Exhibit 10.18


 


RECORDING
REQUESTED BY

CHICAGO TITLE COMPANY


 


RECORDING
REQUESTED BY

AND WHEN RECORDED RETURN TO:


 


L. Anthony Beall,
Esquire

Troutman Sanders LLP

P.O. Box 1122

Richmond, Virginia 23218-1122


 


 


59023906


 


 


ASSUMPTION AGREEMENT


 





















 


Freddie Mac Loan No. 487798287

Waterford Place Apartments


 


ASSUMPTION
AGREEMENT

(for use with electronic mortgage documents only)

Revision Date 7-15-09


 


THIS ASSUMPTION AGREEMENT is made effective as of the 25th day of
August, 2009, by and among WATERFORD PLACE
APARTMENTS, LLC, a California limited liability company (“Original Borrower”); BEHRINGER HARVARD WATERFORD PLACE REIT, LLC,
a Delaware limited liability company (“New
Borrower”); and the FEDERAL HOME
LOAN MORTGAGE CORPORATION (“Noteholder”)
and is acknowledged and consented to by J. F.
SHEA CO., INC., a Nevada corporation (“Original Guarantor”).


 


RECITALS


 


A.                     Original
Borrower obtained a mortgage loan (the “Loan”)
from Deutsche Bank Berkshire Mortgage, Inc., a Delaware corporation (“Original Lender”), which loan is secured by
certain Land and Improvements (the “Property”),
located in Alameda County, California. The Land is more particularly described
in Exhibit A, attached to this Agreement.


 


B.                       Original
Borrower executed a promissory note evidencing the Loan, dated March 31,
2008, in the original principal amount of $13,245,000.00, payable to Original
Lender (the “Note”). The Original
Guarantor guaranteed payment of certain amounts due under the Note by executing
a Guaranty dated March 31, 2008 (the “Original
Guaranty”).


 


C.                       To secure
repayment of the Loan, Original Borrower executed and delivered to Original
Lender a Multifamily Deed of Trust, Assignment of Rents, Security Agreement and
Fixture Filing (the “Security Instrument”)
of even  date with the Note, which
is recorded in the Official Records in the County of Alameda, State of
California (the “Land Records”) as
Instrument No. 2008-107745. Any capitalized terms used in this Agreement
and not defined shall have the meaning ascribed to them in the Security Instrument.


 


D.                      The Note,
Security Instrument and any other document executed by Original Borrower in
connection with the Loan that will be assumed by New Borrower, all as listed on
Exhibit B to this Agreement, are referred to collectively in this
Agreement as the “Loan Documents”.


 


E.                        Original
Lender endorsed the Note to the order of the Noteholder and by instrument dated
March 31, 2008 filed for record on March 31, 2008 in the Land Records
as Instrument No. 2008-107746 sold, assigned and transferred all right, title
and interest of the Original Lender in and to the Security Instrument and the
Loan Documents to the Noteholder. The Noteholder is now the owner and holder of
the Note and the Loan is serviced by Deutsche Bank Berkshire Mortgage, Inc.,
a Delaware corporation (the “Servicer”).


 


ASSUMPTION AGREEMENT


Multifamily - For Use with Electronic Mortgage
Documents (7/15/2009)


 


 





















 


F.                        Original
Borrower has transferred or has agreed to transfer all of its right, title, and
interest in and to the Property to New Borrower (the “Transfer”).


 


G.                       New
Borrower has agreed to assume all of Original Borrower’s rights, obligations,
and liabilities created or arising under the Loan Documents, with certain
modifications, if any, as set forth in Exhibit C to this Agreement
(the “Assumption”).


 


H.                      Subject to
the full satisfaction of all conditions set forth below, the Noteholder has
agreed to consent to New Borrower’s Assumption.


 


I.                           Original
Borrower desires to be released by the Noteholder from any and all obligations
and liabilities under the terms and provisions of the Loan Documents, and
Noteholder has agreed to release Original Borrower from liability as provided
in Section 16 of this Agreement


 


NOW, THEREFORE, in consideration of these premises, the mutual
covenants contained in this Agreement and other good and valuable
consideration, the receipt and sufficiency of which are acknowledged, the
parties agree as follows:


 


1.                          Assumption
of Obligations.     New Borrower
covenants, promises and agrees that New Borrower, jointly and severally if more
than one, will unconditionally assume and be bound by all terms, provisions,
and covenants of the Loan Documents set forth in Exhibit B to this
Agreement, as if New Borrower had been the original maker of the Loan
Documents. New Borrower will pay all sums to be paid and perform each and every
obligation to be performed by Original Borrower under and in accordance with
the terms and conditions of the Loan Documents.


 


2.                          Affirmation
by New Borrower.     New Borrower agrees that the Loan Documents
set forth in Exhibit B to this Agreement are and will be and remain
in full force and effect, enforceable against New Borrower in accordance with
their terms, except as modified by Exhibit C to this Agreement. The
Property will remain subject to the lien, charge and encumbrance of the
Security Instrument. Nothing contained in this Agreement or done pursuant to
this Agreement will affect or be construed to affect the lien, charge, and
encumbrance of the Security Instrument or the priority of the Security
Instrument over other liens, charges and encumbrances. Nothing contained in
this Agreement or done pursuant to this Agreement will release or be construed
to release or affect the liability of any party or parties who may now or after
the date of this Agreement be liable under or on account of the Note and the
Security Instrument, except as expressly provided in this Agreement. New
Borrower will be liable for the payment of all sums and the performance of
every obligation required under the Loan Documents to the extent set forth in
the Loan Documents as modified by this Agreement.


 


3.                          Subordination
of Rights of Original Borrower and New Borrower.     Any
indebtedness of Original Borrower to New Borrower, or of New Borrower to
Original Borrower, now or existing after the date of this Agreement, together
with any interest on such debt, is hereby subordinated to any indebtedness of
Original Borrower or New Borrower to the Noteholder under the Loan Documents.
Any collection or receipts with respect to any such indebtedness of Original
Borrower to New Borrower, or of New Borrower to Original Borrower, will be
collected, enforced and received by New Borrower or Original Borrower (as
applicable) in


 


2





















 


trust
for the benefit of the Noteholder, and will be paid over to the Noteholder on
account of the indebtedness of Original Borrower and New Borrower to the
Noteholder, but without impairing or affecting in any manner the liability of
Original Borrower or New Borrower under the other provisions of the Loan
Documents and this Agreement. However, until the occurrence of an Event of
Default under the Security Instrument, Original Borrower or New Borrower (as
applicable) will be entitled to retain for its own account all payments made on
account of the principal of and interest on any such indebtedness; provided no
such payment is made more than ten (10) days in advance of the due date.


 


4.                          Modification
of Note and Security Instrument.     New Borrower and Noteholder agree that the
provisions of the Loan Documents are modified as set forth on Exhibit C
to this Agreement.


 


5.                          Replacement
Reserve.     New Borrower and Noteholder agree that a
Replacement Reserve Fund will be established with Servicer with payments to be
made by New Borrower to such account in the amount of Six Thousand Five Hundred
and 00/100 Dollars ($6,500.00) per month, in accordance with the terms and
provisions of the Replacement Reserve Agreement to be executed by New Borrower
and Noteholder on the same date as this Agreement.


 


6.                          Repairs.
    No Repairs are required and no Repair Escrow
will be established as of the date of this Agreement. Original Borrower
acknowledges and agrees that Noteholder is not holding any funds pursuant to
the Repair Escrow, if any, executed by Original Borrower.


 


7.                          Escrows
for Taxes, Insurance and Other Charges.     On or
prior to the execution of this Agreement, to ensure that sufficient funds are
available for the payment of real estate taxes, an escrow account will be established
with Servicer, with payments to be made by New Borrower to such account in the
amount required by Noteholder and/or Servicer. New Borrower will not be
required to establish and pay escrows for (i) fire, hazard or other
insurance premiums, (ii) water and sewer charges and (iii) assessments
or other charges (the “Impositions”); however, New Borrower and New Guarantor,
if any, will be personally liable for any loss or damage as the result of New
Borrower’s failure to pay any Imposition. The Note is hereby amended as set
forth in Exhibit C to evidence the personal liability of New
Borrower and New Guarantor (as defined below) for any taxes, hazard insurance,
flood insurance, ground rent or such other charges or assessments for which no
escrow is being collected, but which are not timely paid. By execution of this
Agreement, Original Borrower acknowledges and agrees that it relinquishes any
right, title or interest it has or may have in any escrow account held by
Servicer in connection with the Property.


 


8.                          Guaranty
Requirements.     On the date of execution of this Agreement,
Behringer Harvard Multifamily REIT I, Inc., a Maryland corporation
(jointly and severally if more than one, “New
Guarantor”) will execute and deliver to Noteholder the appropriate
version of the Guaranty (the “Guaranty”)
under which the New Guarantor guarantees the full and punctual payment when due
of the “Guaranteed Obligations” (as such term is defined in the Guaranty). The
Guaranty will provide that New Guarantor is personally liable for zero percent
(0%) of the outstanding principal balance of the Loan. New Guarantor
automatically will become liable for one hundred percent (100%) of all amounts
payable under the Loan Documents upon the occurrence of certain events more
specifically set forth in the Guaranty.


 


9.                          Original
Guaranty Released.     The original guaranty under which the
Original Guarantor guaranteed payments of certain amounts under the Loan
Documents (“Original Guaranty”) is
released and will not have any force or effect, all as more fully provided in Section 16
below.


 


3





















 


10.                   Representations
and Acknowledgements.     Original Borrower, New Borrower and
Noteholder acknowledge that:


 


a)                        As of the
date of this Agreement, the amount of the unpaid indebtedness under the Note is
Thirteen Million Seventeen Thousand One Hundred Forty-Two and 48/100 Dollars
($13,017,142.48).


 


b)                       Interest at
the rate set forth in the Note has been paid to Noteholder in full through and
including July 31, 2009.


 


Original
Borrower represents and warrants to Noteholder that:


 


a)                        All of the
representations and warranties in the Loan Documents are true as of the date on
which Original Borrower executes this Agreement.


 


b)                       No Event of
Default (or event which, with the giving of notice or the passage of time or
both, would be an Event of Default) has occurred or is continuing under the
Security Instrument.


 


c)                        Original
Borrower has no claims, offsets, defenses, or counterclaims of any kind to its
performance under, or Noteholder’s enforcement of, the Note and the other Loan
Documents; and to the extent any such counterclaims, setoffs, defenses or other
causes of action may exist, whether known or unknown, Original Borrower waives
all such items. Original Borrower acknowledges that all of Noteholder’s actions
in connection with the Loan have been in compliance with the terms of the
applicable Loan Documents, and Original Borrower acknowledges and agrees that
Noteholder has not breached or failed to perform any duty or obligation that
Noteholder may owe Original
Borrower.


 


d)                       There are
no suits or actions pending or, to the knowledge of Original Borrower after
diligent inquiry threatened against Original Borrower which affect the
enforcement or validity of the Note, the Security Instrument and/or the Loan
Documents.


 


11.                    Additional
Transfers.     Notwithstanding the Noteholder’s consent to
the Transfer of the Property to New Borrower, New Borrower understands and
agrees that such consent will in no way limit or operate as a waiver of the
Noteholder’s continuing rights under Section 21 of the Security
Instrument.


 


12.                    Continuing
Obligations.     New Borrower will execute, acknowledge and
deliver an Operations and Maintenance Plan for mold and such other documents as
Noteholder, or Servicer may require to document the Assumption described in
this Agreement and to more fully effectuate the provisions of this Agreement.
The failure of New Borrower to comply with the additional obligations contained
in this Section will constitute an Event of Default under the Security
Instrument, and the Noteholder will be entitled to exercise all remedies
available to it under the terms of the Loan Documents.


 


13.                    Additional
Obligations.


 


a)                        To induce
the Noteholder to consent to New Borrower’s Assumption, in addition to the
covenants and agreements set forth in the Loan Documents, New Borrower


 


4





















 


agrees
that it will comply with the Additional Obligations set forth on Exhibit D
to this Agreement, if applicable.


 


b)                       The failure
of New Borrower to comply with the Additional Obligations, if applicable, will
constitute an Event of Default under the Security Instrument, and the
Noteholder will be entitled to exercise all remedies available to it under the
terms of the Loan Documents.


 


14.                   Release
of Original Borrower; Rights of Noteholder.


 


a)                        Original
Borrower is released from liability under the terms and provisions of the Loan
Documents, all as more fully provided in Section 16 below. If any material
element of Original Borrower’s representations and warranties are materially
false or misleading, this release will be canceled and Original Borrower will
remain obligated under the Loan Documents as though there had been no release.


 


b)                       If at any
time all or any part of any payment by Original Borrower which has been applied
by the Noteholder to payment of the Loan is or must be rescinded, repaid or
returned by the Noteholder for any reason whatsoever (including, without
limitation, the application of any bankruptcy, insolvency or other law), for
purposes of this Agreement, to the extent that such payment is or must be
rescinded, repaid or returned, such payment will be deemed to have continued to
be due and payable, notwithstanding such application by the Noteholder and this
Agreement will continue to be effective as to such payment as though such
application by the Noteholder had not been made. Original Borrower and New
Borrower will each remain liable to the Noteholder for the amount so rescinded,
repaid, or returned to the same extent as if such amount had never originally
been received by the Noteholder, notwithstanding any cancellation of the Note,
release or satisfaction of the Security Instrument, or the cancellation of any
other Loan Document.


 


15.                   Expenses.     New Borrower’s execution of this
Agreement will constitute New Borrower’s agreement to pay all expenses incurred
by the Noteholder in connection with this Assumption, including without
limitation the payment of any title endorsement costs, legal costs (including
in-house legal costs) attorney’s fees, and assumption fees required by the
Noteholder.


 


16.                    Release.


 


a)                        Release
of Original Borrower and Original Guarantor.     Noteholder and Servicer each fully,
finally, and forever releases and discharges Original Borrower and Original
Guarantor (collectively, the “Original Loan
Parties”), and their successors, assigns, members, managers,
directors, officers, employees, agents and representatives from any and all
actions, causes of action, claims, debts, demands, liabilities, obligations,
and suits, of whatever kind or nature, in law or equity, that Noteholder and
Servicer have or in the future may have, whether known or unknown in respect of
the Loan, the Loan Documents, or the acts or omissions of the Original Loan
Parties in respect of the Loan or the Loan Documents (the “Released Claims”). Noteholder and Servicer
agree that the above release shall be effective as a full and final release of
each and every matter specifically and generally referred to above.
Notwithstanding the foregoing, (i) the Released Claims shall not include,
and nothing contained in this Section


 


5





















 


16(a) shall
be deemed to be a release of the Original Loan Parties and their successors and
assigns from, any liability and obligations of any Original Loan Party (i) arising
pursuant to this Agreement, (ii) resulting from the fraud or any material
misrepresentation of any Original Loan Party, or (iii) arising from any
and all actions, causes of action, claims, debts, demands, liabilities,
obligations, and suits, of whatever kind or nature, in law or equity, that
Noteholder or Servicer have or in the future may have, whether known or unknown
in connection with the ownership or operation of Units 2, 3 and 4 as shown on
the Condominium Instruments.


 


b)                       Release
of Lenders.     The Original Loan
Parties each fully, finally, and forever releases and discharges Noteholder and
Servicer, and their successors, assigns, members, managers, directors,
officers, employees, agents and representatives from any and all actions,
causes of action, claims, debts, demands, liabilities, obligations, and suits,
of whatever kind or nature, in law or equity, that the Original Loan Parties
have or in the future may have, whether known or unknown in respect of the
Loan, the Loan Documents, or the acts or omissions of the Noteholder or
Servicer in respect of the Loan or the Loan Documents (the “Lenders’ Released Claims”). The Original
Loan Parties each agree that the above release shall be effective as a full and
final release of each and every matter specifically and generally referred to
above. Notwithstanding the foregoing, (i) the Lenders’ Released Claims
shall not include, and nothing contained in this Section 16(b) shall
be deemed to be a release of the Noteholder or Servicer and their successors
and assigns from, any liability and obligations of Noteholder or Service (i) arising
pursuant to this Agreement, or (ii) resulting from the fraud or any
material misrepresentation of Noteholder or Servicer.


 


c)                        General
Release.    Each of the Original Loan
Parties, Noteholder and Servicer, having consulted with their respective
counsel, is aware of the contents of Section 1542 of the Civil Code of the
State of California. Section 1542 reads as follows:


 


Section 1542.
(General Release - Claims Extinguished.) A general release does not extend to
claims which the creditor does not know or suspect to exist in his or her favor
at the time of executing the release, which if known by him or her must have
materially affected his or her settlement with the debtor.


 


Noteholder
and Servicer each expressly waives and relinquishes all rights and benefits
under that section and any law or legal principle of similar effect in any jurisdiction,
with respect to the Released Claims. Noteholder has executed this Agreement
voluntarily, with full knowledge of its significance, and with the express
intention of effecting the legal consequences provided by a waiver of
California Civil Code Section 1542.


 


Each
of the Original Loan Parties expressly waives and relinquishes all rights and
benefits under that section and any law or legal principle of similar effect in
any jurisdiction, with respect to the Lenders’ Released Claims. Each of the Original
Loan Parties has executed this Agreement voluntarily, with full knowledge of
its significance, and with the express intention of effecting the legal
consequences provided by a waiver of California Civil Code Section 1542.


 


6





















 


17.                   Miscellaneous.


 


a)                        This
Agreement will be binding upon and  will
inure to the benefit of the parties to the Agreement and their respective
heirs, successors and permitted assigns.


 


b)                       Except as
expressly modified by this Agreement, the Note, the Security Instrument and all
other Loan Documents will be unchanged and remain in full force and effect, and
are hereby expressly approved, ratified and confirmed. No provision of this
Agreement that is held to be inoperative, unenforceable or invalid will affect
the remaining provisions, and to this end all provisions of this Agreement are
declared to be severable.


 


c)                        Time is of
the essence of this Agreement.


 


d)                       This
Agreement may not be changed orally, but only by an agreement in writing,
signed by the party against whom enforcement of any waiver, change,
modification or discharge is sought.


 


e)                        This
Agreement will be construed in accordance with the laws of the jurisdiction in
which the Property is located.


 


f)                          This
Agreement may be executed in counterparts, each of which will be deemed an
original, but all of which together will constitute one and the same document.


 


g)                       All notices
given pursuant to the Agreement must be in writing and will be effectively
given if personally delivered or, if mailed, postage prepaid, certified or
registered mail, return receipt requested, to the addresses of the parties set
forth below or to such other address as any party subsequently may designate in
writing.


 


h)                       The failure
of New Borrower to comply with the additional obligations contained in this
Agreement will constitute an Event of Default under the Security Instrument,
and the Noteholder will be entitled to exercise all remedies available to it
under the terms of the Loan Documents.


 


18.                   Executed
Originals.     An executed original
of this Agreement will be (i) attached permanently to the Note as an
amendment to the Note, and (ii) recorded in the Land Records as a
modification to the Security Instrument.


 


19.                   State
Specific Requirements.     N/A.


 


ATTACHED EXHIBITS. The following Exhibits
are attached to this Instrument:


 


	
  x Exhibit A

  	
   

  	
  Legal Description of
  the Land (required).

  
	
   

  	
   

  	
   

  
	
  x Exhibit B

  	
   

  	
  List of Loan Documents
  (required).

  
	
   

  	
   

  	
   

  
	
  x Exhibit C

  	
   

  	
  Modifications to Note
  and Security Instrument, (required).

  
	
   

  	
   

  	
   

  
	
  o Exhibit D

  	
   

  	
  Additional Obligations
  of New Borrower – [check box if applicable]

  



 


7





















 


	
  x Exhibit E

  	
   

  	
  Modification to
  Assumption Agreement Borrower – [check box
  if applicable]

  



 


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


 


8
















 


	
   

  	
  ORIGINAL
  BORROWER:

  
	
   

  	
   

  
	
   

  	
  WATERFORD PLACE APARTMENTS, LLC, a

  California limited liability company

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  Shea
  Properties Management Company, Inc.,

  a Delaware corporation, its manager

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ James G. Shontere

  
	
   

  	
   

  	
   

  	
  James G. Shontere

  
	
   

  	
   

  	
   

  	
  Secretary

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Robert R. O’Dell

  
	
   

  	
   

  	
   

  	
  Robert R. O’Dell

  
	
   

  	
   

  	
   

  	
  Treasurer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Address for Notice to Original Borrower:

  
	
   

  	
   

  
	
   

  	
  c/o J. F. Shea Co., Inc. 

  
	
   

  	
  655 Brea Canyon Road 

  
	
   

  	
  Walnut, California 91789

  



 


9

















 


CALIFORNIA
ALL-PURPOSE ACKNOWLEDGMENT


 


	
  State of California

  
	
   

  
	
  County of Los Angeles

  
	
   

  
	
  On August 14, 2009
  before me, Christine Rodriguez, Notary Public,

  
	
            DATE                              NAME,
  TITLE OF OFFICER- E.G. JANE DOE, NOTARY PUBLIC personally appeared

  
	
  James G. Shontere,

  
	
  NAME(S) OF
  SIGNER(S)

  



who proved to me on the
basis of satisfactory evidence to be the person whose name is subscribed to the
within instrument and acknowledged to me that he executed the same in his
authorized capacity, and that by his signature on the instrument the person, or
the entity upon behalf of which the person acted, executed the instrument.


 


I certify under PENALTY
OF PERJURY under the laws of the State of California that the foregoing
paragraph is true and correct.


 


WITNESS my hand and
official seal.


 


	
  [SEAL]

  	
  /s/ Christine Rodriguez

  
	
   

  	
  Signature of Notary

  



 


CALIFORNIA
ALL-PURPOSE ACKNOWLEDGMENT


 


	
  State of California

  
	
   

  
	
  County of Los Angeles

  
	
   

  
	
  On August 14, 2009
  before me, Christine Rodriguez, Notary Public,

  
	
            DATE                              NAME,
  TITLE OF OFFICER- E.G. JANE DOE, NOTARY PUBLIC personally appeared

  
	
  Robert R. O’Dell,

  
	
  NAME(S) OF
  SIGNER(S)

  



who proved to me on the
basis of satisfactory evidence to be the person whose name is subscribed to the
within instrument and acknowledged to me that he executed the same in his
authorized capacity, and that by his signature on the instrument the person, or
the entity upon behalf of which the person acted, executed the instrument.


 


I certify under PENALTY
OF PERJURY under the laws of the State of California that the foregoing
paragraph is true and correct.


 


WITNESS my hand and
official seal.


 


	
  [SEAL]

  	
  /s/ Christine Rodriguez

  
	
   

  	
  Signature of Notary

  



 


10

















 


	
   

  	
  NEW BORROWER:

  
	
   

  	
   

  
	
   

  	
  BEHRINGER HARVARD WATERFORD

  PLACE REIT, LLC, a Delaware limited liability

  company

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  Behringer
  Harvard Waterford Place Venture,

  LLC, a Delaware limited liability company, its

  manager

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  Behringer
  Harvard Waterford Place,

  LLC, a Delaware limited liability

  company, its manager

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
  /s/ Mark T. Alfieri

  
	
   

  	
   

  	
   

  	
   

  	
  Name: Mark T. Alfieri

  
	
   

  	
   

  	
   

  	
   

  	
  Title: Chief Operating
  Officer

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Tax identification number for New Borrower:

  
	
   

  	
  27-0318723

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Address for Notice to New Borrower:

  
	
   

  	
   

  
	
   

  	
  15601 Dallas Parkway, Suite 600 

  
	
   

  	
  Addison, Texas 75001

  



 


11

















 


CALIFORNIA
ALL-PURPOSE ACKNOWLEDGMENT


 


	
  State of Texas

  
	
   

  
	
  County of Dallas

  
	
   

  
	
  On August 19, 2009
  before me, Mary Lee Hackedorn, Notary Public,

  
	
            DATE                              NAME,
  TITLE OF OFFICER- E.G. JANE DOE, NOTARY PUBLIC personally appeared 

  
	
  Mark T. Alfieri,

  
	
  NAME(S) OF
  SIGNER(S)

  



who proved to me on the
basis of satisfactory evidence to be the person(s) whose name(s) is/are
subscribed to the within instrument and acknowledged to me that he/she/they
executed the same in his/her/their authorized capacity(ies), and that by
his/her/their signature(s) on the instrument the person(s), or the entity
upon behalf of which the person(s) acted, executed the instrument.


 


I certify under PENALTY
OF PERJURY under the laws of the State of California that the foregoing
paragraph is true and correct.


 


WITNESS my hand and
official seal.


 


	
  [SEAL]

  	
  /s/ Mary Lee Hackedorn

  
	
   

  	
  Signature of Notary

  



 


12

















 


	
   

  	
  CONSENTED
  TO BY NOTEHOLDER:

  
	
   

  	
   

  
	
   

  	
  FEDERAL HOME LOAN MORTGAGE

  CORPORATION

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ David J. Goozman

  
	
   

  	
   

  	
  Name: David J. Goozman

  
	
   

  	
   

  	
  Title: Manager of
  Multifamily Portfolio Services

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Address for Notice to
  Noteholder:

  
	
   

  	
   

  
	
   

  	
  8200 Jones Branch Drive

  
	
   

  	
  McLean, Virginia
  22102-3110

  



 


CALIFORNIA
ALL-PURPOSE ACKNOWLEDGMENT


 


	
  State of Virginia

  
	
   

  
	
  County of Fairfax

  
	
   

  
	
  On August 24, 2009
  before me, Jennifer Lam, Notary Public,

  
	
       DATE                                   NAME,
  TITLE OF OFFICER- E.G. JANE DOE, NOTARY PUBLIC personally appeared 

  
	
  David J. Goozman,

  
	
  NAME(S) OF
  SIGNER(S)

  



who proved to me on the
basis of satisfactory evidence to be the person(s) whose name(s) is/are
subscribed to the within instrument and acknowledged to me that he/she/they
executed the same in his/her/their authorized capacity(ies), and that by
his/her/their signature(s) on the instrument the person(s), or the entity
upon behalf of which the person(s) acted, executed the instrument.


 


I certify under PENALTY
OF PERJURY under the laws of the State of California that the foregoing
paragraph is true and correct.


 


WITNESS my hand and
official seal.


 


	
   

  	
  /s/ Jennifer Michelle
  Lam

  
	
   

  	
  Signature of Notary

  
	
   

  	
   

  
	
   

  	
  [SEAL]

  



 


13

















 


	
   

  	
  ACKNOWLEDGED
  AND CONSENTED TO:

  
	
   

  	
   

  
	
   

  	
  ORIGINAL
  GUARANTOR:

  
	
   

  	
   

  
	
   

  	
  J. F.
  SHEA CO., INC., a
  Nevada corporation

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ James G. Shontere

  
	
   

  	
   

  	
  James G. Shontere

  
	
   

  	
   

  	
  Secretary

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Robert R. O’Dell

  
	
   

  	
   

  	
  Robert R. O’Dell

  
	
   

  	
   

  	
  Treasurer

  
	
   

  	
   

  
	
   

  	
  Address for Notice to
  Original Guarantor:

  
	
   

  	
   

  
	
   

  	
  655 Brea Canyon Road

  Walnut, California 91789

  



 


CALIFORNIA
ALL-PURPOSE ACKNOWLEDGMENT


 


	
  State of
                                      

  
	
   

  
	
  County of
                                  

  
	
   

  
	
  On
                                before
  me,                                                                                                                                     ,

  
	
              DATE                              NAME,
  TITLE OF OFFICER- E.G. JANE DOE, NOTARY PUBLIC personally appeared

  
	
                                                                                                                                      
  ,

  
	
  NAME(S) OF
  SIGNER(S)

  



who proved to me on the
basis of satisfactory evidence to be the person(s) whose name(s) is/are
subscribed to the within instrument and acknowledged to me that he/she/they
executed the same in his/her/their authorized capacity (ies), and that by
his/her/their signature(s) on the instrument the person(s), or the entity
upon behalf of which the person(s) acted, executed the instrument.


 


I certify under PENALTY
OF PERJURY under the laws of the State of California that the foregoing
paragraph is true and correct.


 


WITNESS my hand and
official seal.


 


	
   

  	
   

  
	
   

  	
  Signature of Notary

  



 


14

















 


CALIFORNIA
ALL-PURPOSE ACKNOWLEDGMENT


 


	
  State of California

  
	
   

  
	
  County of Los Angeles

  
	
   

  
	
  On August 14, 2009
  before me, Christine Rodriguez, Notary Public,

  
	
             DATE                             NAME,
  TITLE OF OFFICER- E.G. JANE DOE, NOTARY PUBLIC personally appeared 

  
	
  James G. Shontere &
  Robert R. O’Dell,

  
	
  NAME(S) OF
  SIGNER(S)

  



who proved to me on the
basis of satisfactory evidence to be the person(s) whose name(s) are
subscribed to the within instrument and acknowledged to me that they executed
the same in their authorized capacity (ies), and that by their signature(s) on
the instrument the person(s), or the entity upon behalf of which the person(s) acted,
executed the instrument.


 


I certify under PENALTY
OF PERJURY under the laws of the State of California that the foregoing
paragraph is true and correct.


 


WITNESS my hand and
official seal.


 


	
  [SEAL]

  	
  /s/ Christine Rodriguez

  
	
   

  	
  Signature of Notary

  



 


15

















 


	
   

  	
  NEW
  GUARANTOR:

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  BEHRINGER HARVARD MULTIFAMILY

  REIT I, INC., a
  Maryland corporation

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Mark T. Alfieri

  
	
   

  	
   

  	
  Name: Mark T. Alfieri

  
	
   

  	
   

  	
  Title: Chief Operating
  Officer

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Address for Notice to
  New Guarantor:

  
	
   

  	
   

  
	
   

  	
  15601 Dallas Parkway,
  Suite 600

  Addison, Texas 75001

  



 


CALIFORNIA
ALL-PURPOSE ACKNOWLEDGMENT


 


	
  State of Texas

  
	
   

  
	
  County of Dallas

  
	
   

  
	
  On August 19, 2009
  before me, Mary Lee Hackedorn, Notary Public,

  
	
            DATE                              NAME,
  TITLE OF OFFICER- E.G. JANE DOE, NOTARY PUBLIC personally appeared 

  
	
  Mark T. Alfieri,

  
	
  NAME(S) OF
  SIGNER(S)

  



who proved to me on the
basis of satisfactory evidence to be the person(s) whose name(s) is/are
subscribed to the within instrument and acknowledged to me that he/she/they
executed the same in his/her/their authorized capacity (ies), and that by
his/her/their signature(s) on the instrument the person(s), or the entity
upon behalf of which the person(s) acted, executed the instrument.


 


I certify under PENALTY
OF PERJURY under the laws of the State of California that the foregoing
paragraph is true and correct.


 


WITNESS my hand and
official seal.


 


	
  [SEAL]

  	
  /s/ Mary Lee Hackedorn

  
	
   

  	
  Signature of Notary

  



 


16
















 


EXHIBIT B


 


REQUIRED


 


(List of Loan Documents that will be Assumed)


 


1.         Multifamily Note dated as
of March 31, 2008 in the original principal amount of $13,245,000.00 by
Original Borrower to Original Lender.


 


2.         Multifamily Deed of
Trust, Assignment of Rents, Security Agreement and Fixture Filing dated as of March 31,
2008, by Original Borrower for the benefit of Original Lender.


 


B-1

















 


EXHIBIT C


 


REQUIRED


 


(Changes to Loan Documents)


 


Modifications to all Loan
Documents


 


As used in the Loan
Documents, all references to Borrower will be deemed to refer to New Borrower.


 


All modifications
currently set forth in Exhibit A to the Note and Exhibit B to the
Security Instrument are hereby deleted.


 


Modification to Note:


 


1.         Section 9(c)(iv) is
deleted in its entirety and restated as follows:


 


(iv)     Borrower fails to pay when
due the amount of any item below marked “Deferred” in accordance with the terms
of the Security Instrument; provided however, that if no item is marked “Deferred”,
this Section 9(c)(iv) shall be of no force or effect.


 


	
  [Deferred]

  	
   

  	
  Hazard Insurance premiums or other insurance
  premiums,

  
	
  [Collect]

  	
   

  	
  Taxes,

  
	
  [Deferred]

  	
   

  	
  water and sewer charges (that could become a lien on
  the Mortgaged Property),

  
	
  [N/A]

  	
   

  	
  ground rents,

  
	
  [Deferred]

  	
   

  	
  assessments or other charges (that could become a
  lien on the Mortgaged Property)

  



 


Modifications to Security
Instrument:


 


1.         The second sentence of Section 4(e) is
modified to read as follows:


 


All Leases for
residential dwelling units shall be on forms approved by Lender, shall be for
initial terms of at least three months and not more than two years, and
shall not include
options to purchase; provided,  however, that as many as 2.5
percent of the total units
in the Mortgaged Property may be leased on a month-to-month basis as corporate
units at any one time.


 


2.         Section 14(a) is
modified to read as follows:


 


Borrower shall keep and
maintain at all times at the Mortgaged Property or the management agent’s
office, and upon Lender’s request shall make available at the Mortgaged
Property (or, at Borrower’s option, at the management agent’s office or at the
corporate offices of Behringer Harvard Multifamily Management services, LLC, in


 


C-1

















 


Addison, Texas), complete
and accurate books of account and records (including copies of supporting bills
and invoices) adequate to reflect correctly the operation of the Mortgaged
Property, and copies of all written contracts, Leases, and other instruments
which affect the Mortgaged Property; provided, however, that
each of the following must be maintained on and available at the Mortgaged
Property:


 


i.         lease files,


ii.        information regarding the
leasing status of each unit,


iii.       documentation regarding
marketing efforts,


iv.       the Moisture Management
Plan (MMP),


v.        all operations &  maintenance (O&M) plans,


vi.       lead-based paint (LBP)
compliance documentation, and


vii.      income compliance reports
for income-restricted units.


 


The books, records,
contracts, Leases and other instruments shall be subject to examination and
inspection by Lender at any reasonable time.


 


3.         Section 21(c)(vii) is
hereby deleted in its entirety.


 


4.         Section 21(e)(vii) is
modified to read as follows:


 


(vii)    a Transfer of any interest in
a Controlling Entity which, if such Controlling Entity were Borrower, would
result in an Event of Default under any of the Sections 21(e)(i) through
(vi), above; provided, however, that the following will
not constitute an Event of Default:


 


A.       a Transfer under Section 21(e)(v) with
respect to Behringer Harvard Multifamily REIT I, Inc., a Maryland
corporation (“BH REIT I”), or


B.        a Transfer under Section 21(e)(ii)(B) with
respect to Behringer Harvard Multifamily OP I LP, a Delaware limited partnership
(“BHMOP”),


 


but only if in each case (X) Behringer
Harvard Multifamily Advisors I LP, a Texas limited partnership (the “Advisor”)
is managing the day-to-day operations, either internally or externally, of BH
REIT I or BHMOP, as applicable, and (Y) there is not a Transfer of a
Controlling Interest in the Advisor; Provided, however, that
it will not be an Event of Default if a Transfer of the Advisor is made to BH
REIT I or BHMOP.


 


5.         A new Section 53 is
hereby added as follows:


 


“53.   SUPPLEMENTAL LIEN PROVISIONS.


 


(a)        Definitions. For purposes of this Section only, the
following terms have the meanings set forth below:


 


i.         Event of Default means an Event of Default
described in this Instrument and the Senior Instrument and if the Senior
Instrument is documented on the FNMA/FHLMC Uniform Instrument dated 1/77, any
breach by Borrower of any covenant or agreement in the


 


C-2

















 


Senior Instrument, Senior
Note or any other Senior Loan Document after the expiration of any applicable
cure period.


 


ii.        Supplemental Instrument means the Instrument to which this Exhibit B
is attached.


 


iii.       Supplemental Loan Documents means all documents relating to
the loan evidenced by the Supplemental Note.


 


iv.       Supplemental Note means the Multifamily Note secured by the
Supplemental Instrument.


 


v.        Supplemental Lender means the Lender named in this
Supplemental Instrument and its successors, assigns and transferees.


 


(b)       Subordination of Lien. Notwithstanding any provisions of this
Supplemental Instrument or the Supplemental Loan Documents to the contrary, it
is understood and agreed that the lien, terms, covenants and conditions of this
Supplemental Instrument are and shall be subordinate in all respects, including
right of payment, to the indebtedness (“Senior
Indebtedness”) evidenced by a Multifamily Note dated April 1,
2004, in the original principal amount of $52,000,000.00 (as modified or
amended the “Senior Note”) made by
or assumed by the Borrower and secured by a Multifamily Deed of Trust,
Assignment of Rents, Security Agreement and Fixture Filing, dated April 1,
2004 (the “Senior Instrument”) to
or for the benefit of Berkshire Mortgage Finance Limited Partnership, a
Massachusetts limited partnership, which was recorded on April 15, 2004 in
the Office of Alameda County, California as Document No. 2004-159476 and
was assigned to the Federal Home Loan Mortgage Corporation (together with its
successors, assigns and transferees, the “Senior
Lender”) by assignment dated April 1, 2004 and recorded on April 15,
2004 in the Office of Alameda County, California as Document No. 2004-159477.


 


(c)       Default Under Other Liens. If there is an Event of Default,
under (i) the Senior Note, the Senior Instrument or any other loan
document executed in connection with the Senior Indebtedness (the “Senior Loan Documents”); or (ii) any
loan document related to another loan in connection with the Mortgaged Property
(regardless of whether Borrower has obtained Supplemental Lender’s approval of
the placement of such lien on the Mortgaged Property), then such Event of
Default shall be an Event of Default under this Supplemental Instrument and
shall entitle Supplemental Lender to invoke any and all remedies permitted to
Supplemental Lender by applicable law, the Supplemental Note, this Supplemental
Instrument or any other Supplemental Loan Documents.


 


(d)       Cross Default of Senior Instrument with Supplemental Instrument.
As Borrower under both this Supplemental Instrument and the Senior Instrument,
Borrower hereby acknowledges and agrees that if there is an Event of Default
under the Supplemental Note, this Supplemental Instrument or any other
Supplemental Loan Document, such Event of Default shall be an Event of Default
under the terms of the Senior Instrument and shall entitle Senior Lender to
invoke any and all remedies permitted to Senior Lender by applicable law, the
Senior Note, the Senior Instrument or any of the other Senior Loan Documents.


 


C-3

















 


(e)       No Merger.


 


(i)        It is the intent of
Borrower and Supplemental Lender that if Supplemental Lender obtains title to
the Mortgaged Property (by virtue of a foreclosure sale, a deed in lieu of
foreclosure or otherwise) and Supplemental Lender is also or subsequently becomes
the holder of the Senior Note and Senior Instrument, Supplemental Lender’s
title interest and lien interest shall not automatically merge so as to effect
an extinguishment of the Senior Instrument by operation of the doctrine of
merger.


 


(ii)       It is the intent of
Borrower and Supplemental Lender that if Senior Lender obtains title to the
Mortgaged Property (by virtue of a foreclosure sale, a deed in lieu of
foreclosure or otherwise) and Senior Lender is also or subsequently becomes the
holder of the Supplemental Note and Supplemental Instrument, Senior Lender’s
title interest and lien interest shall not automatically merge so as to effect
an extinguishment of this Supplemental Instrument by operation of the doctrine
of merger.


 


(iii)      Borrower acknowledges and
agrees that no course of conduct by Borrower, Supplemental Lender or Senior
Lender subsequent to the date of this Supplemental Instrument shall be used to
demonstrate any intent contrary to the express intent stated in this Section.
Borrower further agrees that the holder of the Senior Note is a third party
beneficiary of the provisions of this Section and that no amendments,
modifications, waivers or other limitations of this Section shall be
effective without the prior written agreement of the holder of the Senior Note.


 


(f)        Collection of Escrows for Impositions and Replacement Reserves.


 


(i)        For so long as the same
person or entity is both Senior Lender and Supplemental Lender, monthly
payments made by Borrower under the Senior Instrument from and after the
effective date of this Supplemental Instrument as deposits for the payment of
any Impositions shall be credited to the monthly deposits for the payment of
such Impositions under this Supplemental Instrument.


 


(ii)       For so long as the same
person or entity is both Senior Lender and Supplemental Lender, monthly
payments made by Borrower from and after the effective date of this
Supplemental Instrument pursuant to the Replacement Reserve Agreement executed
in connection with the Senior Note (“Senior
Replacement Reserve Agreement”) shall be credited to the monthly
amounts due by Borrower in connection with the Replacement Reserve Agreement
executed in connection with the Supplemental Indebtedness (“Supplemental Replacement Reserve Agreement”).


 


C-4

















 


(g)       Additional Collateral.


 


(i)       Subject to Senior Lender’s
interest, Borrower hereby assigns and grants to Supplemental Lender a security
interest in all Imposition Deposits, all amounts in the Replacement Reserve
Fund (as such term is defined in the Senior Replacement Reserve Agreement) and
any amount in any repair escrow in connection with the Senior Indebtedness as
additional security for all of the Borrower’s obligations under the
Supplemental Note.


 


(ii)       In addition, Borrower
hereby assigns and grants to Senior Lender a security interest in all
Imposition Deposits, all amounts in the Replacement Reserve Fund (as such term
is defined in the Supplemental Replacement Reserve Agreement) and any amount in
any repair escrow in connection with the Supplemental Indebtedness as
additional security for all of the Borrower’s obligations under the Senior
Note.


 


(iii)      It is the intention of
Borrower that so long as the same person or entity is both Senior Lender and
Supplemental Lender, that all amounts deposited by Borrower in connection with
either the Senior Loan Documents, the Supplemental Loan Documents or both,
constitute collateral for the Indebtedness secured by the Supplemental
Instrument and the Senior Indebtedness secured by the Senior Instrument, with
the application of such amounts to such Senior Indebtedness or Indebtedness to
be at the discretion of Senior Lender and Supplemental Lender.”


 


6.         A new Section 54 is
hereby added as follows:


 


“54. CONDOMINIUM PROVISIONS.


 


(a)       Borrower represents and
warrants that, to the best of its knowledge, the Mortgaged Property is a
condominium (the “Condominium”) and constitutes all of Unit 1 (as defined in
the Condominium Instruments) and a 97% tenancy-in-common interest in the common
elements comprising the Waterford Place Condominiums, a Condominium, as
established under the applicable Condominium Act codified in California Civil
Code Sections 1350 et seq., as from time to time amended (the “Condominium Act”).
The Declaration, as recorded in the official records of Alameda County, State
of California as Document No. 2003653881, Bylaws and Plats establishing
and describing the Condominium, are collectively referred to below as the “Condominium
Instruments.”


 


(b)       Borrower hereby agrees that
the Condominium Instruments will not be modified or amended without the prior
written consent of Lender until the Indebtedness has been paid in full.


 


(c)       Borrower represents and
warrants that none of the units in Unit 1 and its 97% tenancy-in-common
interest in the common elements comprising the Condominium have been sold,
conveyed or encumbered or are subject to any agreement to convey or encumber.
Borrower agrees that it will not in any way


 


C-5

















 


pledge, sell, convey or
encumber or enter into a contract or agreement to pledge, sell, convey or
encumber any unit in Unit 1 or any of its 97% tenancy-in-common interest in the
common elements of the Condominium unless expressly agreed to in writing by Lender.


 


(d)       Borrower agrees that it
shall own, operate and maintain the Mortgaged Property in accordance with the
terms of this Instrument and operate the Mortgaged Property solely as a rental
apartment project.


 


(e)       The Mortgaged Property
granted, conveyed and assigned to Lender hereunder shall include all rights,
easements, rights of way, reservations and powers of the Borrower under the
Condominium Act and the Condominium Instruments in Borrower’s capacity as owner
of the Mortgaged Property and as Declarant as well as any rights that Borrower
may have, in any capacity, under the Condominium Act and the Condominium
Instruments in addition to Borrower’s rights as owner of any of the units or
the Condominium, specifically including but not limited to all rights to
approve any amendments to the Condominium Instruments and all rights to expand
the Condominium.


 


(f)        Borrower hereby
irrevocably constitutes and appoints Lender as Borrower’s proxy and
attorney-in-fact (which appointment shall be deemed coupled with an interest)
for and in its behalf to perform all of the obligations of Borrower and to
exercise all of the rights and powers of Borrower under the Condominium
Instruments without any liability therefor or thereunder (except for gross
negligence or willful misconduct). Borrower hereby instructs and grants and
gives to Lender full power and authority to do and perform all and every act
and thing whatsoever authorized, permitted, requisite or necessary to be done
by Borrower under the provisions of the Condominium Instruments to all intents
and purposes the same as Borrower might do, hereby ratifying and confirming all
such attorney shall lawfully do or choose to do or be done by virtue hereof, it
being understood and agreed that the aforesaid provisions impose no burden or
obligation on the Lender to do or perform any act whatsoever. It shall be a
default under this Instrument if (i) Borrower terminates or revokes or
attempts to terminate or revoke the aforesaid appointment of Lender as Borrower’s
proxy or attorney-in-fact either permanently or as to any election in the
Condominium Act or Condominium Instruments or (ii) Borrower attempts to
modify the terms of the Condominium Instruments without the prior written
consent of Lender. Notwithstanding anything in this paragraph to the contrary,
the rights and powers of Borrower granted in this paragraph may not be
exercised by Lender prior to the occurrence of an Event of Default.


 


(g)       Borrower hereby agrees that
it shall maintain insurance in accordance with Lender’s requirements on all of
the Mortgaged Property, including any common areas.


 


(h)       Nothing contained herein is
intended to or shall be construed to constitute Lender as the “Declarant” under
the Condominium Act and/or the Condominium Instruments or as owner of the
Condominium, a partner or joint venturer of Borrower.


 


C-6

















 


(i)       Borrower hereby agrees to
indemnify and hold Lender harmless from and against any and all losses, cost,
liabilities, or damages (including attorney’s fees and disbursements) arising
out of (i) the failure of the Borrower to comply with any state or local
law, ordinance, statute, or regulation by any governmental authority covering
the condominium at the Mortgaged Property; or (ii) any claim of any unit
owner or tenant of any unit owner as a result of any violation, breach,
misrepresentation, fraud, act, or omission of any obligation of Borrower, as
set forth in the Condominium Instruments.


 


C-7