MASTER RESIDENTIAL INTERIM CONSTRUCTION LOAN …

MASTER RESIDENTIAL INTERIM CONSTRUCTION LOAN DOCUMENTS WITH A TWIST OF E-RECORDING

MICHAEL H. PATTERSON PeirsonPatterson, LLP

2310 West Interstate 20, Suite 100 Arlington, Texas 76017-1668 Telephone: 817.461.5500 Fax: 817.856.6090 Email:mike@

State Bar of Texas 17TH ANNUAL ADVANCED REAL ESTATE DRAFTING COURSE

March 9-10, 2006 Dallas

CHAPTER 5

Michael H. Patterson

Michael H. Patterson, P.C. is a partner of PeirsonPatterson, L.L.P. Mike's practice focuses on residential loan documentation and the regulations relating thereto. His firm regularly represents and prepares loan documents for residential lenders. He graduated from the University of Texas School of Law in 1979.

Thanks to:

1) The State Bar for the invitation.

2) My partners, Chris and Bill Peirson, who always cover for me and so graciously correct me when I am wrong. I am seldom wrong, but never in doubt.

3) My office for tolerating me.

4) My wife, Debi, and our 4 sons (15, 19, 21 and 22) for sometimes tolerating me.

5) My clients that stand beside me as I learn from my mistakes.

Thank you all and God bless.

Master Residential Interim Construction Loan Documents with a Twist of e-Recording

Chapter 5

TABLE OF CONTENTS

I. THE PROBLEM/CHALLENGE ............................................................................................................................ 1

II. POSSIBLE SOLUTION-DEED OF TRUST MASTER FORM ............................................................................ 1 A. Property Code ?12.009 Mortgage or Deed of Trust Master Form .................................................................. 1 1. The Statute............................................................................................................................................... 1 2. What's required to incorporate by reference ........................................................................................... 2 3. What's not required ................................................................................................................................. 2 a. No requirement for execution, notarization or jurat ........................................................................ 2 B. Advantages ...................................................................................................................................................... 2 1. Less attorney fees .................................................................................................................................... 2 a. Document preparation...................................................................................................................... 2 b. Due diligence ................................................................................................................................... 2 2. Less filing fees......................................................................................................................................... 2 a. Filing fees in the various counties ................................................................................................... 2 b. "The Filing Fee Perfect Storm"........................................................................................................ 2 3. Less documents at each individual closing.............................................................................................. 3 4. Less parties at each individual closing .................................................................................................... 3 C. Disadvantages.................................................................................................................................................. 3 1. Advance planning .................................................................................................................................... 3 2. Subsequent negotiation of pre-recorded master deed of trust.................................................................. 3 3. Danger of closing in a county without pre-recorded deed of trust .......................................................... 3 4. Same interest rate for various collateral types......................................................................................... 3 D. The Documents................................................................................................................................................ 3 1. Where these documents came from......................................................................................................... 3 a. Original source................................................................................................................................. 4 b. Download site .................................................................................................................................. 4 c. Mini-CD........................................................................................................................................... 4 2. County specific ........................................................................................................................................ 4 a. Master Deed of Trust ....................................................................................................................... 4 b. County clerk offices......................................................................................................................... 4 3. Borrower specific .................................................................................................................................... 4 a. Master Note ..................................................................................................................................... 4 (1) Texas Finance Code ? 346.004 ................................................................................................ 4 b. Master Construction Loan Agreement............................................................................................. 4 (1) Texas Business and Commerce Code ?26.02 .......................................................................... 4 c. Ancillary loan documents ................................................................................................................ 5 4. Loan specific ........................................................................................................................................... 5 a. Short Form Deed of Trust................................................................................................................ 5 (1) Texas Business and Commerce Code ?9.334(h) "construction mortgage" clause................... 5 (2) Texas Business and Commerce Code ?9.516(b) borrowing entity identification.................... 5 (3) Texas Property Code ?11.008(b) Notice of Confidentiality Rights......................................... 5 b. Combined Attorney Invoice with Notice & Document Correction Agreement .............................. 5 E. Title insurance ................................................................................................................................................. 6 1. P-16. Mortgagee Title Policy Binder on Interim Construction Loan (Interim Binder) ........................... 6 2. P-9(b)(8) Revolving credit promissory note endorsement to mortgagee title policy .............................. 6 F. Fannie Mae and Freddie Mac .......................................................................................................................... 6

III. E-RECORDING...................................................................................................................................................... 6 A. What is e-recording? ....................................................................................................................................... 6 B. How easy can it be?......................................................................................................................................... 7 C. SB 335-Texas Adoption of the Uniform Real Property Electronic Recording Act effective September 1, 2005. ................................................................................................................................................................ 7 D. The "Need for Speed" ................................................................................................................................... 11 1. Inception date for mechanic liens .......................................................................................................... 11 a. The "early start"............................................................................................................................ 11

i

 ................
................

In order to avoid copyright disputes, this page is only a partial summary.

Google Online Preview   Download