattel

mortgage as our counsel shall prepare in order to give us a first lien on all the items of personal property as

Commitment Letter Template For Construction Mortgage Loan With Variable Interest Rate

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