**Exhibit 10.17**

 

**RECORDING REQUESTED BY**CHICAGO TITLE COMPANY

** **

RECORDING REQUESTED 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. 002669129Waterford Place Apartments

 

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

** **

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

 

**RECITALS**

** **

A.                     OriginalBorrower obtained a mortgage loan (the “**Loan**”)from Berkshire Mortgage Finance Limited Partnership, a Massachusetts limitedpartnership (“**Original Lender**”),which loan is secured by certain Land and Improvements (the “**Property**”), located in Alameda County,California. The Land is more particularly described in Exhibit A,attached to this Agreement.

 

B.                       OriginalBorrower executed a promissory note evidencing the Loan, dated April 1,2004,, in the original principal amount of $52,000,000.00, payable to OriginalLender (the “**Note**”). The OriginalGuarantor guaranteed payment of certain amounts due under the Note by executinga Guaranty dated April 1, 2004 (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. 2004-159476. Any capitalized terms used in this Agreementand not defined shall have the meaning ascribed to them in the SecurityInstrument.

 

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 datedApril 1, 2004 filed for record on April 15, 2004 in the Land Recordsas Instrument No. 2004-159477 sold, assigned and transferred all right,title and interest of the Original Lender in and to the Security Instrument andthe Loan Documents to the Noteholder. The Noteholder is now the owner andholder of the Note and the Loan is serviced by Deutsche Bank Berkshire Mortgage, Inc.,a Delaware corporation (the “**Servicer**”).

 

**ASSUMPTION AGREEMENT**

**Multifamily - For Use with Electronic 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, inconsideration of these premises, the mutual covenants contained in thisAgreement and other good and valuable consideration, the receipt andsufficiency of which are acknowledged,the parties agree as follows:

 

1.                          Assumptionof Obligations. New Borrower covenants, promises and agrees that NewBorrower, jointly and severally if more than one, will unconditionally assumeand be bound by all terms, provisions, and covenants of the Loan Documents setforth in Exhibit B to this Agreement, as if New Borrower had beenthe original maker of the Loan Documents. New Borrower will pay all sums to bepaid and perform each and every obligation to be performed by Original Borrowerunder and in accordance with the terms and conditions of the Loan Documents.

 

2.                          Affirmationby New Borrower. New Borrower agrees that the Loan Documents set forth in Exhibit Bto this Agreement are and will be and remain in full force and effect,enforceable against New Borrower in accordance with their terms, except asmodified by Exhibit C to this Agreement. The Property will remainsubject to the lien, charge and encumbrance of the Security Instrument. Nothingcontained in this Agreement or done pursuant to this Agreement will affect orbe construed to affect the lien, charge, and encumbrance of the SecurityInstrument or the priority of the Security Instrument over other liens, chargesand encumbrances. Nothing contained in this Agreement or done pursuant to thisAgreement will release or be construed to release or affect the liability ofany party or parties who may now or after the date of this Agreement be liableunder or on account of the Note and the Security Instrument, except asexpressly provided in this Agreement. New Borrower will be liable for thepayment of all sums and the performance of every obligation required under the LoanDocuments to the extent set forth in the Loan Documents as modified by thisAgreement.

 

3.                          Subordinationof Rights of Original Borrower and New Borrower. Any indebtedness ofOriginal Borrower to New Borrower, or of New Borrower to Original Borrower, nowor existing after the date of this Agreement, together with any interest onsuch debt, is hereby subordinated to any indebtedness of Original Borrower orNew Borrower to the Noteholder under the Loan Documents. Any collection orreceipts with respect to any such indebtedness of Original Borrower to NewBorrower, or of New Borrower to Original Borrower, will be collected, enforcedand received by New Borrower or Original Borrower (as applicable) in

 

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trust for the benefit ofthe Noteholder, and will be paid over to the Noteholder on account of theindebtedness of Original Borrower and New Borrower to the Noteholder, butwithout impairing or affecting in any manner the liability of Original Borroweror New Borrower under the other provisions of the Loan Documents and thisAgreement. However, until the occurrence of an Event of Default under theSecurity Instrument, Original Borrower or New Borrower (as applicable) will beentitled to retain for its own account all payments made on account of theprincipal of and interest on any such indebtedness; provided no such payment ismade 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 C to this Agreement.

 

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

 

6.                          Repairs. No Repairs are required and no Repair Escrow will be established asof the date of this Agreement. Original Borrower acknowledges and agrees thatNoteholder is not holding any funds pursuant to the Repair Escrow, if any, executedby Original Borrower.

 

7.                          Escrows for Taxes, Insurance and OtherCharges. On or prior to theexecution of this Agreement, to ensure that sufficient funds are available forthe payment of real estate taxes, an escrow account will be established withServicer, 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.                          Guaranty Requirements. On the date of execution of this Agreement,Behringer Harvard Multifamily REIT I, Inc., a Maryland corporation(jointly and severally if more than one, “**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.                          Original Guaranty 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 and Noteholderacknowledge that:

 

a)                          As of the date of this Agreement, theamount of the unpaid indebtedness under the Note is Forty-Seven Million ThreeHundred Ninety-Eight Thousand Six Hundred One and 91/100 Dollars($47,398,601.91).

 

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

 

Original Borrowerrepresents and warrants to Noteholder that:

 

a)                          All of the representations and warrantiesin the Loan Documents are true as of the date on which Original Borrowerexecutes this Agreement.

 

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

 

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

 

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

 

11.                    AdditionalTransfers. Notwithstanding the Noteholder’s consent to the Transfer of theProperty to New Borrower, New Borrower understands and agrees that such consentwill in no way limit or operate as a waiver of the Noteholder’s continuingrights under Section 21 of the Security Instrument.

 

12.                    ContinuingObligations. New Borrower will execute, acknowledge and deliver anOperations 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 induce the Noteholder to consent toNew Borrower’s Assumption, in addition to the covenants and agreements setforth in the Loan Documents, New Borrower

 

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agrees that it willcomply with the Additional Obligations set forth on Exhibit D tothis 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.                    Release ofOriginal 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 this Agreement will constitute New Borrower’sagreement to pay all expenses incurred by the Noteholder in connection withthis Assumption, including without limitation the payment of any titleendorsement costs, legal costs (including in-house legal costs) attorney’sfees, and assumption fees required by the Noteholder.

 

16.                    Release.

 

a)                        Releaseof Original Borrower and Original Guarantor. Noteholder and Servicer eachfully, finally, and forever releases and discharges Original Borrower andOriginal Guarantor (collectively, the “**OriginalLoan Parties**”), 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 Loan Partiesin respect of the Loan or the Loan Documents (the “**Released Claims**”). Noteholder and Servicer agree that theabove release shall be effective as a full and final release of each and everymatter specifically and generally referred to above. Notwithstanding theforegoing, (i) the Released Claims shall not include, and nothingcontained in this Section

 

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16(a) shall bedeemed 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 Loan Parties each fully, finally, and foreverreleases and discharges Noteholder and Servicer, and their successors, assigns,members, managers, directors, officers, employees, agents and representativesfrom any and all actions, causes of action, claims, debts, demands,liabilities, obligations, and suits, of whatever kind or nature, in law orequity, that the Original Loan Parties have or in the future may have, whetherknown or unknown in respect of the Loan, the Loan Documents, or the acts oromissions of the Noteholder or Servicer in respect of the Loan or the LoanDocuments (the “**Lenders’ Released Claims**”).The Original Loan Parties each agree that the above release shall be effectiveas a full and final release of each and every matter specifically and generallyreferred to above. Notwithstanding the foregoing, (i) the Lenders’Released Claims shall 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 Loan Parties, Noteholder and Servicer, havingconsulted with their respective counsel, is aware of the contents of Section 1542of the Civil Code of the State of California. Section 1542 reads as follows:

 

**Section 1542.(General Release - Claims Extinguished.) A general release does not extend 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.**

 

Noteholder and Servicereach expressly waives and relinquishes all rights and benefits under thatsection 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.

 

Each of the Original LoanParties expressly waives and relinquishes all rights and benefits under thatsection and any law or legal principle of similar effect in any jurisdiction,with respect to the Lenders’ Released Claims. Each of the Original Loan Partieshas executed this Agreement voluntarily, with full knowledge of itssignificance, 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 original of this Agreement will be (i) attachedpermanently to the Note as an amendment to the Note, and (ii) recorded inthe Land Records as a modification to the Security Instrument.

 

19.                    StateSpecific Requirements. N/A.

 

**ATTACHEDEXHIBITS.** The following Exhibits are attached to thisInstrument:

 
| 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 WITNESSWHEREOF, the parties have executed this Agreement as of the date 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 toOriginal Borrower:

 

c/o J. F. Shea Co., Inc.655 Brea Canyon Road Walnut, California 91789

 

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** **

**CALIFORNIA ALL-PURPOSE ACKNOWLEDGMENT**

 
| State of California                                                                                   |                                                                      |
|-------------------------------------------------------------------------------------------------------|---------------------------------------------------------------------------|
|                                                                                                  |                                                                      |
| County of Los Angeles                                                                                 |                                                                      |
|                                                                                                  |                                                                      |
| On August 14, 2009  before me,                                                                   | Christine Rodriguez,  Notary Public,                                      |
|                  DATE | NAME, TITLE OF OFFICER-  E.G. JANE DOE, NOTARY PUBLIC personally appeared |
| James G. Shontere,                                                                                    |
| NAME(S) OF  SIGNER(S)                                                                            |

who proved to me on 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 and officialseal.

 

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

 

 

**CALIFORNIA ALL-PURPOSE ACKNOWLEDGMENT**

 
| State of California                                                                                   |                                                                      |
|-------------------------------------------------------------------------------------------------------|---------------------------------------------------------------------------|
|                                                                                                  |                                                                      |
| County of Los Angeles                                                                                 |                                                                      |
|                                                                                                  |                                                                      |
| On August 14, 2009  before me,                                                                   | Christine Rodriguez,  Notary Public,                                      |
|                  DATE | NAME, TITLE OF OFFICER-  E.G. JANE DOE, NOTARY PUBLIC personally appeared |
| Robert R. O’Dell,                                                                                |
| NAME(S) OF  SIGNER(S)                                                                            |

who proved to me on 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/ 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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** **

**CALIFORNIA ALL-PURPOSE ACKNOWLEDGMENT**

 
| State of Texas                                                                                              |                                                                      |
|-------------------------------------------------------------------------------------------------------------|---------------------------------------------------------------------------|
|                                                                                                        |                                                                      |
| County of Dallas                                                                                            |                                                                      |
|                                                                                                        |                                                                      |
| On August 19, 2009  before me,                                                                         | Mary Lee Hackedorn, Notary  Public,                                       |
|                   DATE | NAME, TITLE OF OFFICER-  E.G. JANE DOE, NOTARY PUBLIC personally appeared |
| Mark T. Alfieri,                                                                                            |
| NAME(S) OF  SIGNER(S)                                                                                  |

who proved to me on 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 |

 

 

**CALIFORNIA ALL-PURPOSE ACKNOWLEDGMENT**

 
| State of Virginia                                                                   |                                                                      |
|-------------------------------------------------------------------------------------|---------------------------------------------------------------------------|
|                                                                                |                                                                      |
| County of Fairfax                                                                   |                                                                      |
|                                                                                |                                                                      |
| On August 24, 2009  before me,                                                 | Jennifer Lam, Notary  Public,                                             |
|               DATE | NAME, TITLE OF OFFICER-  E.G. JANE DOE, NOTARY PUBLIC personally appeared |
| David J. Goozman,                                                                   |
| NAME(S) OF  SIGNER(S)                                                          |

who proved to me on 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  GURANTOR:**                         |
| ** ** | ** **                                      |
| ** ** | **J. F.  SHEA CO., INC.,**a  Nevada corporation |
| ** ** | ** **                                      |
| ** ** | ** **                                      |
|       | By:                                             | /s/ James G. Shontere |
|       |                                            | James G. Shontere |
|       |                                            | Secretary |
|       |                                            |   |
|       |                                            |   |
|       | By:                                             | /s/ Robert R. O’Dell |
|       |                                            | Robert R. O’Dell |
|       |                                            | Treasurer |
|       |                                            |   |
|       | Address for Notice to  Original Guarantor:      |
|       |                                            |
|       | 655 Brea Canyon Road  Walnut, California 91789  |

** **

** **

**CALIFORNIA ALL-PURPOSE ACKNOWLEDGMENT**

 
| State of 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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**CALIFORNIA ALL-PURPOSEACKNOWLEDGMENT**

 
| State of                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| County of                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| On                                      before  me,                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |                                                                                                                        , |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        | DATE                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        | NAME, TITLE OF OFFICER- E.G. JANE DOE, NOTARY PUBLIC  personally appeared |
|                                                                                                                        , |
| NAME(S) OF SIGNER(S)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |  |

who proved to me on the basis of satisfactory evidenceto be the person(s) whose name(s) is/are subscribed to the withininstrument and acknowledged to me that he/she/they executed the same inhis/her/their authorized capacity, and that by his/her/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 PENALTY OF PERJURY under the laws ofthe State of California that the foregoing paragraph is true and correct.

 

WITNESS my hand and official seal.

 

 
|   |                |
|--------|---------------------|
|   | 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             |

 

 

**CALIFORNIA ALL-PURPOSEACKNOWLEDGMENT**

 
| State of Texas                     |                               |
|------------------------------------|------------------------------------|
|                               |                               |
| County of Dallas                   |                               |
|                               |                               |
| On August 19, 2009 before me, | Mary Lee Hackedorn, Notary Public, |
|                               | DATE                               | NAME, TITLE OF OFFICER- E.G. JANE DOE, NOTARY PUBLIC  personally appeared |
| Mark T. Alfieri,                   |
| NAME(S) OF SIGNER(S)          |
|                                    |                                    |  |

who proved to me on the basis of satisfactory evidenceto be the person(s) whose name(s) is/are subscribed to the withininstrument and acknowledged to me that he/she/they executed the same inhis/her/their authorized capacity (ies), and that by his/her/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 PENALTY OF PERJURY under the laws ofthe State of California that the foregoing paragraph is true and correct.

 

WITNESS my hand and official seal.

 

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

 

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**EXHIBITB**

 

**REQUIRED**

 

**(Listof Loan Documents that will be Assumed)**

 

1.                          MultifamilyNote dated as of April 1, 2004 in the original principal amount of$52,000,000.00 by Original Borrower to Original Lender.

 

2.                          MultifamilyDeed of Trust, Assignment of Rents, Security Agreement and Fixture Filing datedas of April 1, 2004, by Original Borrower for the benefit of OriginalLender.

 

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**EXHIBITC**

 

**REQUIRED**

 

**(Changesto Loan Documents)**

 

**Modifications to all LoanDocuments**

** **

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

 

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

 

**Modification to Note:**

** **

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

 

(iv)                Borrowerfails to pay when due the amount of any item below marked “Deferred” inaccordance with the terms of the Security Instrument; provided however, that ifno item is marked “Deferred”, this Section 9(c)(iv) shall be of noforce 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.                          Thesecond sentence of Section 4(e) is modified to read as follows:

 

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

 

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

 

Borrower shall keep and maintain at all times at theMortgaged Property or the management agent’s office, and upon Lender’s requestshall make available at the Mortgaged Property (or, at Borrower’s option, atthe management agent’s office or at the corporate offices of Behringer HarvardMultifamily Management Services, LLC, in Addison, Texas), complete and accuratebooks of account and records (including copies

 

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of supporting bills and invoices) adequate to reflectcorrectly the operation of the Mortgaged Property, and copies of all writtencontacts, Leases, and other instruments which affect the Mortgaged Property; provided, however,that each of the following must be maintained on and available at theMortgaged Property:

 

i.                            leasefiles,

ii.                         informationregarding the leasing status of each unit,

iii.                      documentationregarding marketing efforts,

iv.                     theMoisture Management Plan (MMP),

v.                        alloperations & maintenance (O&M) plans,

vi.                     lead-basedpaint (LBP) compliance documentation, and

vii.                  incomecompliance reports for income-restricted units.

 

The books, records, contracts, Leases and otherinstruments shall be subject to examination and inspection by Lender at anyreasonable time.

 

3.                          SectionsI9(a), (b) and (c) of the Security Instrument are deleted and replacedwith the following:

 

(a)                    Borrowershall keep the Improvements insured at all times against such hazards as Lendermay from time to time require, which insurance shall include but not be limitedto coverage against loss by fire, windstorm and allied perils, general boilerand machinery coverage, and business interruption including loss of rentalvalue insurance for the Mortgaged Property with extra expense insurance. IfLender so requires, such insurance shall also include sinkhole insurance, minesubsidence insurance, earthquake insurance, and, if the Mortgaged Property doesnot conform to applicable zoning or land use laws, building ordinance or lawcoverage. In the event any updated reports or other documentation arereasonably required by Lender in order to determine whether such additionalinsurance is necessary or prudent, Borrower shall pay for all suchdocumentation at its sole cost and expense. Borrower acknowledges and agreesthat Lender’s insurance requirements may change from time to time throughoutthe term of the Indebtedness. If any of the Improvements is located in an areaidentified by the Federal Emergency Management Agency (or any successor to thatagency) as an area having special flood hazards, Borrower shall insure suchImprovements against loss by flood. All insurance required pursuant to this Section 19(a) shallbe referred to as “Hazard Insurance.” All policies of Hazard Insurance mustinclude a non-contributing, non-reporting mortgage clause in favor of, and in aform approved by, Lender.

 

(b)                   Allpremiums on insurance policies required under this Section 19 shall bepaid in the manner provided in Section 7, unless Lender has designated inwriting another method of payment. All such policies shall also be in a formapproved by Lender. Borrower shall deliver to Lender a legible copy of eachinsurance policy (or duplicate original) and Borrower shall promptly deliver toLender a copy of all renewal and other notices received by Borrower withrespect to the policies and all receipts for paid premiums. At least 5 daysprior to the expiration date of any insurance policy, Borrower shall deliver toLender evidence acceptable to Lender that the policy has been renewed. IfBorrower has not delivered a legible copy of each renewal policy (or a duplicateoriginal) prior to the expiration date of any

 

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insurance policy, Borrower shall deliver a legiblecopy of each renewal policy (or a duplicate original) in a form satisfactory toLender within 120 days after the expiration date of the original policy.

 

(c)                    Borrowershall maintain at all times commercial general liability insurance, workers,compensation insurance and such other liability, errors and omissions andfidelity insurance coverages as Lender may from time to time require. Allpolicies for general liability insurance must contain a standard additionalinsured provision, in favor of, and in a form approved by, Lender.

 

4.                          Section 21(c)(vii) is herebydeleted in its entirety.

 

5.                          Section 21(e)(vii) is modified toread as follows:

 

(vii)             a Transfer of any interest in a ControllingEntity which, if such Controlling Entity were Borrower, would result in anEvent of Default under any of the Sections 2l(e)(i) through (vi), above; provided,however, that the following will not constitute an Event ofDefault:

 

A.                      a Transfer under Section 2l(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 limitedpartnership (“BHMOP”),

 

but only if in each case (X) Behringer HarvardMultifamily Advisors I LP, a Texas limited partnership (the “Advisor”) ismanaging the day-to-day operations, either internally or externally, of BH REITI 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.

 

6.                          Anew Section 53 is hereby added as follows:

 

“**53.****          ****CONDOMINIUM PROVISIONS.**

 

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

 

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

 

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(c)                      Borrowerrepresents and warrants that none of the units in Unit 1 and its 97%tenancy-in-common interest in the common elements comprising the Condominiumhave been sold, conveyed or encumbered or are subject to any agreement toconvey or encumber. Borrower agrees that it will not in any way pledge, sell,convey or encumber or enter into a contract or agreement to pledge, sell,convey or encumber any unit in Unit 1 or any of its 97% tenancy-in-commoninterest in the common elements of the Condominium unless expressly agreed toin 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 hereby irrevocablyconstitutes and appoints Lender as Borrower’s proxy and attorney-in-fact (whichappointment shall be deemed coupled with an interest) for and in its behalf toperform all of the obligations of Borrower and to exercise all of the rightsand powers of Borrower under the Condominium Instruments without any liabilitytherefor or thereunder (except for gross negligence or willful misconduct).Borrower hereby instructs and grants and gives to Lender full power andauthority to do and perform all and every act and thing whatsoever authorized,permitted, requisite or necessary to be done by Borrower under the provisionsof the Condominium Instruments to all intents and purposes the same as Borrowermight do, hereby ratifying and confirming all such attorney shall lawfully door choose to do or be done by virtue hereof, it being understood and agreedthat the aforesaid provisions impose no burden or obligation on the Lender todo or perform any act whatsoever. It shall be a default under this Instrumentif (i) Borrower terminates or revokes or attempts to terminate or revokethe aforesaid appointment of Lender as Borrower’s proxy or attorney-in-facteither permanently or as to any election in the Condominium Act or CondominiumInstruments or (ii) Borrower attempts to modify the terms of theCondominium Instruments without the prior written consent of Lender.Notwithstanding anything in this paragraph to the contrary, the rights andpowers of Borrower granted in this paragraph may not be exercised by Lenderprior 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.

 

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(h)*                    *Nothingcontained herein is intended to or shall be construed to constitute Lender asthe “Declarant” under the Condominium Act and/or the Condominium Instruments oras owner of the Condominium, a partner or joint venturer of Borrower.

 

(i)                         Borrowerhereby agrees to indemnify and hold Lender harmless from and against any andall losses, cost, liabilities, or damages (including attorney’s fees anddisbursements) arising out of (i) the failure of the Borrower to complywith any state or local law, ordinance, statute, or regulation by anygovernmental authority covering the condominium at the Mortgaged Property; or (ii) anyclaim of any unit owner or tenant of any unit owner as a result of anyviolation, breach, misrepresentation, fraud, act, or omission of any obligationof Borrower as set forth in the Condominium Instruments.

 

7.                          Anew Section 54 is hereby added as follows:

 

**54.****                  MOISTUREMANAGEMENT PLAN AND MOLD.**

 

Borrower must have or must establish and must adhereto a moisture management plan (an “MMP”). The Borrower must keep all MMPdocumentation at the Mortgaged Property or at the management agent’s office andavailable for the Lender or the Loan Servicer to review during any annualassessment or other inspection of the Mortgaged Property that is required byLender.

 

If Lender determines that Mold has developed at theMortgaged Property as a result of a water intrusion event or leak, Lender, atLender’s discretion, may require that a professional inspector inspect theMortgaged Property as frequently as Lender determines is necessary until anyissue with Mold and its cause(s) are resolved to Lender’s satisfaction.Such inspection shall be limited to a visual and olfactory inspection of thearea that has experienced the water intrusion event, leak or Mold. Borrowershall be responsible for the cost of such professional inspection and anyremediation deemed to be necessary as a result of the professional inspection.After any issue with Mold, water intrusion or leaks is remedied to Lender’ssatisfaction, Lender shall not be entitled to require a professional inspectionany more frequently than once every three years unless Lender is otherwiseaware of subsequent Mold as a result of a water intrusion event or leak.

 

If Lender or Loan Servicer determines not to conductan annual inspection of the Mortgaged Property, and in lieu thereof Lenderrequests a certification, Borrower shall be prepared to provide and mustactually provide to Lender a factually correct certification each year that theannual inspection is waived to the following effect:

 

Borrower has not received any written complaint,notice, letter or other written communication from tenants, management agent orgovernmental authorities regarding odors, indoor air quality, mold, fungus,microbial contamination or pathogenic organisms (“Mold”) or any activity,condition, event or omission that causes or facilitates the growth of Mold onor in any part of the

 

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Mortgaged Property or if Borrower has received anysuch written complaint, notice, letter or other written communication thatBorrower has investigated and determined that no Mold activity, condition orevent exists or alternatively has fully and properly remediated such activity,condition, event or omission in compliance with the Moisture Management Planfor the Mortgaged Property.

 

If Borrower is unwilling or unable to provide suchcertification, Lender may require a professional inspection of the MortgagedProperty at Borrower’s expense.

 

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