Exhibit 10.7
RECORDING REQUESTED BY:
AND WHEN RECORDED MAIL TO:
La Jolla Bank, FSB
390 W. Valley Parkway
Escondido, CA 92025
Loan No. 1013023934
[Space above this line for Recorder’s use.]
 
LOAN ASSUMPTION AND SECURITY AGREEMENT,
AND NOTE MODIFICATION AGREEMENT
THIS AGREEMENT is entered into and dated for reference purposes as of, AUGUST 1,
2009, by and among LA JOLLA BANK, FSB, (“Lender”), and NETREIT, A CALIFORNIA
CORPORATION (“Purchaser”), with reference to the following facts:

A.  
Lender holds a loan (the “Loan”) evidenced by an Adjustable Rate Note dated
MARCH 16, 2004, payable by MONTEREY PALMS SELF STORAGE, LLC.(the “Original
Borrower”), to the order of Lender in the original principal amount of
$5,200,000.00 (the “Note”) and a Change in Terms Agreement dated December 1,
2005. The Note is secured by, among other things, a Deed of Trust, dated MARCH
16, 2004, executed by the Original Borrower, as trustor, in favor of OLD
REPUBLIC TITLE COMPANY, as trustee, for the benefit of Lender, as beneficiary,
recorded in the Official Records of RIVERSIDE COUNTY, State Of CALIFORNIA, (the
“Official Records”) on MARCH 25, 2004, as Document No. 2004-0208211 (the “Deed
of Trust”) and a Modification of Deed of Trust dated December 1, 2005 and
recorded on December 22, 2005 as Document No. 2005-1057223 in the official
records of Riverside county, state of California.
  B.  
The Deed of Trust constitutes a first lien on the Original Borrower’s fee simple
estate as more particularly described in Exhibit “A”. The Original Borrower’s
right, title and interest in and to the land and the improvements located on the
land, are collectively referred to in this Agreement as the “Property”.
  C.  
Concurrently with the recordation of this Agreement in the Official Records,
Purchaser has acquired title to the Property from the Original Borrower. In
connection therewith, Purchaser has requested that Lender consent to Purchaser’s
assumption of the Loan. Lender is willing to permit Purchaser to assume the Loan
on the terms and subject to the conditions contained in this Agreement.

NOW, THEREFORE, for valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, Lender and Purchaser agree as follows:

1.  
Assumption of Loan. Effective as of the date on which Purchaser acquires title
to the Properly, which shall conclusively be deemed to have occurred no later
than the date on which this Agreement is recorded in the Official Records,
Purchaser hereby assumes and agrees to perform fully and when due each and every
monetary and non-monetary obligation of the Original Borrower under the Note,
the Deed of Trust and every other instrument, certificate, agreement and
document that sets forth or secures any obligations of the Original Borrower
relating to the Loan (collectively, the “Loan Documents”). Lender hereby
consents to Purchaser’s assumption of the Loan.
  2.  
Assumption Fee. Concurrently with the recordation of this Agreement, Purchaser
shall pay to Lender an assumption fee in the amount of $0.00. If Purchaser is
acquiring the Real Property through an escrow (the “Escrow”), this paragraph
constitutes Purchaser’s irrevocable instructions to the holder of the Escrow to
remit such assumption fee to Lender upon the closing of the Escrow from the
funds then held in the Escrow for Purchaser’s account.
  3.  
Purchaser’s Receipt of Loan Documents. Purchaser acknowledges having received a
complete copy of each Loan Document, including all riders and exhibits thereto,
each in the form executed and delivered by the Original Borrower.

 

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  4.  
Lender’s Costs; Title Endorsement. Purchaser shall pay, immediately upon
Lender’s written request, all out-of-pocket expenses incurred by Lender in
connection with Purchaser’s assumption of the Loan, including the fees for
recording this Agreement in the Official Records, the cost of obtaining a new
Loan Policy of Title Insurance, or an ALTA No. 10, Policy Bring Down endorsement
to Lender’s policy of title insurance insuring the continued validity and first
lien priority of the Deed of Trust. If for any reason Lender’s title insurer is
unwilling or unable to issue such ALTA No. 10, Policy Bring Down endorsement,
then Lender, at its election, shall have the right, but not the obligation, to
revoke Lender’s consent to Purchaser’s assumption of the Loan and to declare the
Loan due and payable in full. Purchaser acknowledges that as a condition of
issuing the ALTA No. 10 Policy Bring Down Form endorsement. Lender’s title
insurer may require that the Original Borrower or Purchaser obtain and deliver
to the title insurer for recordation a subordination agreement in form and
content satisfactory to the title insurer, executed and acknowledged by each
person or entity that holds or proposes to acquire any lien or security interest
on or in the Property or any part thereof. Purchaser hereby agrees to obtain any
and all such subordination agreements at no expense whatsoever to Lender, and to
deliver a complete and correct copy of each subordination agreement to Lender
concurrently with the Purchaser’s receipt thereof.
  5.  
Non-Recourse. Notwithstanding anything contained herein to the contrary, Lender
by its acceptance hereof, hereby agrees that none of the partners of Borrower,
individually, shall ever have any personal liability for the payment of the
indebtedness evidenced hereby or for the performance of any covenant, condition
or term of this Note or the Deed of Trust or any other instrument or other
agreement existing as security for the payment of this Note. Such non-personal
liability shall in no way affect or impair the rights of the holder hereof to
realize upon the security thereof in the default, or levy execution of any
money, judgement, deficiency, or otherwise against Borrower or any property of
Borrower. Lender hereby agrees that at such time as a default shall occur, the
sole remedies of the legal holder hereof, or the Lender, or the Trustee, or the
Beneficiary under the Deed of Trust, shall be the foreclosure of the properly
covered by the Deed of Trust or an action against Borrower or the assets of
Borrower and Lender shall not be entitled to a personal or deficiency judgement
against any partner.
  6.  
Original Borrower and Guarantor Released. Upon Purchaser’s satisfaction of all
conditions and requirements of Lender to the this assumption, including, without
limitation, the payment of all principal reductions, fees and expenses, the
closing of this assumption, and the recordation of all agreements required to be
recorded, this Agreement shall release the Original Borrower(s) and Guarantors
from any of their respective liabilities under the Loan Documents and/or
Guaranties.
  7.  
Costs of Suit. If any legal action, suit, or other proceeding is brought by
either party to enforce any provision of this Agreement, to rescind or otherwise
set aside or vacate this Agreement, or to remedy any breach or alleged breach of
this Agreement, the party who obtains substantially the relief sought by it in
such action, suit or proceeding shall be entitled to recover from the other
party all costs and expenses of suit, including actual attorneys’ fees.
  8.  
No Novation. This Agreement shall not be construed as a novation, it being the
intent of the parties that the Loan Documents shall remain in full force and
effect and that the lien priority of the Deed of Trust relative to any other
lien or encumbrance on the Property shall not in any way be affected by this
Agreement.
  9.  
Notices. All notices and other communications required or permitted under this
Agreement shall be in writing and shall be personally delivered or sent by first
class United States mail, and if mailed, shall be deemed received on the third
business day after deposit in the mail in the State of California, postage
prepaid, addressed to Lender at 390 W. Valley Parkway, Escondido, California
92025, or to Purchaser at 1282 PACIFIC OAKS PLACE, ESCONDIDO, CA 92029. Notice
of any change of either party’s address shall be given by written notice in the
manner set forth in this paragraph.
  10.  
Counterparts. This Agreement may be executed in counterparts, each of which
shall be deemed an original and all of which together shall constitute one and
the same document.
  11.  
Further Actions. The parties shall execute such further documents and take such
further actions as may be necessary to carry the provisions of this Agreement
into effect.
  12.  
Construction of Agreement. Paragraph headings in this Agreement are included
solely for ease of reference and shall not affect the construction of this
Agreement. This Agreement shall be construed as if it had been prepared jointly
by Lender and Purchaser. Unless otherwise indicated, all references to
paragraphs are to paragraphs in this Agreement. Unless otherwise indicated, each
exhibit referred to in this Agreement is an exhibit attached to this Agreement
and is incorporated herein by reference. When used in this Agreement, the words
“include”, “includes”, and “including” shall be construed as if immediately
followed by the words “without limitation”. If any portion of this Agreement
shall be declared to be invalid, illegal or unenforceable by any court of
competent jurisdiction, such portion shall be deemed severed from this Agreement
and the remaining portions shall continue in full force and effect. CALIFORNIA
law shall govern the construction and enforcement of this Agreement.

 

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  13.  
Entire Agreement. This Agreement is intended by the parties to be a final
expression of their agreement with respect to the subject matter hereof and a
complete and exclusive statement of the terms of such agreement between the
parties. This Agreement supersedes any and all prior understandings, written or
oral, between the parties.
  14.  
No Relationship. Purchaser, Original Borrower(s) and each Guarantor represent
and warrant to Lender, that neither Original Borrower(s) nor any Guarantor have
any interest in or is anyway related to or affiliated with Purchaser or any
party holding and interest in Purchaser or the Property.

IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date
first above written.

          LENDER

LA JOLLA BANK, FSB
            BY: R.W. LOVELESS, AVP              PURCHASER

NETREIT
            BY: JACK K. HEILBRON, PRESIDENT             

CONSENT OF ORIGINAL BORROWER AND GUARANTORS
The undersigned Original Borrower and Guarantors consent to the execution and
delivery of this Agreement.
ORIGINAL BORROWER
MONTEREY PALMS SELF STORAGE, LLC
BY: SOVREN VENTURES II, LLC, MANAGING MEMBER OF
MONTEREY PALMS SELF STORAGE, LLC
BY: GRANITE SOVREN PARTNERS, LLC, MANAGING MEMBER OF
SOVREN VENTURES II, LLC
BY: GRANITE INVESTMENT GROUP, MANAGING MEMBER OF
GRANITE SOVREN PARTNERS. LLC

 

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