<PAGE>
 
                                                                   Exhibit 10.36


                   MORTGAGE AND NOTE MODIFICATION AGREEMENT

THIS AGREEMENT made and entered into this 22nd_ day of January, 1997 by and
between the TRUSTEE OF THE M.B. CO., INC. PENSION PLAN, the TRUSTEE OF E
MENSWEAR-BOYSWEAR CO., INC. PENSION PLAN, the TRUSTEE OF THE DOMENICK GRECO
REVOCABLE TRUST, STANLEY ELKMAN, the TRUSTEE OF THE ARTHUR A. KOBER CO., INC.
EMPLOYEES PROFIT SHARING FUND, and MORTON J. BERMAN, with offices located at
4541 White Cedar Lane, Delray Beach, FL 33044 (hereinafter referred to as
"Mortgagee") and OCEAN PALMS COOPERATIVE ASSOCIATION, INC., a Florida not-for
profit corporation, with offices located at 1200 North Ocean Blvd., Pompano
Beach, F 33016 (hereinafter collectively referred to as "Mortgagor");


                                  WITNESSETH:

        WHEREAS, Lucaya Beach Hotel Corporation heretofore executed and
        delivered to Del-Aire Management Co., Inc. a certain promissory note
        dated the 26th day of February, 1992 in the original principal amount of
        ONE MILLION TWO-HUNDRED THOUSAND DOLLARS ($1,200,000.00) (the "Note");
        and

        WHEREAS, The (Pounds) Note is secured by that certain Purchase Money
        Leasehold Mortgage and Security Agreement made by Lucaya Beach Hotel
        Corporation in favor of Del-Aire Management Co~, Inc. dated the 26th day
        of February 1992, and recorded the 28th day of February, 1992 in
        Official Records Book 19218, Page 815, of the Public Records of Broward
        County, Florida (the "Mortgage"), which Mortgage encumbers lands more
        particularly described in Exhibit "A" attached hereto and by reference
        made a part hereof, lying, being and situate in Broward County, Florida
        (the "Property"); and

        WHEREAS, Mortgagee is the owner and holder of the Note and the Mortgage,
        having obtained same by Assignment of Mortgage dated the 28th day of
        May, 1993 and recorded in Official Records book 21050, Page 330, of the
        Public records of Broward County, Florida; and

        WHEREAS, Mortgagor, by virtue of that certain Assignment of Lease dated
        October 29, 1996 and recorded November 13, 1996 in Official Records Book
        25644, Page 806, of the Public Records of Broward County, Florida, and
        with the consent of Mortgagee, did succeed to the interest of Lucaya
        Beach Hotel Corporation in the Property;

        WHEREAS, Mortgagor and Mortgagee desire to modify the Mortgage and Note
        in certain particulars;

        NOW, THEREFORE, in consideration of the mutual benefits accruing to the
        respective parties under the provisions of this Agreement it is hereby
        agreed as follows:

        1. Recitals. The foregoing recitals are true and Correct and are
        incorporated herein by reference as though set out in full.
<PAGE>
 
        2. Outstanding Principal Balance. As of the date hereof the outstanding
        principal balance of the Note (including the $100,000.00 readvancement
        made on or about December 20, 1996) is $ 1,158,000.00, the January, 1997
                                               ---------------   
        payment having been received by Mortgagee and credited. The next payment
        under the Note and Mortgage is due on February 1, 1997.

        3. Interest Rate; Maturity Date; Payment. From and after the 29th day of
        October, 1996, the interest rate recited in the Note is increased to
        Twelve and Three-quarters percent (12.75%); and the maturity date of the
        Note is extended to April 1, 1997. In addition, the monthly payment due
        under the Note to and through the maturity date is increased
        to $12,303.75.
           ----------

        4. Option To Extend. Mortgagor shall have the right and option to extend
        the Note and Mortgage for three (3) consecutive extension periods of one
        (1) year each (subject to payment of an annual extension fee in an
        amount equal to one percent (1%) of the then outstanding principal
        balance of the Note (but not including that portion of the then
        outstanding principal balance of the Note which represents the aforesaid
        $ 100.000.00 readvancement made on or about December 20, 1996), said
        extension fee to be due and payable on or before March 1 each year prior
        to the commencement of each extension period); so that said Note and
        Mortgage will become all due and payable on the 1st day of April, 1998
        (if the first extension is exercised), on the 1st day of April, 1999 (if
        the second extension is also exercised), and on the 1st day of April,
        2000 (if the third extension is also exercised). In order to exercise
        the aforesaid right and option Mortgagor shall, on or before March 1 of
        each year prior to the commencement of each extension period, notice the
        Mortgagee in writing of Mortgagee's election to exercise the right and
        option and, in each such case, such written notice must be accompanied
        by the aforesaid appropriate extension fee.

        5. Sub-leasing Attornment; Non-disturbance. Notwithstanding anything to
        the contrary contained in the Mortgage, Mortgagor shall have the right
        to sub-lease individual apartments and commercial spaces on the property
        to such sub-tenants and upon such terms and conditions (including, but
        not limited to, non-recourse terms) and pursuant to such form of sub-
        lease as Mortgagor may from time to time determine (and to modify and
        amend such sub-leases as Mortgagor may from time to time determine);
        provided that any such sub-lease shall be subordinate to the lien of the
        Mortgage; and provided further that each such sub-lease shall provide
        that in the event of a default by Mortgagor and the enforcement by
        Mortgagee of any remedy under the Mortgage, the tenant under any such
        sub-lease shall at Mortgagee's request attorn to Mortgagee or to any
        other person or entity succeeding to the interest of Mortgagee as a
        result of such enforcement and shall recognize Mortgagee or such
        successor in interest as sub-landlord under the sub-lease without change
        in the provisions thereof (provided, however, that Mortgagee or such
        successor in interest shall not be bound by (a), any payment of an
        installment of rent or additional rent which may have been made more
        than thirty days before the due date of such installment, or (b) any
        existing offsets or defenses. In addition Mortgagee shall and does
        hereby agree to execute and deliver a non-disturbance agreement (in form
        and content reasonably acceptable to Mortgagor and its counsel) for each
        apartment and commercial space upon the Property at the time of the
        leasing of each such apartment or
<PAGE>
 
        commercial space and upon concurrent Payment to Mortgagee of a non-
        disturbance agreement price for each unit sought to be provided with a
        non-disturbance agreement (which non-disturbance agreement price when
        paid shall be applied, to the extent of the cash portion thereof,
        against the principal amount of the Note and Mortgage) in an amount
        equal to seventy-five percent (75%) of the purchase price of such
        apartment or commercial space lease, but only where the sale of such
        apartment or commercial space lease is the result of a bona fide arms
        length transaction; and such non-disturbance agreement price shall be
        payable in cash or in purchase money obligations of the apartment or
        commercial space tenant, or in any combination thereof (provided that
        such portions thereof as are paid in purchase money obligations shall be
        held by Mortgagee as additional collateral for the Mortgage; and 
        seventy-five percent (75%) the monthly Proceeds of such purchase money
        obligations shall be applied as and when received upon the indebtedness
        represented by the Note and Mortgage, first to accrued interest and then
        to principal (and the remaining twenty-five percent (25%) thereof shall
        be paid over Mortgagee to Mortgagor). Each of the parties comprising
        Mortgagee shall and does hereby make, constitute and appoint DOMENICK
        GRECO, whose address is 4541 White Cedar lane, Delray Beach, FL 33044,
        its, his or their true and lawful attorney-in-fact for the limited
        purpose of executing and delivering and with full power and authority to
        execute and deliver, from time to time, the non-disturbance agreements
        hereinabove described. The power of attorney herein granted shall
        commence and be in full force and effect as of the date of the complete
        execution of this instrument and shall remain in full force and effect
        thereafter until termination by written notice executed by any one of
        the parties comprising Mortgagee, recorded in the Public Records of
        Broward County, Florida, and served upon Mortgagor.

        6. Escrows for Taxes Insurance and Ground Lease Payments. From and after
        the 29th day of October, 1996 Mortgagor will.

              .Escrow with Mortgagee's attorney or other acceptable escrow
        agent, each month beginning on November 1, 1996 an amount equal to
        1/12th of the estimated real estate taxes to be levied against the
        Property for the ensuing tax year. Escrowed funds shall be held at
        interest for the benefit of Mortgagor.

              .Escrow with Mortgagee's attorney or other acceptable escrow
        agent, each month beginning on November 1, 1996 an amount equal to
        1/12th of the annual lease payment due under the long term lease.
        Escrowed funds shall be held at interest for the benefit of Mortgagor.

              .Escrow with Mortgagee's attorney or other acceptable escrow
        agent, each month beginning on November 1, 1996 an amount equal to 
        1/12th of the annual premiums for flood, hazard and liability insurance
        on the Property. Escrowed funds shall be held at interest for the
        benefit of Mortgagor.

        7. Transfer. Notwithstanding anything to the contrary contained in the
        Mortgage, Mortgagor shall have the right to transfer the Property to a
        Florida corporation, partnership, limited partnership or limited
        liability company, or to amend the at-tides of incorporation of
        Mortgagor or undertake such procedure as may be necessary to convert
        Mortgagor from a not-for-profit to a for profit corporation; provided,
        however, that no such transfer, amendment and/or conversion shall
        relieve Mortgagor of any liability hereunder or jeopardize the status of
<PAGE>
 
        the Mortgage as a first or prior lien. And Notwithstanding anything to
        the contrary contained in the Mortgage, Mortgagor shall have the right,
        Without the consent of Mortgagee, to enter into any agreement regarding
        the management and/or operation of the property; provided, however, no
        such agreement shall relieve the Mortgagor of any duty, responsibility
        or liability hereunder and any such agreement shall contain a Provision
        requiring payment of the monthly payment due each month under the Note
        and Mortgage before payment each month to the managing entity under any
        such management and/or operations agreement.

        8. Purchase Money Security Interests. The taking by Mortgagor or a third
        party of a purchase money security interest in any sub-lease of an
        apartment or commercial space upon the property in Connection with the
        sale of any such sub-lease shall not constitute Prohibited secondary
        financing under Section 8 of the Mortgage or require the consent of the
        Mortgagee; and the enforcement of any such purchase money security
        interest shall not fall within the purview of or limitations contained
        in said Section 8.

        9. First Leasehold Mortgage. Notwithstanding the changes, amendments and
        modifications provided herein, and notwithstanding any transfer or
        conveyance of the Property by Mortgagor, and notwithstanding any sub-
        leasing of individual apartment- and/or commercial spaces upon the
        Property, the Mortgage is and will remain a first leasehold mortgage.

        10. Modification of Financing Statement. This Mortgage and Note
        Modification Agreement shall also constitute a modification of that
        certain UCC- 1 financing Statement recorded February 28, 1992 in
        Official Records Book 19218, Page 842, of the Public Records of Broward
        County, Florida.

        11. Full Force and Effect; Conflicts. This modification in made upon the
        express agreement and understanding that, except as herein specifically
        set forth, the Mortgage and the Note shall remain unmodified and in full
        force and effect. In the event of any conflict between the terms and
        provisions of the Mortage or Note and the terms and Provisions of this
        Mortgage and Note Modification Agreement, the terms and provisions of
        this Mortgage and Note Modification Agreement shall take precedence.

        12. Binding Effect. This agreement shall be binding upon and inure to
        the benefit of the successors and assigns of the respective parties
        hereto.

        IN WITNESS WHEREOF, the parties have hereunto set their hands and seals
        the day and year first above written.
<PAGE>
 
In the presence of:



Witnesses


/s/ Gayle R. Gerst               MORTGAGEE:
                                 TRUSTEE OF THE M.B. CO., INC.
                                 PENSION PLAN

                                 /s/ Domenic Greco
                                 DOMENIC GRECO, as Trustee /s/ Pearl /s/ 
Pearl Morris     
                                 of the M. B. Co. Inc. Pension Plan
/s/ Gayle R. Gerst
 
                                 TRUSTEE OF THE MENSWEAR-
                                 BOYSWEAR CO., INC. PENSION PLAN

/s/ Pearl Morris
                                 /s/ Domenic Greco
/s/ Gayle R. Gerst               DOMENIC GRECO, as Trustee of
                                 The Domenic Greco Revocable Trust


/s/ Pearl Morris                 /s/ Stanley Elkman
/s/ Gayle R. Gerst               STANLEY ELKMAN


                                 TRUSTEE OF THE ARTHUR A. KOBER
/s/ Pearl Morris                 CO., INC. Employees Profit
/s/ Gayle R. Gerst               Sharing Fund

                                 /s/ Morton J. Berman
                                 MORTON J. BERMAN, TRUSTEE


/s/ Pearl Morris                 /s/ Morton J. Berman
/s/ Gayle R. Gerst               MORTON J. BERMAN



                                 MORTGAGOR:
                                 OCEAN PALMS COOPERATIVE
/s/ Christine Search             ASSOCIATION, INC., a Florida not-for-
                                 profit corporation
/s/ Rosemary Hansen
                                 By: /s/ Karen Abdallah
                                 Karen Abdallah, President
<PAGE>
 
State of Florida
County of Palm Beach

The foregoing instrument was acknowledged before me this 22 day of January,
                                                                   ------- 
1997, by DOMENICK GRECO as TRUSTEE OF THE M.B. Co., INC. PENSION PLAN who is
personally known to me
-------------------   

                           (Signature of Person Taking Acknowledgment)

                           /s/ Linda L. Means
                           LINDA L MEANS
                           COMMISSION # CC 421559
                           EXPIRES: Nov. 17, 1998
 



State of Florida
County of Palm Beach

The foregoing instrument was acknowledged before me this 22 day of January,
                                                                   ------- 
1997, by DOMENICK GRECO as TRUSTEE OF MENSWEAR-BOYSWEAR CO., INC. PENSION PLAN
who is personally known to me
       -------------------   

                           (Signature of Person Taking Acknowledgment)

                           /s/ Linda L. Means
                           LINDA L MEANS
                           COMMISSION # CC 421559
                           EXPIRES: Nov. 17, 1998


State of Florida
County of Palm Beach

The foregoing instrument was acknowledged before me this 22 day of January,
                                                                   ------- 
1997, by DOMENICK GRECO as TRUSTEE OF DOMENIC GRECO REVOCABLE TRUST,  who is
personally known to me
-------------------   

                           (Signature of Person Taking Acknowledgment)

                           /s/ Linda L. Means
                           LINDA L MEANS
                           COMMISSION # CC 421559
                           EXPIRES: Nov. 17, 1998
 

State of Florida
County of Palm Beach

The foregoing instrument was acknowledged before me this 22 day of January,
                                                                   ------- 
1997, by MORTON J. BERMAN, as TRUSTEE OF THE ARTHUR A. KOBER CO., INC.,
EMPLOYEES PROFIT SHARING FUND,  who is personally known to me
                                       -------------------   

                           (Signature of Person Taking Acknowledgment)
<PAGE>
 
                           /s/ Linda L. Means
                           LINDA L MEANS
                           COMMISSION # CC 421559
                           EXPIRES: Nov. 17, 1998


State of Florida
County of Palm Beach

The foregoing instrument was acknowledged before me this 22 day of January,
                                                                   ------- 
1997, by STANLEY ELKMAN,  who is personally known to me
                                 -------------------   

                           (Signature of Person Taking Acknowledgment)

                           /s/ Linda L. Means
                           LINDA L MEANS
                           COMMISSION # CC 421559
                           EXPIRES: Nov. 17, 1998



State of Florida
County of Palm Beach

The foregoing instrument was acknowledged before me this 23 day of January,
                                                                   ------- 
1997, by KAREN ABDALLAH, as President of OCEAN PALMS COOPERATIVE ASSOCIATION,
INC., a Florida not-for-profit corporation,  who is personally known to me
                                                    -------------------   

                           (Signature of Person Taking Acknowledgment)

                           /s/ Audrey L. Gay
                           AUDREY L. GAY
                           COMMISSION # CC 415232
                           EXPIRES: October 20, 1998
<PAGE>
 
                                  Exhibit "A"
                               Legal Description

That certain real property being, being and situated in Broward County, Florida,
and more particularly described as follows:

        The lessee's interest in a 99 year leasehold created pursuant to lease
        dated February 10, 1965 made and entered into by and between Nancy H.
        Newell and Jane H. Tubbs, as lessors, and Lighthouse Point Construction
        Corp., as lessee, recorded in Official Records Book 2973, Page 677, of
        the Public Records of Broward County, Florida, and re-recorded in
        Official Records Book 3069, Page 186, of the Public Records of Broward
        County, Florida; which leasehold covers the following described real
        property; to wit:

        Lots 14, 15 and 16 in Block 13 of POMPANO BY THE SEA
        RESUBDIVISION, according to the Plat thereof, recorded in Plat Book 
        1, Page 22 of the Public Records of Broward County, Florida.

        TOGETHER WITH that portion of the East one-half of Alta Avenue, lying
        West of and adjacent to Lots 14, 15 and 16, in said Block 13.

        TOGETHER WITH the following described property:

        Begin at the intersection of the Center Line of Alta Avenue with a
        westerly extension of the North boundary of Lot 16, Block 13 as shown on
        the Plat of POMPANO BY THE SEA, as recorded in Plat book 1, Page 22 of
        the Public Records of Broward County, Florida; thence Westerly along
        said Westerly extension of the North boundary line of said Lot 16 a
        distance of 15.91 feet; thence Southerly, making an included angle of
        104 degrees, 14', 30" a distance of 123.76 feet; thence Easterly with an
        included angle of 75 degrees, 45', 30" a distance of 45.64 feet to the
        Center Line of Alta Avenue; thence North along said Center Line a
        distance of 120.0 feet more or less to the point of beginning.