ex10_9.htm


    
       

      Exhibit 10.9


      


      


      


      


      


      


      


      


      


      


      


      CONSULTATION
REPORT OF

      


      UDF
X

      The
Fairness of the Financing Terms

      Between
United Development Funding III, L.P.

      and
United Development Funding X, L.P.,

      Dated
August 30, 2008

      


      


      


      Prepared
For:

      


      Mr.
Hollis Greenlaw

      President

      UMTH
Land Development, LP

      1702
N. Collins Boulevard, Suite 100

      Richardson,
TX  75080

      


      


      


      


      


      


      


      Prepared
By:

      


      JACKSON
CLABORN, INC.

      Real
Estate Consulting and Appraisal Services

      5800
W. Plano Parkway, Suite 220

      Plano,
TX 75093

      


      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      
        	
                Jackson
      Claborn, Inc.

              


      

      · Real Estate Consulting and
Appraisal Services ·

      · Plano, Texas · Southlake, Texas ·

      www.jacksonclaborn.com

      Jimmy H.
Jackson, MAI David Claborn, MAI

      Allen W.
Gardiner, SRA Dod W. Clapp, SRA

      


      August
30, 2008

      


      Mr.
Hollis Greenlaw

      President

      UMTH Land
Development, LP

      1812
Cindy Lane, Suite 200

      Bedford,
TX 76021

      


      
        	
                RE:

              	
                A
      consultation report of the fairness of the financing terms between United
      Development Funding III, L.P., and United Development Funding X, L.P.,
      dated August 30, 2008; our file number
  ___________

              


      

      


      Ladies
and Gentlemen:

      


      At your
request, we have performed a consulting assignment regarding the
above-referenced agreement as of August 30, 2008, subject to certain assumptions
and limiting conditions that are attached. Our employment was not based upon an
appraisal producing a specific value or a value range and it should also be
noted that this assignment should not be considered to be an appraisal report as
we are not providing our opinion as to the sales price of the subject property,
but only providing our opinion as to the fairness of the financing terms.
Furthermore, we have not inspected the subject property of the above-referenced
agreement.

      


      You have
requested our opinion as an independent advisor (as that term is defined in the
Prospectus of United Development Funding III, L.P. dated May 15, 2006) as to the
fairness of the terms of that certain note to be dated effective as of November
12, 2007 amongst and between United Development Funding III, L.P., a Delaware
limited partnership (“UDF III”) as Lender and United Development Funding X,
L.P., a Delaware limited partnership (“UDF X”) as Borrower (the “UDF X Note”)
and the subsequent amendment thereof dated August 26, 2008 entitled the First
Amendment to Secured Line of Credit Promissory Note (the “UDF X Note
Amendment”).  Pursuant to the terms of the UDF X Note, UDF III agreed
to advance to UDF X the amount of up to $70,000,000 at an annual interest rate
of 15.0%, which amount shall be due and payable along with accrued and unpaid
interest on September 30, 2012.  We issued a Fairness Opinion dated
October 1, 2007 with respect to the financing terms of this transaction and
deemed “...the terms of the UDF X Note are fair and at least as favorable to UDF
III as such transaction with an unaffiliated party in similar
circumstances.”

      


      
        


      

      Headquarters:
5800 W. Plano Parkway · Suite 220 · Plano, Texas 75093 · (972) 732-0051 · FAX (972)
733-1403

      Branch
Office: 1560 E. Southlake Blvd. · Suite 220 · Southlake, Texas 76092
· (817) 421-3833 · FAX (817)
421-3844

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      UMTH Land
Development, LP

      Page
Two

      August
30, 2008

      


      


      


      Subsequent
to rendering this opinion, Borrower and Lender have entered into the UDF X Note
Amendment where by the funding obligation under the UDF X Note will be reduced
from $70,000,000 to $25,000,000.  Other than the reduction in the
funding obligation, there are no other changes in terms or conditions of this
credit facility.  The credit facility shall still revolve allowing for
interest to accrue on a monthly basis which shall be compounded on an annual
basis if not paid in full on each anniversary date.  The security for
the loan shall remain to be all the assets and receivables held in UDF X,
including without limitation, the assignment of any liens and entity equity
interests pledged to UDF X in the course of its business.

      


      Since UDF
X is an “Affiliated Party”, any amendment or change to the original transaction
and credit facility requires UDF III to obtain a fairness opinion with respect
to the terms of the transaction as amended.

      


      We are a
full service real estate appraisal and consulting firm. As part of our real
estate appraisal and consulting services, we are regularly engaged in the
consultation with regard to real estate value and finance.

      


      We are
acting as an independent advisor to UDF III in connection with the UDF X Note
and will receive a fee for our services. The opinion fee is not contingent upon
the conclusions of our opinion. In addition, UMTH Land Development, L.P. has
agreed to indemnify us for certain liabilities arising out of our
engagement.

      


      In the
course of performing our review and analysis for rendering this opinion, we
have: (i) reviewed the details of the transaction with UDF X, (ii) reviewed the
terms of the UDF X Note, (iii) reviewed materials provided to us by members of
the senior management of UDF III with respect to the described transaction; (iv)
conducted discussions with members of the senior management of UDF III with
respect to the described transaction; and (v) conducted such other financial
studies, analyses and investigations and considered such other information as we
deemed appropriate.

      


      With
respect to the data and discussions relating to the transaction, we have
assumed, at the direction of management of UDF III and without independent
verification, that such data has been reasonably prepared on a basis reflecting
the best currently available estimates and judgments of UDF III. We have further
relied on the assurances of senior management of UDF III that they are unaware
of any facts that would make such information incomplete or
misleading.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      UMTH Land
Development, LP

      Page
Three

      August
30, 2008

      


      


      


      In
rendering our opinion, we have assumed and relied upon the accuracy and
completeness of the financial, legal, tax, operating and other information
provided to us by UDF III, and have not assumed responsibility for independently
verifying and have not independently verified such information. We have not
assumed any responsibility to perform, and have not performed, an independent
evaluation or appraisal of any of the respective assets or liabilities
(contingent or otherwise) involved in the contemplated transaction. In addition,
we have not assumed any obligation to conduct, and have not conducted, any
physical inspection of the property involved in the contemplated transaction.
Additionally, we have not been asked and did not consider the possible effects
of any litigation or other legal claims.

      


      Our
opinion is subject to the assumptions and conditions set forth herein, speaks
only as of the date hereof, is based on market, economic, financial, legal and
other conditions as they exist and information which we have been supplied as of
the date hereof, and is without regard to any market, economic, financial, legal
or other circumstances or events of any kind or nature which may exist or occur
after such date. We have not undertaken to reaffirm or revise this opinion or
otherwise comment upon any events occurring after the date hereof and do not
have any obligation to update, revise or reaffirm our opinion.

      Our
opinion expressed herein is provided for the information and assistance of the
senior management of UDF III in connection with the UDF X Note.

      


      Our
opinion does not address the merits of the underlying decision by UDF III to
undertake the UDF X Note, but solely addresses the fairness of the terms
associated therewith.

      


      Based on
and subject to the foregoing, including the various assumptions and limitations
set forth herein, it is our opinion that, as of the date hereof, that the terms
of the UDF X Note as amended by the UDF X Note Amendment are fair and at least
as favorable to UDF III as such transaction with an unaffiliated party in
similar circumstances.

      


      This
consulting assignment conforms to the requirements of the Code of Professional
Ethics and the Uniform Standards of Professional Appraisal Practice (USPAP)
established by the Appraisal Institute and instituted by the State of Texas. If
you have any questions regarding the contents of this report, please contact
either of the undersigned.

      


      Respectfully
submitted,

       

      /s/
Jackson Claborn, Inc.

      


      JACKSON
CLABORN, INC.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      CERTIFICATION -
CONSULTATION

      


      


      We
certify to the best of our knowledge and belief, that:

      


      
        	
                 
      

              	
                The
      statements of fact contained herein and upon which the opinions herein are
      based, are true and correct, subject to the assumption and limiting
      conditions explained in the report.

              


      

      


      
        	
                 
      

              	
                Employment
      in and compensation for providing this consultation are in no way
      contingent upon any value reported and we certify that we have no
      interest, either present or contemplated, in the subject property. We have
      no personal interest or bias with respect to the subject matter of this
      consultation report or the parties
involved.

              


      

      


      
        	
                 
      

              	
                This
      consultation report identifies all of the limiting conditions (imposed by
      the terms of my assignment or by the undersigned) affecting the analysis,
      opinions and conclusions contained in this
  report.

              


      

      


      
        	
                 
      

              	
                The
      analysis, opinions and/or conclusions, if any, contained in this report
      have been developed in accordance with the Code of Professional Ethics and
      Standards of Professional Practice of the Appraisal
    Institute.

              


      

      


      
        	
                 
      

              	
                The
      use of this consultation report is subject to the requirements of the
      Appraisal Institute relating to review by its duly authorized
      representatives.

              


      

      


      
        	
                 
      

              	
                No
      one other than the undersigned prepared the analysis, opinions or
      conclusions concerning real estate that are set forth in this consultation
      report.

              


      

      


      
        	
                 
      

              	
                Mr.
      Ernest E. Gatewood, III has not personally inspected the property that is
      the subject of this report.

              


      

      


      
        	
                 
      

              	
                We
      certify that this consultation assignment was not based on a requested
      minimum valuation, a specific valuation, or the approval of a
      loan.

              


      

      


      /s/
Jackson Claborn, Inc.

      


      JACKSON
CLABORN, INC.

      


      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      ASSUMPTIONS AND LIMITING
CONDITIONS

      


      This
consultation is expressly subject to the following assumptions and limiting
conditions:

      


      
        	
                 
      

              	
                1)

              	 	
                No
      responsibility is assumed for matters of legal nature. It is assumed that
      title to the property is marketable and the legal description furnished us
      is correct.

              


      

      


      
        	
                 
      

              	
                2)

              	 	
                The
      property is treated as though under responsible ownership and competent
      management and free and clear of all liens and
    encumbrances.

              


      

      


      
        	
                 
      

              	
                3)

              	 	
                The
      described physical condition of any improvements is based on visual
      inspection only. It is assumed that there are no hidden or unapparent
      physical conditions affecting value such as the existence of hazardous
      materials such as asbestos or any other potentially hazardous materials.
      No liability is assumed for the soundness of structural members, equipment
      or soil conditions, since no engineering tests were
  made.

              


      

      


      
        	
                 
      

              	
                4)

              	 	
                Improvements
      are considered to be within lot lines and in accordance with local zoning
      and building ordinances, as well as all applicable Federal, state and
      local environmental laws and regulations, except as noted herein. Any
      plats, diagrams or drawings provided are intended solely to facilitate
      understanding and aid to the reader in picturing the property and are not
      meant to be used as references in matters of survey, as no survey was made
      and no liability is assumed regarding questions of
  survey.

              


      

      


      
        	
                 
      

              	
                5)

              	 	
                It
      is assumed that all required private, Federal, state or local licenses,
      certificates of occupancy, consents or other legislative or administrative
      permissions required have been or can be readily obtained or renewed for
      any use on which the value estimate in this report is
    based.

              


      

      


      
        	
                 
      

              	
                6)

              	 	
                Any
      information received from public or private sources is believed to be
      reliable; however, no warranty is given for its
  accuracy.

              


      

      


      
        	
                 
      

              	
                7)

              	 	
                The
      authors shall not be required to give further consultation or testimony or
      appear in court, by reason of this consultation report with reference to
      the property described unless previous arrangements have been made to that
      effect.

              


      

      


      
        	
                 
      

              	
                8)

              	 	
                Disclosure
      of the contents of this consultation report is governed by the Bylaws and
      Regulations of the Appraisal Institute. Possession of this consultation
      report or a copy thereof or any part thereof, does not carry with it the
      right of publication, nor may it be used by anyone but the party for whom
      it has been prepared without the previous written consent of the
      appraisers and, in any event, only with proper written qualifications and
      only in its entirety.

              


      

      


      
        	
                 
      

              	
                9)

              	 	
                Neither
      all nor any part of the contents of this consultation report (especially
      conclusions as to value, the identity of the appraisers or the firm with
      which the appraiser is connected) shall be disseminated to the public
      through advertising, public relations, news, sales or other media without
      the prior written consent and approval of Jackson Claborn,
      Inc.

              


      

      


      
        	
                 
      

              	
                10)

              	 	
                Any
      opinions of value stated herein are based on the purchasing power of the
      dollar as of the date of this report, except as otherwise specified.
      Therefore, the opinion of value is considered reliable only as of the
      stated date of valuation.

              


      

      


      
        	
                 
      

              	
                11)

              	 	
                This
      consultation report is intended to be read and used as a whole and not in
      parts. Separation of any section or page from the main body of the
      consultation report is expressly forbidden and will be considered as
      invalidating the consultation.

              


      

      


      
        	
                 
      

              	
                12)

              	 	
                Any
      allocation of value of this consultation report between land and
      improvements applies only to this consultation and must not be used as
      part of any other appraisal and is invalid if so used. The value reported
      for any portion appraised, plus the value of all other portions may or may
      not equal the value of the entire parcel or tract considered as an
      entity.

              


      

      


      
        	
                 
      

              	
                13)

              	 	
                No
      responsibility is assumed for the accuracy of any descriptions of physical
      materials and conditions pertaining to the property or for any damages
      sustained in connection with actual or potential deficiencies or hazards
      such as, but not limited to, inadequacies or defects in the structure,
      design, mechanical equipment or utility services associated with the
      improvements; air or water pollution; noise; flooding; storms or wind;
      traffic and other neighborhood hazards; radon gas, asbestos, natural or
      artificial radiation or toxic substances of any description, whether on or
      off the premises.

              


      

      


      
        	
                 
      

              	
                14)

              	 	
                The
      opinions of value and/or lease rates contained within this consultation
      report are estimates. There is no guarantee, written or implied, that the
      subject will actually sell or lease for the estimated value/lease
      rate.

              


      

      


      
        	
                 
      

              	
                15)

              	 	
                The
      Americans with Disabilities Act ("ADA") became effective January 26, 1992.
      We have not made a specific compliance survey and analysis of this
      property to determine whether or not it is in conformity with the various
      detailed requirements of the ADA. Indeed, we have not been supplied with
      nor have we rendered a qualified opinion as to whether or not there are
      any "readily achievable" barrier removal items present. It is possible
      that a survey of the property together with a detailed analysis of the
      requirements of the ADA could reveal that the property is not in
      compliance with one or more of the requirements of the Act.  If
      so, this fact could have a negative affect upon the value of the
      property.  Since we have no direct evidence relating to this
      issue, we did not consider possible non-compliance with the requirements
      of ADA in estimating the value of the property.  Consequently,
      the subject property has been valued assuming compliance to
      ADA.  Should a professional survey
      prove non-compliance, we reserve the right to re-evaluate the
      property.