Performance Mortgage/Trust Deed There are two ways to create a performance mortgage. On a mortgage or trust deed document Attorney Bill Bronchick ( www.legalwiz.com ) suggests simply changing the terms “lender” and “borrower” to “obligor” (the seller) and “obligee” (you – the buyer). The face value of the mortgage is the difference between your option price and the market value of the property.
Jack Miller ( www.CashFlowConcepts.com ) adds the following to a standard FNMA Mortgage/Trust Deed:
Anywhere in this instrument that the words “Borrower” or “Debtor” occur, they shall be construed to relate to, and mean, the “Optionor” who has promised to deliver the above described real property together with improvements appurtenance thereto upon exercise of a certain Option Contract of even date herewith as between Optionor and Optionee. Wherever the word “Lender” or “Secured Party” occur, they shall be construed to relate to, and mean, the “Optionee and or assigns” who is securing his rights under and Option Contract of even date herewith by recording this instrument. Where the words “note” or “debt” appear, they shall be construed to relate to, and mean, the Option Contract itself. Now, should any conflict or ambiguity arise as a result of this construction of language, it shall be resolved to the extent possible in the favor of the “Lender”/”Optionor herein. Where specific sums are entered herein, or referenced to in any way, they should be construed to represent surety given by the optionor to the Optionee to guarantee performance on the aforesaid Option Contract and full liquidated damages, due and payable to the Optionee from the Optionor in consideration of a breach of the said Option Contract.
You could use the same paragraph as an addendum to a mortgage or trust deed. Be careful to use the same words as those that identify the parties in the mortgage document.
WARNING: These are just examples! If you don’t understand how to modify a standard mortgage or trust deed…. GET HELP! This document and accompanying materials are designed to provide authoritative information in regard to the subject matter covered in it. It is for illustration purposes only and presented with the understanding that the author and publisher are not engaged in rendering legal, accounting or other professional opinions. If legal advice or other expert assistance is required, the services of a competent professional should be sought. |
