Current Financial Statement of Borrower.
Authorization Documentation.
Promissory Note.
Copy of Lease.
Leasehold Deed of Trust. An assignment of a lease can be accomplished with a “Leasehold Deed of Trust” and should be filed in the county clerk’s office in the county where the leased property is located. The form Real Estate Deed of Trust (with Future Advance Clause) located at the end of Chapter 8 can be used for leasehold interests. Under Section 2 Conveyance the description of the real estate should be prefaced by “Grantor’s leasehold interest in that certain lease dated __________, _____ between Grantor and on the property described as __________.”
Security Agreement covering fixtures and equipment if the Deed of Trust does not contain a security agreement. The Real Estate Deed of Trust (with Future Advance Clause) referenced above includes a security agreement.
Form UCC-1 Financing Statement. Since leasehold improvements may be classified as either “fixtures” or “equipment,” a UCC-1 Financing Statement should be filed in both the Office of the County Clerk in the county where the leased premises are located in the same records where a mortgage of the real property would be filed and in the Office of the Secretary of State where the debtor is located. A Form UCC-1 and UCC-1 Addendum are available at www.sos.state.tx.us. The Real Estate Deed of Trust form can be used as a financing statement on fixtures in the Real Property Records. This would avoid another creditor with a security interest in equipment arguing that the collateral consisted only of fixtures and thus the Bank was not perfected in the equipment.
Request for Information and Copies (Form UCC-11). The UCC searches should be made in the appropriate filing offices prior to disbursement of funds.
Title Search, the Real Property Records in the county where the leased premises are located must be searched. Request copies of all prior filings and review such copies to determine if Lease was recorded. The Lessor has title to the real estate if there are any pre-existing security interests in the collateral and there are conflicting real estate interests.
Title Commitment and Title Policy. See Leasehold Owner’s Policy Endorsement (Form T-4) located at the end of this Chapter
Landlord’s Consent. This document should be required when taking a Lease as collateral and considered where the Bank’s security interest in fixtures and equipment will not or may not be prior to the security interest of an owner or mortgagee of the real estate. See the form Leasehold Subordination, Non-Disturbance and Attornment Agreement and Estoppel Certificate located at the end of this Chapter.
Collateral Protection Insurance Policy. With endorsement naming Bank as loss payee as its interest appears.
Vendor’s Invoice. If purchase money security interest is taken on leasehold improvements.