Exhibit 10.3


 


LOAN
MODIFICATION AGREEMENT


 


THIS LOAN MODIFICATION
AGREEMENT (this “Agreement”) is made and entered into effective as of the 22nd day of May, 2015 (the “Effective
Date”), by and between UNITED DEVELOPMENT FUNDING INCOME FUND V, a Maryland real estate
investment trust (“Borrower”) and VERITEX COMMUNITY BANK (the “Lender”).


 


RECITALS:


 


On or about November
14, 2014, Lender made a revolving line of credit loan to Borrower in the original stated principal amount of Ten Million and No/100
Dollars ($10,000,000.00) (the “Loan”). The Loan is evidenced and secured by, among other things, the following documents
and instruments: (i) that certain Loan Agreement dated effective as of November 14, 2014, executed by Borrower and Lender (the
“Loan Agreement”); (ii) that certain Promissory Note, dated as of November 14, 2014, in the stated principal amount
of Ten Million and No/100 Dollars ($10,000,000.00), made by Borrower and payable to the order of Lender (the “Note”);
and (iii) that certain Pledge and Security Agreement (the “Pledge Agreement”) dated as of November 14, 2014, executed
by and between Borrower and Lender. The Pledge Agreement currently encumbers the Mortgage Loans (herein so called) more particularly
described on Exhibit A attached hereto (the “Collateral”). The Loan Agreement, the Note, the Pledge Agreement,
together with any and all other documents and instruments evidencing, securing or in any manner relating to the Loan are hereinafter
sometimes collectively referred to as the “Loan Documents.”


 


Borrower has requested
that Lender increase the Committed Sum (as defined in the Loan Agreement) of the Loan and make certain other modifications to the
terms of the Loan Documents, and Lender is willing to so increase the Committed Sum and modify such other terms, on and subject
to the terms and conditions contained in this Agreement.


 


AGREEMENT:


 


NOW, THEREFORE,
for and in consideration of the foregoing recitals, the sum of Ten and No/100 Dollars ($10.00) in hand paid, and other good and
valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto, intending to be legally
bound hereby, do covenant and agree as follows:


 


1.          Recitals.
The foregoing Recitals are agreed to be true and correct and are hereby incorporated by reference and made a part hereof for all
purposes.


 


2.          Definitions.
Capitalized terms used herein and not otherwise defined herein shall have the meanings set forth in the Note or the Loan Agreement,
as applicable.


 


3.          Current
Note Balance; Commitment to Lend. Notwithstanding anything contained herein or in the Loan Documents, Borrower and Lender
hereby acknowledge and agree that (a) as of the Effective Date, the outstanding principal balance of the Note is Ten Million and
No/100 Dollars ($10,000,000.00), (b) as of the Effective Date, there are no funds available to be advanced as an Advance (as defined
in the Loan Agreement) by Lender to Borrower, (c) payments or prepayments of advances made under the Note may be reborrowed strictly
in accordance with the terms of the Note and the other Loan Documents, each as modified by this Agreement, and (d) Lender has no
obligation to make any further advances under the Note unless the terms and conditions of the Loan Documents are met for each advance.


 




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4.        Modification
of Loan Documents. From and after the Effective Date of this Agreement, the Loan Documents are hereby modified and amended
in the following respects (and all provisions of the prior Loan Documents, including any financial terms which are modified hereby,
are intended to govern until the Effective Date of this Agreement):


 


(a)          All
references to the notice address for Lender are hereby modified and amended in their entirety to read “Veritex Community
Bank, 5049 W. Park Boulevard, Plano, Texas 75093, Attention: Adam Garbe, Facsimile No.: (972) 398-7414, with a copy to Liechty
& McGinnis, LLP, 11910 Greenville Avenue, Suite 400, Dallas, Texas 75243, Attention: Kristy K. Bowen, Esq., Facsimile No.:
(214) 265-0615”.


 


(b)          All
references to the notice address for Borrower are hereby modified and amended in their entirety to read “1301 Municipal Way,
Suite 200, Grapevine, Texas 76051, Facsimile: 817/835-0383, Attention: Ben Wissink or Melissa Youngblood”.


 


(c)          All
references in the Loan Documents, including without limitation, the reference at the top left corner of the Note, in the first
paragraph of the Note, and the definition of “Committed Sum” in Section 1.1 of the Loan Agreement, to the amount of
“Ten Million and No/100 Dollars ($10,000,000.00)” are hereby modified and amended to read in their entireties as “Twelve
Million Five Hundred Thousand and No/100 Dollars ($12,500,000.00)”.


 


(d)          The
definition of “Loan Agreement” contained in Section 1.1 of the Note is hereby modified and amended to read in its entirety
as follows:


 


“Loan
Agreement: The Loan Agreement dated effective November 14, 2014, executed by Lender and Borrower, as modified by that certain
Loan Modification Agreement (the “Modification”) dated effective May 22,
2015 by and among Lender and Borrower.”


 


(e)          The
definition of “Note” contained in Section 1.1 of the Note is hereby modified and amended to read in its entirety as
follows:


 


“Note:
This Promissory Note, as modified by the Modification.”


 


(d)          The
definition of “Agreement” contained in Section 1.1 of the Loan Agreement is hereby modified and amended to read in
its entirety as follows:


 


“Agreement
means this Loan Agreement, as modified by the Modification, and as the same may, from time to time, be further amended, supplemented,
or replaced.”


 


(e)          The
definition of “Loan Documents” contained in Section 1.1 of the Loan Agreement is hereby modified and amended to read
in its entirety as follows:


 




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“Loan
Documents means this Agreement, the Note, the Security Documents, the Modification and any and all other agreements, documents,
and instruments executed and delivered pursuant to the terms of this Agreement, and any future amendments hereto, or restatements
hereof, or pursuant to the terms of any of the other loan documents, together with any and all renewals, extensions, and restatements
of, and amendments and modifications to, any such agreements, documents, and instruments.”


 


(f)          The
definition of “Modification” is hereby added to Section 1.1 of the Loan Agreement to read in its entirety as follows:


 


“Modification
shall have the meaning ascribed to it in the Note.”


 


(g)          The
definition of “Note” contained in Section 1.1 of the Loan Agreement is hereby modified and amended to read in its entirety
as follows:


 


“Note
means the promissory note, dated the Closing Date, in the original principal amount of Ten Million and No/100 Dollars ($10,000,000.00)
executed by Borrower and payable to the order of Bank, in form and substance satisfactory to Bank, as modified by the Modification
to a principal amount of Twelve Million Five Hundred Thousand and No/100 Dollars ($12,500,000.00), and all renewals, amendments,
extensions, replacements, increases and modifications thereof.”


 


(h)          Section
6.1(a)-(c) of the Loan Agreement is hereby modified and amended to read in its entirety as follows:


 


“(a)          Quarterly
and Annual Financial Statements and Tax Returns of Borrower. Within the earlier of (i) the date of filing or (ii) March 31st
of each year, annual Form 10-K for Borrower filed with the Securities and Exchange Commission (the “SEC”) (or if no
longer required to be filed by the SEC, annual audited (by a certified public accountant acceptable to Bank) financial statements)
showing the financial position and results of operations of Borrower as of, and for the year ended on, such last day. Within the
earlier of (i) forty-five (45) days after filing or (ii) May 15th, August 15th and November 15th
of each year, quarterly Form 10-Q for Borrower filed with the SEC (or if no longer required to be filed by the SEC, quarterly company
prepared, auditor reviewed financial statements) showing the financial position and results of operations of Borrower as of, and
for the quarter ended on, such last day. All annual financial statements submitted to Bank shall include (i) the unqualified opinion
of such certified public accountant that such financial statements present fairly, in all material respects, the financial position
of Borrower as of the last day of such fiscal year and the results of operations and the cash flow of Borrower for the fiscal year
then ended in conformity with GAAP, or other method of accounting acceptable to Bank and with no exceptions, inconsistencies, or
uncertainties described or disclosed therein. All financial statements submitted to Bank shall include the certificate of Borrower
that all of such financial statements present fairly the financial position of Borrower as of the last day of such fiscal year
and the results of the operations and the cash flow of Borrower for the fiscal year then ended in conformity with GAAP, or other
method of accounting acceptable to Bank. Each such financial statement shall contain at least a balance sheet of Borrower as at
the end of such fiscal year and statements of income, cash flow, and retained earnings. Borrower shall provide Bank with a copy
of such Borrower’s annual tax return for the preceding calendar year, as soon as available, but in no event later than the
earlier of (a) thirty (30) days after filing or (b) October 15th of each calendar year;


 




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(b)          Monthly
Financial Statements of Borrower. Within thirty-five (35) days after the last day of each calendar month, internally prepared
financial statements of Borrower (including, but not necessarily limited to, balance sheets and a related statement of income),
showing the financial position and results of operations of Borrower as of and for such calendar month and for the period from
the beginning of the current fiscal year to the last day of such calendar month, together with a certificate executed by Borrower
certifying that such financial statements present fairly the financial position of Borrower as of the last day of such periods
in conformity with GAAP, or other method of accounting acceptable to Bank (except as to reasonable year end adjustments and the
absence of notes with respect to interim financial statements);


 


(c)          Borrowing
Base Certificate. Within thirty-five (35) days after the last day of each calendar month, a Borrowing Base Certificate as of
the end of such month and in connection with any Advance Request;”


 


5.        Payment
of Lender’s Fees and Expenses. Contemporaneously with the execution and delivery of this Agreement, Borrower shall
pay, or cause to be paid, an origination fee of Twenty-Five Thousand and No/100 Dollars ($25,000.00), plus (c) all costs and expenses
incident to the preparation, negotiation, execution and recordation of this Agreement and the consummation of the transaction contemplated
hereby, including, but not limited to, recording fees, title insurance policy or endorsement premiums or other charges of the Title
Company, and reasonable fees and expenses of legal counsel to Lender.


 


6.        Incorporation
into the Note. This Agreement is hereby made a part of, and is incorporated by reference in the Note. The Note, as modified
by this Agreement, shall be deemed to be one and the same instrument, evidencing a single indebtedness owed by the Borrower to
the Lender.


 


7.        Reaffirmation.
Borrower hereby represents and agrees that there are no oral agreements which modify any of the Loan Documents, and that the Loan
Documents, as expressly modified herein, constitute the entire agreement between Borrower and Lender with respect to the Loan.
Borrower hereby reaffirms and restates, as of the Effective Date, all covenants, representations, and warranties set forth in any
of the Loan Documents to which it is a party or by which it is otherwise bound, including without limitation, any deficiencies
(together with interest thereon as provided in the Loan Documents) in the event that the proceeds of any sale of, collection from,
or other realization upon, all or any part of the Collateral by Lender are insufficient to pay such amounts notwithstanding anything
contained in Sections 9.608(b) or 9.615(e) of the UCC (as defined in the Pledge Agreement). Except as expressly modified by or
provided for in this Agreement, nothing herein shall constitute, and there has not otherwise occurred, any extinguishment or release
of or substitution for the obligations and agreements of Borrower under the Note or any of the other Loan Documents and nothing
herein shall constitute, and there has not otherwise occurred, any novation with respect to the Note or any other Loan Document.
Except as expressly modified herein, all terms, covenants and provisions of the Note and the other Loan Documents shall remain
unaltered and in full force and effect; and Borrower does hereby expressly ratify and confirm the Note and the other Loan Documents
as modified hereby.


 




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8.        Representations.
The Borrower hereby warrants, represents, and certifies to the Lender the following facts knowing that the Lender requires, and
is relying upon, the warranties, representations, and certifications contained in this paragraph as a condition to entering into
this Agreement:


 


(a)          No
Defenses. As of the Effective Date, Borrower has no defense, right of setoff, counterclaim, claim, or cause of action of
any kind or description against the Lender related to (i) payment of the principal sum described in the Note, (ii) payment of interest
under the Note, (iii) payment of any other sums due and payable under the Note or any of the other Loan Documents, (iv) performance
of any obligations under the Loan Documents, or (v) any of Lender’s acts or omissions with respect to the Collateral, the
Loan Documents or Lender’s performance under the Loan Documents with respect to the Collateral. To the extent Borrower now
has any defenses, rights of setoff, counterclaims, claims or causes of action against Lender or the repayment of all or a portion
of the Loan, whether known or unknown, fixed or contingent, the same are hereby forever irrevocably waived and released in their
entireties.


 


(b)          Enforceable
Obligations. The Note and the other Loan Documents are valid and enforceable against the Borrower in accordance with their
respective terms. Lender is not in default and no event has occurred which, with the passage of time, giving of notice, or both,
would constitute a default by Lender of Lender’s obligations under the terms and provisions of the Loan Documents.


 


(c)          Strict
Performance. Lender’s agreement to modify the Note, as set forth herein, is without prejudice to Lender’s right
at any time hereafter to exercise any right or remedy conferred upon the Lender in the Note or any of the other Loan Documents
or otherwise available at law or in equity, and shall not constitute a waiver of Lender’s right to insist upon strict performance
by the Borrower of its respective obligations under the Note and the other Loan Documents.


 


9.        No
Waiver or Implication. This Agreement modifies the Loan Documents, and in no way acts as a release or relinquishment of
any lien, security interest, right, title, privilege, or remedy created by any of the Loan Documents or now or hereafter existing
at law or in equity. The liens and security interests of the Loan Documents securing payment of the Note (as the Note has been
herein modified) are hereby confirmed by Borrower in all respects, and shall continue to be enforceable and shall remain in full
force and effect until the entire principal amount of the Note, as modified by this Agreement, all accrued but unpaid interest,
and all extensions, renewals and rearrangements thereof, and all other sums secured by the Loan Documents have been fully and finally
paid. Borrower and hereby agrees that nothing herein shall constitute a waiver by Lender of any default, whether known or unknown,
which may now or hereafter exist under the Note or any other Loan Document. Borrower hereby further agrees that no action, inaction
or agreement by Lender, including, without limitation, any extension, indulgence, waiver, consent, or agreement of modification
which may have occurred or been granted or entered into (or which may be occurring or be granted or entered into hereunder or otherwise)
with respect to nonpayment of the Loan or any portion thereof, or with respect to matters involving security for the Loan, or with
respect to any other matter relating to the Loan, shall require or imply any future extension, indulgence, waiver, consent, or
agreement by Lender. Borrower hereby acknowledges and agrees that Lender has made no agreement, and is in no way obligated, to
grant any future extension, indulgence, waiver, or consent or enter into any further agreement or modification with respect to
the Loan or any matter relating to the Loan.


 




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10.      Additional
Documentation. From time to time, Borrower shall execute or procure and deliver to Lender such other and further documentation
evidencing, securing or pertaining to the Loan or the Loan Documents as reasonably requested by Lender so as to evidence or effect
the terms and provisions hereof.


 


11.      Successors
and Assigns. The terms and provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors, heirs, and assigns forever; however, the foregoing shall not be deemed or construed to (i) permit,
sanction, authorize or condone the assignment of all or any part of the Collateral or any of Borrower’s rights, titles or
interests in and to the Collateral or any rights, titles or interest in and to Borrower, except as expressly authorized in the
Loan Documents or in this Agreement, or (ii) confer any right, title, benefit, cause of action or remedy upon any person or entity
not a party hereto, which such party would not or did not otherwise possess.


 


12.      Governing
Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Texas (without giving
effect to the conflict of law principles thereof).


 


13.      Miscellaneous.
All personal pronouns used herein whether used in the masculine, feminine or neuter gender, shall include all other genders; the
singular shall include the plural, and vice versa. Titles of articles and paragraphs as set forth herein are for convenience only
and in no way define, limit, amplify, or describe the scope or intent of any provisions hereof.


 


14.      Authority.
Each party hereto has the full legal authority to execute and deliver this Agreement. In addition, the individual who executes
this Agreement on behalf of each party hereto is authorized to act for and on behalf of such party and to bind such party to the
terms and provisions hereof.


 






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15.      FINAL
AGREEMENT. THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS EMBODY THE FINAL, ENTIRE AGREEMENT AMONG THE PARTIES HERETO AND THERETO
AND SUPERSEDE ANY AND ALL PRIOR COMMITMENTS, AGREEMENTS, REPRESENTATIONS, AND UNDERSTANDINGS, WHETHER WRITTEN OR ORAL, RELATING
TO THE SUBJECT MATTER HEREOF AND THEREOF AND MAY NOT BE CONTRADICTED OR VARIED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT
ORAL AGREEMENTS OR DISCUSSIONS OF THE PARTIES HERETO OR THERETO. THERE ARE NO ORAL AGREEMENTS AMONG THE PARTIES HERETO OR THERETO.
THE PROVISIONS OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS MAY BE AMENDED OR WAIVED ONLY BY AN INSTRUMENT IN WRITING SIGNED
BY THE RESPECTIVE PARTIES TO SUCH DOCUMENTS.


 


[THE REMAINDER OF THIS
PAGE IS INTENTIONALLY LEFT BLANK]


 




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IN WITNESS WHEREOF,
Borrower and Lender have caused this Agreement to be duly executed as of the day and year first above written.


 


	 	BORROWER:
	 	 
	 	UNITED DEVELOPMENT FUNDING INCOME FUND V, a Maryland real estate investment trust 
	 	 
	 	/s/ Cara Obert	 
	 	Cara Obert	 
	 	Chief Financial Officer	 


 


	STATE OF TEXAS	§
	 	§
	COUNTY OF TARRANT	§


 


This instrument was
acknowledged before me this 22ND day of May, 2015, by Cara Obert, CFO of United Development Funding Income Fund V, a Maryland real
estate investment trust, on behalf of said real estate investment trust.


 


	 	 	/s/ Mary Ashley Price
	 	 	Notary Public
	 	 	 
	My Commission Expires:	 	Mary Ashley Price
	9-26-17	 	Print name of Notary


 




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	 	LENDER:
	 	 
	 	VERITEX COMMUNITY BANK
	 	 
	 	/s/ Adam Garbe	 
	 	Adam Garbe 	 
	 	Vice President	 


 


	STATE OF TEXAS	§
	 	§
	COUNTY OF COLLIN	§


 


This instrument was
acknowledged before me this 27 day of May, 2015, by Adam Garbe, Vice President of VERITEX COMMUNITY BANK, on behalf of said bank.


 


	 	 	/s/ Lori Mach
	 	 	Notary Public
	 	 	 
	My Commission Expires:	 	Lori Mach
	10-3-2015	 	Print name of Notary


  




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EXHIBIT A


 


Mortgage Loan Description


 


		1.	$10,660,00.00 loan to CTMGT Frisco 113, LLC, a Texas limited
liability company, by United Development Funding Income Fund V, a Maryland real estate investment trust, as evidenced by, among
other things, that certain Amended and Restated Secured Promissory Note dated on or about December 1, 2014, in the original principal
amount of $10,660,000.00.



 


		2.	$42,372,200.00 loan to Rosehill Reserve, Ltd., a Texas
limited partnership, by United Development Funding Income Fund V, a Maryland real estate investment trust, as evidenced by, among
other things, that certain Secured Promissory Noted dated on or about December 5, 2014, in the original principal amount of $42,372,200.00.



 


		3.	$18,865,000.00 loan to CTMGT Frisco Hills 2B, 5A, 5B FL-2,
LLC, a Texas limited liability company, by United Development Funding Income Fund V, a Maryland real estate investment trust,
as evidenced by, among other things, that certain Secured Promissory Noted dated on or about January 22, 2015, in the original
principal amount of $18,865,000.00.



 




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