**Exhibit 10.18**

** **

**RECORDINGREQUESTED BYCHICAGO TITLE COMPANY**

** **

RECORDINGREQUESTED BYAND WHEN RECORDED RETURN TO:

 

L. Anthony Beall,EsquireTroutman Sanders LLPP.O. Box 1122Richmond, Virginia 23218-1122

 

 

59023906

 

 

**ASSUMPTION AGREEMENT**

** **

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** **

Freddie Mac Loan No. 487798287Waterford Place Apartments

 

**ASSUMPTIONAGREEMENT(for use with electronic mortgage documents only)Revision Date 7-15-09**

** **

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

 

**RECITALS**

** **

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

 

B.                       OriginalBorrower executed a promissory note evidencing the Loan, dated March 31,2008, in the original principal amount of $13,245,000.00, payable to OriginalLender (the “**Note**”). The OriginalGuarantor guaranteed payment of certain amounts due under the Note by executinga Guaranty dated March 31, 2008 (the “**OriginalGuaranty**”).

 

C.                       To securerepayment of the Loan, Original Borrower executed and delivered to OriginalLender a Multifamily Deed of Trust, Assignment of Rents, Security Agreement andFixture Filing (the “**Security Instrument**”)of even**date with the Note, whichis recorded in the Official Records in the County of Alameda, State ofCalifornia (the “**Land Records**”) asInstrument No. 2008-107745. Any capitalized terms used in this Agreementand 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 inconnection with the Loan that will be assumed by New Borrower, all as listed onExhibit B to this Agreement, are referred to collectively in thisAgreement as the “Loan Documents”.

 

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

 

**ASSUMPTION AGREEMENT**

**Multifamily - For Use with Electronic MortgageDocuments (7/15/2009)**

 

 

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

 

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

 

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

 

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

 

NOW, THEREFORE, in consideration of these premises, the mutualcovenants contained in this Agreement and other good and valuableconsideration, the receipt and sufficiency of which are acknowledged, theparties agree as follows:

 

1.                          Assumptionof Obligations.     New Borrowercovenants, promises and agrees that New Borrower, jointly and severally if morethan one, will unconditionally assume and be bound by all terms, provisions,and covenants of the Loan Documents set forth in Exhibit B to thisAgreement, as if New Borrower had been the original maker of the LoanDocuments. New Borrower will pay all sums to be paid and perform each and everyobligation to be performed by Original Borrower under and in accordance withthe terms and conditions of the Loan Documents.

 

2.                          Affirmationby New Borrower.     New Borrower agrees that the Loan Documentsset forth in Exhibit B to this Agreement are and will be and remainin full force and effect, enforceable against New Borrower in accordance withtheir terms, except as modified by Exhibit C to this Agreement. TheProperty will remain subject to the lien, charge and encumbrance of theSecurity Instrument. Nothing contained in this Agreement or done pursuant tothis Agreement will affect or be construed to affect the lien, charge, andencumbrance of the Security Instrument or the priority of the SecurityInstrument over other liens, charges and encumbrances. Nothing contained inthis Agreement or done pursuant to this Agreement will release or be construedto release or affect the liability of any party or parties who may now or afterthe date of this Agreement be liable under or on account of the Note and theSecurity Instrument, except as expressly provided in this Agreement. NewBorrower will be liable for the payment of all sums and the performance ofevery obligation required under the Loan Documents to the extent set forth inthe Loan Documents as modified by this Agreement.

 

3.                          Subordinationof Rights of Original Borrower and New Borrower.     Anyindebtedness of Original Borrower to New Borrower, or of New Borrower toOriginal Borrower, now or existing after the date of this Agreement, togetherwith any interest on such debt, is hereby subordinated to any indebtedness ofOriginal Borrower or New Borrower to the Noteholder under the Loan Documents.Any collection or receipts with respect to any such indebtedness of OriginalBorrower to New Borrower, or of New Borrower to Original Borrower, will becollected, enforced and received by New Borrower or Original Borrower (asapplicable) in

 

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trustfor the benefit of the Noteholder, and will be paid over to the Noteholder onaccount of the indebtedness of Original Borrower and New Borrower to theNoteholder, but without impairing or affecting in any manner the liability ofOriginal Borrower or New Borrower under the other provisions of the LoanDocuments and this Agreement. However, until the occurrence of an Event ofDefault under the Security Instrument, Original Borrower or New Borrower (asapplicable) will be entitled to retain for its own account all payments made onaccount of the principal of and interest on any such indebtedness; provided nosuch payment is made more than ten (10) days in advance of the due date.

 

4.                          Modificationof Note and Security Instrument.     New Borrower and Noteholder agree that theprovisions of the Loan Documents are modified as set forth on Exhibit Cto this Agreement.

 

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

 

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

 

7.                          Escrowsfor Taxes, Insurance and Other Charges.     On orprior to the execution of this Agreement, to ensure that sufficient funds areavailable for the payment of real estate taxes, an escrow account will be establishedwith Servicer, with payments to be made by New Borrower to such account in theamount required by Noteholder and/or Servicer. New Borrower will not berequired to establish and pay escrows for (i) fire, hazard or otherinsurance premiums, (ii) water and sewer charges and (iii) assessmentsor 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 NewBorrower’s failure to pay any Imposition. The Note is hereby amended as setforth in Exhibit C to evidence the personal liability of NewBorrower and New Guarantor (as defined below) for any taxes, hazard insurance,flood insurance, ground rent or such other charges or assessments for which noescrow is being collected, but which are not timely paid. By execution of thisAgreement, Original Borrower acknowledges and agrees that it relinquishes anyright, title or interest it has or may have in any escrow account held byServicer in connection with the Property.

 

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

 

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

 

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10.                   Representationsand Acknowledgements.     Original Borrower, New Borrower andNoteholder acknowledge that:

 

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

 

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

 

OriginalBorrower represents and warrants to Noteholder that:

 

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

 

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

 

c)                        OriginalBorrower has no claims, offsets, defenses, or counterclaims of any kind to itsperformance under, or Noteholder’s enforcement of, the Note and the other LoanDocuments; and to the extent any such counterclaims, setoffs, defenses or othercauses of action may exist, whether known or unknown, Original Borrower waivesall such items. Original Borrower acknowledges that all of Noteholder’s actionsin connection with the Loan have been in compliance with the terms of theapplicable Loan Documents, and Original Borrower acknowledges and agrees thatNoteholder has not breached or failed to perform any duty or obligation thatNoteholder may *owe*OriginalBorrower.

 

d)                       There areno suits or actions pending or, to the knowledge of Original Borrower afterdiligent inquiry threatened against Original Borrower which affect theenforcement or validity of the Note, the Security Instrument and/or the LoanDocuments.

 

11.                    AdditionalTransfers.     Notwithstanding the Noteholder’s consent tothe Transfer of the Property to New Borrower, New Borrower understands andagrees that such consent will in no way limit or operate as a waiver of theNoteholder’s continuing rights under Section 21 of the SecurityInstrument.

 

12.                    ContinuingObligations.     New Borrower will execute, acknowledge anddeliver an Operations and Maintenance Plan for mold and such other documents asNoteholder, or Servicer may require to document the Assumption described inthis Agreement and to more fully effectuate the provisions of this Agreement.The failure of New Borrower to comply with the additional obligations containedin this Section will constitute an Event of Default under the SecurityInstrument, and the Noteholder will be entitled to exercise all remediesavailable to it under the terms of the Loan Documents.

 

13.                    AdditionalObligations.

 

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

 

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agreesthat it will comply with the Additional Obligations set forth on Exhibit Dto this Agreement, if applicable.

 

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

 

14.                   Releaseof Original Borrower; Rights of Noteholder.

 

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

 

b)                       If at anytime all or any part of any payment by Original Borrower which has been appliedby the Noteholder to payment of the Loan is or must be rescinded, repaid orreturned by the Noteholder for any reason whatsoever (including, withoutlimitation, the application of any bankruptcy, insolvency or other law), forpurposes of this Agreement, to the extent that such payment is or must berescinded, repaid or returned, such payment will be deemed to have continued tobe due and payable, notwithstanding such application by the Noteholder and thisAgreement will continue to be effective as to such payment as though suchapplication by the Noteholder had not been made. Original Borrower and NewBorrower 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 originallybeen received by the Noteholder, notwithstanding any cancellation of the Note,release or satisfaction of the Security Instrument, or the cancellation of anyother Loan Document.

 

15.                   Expenses.     New Borrower’s execution of thisAgreement will constitute New Borrower’s agreement to pay all expenses incurredby the Noteholder in connection with this Assumption, including withoutlimitation the payment of any title endorsement costs, legal costs (includingin-house legal costs) attorney’s fees, and assumption fees required by theNoteholder.

 

16.                    Release.

 

a)                        Releaseof Original Borrower and Original Guarantor.     Noteholder and Servicer each fully,finally, and forever releases and discharges Original Borrower and OriginalGuarantor (collectively, the “**Original LoanParties**”), and their successors, assigns, members, managers,directors, officers, employees, agents and representatives from any and allactions, causes of action, claims, debts, demands, liabilities, obligations,and suits, of whatever kind or nature, in law or equity, that Noteholder andServicer have or in the future may have, whether known or unknown in respect ofthe Loan, the Loan Documents, or the acts or omissions of the Original LoanParties in respect of the Loan or the Loan Documents (the “**Released Claims**”). Noteholder and Serviceragree that the above release shall be effective as a full and final release ofeach 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

 

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16(a) shallbe deemed to be a release of the Original Loan Parties and their successors andassigns from, any liability and obligations of any Original Loan Party (i) arisingpursuant to this Agreement, (ii) resulting from the fraud or any materialmisrepresentation of any Original Loan Party, or (iii) arising from anyand all actions, causes of action, claims, debts, demands, liabilities,obligations, and suits, of whatever kind or nature, in law or equity, thatNoteholder or Servicer have or in the future may have, whether known or unknownin connection with the ownership or operation of Units 2, 3 and 4 as shown onthe Condominium Instruments.

 

b)                       Releaseof Lenders.     The Original LoanParties each fully, finally, and forever releases and discharges Noteholder andServicer, 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 Partieshave or in the future may have, whether known or unknown in respect of theLoan, the Loan Documents, or the acts or omissions of the Noteholder orServicer in respect of the Loan or the Loan Documents (the “**Lenders’ Released Claims**”). The OriginalLoan Parties each agree that the above release shall be effective as a full andfinal release of each and every matter specifically and generally referred toabove. Notwithstanding the foregoing, (i) the Lenders’ Released Claimsshall not include, and nothing contained in this Section 16(b) shallbe deemed to be a release of the Noteholder or Servicer and their successorsand assigns from, any liability and obligations of Noteholder or Service (i) arisingpursuant to this Agreement, or (ii) resulting from the fraud or anymaterial misrepresentation of Noteholder or Servicer.

 

c)                        GeneralRelease.    Each of the Original LoanParties, Noteholder and Servicer, having consulted with their respectivecounsel, is aware of the contents of Section 1542 of the Civil Code of theState of California. Section 1542 reads as follows:

 

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

 

Noteholderand Servicer each expressly waives and relinquishes all rights and benefitsunder that section and any law or legal principle of similar effect in any jurisdiction,with respect to the Released Claims. Noteholder has executed this Agreementvoluntarily, with full knowledge of its significance, and with the expressintention of effecting the legal consequences provided by a waiver ofCalifornia Civil Code Section 1542.

 

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

 

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17.                   Miscellaneous.

 

a)                        ThisAgreement will be binding upon and**willinure to the benefit of the parties to the Agreement and their respectiveheirs, successors and permitted assigns.

 

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

 

c)                        Time is ofthe essence of this Agreement.

 

d)                       ThisAgreement 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)                        ThisAgreement will be construed in accordance with the laws of the jurisdiction inwhich the Property is located.

 

f)                          ThisAgreement may be executed in counterparts, each of which will be deemed anoriginal, but all of which together will constitute one and the same document.

 

g)                       All noticesgiven pursuant to the Agreement must be in writing and will be effectivelygiven if personally delivered or, if mailed, postage prepaid, certified orregistered mail, return receipt requested, to the addresses of the parties setforth below or to such other address as any party subsequently may designate inwriting.

 

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

 

18.                   ExecutedOriginals.     An executed originalof this Agreement will be (i) attached permanently to the Note as anamendment to the Note, and (ii) recorded in the Land Records as amodification to the Security Instrument.

 

19.                   StateSpecific Requirements.     N/A.

 

**ATTACHED EXHIBITS.** The following Exhibitsare 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**] |

 

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| x Exhibit E |   | Modification to  Assumption Agreement Borrower – [**check box  if applicable**] |
|-------------|--------|--------------------------------------------------------------------------------------|

 

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

 

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|   | **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                                                     |

 

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**CALIFORNIAALL-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 thebasis of satisfactory evidence to be the person whose name is subscribed to thewithin instrument and acknowledged to me that he executed the same in hisauthorized capacity, and that by his signature on the instrument the person, orthe entity upon behalf of which the person acted, executed the instrument.

 

I certify under PENALTYOF PERJURY under the laws of the State of California that the foregoingparagraph is true and correct.

 

WITNESS my hand andofficial seal.

 
| **[SEAL]** | /s/ Christine Rodriguez |
|------------|-------------------------|
|       | Signature of Notary     |

 

**CALIFORNIAALL-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 thebasis of satisfactory evidence to be the person whose name is subscribed to thewithin instrument and acknowledged to me that he executed the same in hisauthorized capacity, and that by his signature on the instrument the person, orthe entity upon behalf of which the person acted, executed the instrument.

 

I certify under PENALTYOF PERJURY under the laws of the State of California that the foregoingparagraph is true and correct.

 

WITNESS my hand andofficial seal.

 
| **[SEAL]** | /s/ Christine Rodriguez |
|------------|-------------------------|
|       | Signature of Notary     |

 

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|   | **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                                                                    |

 

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**CALIFORNIAALL-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 thebasis of satisfactory evidence to be the person(s) whose name(s) is/aresubscribed to the within instrument and acknowledged to me that he/she/theyexecuted the same in his/her/their authorized capacity(ies), and that byhis/her/their signature(s) on the instrument the person(s), or the entityupon behalf of which the person(s) acted, executed the instrument.

 

I certify under PENALTYOF PERJURY under the laws of the State of California that the foregoingparagraph is true and correct.

 

WITNESS my hand andofficial seal.

 
| **[SEAL]** | /s/ Mary Lee Hackedorn |
|------------|------------------------|
|       | Signature of Notary    |

 

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|   | **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                |

 

**CALIFORNIAALL-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 thebasis of satisfactory evidence to be the person(s) whose name(s) is/aresubscribed to the within instrument and acknowledged to me that he/she/theyexecuted the same in his/her/their authorized capacity(ies), and that byhis/her/their signature(s) on the instrument the person(s), or the entityupon behalf of which the person(s) acted, executed the instrument.

 

I certify under PENALTYOF PERJURY under the laws of the State of California that the foregoingparagraph is true and correct.

 

WITNESS my hand andofficial seal.

 
| ** ** | /s/ Jennifer Michelle  Lam |
|------------|----------------------------|
|       | Signature of Notary        |
|       |                       |
|       | **[SEAL]**                 |

 

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|   | **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  |

 

**CALIFORNIAALL-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 thebasis of satisfactory evidence to be the person(s) whose name(s) is/aresubscribed to the within instrument and acknowledged to me that he/she/theyexecuted the same in his/her/their authorized capacity (ies), and that byhis/her/their signature(s) on the instrument the person(s), or the entityupon behalf of which the person(s) acted, executed the instrument.

 

I certify under PENALTYOF PERJURY under the laws of the State of California that the foregoingparagraph is true and correct.

 

WITNESS my hand andofficial seal.

 
|   |                |
|--------|---------------------|
|   | Signature of Notary |

 

14

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**CALIFORNIAALL-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 thebasis of satisfactory evidence to be the person(s) whose name(s) aresubscribed to the within instrument and acknowledged to me that they executedthe same in their authorized capacity (ies), and that by their signature(s) onthe instrument the person(s), or the entity upon behalf of which the person(s) acted,executed the instrument.

 

I certify under PENALTYOF PERJURY under the laws of the State of California that the foregoingparagraph is true and correct.

 

WITNESS my hand andofficial seal.

 
| **[SEAL]** | /s/ Christine Rodriguez |
|------------|-------------------------|
|       | Signature of Notary     |

 

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|   | **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             |

 

**CALIFORNIAALL-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 thebasis of satisfactory evidence to be the person(s) whose name(s) is/aresubscribed to the within instrument and acknowledged to me that he/she/theyexecuted the same in his/her/their authorized capacity (ies), and that byhis/her/their signature(s) on the instrument the person(s), or the entityupon behalf of which the person(s) acted, executed the instrument.

 

I certify under PENALTYOF PERJURY under the laws of the State of California that the foregoingparagraph is true and correct.

 

WITNESS my hand andofficial seal.

 
| **[SEAL]** | /s/ Mary Lee Hackedorn |
|------------|------------------------|
|       | Signature of Notary    |

 

16

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**EXHIBIT B**

 

**REQUIRED**

** **

**(List of Loan Documents that will be Assumed)**

** **

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

 

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

 

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**EXHIBIT C**

 

**REQUIRED**

 

**(Changes to Loan Documents)**

 

**Modifications to all LoanDocuments**

** **

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

 

All modificationscurrently set forth in Exhibit A to the Note and Exhibit B to theSecurity Instrument are hereby deleted.

 

**Modification to Note:**

** **

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

 

(iv)     Borrower fails to pay whendue the amount of any item below marked “Deferred” in accordance with the termsof 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 SecurityInstrument:**

** **

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

 

All Leases forresidential dwelling units shall be on forms approved by Lender, shall be forinitial terms of at least three months and not more than two years, andshall not includeoptions to purchase; provided,however, that as many as 2.5percent of the total unitsin the Mortgaged Property may be leased on a month-to-month basis as corporateunits at any one time.

 

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

 

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

 

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Addison, Texas), completeand accurate books of account and records (including copies of supporting billsand invoices) adequate to reflect correctly the operation of the MortgagedProperty, and copies of all written contracts, Leases, and other instrumentswhich affect the Mortgaged Property; provided, however, thateach of the following must be maintained on and available at the MortgagedProperty:

 

i.         lease files,

ii.        information regarding theleasing status of each unit,

iii.       documentation regardingmarketing efforts,

iv.       the Moisture ManagementPlan (MMP),

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

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

vii.      income compliance reportsfor income-restricted units.

 

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

 

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

 

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

 

(vii)    a Transfer of any interest ina Controlling Entity which, if such Controlling Entity were Borrower, wouldresult in an Event of Default under any of the Sections 21(e)(i) through(vi), above; provided, however, that the following willnot constitute an Event of Default:

 

A.       a Transfer under Section 21(e)(v) withrespect to Behringer Harvard Multifamily REIT I, Inc., a Marylandcorporation (“BH REIT I”), or

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

 

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

 

5.         A new Section 53 ishereby added as follows:

 

**“53.****   SUPPLEMENTAL LIEN PROVISIONS.**

 

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

 

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

 

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Senior Instrument, SeniorNote or any other Senior Loan Document after the expiration of any applicablecure period.

 

ii.        **Supplemental Instrument**means the Instrument to which this Exhibit Bis attached.

 

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

 

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

 

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

 

(b)       **Subordination of Lien**. Notwithstanding any provisions of thisSupplemental Instrument or the Supplemental Loan Documents to the contrary, itis understood and agreed that the lien, terms, covenants and conditions of thisSupplemental Instrument are and shall be subordinate in all respects, includingright of payment, to the indebtedness (“**SeniorIndebtedness**”) evidenced by a Multifamily Note dated April 1,2004, in the original principal amount of $52,000,000.00 (as modified oramended the “**Senior Note**”) made byor 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**”) toor for the benefit of Berkshire Mortgage Finance Limited Partnership, aMassachusetts limited partnership, which was recorded on April 15, 2004 inthe Office of Alameda County, California as Document No. 2004-159476 andwas assigned to the Federal Home Loan Mortgage Corporation (together with itssuccessors, assigns and transferees, the “**SeniorLender**”) 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 loandocument executed in connection with the Senior Indebtedness (the “**Senior Loan Documents**”); or (ii) anyloan document related to another loan in connection with the Mortgaged Property(regardless of whether Borrower has obtained Supplemental Lender’s approval ofthe placement of such lien on the Mortgaged Property), then such Event ofDefault shall be an Event of Default under this Supplemental Instrument andshall entitle Supplemental Lender to invoke any and all remedies permitted toSupplemental Lender by applicable law, the Supplemental Note, this SupplementalInstrument 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 Defaultunder the Supplemental Note, this Supplemental Instrument or any otherSupplemental Loan Document, such Event of Default shall be an Event of Defaultunder the terms of the Senior Instrument and shall entitle Senior Lender toinvoke any and all remedies permitted to Senior Lender by applicable law, theSenior Note, the Senior Instrument or any of the other Senior Loan Documents.

 

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(e)       **No Merger**.

 

(i)        It is the intent ofBorrower and Supplemental Lender that if Supplemental Lender obtains title tothe Mortgaged Property (by virtue of a foreclosure sale, a deed in lieu offoreclosure or otherwise) and Supplemental Lender is also or subsequently becomesthe holder of the Senior Note and Senior Instrument, Supplemental Lender’stitle interest and lien interest shall not automatically merge so as to effectan extinguishment of the Senior Instrument by operation of the doctrine ofmerger.

 

(ii)       It is the intent ofBorrower and Supplemental Lender that if Senior Lender obtains title to theMortgaged Property (by virtue of a foreclosure sale, a deed in lieu offoreclosure or otherwise) and Senior Lender is also or subsequently becomes theholder of the Supplemental Note and Supplemental Instrument, Senior Lender’stitle interest and lien interest shall not automatically merge so as to effectan extinguishment of this Supplemental Instrument by operation of the doctrineof merger.

 

(iii)      Borrower acknowledges andagrees that no course of conduct by Borrower, Supplemental Lender or SeniorLender subsequent to the date of this Supplemental Instrument shall be used todemonstrate any intent contrary to the express intent stated in this Section.Borrower further agrees that the holder of the Senior Note is a third partybeneficiary of the provisions of this Section and that no amendments,modifications, waivers or other limitations of this Section shall beeffective 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 sameperson or entity is both Senior Lender and Supplemental Lender, monthlypayments made by Borrower under the Senior Instrument from and after theeffective date of this Supplemental Instrument as deposits for the payment ofany Impositions shall be credited to the monthly deposits for the payment ofsuch Impositions under this Supplemental Instrument.

 

(ii)       For so long as the sameperson or entity is both Senior Lender and Supplemental Lender, monthlypayments made by Borrower from and after the effective date of thisSupplemental Instrument pursuant to the Replacement Reserve Agreement executedin connection with the Senior Note (“**SeniorReplacement Reserve Agreement**”) shall be credited to the monthlyamounts due by Borrower in connection with the Replacement Reserve Agreementexecuted in connection with the Supplemental Indebtedness (“**Supplemental Replacement Reserve Agreement**”).

 

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(g)       **Additional Collateral**.

 

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

 

(ii)       In addition, Borrowerhereby assigns and grants to Senior Lender a security interest in allImposition Deposits, all amounts in the Replacement Reserve Fund (as such termis defined in the Supplemental Replacement Reserve Agreement) and any amount inany repair escrow in connection with the Supplemental Indebtedness asadditional security for all of the Borrower’s obligations under the SeniorNote.

 

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

 

6.         A new Section 54 ishereby added as follows:

 

“**54. CONDOMINIUM PROVISIONS**.

 

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

 

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

 

(c)       Borrower represents andwarrants that none of the units in Unit 1 and its 97% tenancy-in-commoninterest 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

 

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

 

(d)       Borrower agrees that itshall own, operate and maintain the Mortgaged Property in accordance with theterms of this Instrument and operate the Mortgaged Property solely as a rentalapartment project.

 

(e)       The Mortgaged Propertygranted, conveyed and assigned to Lender hereunder shall include all rights,easements, rights of way, reservations and powers of the Borrower under theCondominium Act and the Condominium Instruments in Borrower’s capacity as ownerof the Mortgaged Property and as Declarant as well as any rights that Borrowermay have, in any capacity, under the Condominium Act and the CondominiumInstruments in addition to Borrower’s rights as owner of any of the units orthe Condominium, specifically including but not limited to all rights toapprove any amendments to the Condominium Instruments and all rights to expandthe Condominium.

 

(f)        Borrower herebyirrevocably constitutes and appoints Lender as Borrower’s proxy andattorney-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 toexercise all of the rights and powers of Borrower under the CondominiumInstruments without any liability therefor or thereunder (except for grossnegligence or willful misconduct). Borrower hereby instructs and grants andgives to Lender full power and authority to do and perform all and every actand thing whatsoever authorized, permitted, requisite or necessary to be doneby Borrower under the provisions of the Condominium Instruments to all intentsand purposes the same as Borrower might do, hereby ratifying and confirming allsuch attorney shall lawfully do or choose to do or be done by virtue hereof, itbeing understood and agreed that the aforesaid provisions impose no burden orobligation on the Lender to do or perform any act whatsoever. It shall be adefault under this Instrument if (i) Borrower terminates or revokes orattempts to terminate or revoke the aforesaid appointment of Lender as Borrower’sproxy or attorney-in-fact either permanently or as to any election in theCondominium Act or Condominium Instruments or (ii) Borrower attempts tomodify the terms of the Condominium Instruments without the prior writtenconsent of Lender. Notwithstanding anything in this paragraph to the contrary,the rights and powers of Borrower granted in this paragraph may not beexercised by Lender prior to the occurrence of an Event of Default.

 

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

 

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

 

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

 

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