ESCROW HOLDBACK AGREEMENT Words used in this Agreement are defined below. Words in the singular mean and include the plural and vice versa. “Borrower” is “Business Days” means the days in the week excluding Saturdays, Sundays and legal Holidays. “Completion Date” is “Contractor” is or another person employed by Borrower if Borrower elects to terminate the services of Contractor. “Escrow Agent” is “Escrow Funds” is the sum of “Improvements” means the debt evidenced by the Note and all sums due under the Security Instrument. “Lender” is and its successors or assigns. “Note” means the promissory note in the original principal amount of $ , signed by Borrower in favor of Lender. “Property” means the property commonly known as “Provider of Funds” is “Security Instrument” means the Deed of Trust/Mortgage/Security Deed/Security Instrument signed by Borrower in favor of Lender, securing payment of the Note. This Escrow Holdback Agreement (hereinafter the “Agreement”) agreement is entered into as of the dated executed between the Provider of Funds, Lender, Borrower and Escrow Agent. In consideration of the Loan ("Loan") made by Lender, the proceeds of which have been fully advanced this day by Lender, evidenced by the Note and Security Instrument, the undersigned agree to the following terms and conditions: 1. Provider of Funds causes to be delivered to Escrow Agent the Escrow Funds. The Escrow Funds are for the use of Borrower consistent with the terms of this Agreement. The Escrow Funds are to be used in the construction, installation or completion of the Improvements. Borrower hereby agrees to obtain or cause to obtain at his or her expense if necessary any building permits required by applicable municipal codes or regulations prior to the execution of this Agreement. Escrow Agent is hereby authorized and directed by Borrower to disburse the Escrow Funds according to the terms of this Agreement. 2. Borrower pledges the funds held pursuant to the terms of this Agreement as additional security for the loan. Borrower understands that such funds cannot be used at Borrower discretion to make principal or interest payments owed by the Borrower under the terms of the Loan. Any attempted assignment by Borrower of Borrower’s interest in the Escrow Funds without the assumption of the Loan by an authorized party and the written prior consent of Lender is void. 3. By the execution of this Agreement Escrow Agent acknowledges receipt of the Escrow Funds into a non-interest bearing account. Escrow Agent agrees to hold these funds for the benefit of Borrower in a segregated bank account which permits the funds to be withdrawn on a daily basis. The account must be insured by the Federal Deposit Insurance Corporation or by another agency of the United States Government. Escrow agent shall be the only person authorized to make withdrawals from the account. Escrow Agent will serve in this capacity without charging any fees compensation or charges to Lender related to the performance of its duties, responsibilities and obligations under this Agreement. Escrow Agent is not liable for any error of judgment or for any act done or omitted in good faith or for anything which it may in good faith do or refrain from doing in connection with this Agreement. Escrow Agent is authorized to act on any document believed by Escrow Agent to be genuine and signed by the proper party or parties, and will incur no liability for acting on the document or request for disbursement and is hereby held harmless by Borrower and Lender from all loss, damage or expense incurred in connection with its compliance in good faith with this Agreement. 4. Lender reserves the right (but shall not be obligated) to inspect the Property prior to disbursements of any Escrow Funds. Upon notification by Borrower of completion of the Improvements (or so as pertains to the subject disbursement), Lender shall then have a period of five (5) Business Days within which to inspect the Improvements. Borrower’s notification of completion shall constitution Borrower’s Escrow Holdback Agreement Page 1 of 6 representation to Lender that the Improvements, or applicable portion thereof, have been satisfactorily completed, and Lender may rely on such representation. If the Improvements are satisfactorily completed or Lender waives any right to inspect the Property, Lender will sign and deliver a disbursement notice to Escrow Agent. Following receipt of such Notice, Escrow Agent agrees (and is hereby authorized and directed by Borrower) to pay the amount of the Escrow Funds designated in the Disbursement Notice to Contractor, in the form of a check issued by Escrow Agent payable to the order of Contractor and Borrower. Any undisbursed funds that are not loan proceeds will be disbursed to Provider of Funds and any undisbursed funds that are loan proceeds will be applied to reduce the unpaid principal balance of the Loan. If Lender determines that the Improvements or a portion thereof are not properly completed, Lender will deliver to Escrow Agent and Borrower written notice of its disapproval, describing the areas wherein the Improvements are not satisfactory or the portion needing completion, and Borrower will thereafter have a period of up to the completion date stated herein within which to cause Contractor to correct the described areas in the notice from Lender. Escrow Agent agrees that it will make no advance of the Escrow Funds after its receipt of Lender’s written notice of disapproval of the Improvements, until such time as it receives a disbursement notice fully signed by Borrower and Lender. When and if the disapproved Improvements are applicable portion thereof are properly completed, Borrower will sign and deliver the disbursement notice to Lender, and within five (5) Business Days thereafter, Lender may inspect the Improvements. If Lender agrees that the Improvements or applicable portion thereof are properly completed, Lender will sign and deliver the disbursement notice to Escrow Agent, whereupon Escrow Agent will make the disbursement to Contractor and Borrower in the amount stated in the disbursement notice, or if Borrower has engaged another person or contractor to complete Improvements, then the disbursement will be made by Escrow Agent issuing its check payable jointly to the Contractor name in the disbursement notice received by Escrow Agent and Borrower. If the Improvements have not been satisfactorily completed on or before thirty calendar days after the Completion Date, Borrower may request an extension which shall be for a fee to be determined by Lender. Such fee may be paid out of the Escrow funds held on deposit. If an extension is not agreed to by Lender, Escrow Agent will pay to lender the balance of the Escrow Funds, including accrued interest, which it then holds in escrow pursuant to this Agreement. Lender may at its option, apply the proceeds to reduce accrued by unpaid interest (if any) and then to the principal balance owing on the loan, less any fees due Lender under the terms of this Agreement, or elect to complete the Improvements. Lender shall have the option but not the obligation to select a contractor to complete the Improvements and Borrower hereby agrees to execute any necessary documentation to effect such substitution. 5. As a condition precedent to any funds being disbursed by Escrow Agent, when the construction, installation or completion of the Improvements has been completed, Borrower agrees to sign and deliver to Escrow Agent a satisfactory completion affidavit, and satisfactory evidence acceptable to Escrow Agent that all applicable bills for labor and materials have been paid in full and satisfactory survey is furnished to Lender, if so required. A final inspection of the Property by the inspector satisfactory to Lender will be required before any final funds are disbursed by Escrow Agent. Any fees charged for such inspections or surveys shall be paid by Borrower out of the funds in the escrow account if such fees have not been collected at closing. 6. If litigation arises between Borrower, Lender or any other person requiring Escrow Agent to appear in court, or if Escrow Agent deems it necessary to file an interpleader action with respect to the administration of this Agreement or the proper payment of the Escrow Funds, Escrow Agent shall be reimbursed by Borrower for all costs and expenses in connection therewith, including reasonable attorneys’ fees. Borrower hereby indemnifies and saves Escrow Agent and Lender harmless from all losses, cost, damages, expenses and attorneys’ fees suffered or incurred by Escrow Agent and/or Lender as the result of the entry into and non-negligent performance of the Agreement by Escrow Agent. Borrower and Lender hereby stipulate and agree that if any proceeds of the Loan are to be escrowed pursuant to the terms of this Agreement (i) on this date the Loan has been fully funded by Lender to Borrower, and that the Escrow Funds are the property of Borrower, subject only to the provisions of this Agreement, (ii) that the Escrow Funds are to be utilized by Borrower to pay for the completion of the Improvements as described on the attached Schedule, and (iii) Borrower’s obligations are to cause the construction of the Improvements to be completed within the time herein specified and to repay the Loan to Lender pursuant to the provision of the Note. Borrower acknowledges that Lender is not an architect, and shall not make inspections for the Escrow Holdback Agreement Page 2 of 6 benefit of or as agent for Borrower, and Borrower agrees that Lender is not liable for nor will be held responsible to Borrower or any person for any defects in or failure of the workmanship or materials comprising the Improvements or other performance of the Contractor, even though Lender inspected the Improvements and/or approved the making of disbursements of the Escrow Funds hereunder by Escrow Agent, and has made no representation or warranties to Borrower regarding same. 7. Borrower further agrees that no approval of a disbursement shall constitute a waiver or qualification of Lender’s rights under the loan documents. 8. There will be an extension fee charged for any extension of this Agreement. The term of this Agreement shall extend until the earlier to occur of: (i) the payment to Contractor of all of the Escrow Funds due to Contractor in accordance with the above provision of this Agreement, (ii) the Completion Date, or (iii) the filing by Escrow Agent of an interpleader action with the appropriate court of the state in which the property is located having jurisdiction, and the deposit of the remaining Escrow Funds by Escrow Agent into the registry of such court, with respect to the administration of this Agreement. If any funds remain on deposit hereunder at the end of the aforesaid period and the interpleader action described in (iii) above had not been filed by Escrow Agent, then all funds then held in escrow, less any fees due Lender hereunder shall be paid to the appropriate party. Should the mortgage title policy covering the Loan referred to herein contain an exception for disbursement or mechanic’s lien, Escrow Agent agrees at the termination of this Agreement to issue an endorsement deleting such exceptions, which shall be at the expense of Borrower. 9 No fee will be charged by Lender if the work authorized in this Agreement has been substantially completed and inspected by Lender on or before the Completion Date. Borrower and/or Provider of Funds recognize that Lender will suffer financial loss if the Improvements are not completed on or before the Completion Date. Accordingly, Borrower and/or Provider of Funds agree that a charge of per day will be made for each calendar day that the Improvements have not been satisfactorily completed up to a period of sixty (60) days after the Completion Date. In such Event, Escrow Agent is directed to pay such funds out of the Escrow Funds directly to Lender, prior to any other amounts being paid, The time periods stated in Paragraph 4 do not constitute any extension or waiver of any fees due Lender. 10. All communications and notices hereunder shall be delivered to the party to receive the same at the following addresses and shall be deemed to have been given to the intended recipient therefor five (5) days after being deposited into the United States Mail, postage prepaid, certified return receipt requested, addressed to the intended recipient: Lender: Borrower: Escrow Agent: 11. Any waiver of any term or condition of the Agreement shall be made in writing and signed by Lender to be effective. Any waiver of any term or condition of this Agreement shall not constitute a continuous wavier of strict performance of the same or any other term or condition hereof unless so specified in any such writing. 12. Additional terms, if any, including any disbursement schedule: 13. Time is of the essence to the dates and time periods stated herein. Escrow Holdback Agreement Page 3 of 6 14. This agreement is a final expression of the parties regarding the escrow disbursements, and may not be amended or altered except by written instrument executed and delivered by the parties hereto. The provisions hereof shall extend to the heirs, legal representatives, successors in interest and assigns of the parties hereto. IN WITNESS WHEREOF, this Agreement is executed and delivered by the parties hereto, with each such party having a fully executed copy thereof, on _____________________. Borrower: Provider of Funds: Lender: Escrow Agent ________________________________________ [Acknowledgment on following page] ____________________________________ Escrow Holdback Agreement Page 4 of 6 INDIVIDUAL ACKNOWLEDGMENT State of County of § § § Before me, on this day personally appeared , a Notary Public, known to me (or proved to me on the oath of through or [description of identity card or other document]) to be the person whose name is subscribed to the foregoing instrument and acknowledged to me that he executed the same for the purposes and consideration therein expressed. Given under my hand and seal of office this day of , A.D., . [Printed Name] Signature of Officer (Seal) Title of Officer My Commission Expires: State of County of § § § Before me, on this day personally appeared , a Notary Public, known to me (or proved to me on the oath of through or [description of identity card or other document]) to be the person whose name is subscribed to the foregoing instrument and acknowledged to me that he executed the same for the purposes and consideration therein expressed. Given under my hand and seal of office this day of Signature of Officer (Seal) Title of Officer My Commission Expires: Escrow Holdback Agreement Page 5 of 6 , A.D., . [Printed Name] State of County of by CORPORATE ACKNOWLEDGMENT § § § The foregoing instrument was acknowledged before me on [name of officer or agent, title of officer or agent] of , [date], . [state or place of incorporation], on behalf of the corporation. Given under my hand and seal of office this day of , A.D., . [Printed Name] Signature of Officer (Seal) Title of Officer My Commission Expires: State of County of by § § § The foregoing instrument was acknowledged before me on [name of officer or agent, title of officer or agent] of , [date], . [state or place of incorporation], on behalf of the corporation. Given under my hand and seal of office this day of Signature of Officer (Seal) Title of Officer My Commission Expires: Escrow Holdback Agreement Page 6 of 6 , A.D., . [Printed Name]