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The document titled 'Wrap around mortgage' is a wraparound addendum that modifies a property sale and purchase contract. It is made between the seller (referred to as Party 1) and the buyer (referred to as Party 2). The addendum pertains to a property located at a specific address.
The addendum states that the property is subject to a mortgage, referred to as the 'wrapped mortgage,' which was made by the seller. The seller agrees to comply with all the terms and conditions of the mortgage, except for the payment of principal or interest. The buyer will take the title to the property subject to the existing mortgage.
The buyer is required to execute a wrap-around promissory note payable to the seller. This note outlines the payment terms, and the buyer is obligated to make regular monthly payments accordingly. The seller will continue to be responsible for paying the mortgage in accordance with the terms of the mortgage deed.
In the event that the seller fails to adhere to the terms of the mortgage deed, excluding payments of principal and interest, the buyer has the option to intercede and cure the seller's default to prevent foreclosure. Any payments made by the buyer to cure the default will be credited against the next installment of principal and interest due under the wraparound note.
If the buyer defaults in making any payment owed under the wraparound note and fails to cure the default within seven days after written notice, the seller may declare all outstanding sums owed on the wraparound note to be immediately due and payable.
The seller represents that there are no other liens, encumbrances, or indebtedness against the property, other than the mortgage deed. The seller also agrees to indemnify, defend, and hold the buyer harmless against any claims arising from the seller's breach of obligations under the mortgage deed.
It is important to note that the terms and conditions of this wraparound addendum prevail over any conflicting terms and conditions contained in the contract.
To use the 'Wrap around mortgage' document effectively, follow these steps:
1. Review the existing property sale and purchase contract between the buyer and seller.
2. Understand that this wraparound addendum modifies the original contract and pertains to a specific property.
3. Ensure that both parties, the seller (Party 1) and the buyer (Party 2), are identified correctly in the addendum.
4. Familiarize yourself with the terms and conditions of the existing mortgage on the property, referred to as the 'wrapped mortgage.'
5. Note that the buyer will take the title to the property subject to the wrapped mortgage and will not assume it via a qualified assumption.
6. Execute a wrap-around promissory note as outlined in the addendum, ensuring that the payment terms are clearly defined.
7. Make regular monthly payments according to the terms of the wrap-around note.
8. Understand that the seller remains responsible for paying the mortgage in accordance with the terms of the mortgage deed.
9. In the event of the seller's default under the mortgage deed, the buyer has the option to intercede and cure the default to prevent foreclosure.
10. If the buyer defaults in making any payment owed under the wrap-around note, the seller may declare all outstanding sums owed to be immediately due and payable after providing written notice.
11. Verify that there are no other liens, encumbrances, or indebtedness against the property, except for the mortgage deed.
12. The seller must continue to pay the mortgage deed until it is fully discharged and a release of lien is obtained.
13. The seller is responsible for indemnifying, defending, and holding the buyer harmless against any claims arising from the seller's breach of obligations under the mortgage deed.
14. Remember that the terms and conditions of this wraparound addendum prevail over any conflicting terms and conditions in the contract.