New Mexico Administrative Code
Title 4 - CULTURAL RESOURCES
Chapter 10 - CULTURAL PROPERTIES AND HISTORIC PRESERVATION
Part 2 - HISTORIC PRESERVATION LOAN FUND
Section 4.10.2.22 - ATTACHMENT A: HISTORIC PRESERVATION LOAN FUND: LOAN PARTICIPATION AGREEMENT
Universal Citation: 4 NM Admin Code 4.10.2.22
Current through Register Vol. 35, No. 6, March 26, 2024
THIS LOAN PARTICIPATION AGREEMENT, is made this_____day of ,_____, between [the participating lending institution, and/or other participating parties and address(es)] and the Historic Preservation Division, Office of Cultural Affairs, State of New Mexico, a government entity with its principal office at 228 East Palace Avenue, Santa Fe, New Mexico, 87501 (the "division").
A. RECITALS:
(1) The division has been working
cooperatively with lending institutions and/or [other participating
parties] to support the rehabilitation, restoration and
preservation of historic commercial and/or residential buildings and historic
sites in New Mexico.
(2)
[Borrower] has applied to the division for assistance
for a project involving the rehabilitation of
[property], a historic property located at
[address], New Mexico.
(3) To promote the shared goals of historic
preservation in New Mexico, the lending institution has agreed to join with the
division in providing a loan to [borrower] for this project. The lending
institution has further agreed to coordinate the administration of these funds
in accordance with the terms and conditions of this loan participation
agreement.
B. THE PARTIES HEREBY AGREE AS FOLLOWS: AGREEMENT: Definitions:
(1) "Account" - The account at the lending
institution or at one or more other lending institutions into which the
division contribution is deposited pending disbursement to borrower and into
which the collections are deposited pending delivery to the division.
(2) "Application" - Borrower's application
for assistance from the division, in the form of the New Mexico historic
preservation preliminary loan application, dated _____ and approved on
____.
(3) "Borrower" -
[name and address]
(4) "Collateral" - The property, which is
subject to the mortgage and such other collateral as shall be accepted by the
lending institution and HPD as security for the loan, and in which the lending
institution shall hold a security interest on behalf of the lending institution
and HPD in proportion to the respective amounts loaned by the lending
institution and HPD.
(5)
"Collections" - All moneys received by the lending institution as principal or
interest on and for the account of the loan or as proceeds of the
collateral.
(6) "Covenants and deed
restrictions" The historic preservation covenants and deed restrictions which
shall be entered into by the borrower/owner and HPD which shall remain in
effect for a minimum period of seven (7) years (the "deed restriction period")
and which shall be recorded.
(7)
"Division contribution" - The amount of _____ dollars ($ _____ ), representing
the share of the loan purchased by the division.
(8) "Event of default" - The occurrence of
any of the events of default defined in the loan documents, which shall
include, without limitation, a violation of the development agreement
preservation covenants and deed restrictions, the secretary's standards, the
mortgage or the loan documents.
(9)
"Loan" - The loan in the principal amount of _____ dollars ($ _____) from the
lending institution to borrower, the proceeds of which are to be used for the
project.
(10) "Loan documents" -
The loan agreement, promissory note, mortgage, development agreement and
preservation covenants and deed restrictions, any guaranty agreements, all
other security documents and any other documents executed by borrower, the
division and the lending institution, evidencing, securing or relating to the
loan or loan subsidy.
(11)
"Mortgage" - The mortgage covering the collateral granted to the lending
institution as security for the loan.
(12) "Project" - The rehabilitation of the
property for use as [description].
(13) "Property" - The real property
consisting of [property description].
(14) "Secretary's standards" - The secretary
of the interior's standards for rehabilitation and guidelines for
rehabilitating historic buildings or the Secretary of the Interior's Standards
for the Treatment of Historic Properties ( 36 CFR part 68 ).
C. Sale of participation:
(1) The lending institution hereby sells to
the division, and the division hereby purchases, a participation of _____
dollars ($_____) of the loan.
(2)
The percentage shares of the parties in the loan will be as follows:
(a) lending institution - __
percent
(b) division - __
percent
(c) [other
participating parties] - __ percent
(3) The division's participating share shall
include a proportional interest in the collateral.
D. Delivery and deposit of the contributions:
(1) Following the execution of this loan
participation agreement by all parties, the lending institution will notify HPD
at least _____ business days before each release of loan funds to borrower is
scheduled to occur.
(2) HPD shall
deposit with the lending institution HPD's portion of the loan amount to be
released at least 24 hours prior to the release date indicated in the lending
institution's notification to HPD.
(3) Such funds shall be held by the lending
institution on behalf of and as trustee for the division, to be disbursed at
the times and in the manner provided in this loan participation
agreement.
(4) In the event HPD's
portion of the loan is not disbursed to the borrower within 24 hours from the
time HPD transfers its loan contribution to the lending institution, the
division contribution shall accrue interest at the rate of three percent per
annum. Such interest will be paid to the division in accordance with the
provisions of the payments to the division section below.
E. Disbursement of loan funds to borrower:
(1) The lending institution will be
responsible for disbursing the proceeds of the loan to borrower in accordance
with the terms of this loan participation agreement.
(2) The loan will be disbursed in at least
five (5) installments, based on work progress, during a period of [_____]. The
[_____] period shall commence on the date the first disbursement of loan funds
is made to the borrower.
(3) The
division will be responsible for establishing and carrying out a schedule of
inspections relating to the historic preservation objectives and standards
applicable to the project.
(4) The
lending institution will be responsible for carrying out inspections necessary
to monitor construction progress.
(5) Based on the HPD's and lending
institution's inspections and upon the receipt of such certifications as the
division may require from the architect for the project, the division will
notify the lending institution that an installment may be disbursed.
(6) The lending institution will advise the
division promptly of each disbursement.
(7) Any portion of the division contribution
not disbursed to borrower at the end of the [_____] period shall promptly be
remitted to the division by the lending institution by wire transfer to an
account to be designated by the parties.
F. Interest on loan:
(1) The interest rate to be charged on the
lending institution's portion of the loan shall be
[rate].
(2) The interest rate to be charged on the
division's portion of the loan shall be [rate]. The
interest rate charged to borrower on the division's portion of the loan shall
not exceed the maximum allowable interest rate stated in Section
18-6-23 NMSA
1978.
(3) The interest rate to be
charged on the [other participating party] portion of
the loan shall be [rate].
(4) The combined interest rate of the loan as
a whole shall be _____.
G. Administration of loan:
(1) The lending institution shall receive the
division contribution, the collections and collateral and hold the division's
proportional share in trust for the division.
(2) The lending institution shall service and
manage the loan and the collateral in the ordinary course of its business and
will exercise the same care as is customary for prudent lending practices by
lending institutions in New Mexico and as it customarily exercises in the case
of similar loans in which it alone is interested.
(3) The lending institution shall be
responsible for all aspects of loan origination, servicing, collections,
security and other administrative tasks except as otherwise provided in this
agreement.
(4) The lending
institution will document the loan in accordance with sound lending practices,
evidencing the loan with a promissory note and loan agreement and securing the
loan with the mortgage and other necessary security documents.
(a) The promissory note, mortgage and other
loan documents documenting the Loan shall include provisions that events of
default include, without limitation, (i) the borrower's failure to make timely
payments of amounts due under the loan, (ii) the borrower's failure to comply
with the secretary's standards, and (cc) violation of the covenants and deed
restrictions, each of which shall constitute an independent and sufficient
basis for acceleration of all amounts due under the loan and foreclosure on the
collateral.
(b) The lending
institution will provide the division with copies of the loan
documents.
(c) The lending
institution will be the lender and secured party of record, but shall hold the
division's share of collections and collateral in trust for the benefit of the
division. The mortgage and any other recorded documents evidencing security for
the loan shall expressly disclose that the state of New Mexico, acting through
the division, and the lending institution are secured parties of record. The
lending institution will ensure that the original priority of the mortgage
extends to each subsequent disbursement of loan proceeds.
(5) The lending institution will collect, and
will receive on behalf of the division all collections, apply the same promptly
to borrower's account, and remit the portion of the collections allocable to
the division in accordance with the provisions of payments to division section
herein.
(6) The lending institution
will monitor the borrower's maintenance of any insurance required on the
collateral and the payment of all taxes, fees and other charges assessed,
levied or otherwise imposed upon the collateral and required to be paid by
borrower pursuant to the loan documents.
(7) The lending institution will promptly
advise the division of any event of default existing for more than thirty (30)
days and of any other information bearing upon the loan which it considers
important.
(8) Following
notification of an event of default, the lending institution shall consult with
the division as to the appropriate course of action, and shall take action to
cure the default or commence foreclosure action or other legal proceedings
after obtaining written approval of the division.
(a) After receiving the division's approval,
the lending institution shall have full power and authority, subject to the
provisions of Paragraph (9) of Subsection G of 4.10.2.22 NMAC below, to enforce
the loan and foreclose upon the collateral on its own behalf and on behalf of
the division in accordance with the provisions of administration of loan
section above.
(b) Any loss
ultimately incurred with respect to the loan will be allocated pro
rata in accordance with the respective percentage participations
of the parties, as set forth in sale of participation section above.
(9) The lending institution shall
execute and deliver such satisfactions, endorsements, receipts, discharges or
releases as may be necessary in the proper servicing and collection of the
loan. Notwithstanding any other provision of this loan participation agreement,
however, the lending institution shall not, without the prior written consent
of the division (i) modify or supplement any of the loan documents; (ii) agree
to any extension of time or waiver or forgiveness of debt; (iii) take any
action or permit any action to be taken which will release borrower or any
guarantor from any obligation or liability with respect to the loan, or impair
the validity or priority of lending institution's or division's interest in the
collateral.
H. Allocation of costs: The lending institution may charge its usual and customary fees for loan origination, closing and other service charges, but only with respect to the share of the loan extended by the lending institution.
I. Access to records: The division shall have the right to examine any of the documents or records of the lending institution pertaining to the loan during normal business hours.
J. Terms of the loan: The loan shall be made subject to the following terms, each of which shall be reflected or incorporated, as appropriate, in the loan documents:
(1) The proceeds of the loan may be used only
for rehabilitation costs allowable as determined by reference to the
preliminary loan application. The project shall be completed in accordance with
the preliminary loan application, or such modifications, exhibits, or
additional documents as have been approved by the lending institution and the
division. Costs which may be paid from the proceeds of the loan are the
following: [list of eligible costs]
(2) The project must be completed within two
(2) years of the closing of the loan.
(3) The loan shall be for a term of five (5)
years. Interest and principal shall be paid in equal installments no less than
annually with the first installment due within one year of the date the loan is
closed by the lending institution. The loan shall be amortized over a period
not to exceed twenty years, [with a balloon payment due at the end
of the five year term or in lieu of a balloon payment, the lending institution
may purchase the remaining loan amount due to the
division.]
(4) The
loan shall be secured by the collateral.
(5) The project and any other rehabilitation,
restoration, or construction work undertaken with respect to the property
during the time any portion of the loan is outstanding shall conform with the
secretary's standards. Prior to commencement of the project, written approval
of all plans and specifications for interior and exterior work shall be
obtained from the division, together with the division's schedule of
inspections of work in progress. Any substantial changes to the plans and
specifications shall be approved in advance in writing by the division. Upon
completion, the division shall inspect the property to ensure that the project
was completed substantially in accordance with the approved plans and
specifications.
(6) Noncompliance
with the secretary's standards shall be an event of default under the
promissory note and mortgage. The division shall be responsible for determining
compliance with the secretary's standards, shall notify the borrower of any
noncompliance and shall include in its notification the statement that the
borrower has _____ days to cure the noncompliant condition. In the event of an
uncured default by the borrower, the division shall notify the lending
institution of that event of default. The lending institution shall then
promptly undertake the remedies provided by the loan documents for events of
default.
(7) The lending
institution shall include in the loan documents the provision that the borrower
execute a development agreement and preservation covenants and deed
restrictions with the state of New Mexico as a condition of closing the loan,
in a form and substance substantially similar to the attached development
agreement and preservation covenants and deed restrictions, or otherwise in a
form satisfactory to the division (the "covenants and deed restrictions").
(a) The covenants and deed restrictions shall
be recorded and shall run with the land for the deed restriction period, and
shall not be extinguished at the time that the loan is repaid.
(b) The mortgage and all other documents
evidencing security for the loan shall include provisions clarifying that
satisfaction of the loan does not extinguish the lien of the covenants and deed
restrictions and that the covenants and deed restrictions shall continue in
full force and effect for the deed restriction period.
(8) The mortgage and all other documents
evidencing security for the loan shall include provisions specifying that
borrower's default in connection with any loan or other obligation secured by a
lien superior to the mortgage or the lien of the covenants and deed
restrictions shall constitute an event of default pursuant to the mortgage and
loan agreement, and that the division and/or the lending institution shall have
the right (but not the obligation) to cure any default in connection with
superior liens and charge the costs of curing such defaults to
borrower.
(9) A construction sign
will be displayed prominently at the property acknowledging the assistance of
the lending institution and the division.
(10) Borrower shall maintain complete
financial records regarding the project throughout the term of the loan and
shall make these available to the lending institution and the division upon
request.
K. Payments to the division: The lending institution shall immediately transfer to the division its share of the collections, including any interest, within five working days or less after receipt of a payment from borrower, in conformity with the division's share designated in sale of participation section above, and the interest rate provided in the section on interest on loan, above.
L. Reports:
(1) The lending institution will submit
reports to the division quarterly (together with payments required pursuant to
the payments to the division section above, containing the following
information:
(a) a financial summary with
respect to the loan, including a copy of the promissory note and repayment
schedule;
(b) calculation of the
quarterly payments, including a statement of the account which sets forth that
portion of the payment attributable to interest paid by borrower, that portion
of the payment attributable to interest earned on the account, and that portion
of the payment which is payment of principal; and
(c) report on lending institution's
inspections necessary to monitor construction progress; and any other
information reasonably requested by the division with respect to the
loan.
(2) The first
report will be due two (2) weeks after the end of the quarter in which this
loan participation agreement is executed. Thereafter, reports will be due on
April 15, July 15, October 15, and January 15.
M. Notices: Any notices required in connection with this loan participation agreement shall be in writing and shall be deemed to have been properly given if transmitted by certified mail, return receipt requested, or by national overnight courier service, directed to the party at its address below or at such other address of which the other parties have been notified.
(1) To the lending
institution: [name and address]
(2) To the division: Historic Preservation
Division, Office of Cultural Affairs, State of New Mexico 228 East Palace
Avenue, Santa Fe, New Mexico 87503, Attn: State Historic Preservation
Officer
N. Applicable law: This agreement shall be governed by and construed in accordance with the laws of the state of New Mexico.
O. Severability: If any provision of this loan participation agreement shall for any reason be held to be illegal, invalid, or unenforceable, such illegality, invalidity, or unenforceability shall not affect any other provision of this loan participation agreement, but this agreement shall be construed as if such illegal, invalid or unenforceable provision had not been contained herein.
P. Nonassignability: No party shall sell, pledge, assign, or otherwise transfer its respective interest in this loan participation agreement, the loan, or the collateral without the prior written consent of the other parties.
Q. Amendment: This loan participation agreement may be amended only in writing signed by all of the parties.
R. Counterparts: This loan participation agreement may be executed in any number of counterparts, all of which together shall comprise one and the same instrument.
IN WITNESS WHEREOF, the parties have caused this loan participation agreement to be executed, in each case by an officer thereunto duly authorized, as of the date first above written.
[lending institution]
By:____________ Date:____ [name and title]
[other participating parties]
By:____________ Date:____
STATE OF NEW MEXICO
By:____________ Date:___
[name]
state historic preservation officer
Disclaimer: These regulations may not be the most recent version. New Mexico may have more current or accurate information. We make no warranties or guarantees about the accuracy, completeness, or adequacy of the information contained on this site or the information linked to on the state site. Please check official sources.
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