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Ancillary agreement to reimburse seller for farming expenses prior to transfer of title.
This agreement is made this _________[date] between _________, buyer, and _________, seller, and provides: Recitals 1. Concurrently with the execution of this agreement, buyer and seller are executing an agreement to purchase real estate ("master agreement"). [See §7.5264.] In the master agreement, buyer agrees to buy and seller to sell the property commonly known as the _________ property, more particularly described as follows: _________("subject real property"). 2. This agreement is ancillary to and contingent upon the master agreement. 3. _________[e.g., citrus fruit trees] are planted on most of the subject real property. 4. Seller has incurred operating expenses with respect to the management and cultivation of the _________[e.g., citrus fruit trees] and will incur additional operating expenses prior to the actual transfer of title of the subject real property. 5. Seller desires to be reimbursed and buyer desires to reimburse seller for the operating expenses. Agreement Therefore, in consideration of the mutual covenants contained in this agreement and of the mutual covenants contained in the master agreement, and other and further consideration, the receipt and sufficiency of which is acknowledged, buyer agrees to reimburse seller for seller's operating expenses for the _________[e.g., citrus fruit trees] planted on the subject real property, in the following amount and on the following terms and conditions: 1. Amount of Reimbursement. The total amount of reimbursement for operating expenses shall be the sum of $_____. 2. Terms of Payment. The $_____ shall be paid as follows: A. Prior to the close of the escrow described in the master agreement, buyer shall pay to seller a cash payment of $_____. The cash payment shall be allocated as follows:
B. The unpaid balance, of $_____ shall be evidenced by a promissory note, in standard form, bearing interest at the rate of _____% per annum on the unpaid balance, executed by buyer in favor of seller, which note shall be secured by a second deed of trust covering the subject real property. The note shall be payable as follows: (1). Interest shall be paid in advance, in annual installments, the first installment being due, as stated above, prior to the close of escrow, and each succeeding installment to be due one day prior to the next succeeding annual anniversary dates of the close of escrow, until the interest is paid in full. (2). In addition to the interest payments, principal payments, each in the amount of $_____ will be due one day prior to the _________[e.g., sixth, seventh, eighth, ninth, tenth, eleventh and twelfth] annual anniversaries of the close of escrow. Any and all then unpaid balance, whether of principal or interest, will all be due and payable one day prior to the _________[e.g., twelfth] annual anniversary of the close of escrow. (3). Buyer shall have no right to prepay the promissory note prior to one year after the close of escrow. Commencing on the first annual anniversary of the close of escrow, buyer shall have the right to prepay any amount of principal without penalty. Interest which is prepaid and subsequently unearned as a result of a prepayment made during the 12 months next succeeding an interest payment date shall be applied to reduce the interest payable on the next succeeding interest payment date, or, in the event of payment of principal in full, such unearned interest shall be applied to reduce the then principal balance. (4). At any time, buyer may prepay all or any portion of the unpaid interest on the promissory note. The prepayment shall be credited against the next due interest installment or installments, and the then unpaid interest balance shall be reduced by the amount derived by increasing the prepaid amount by _____%, compounded annually, from the date of prepayment to the date or dates on which the prepaid amount would otherwise be payable. 3. Deed of Trust. The deed of trust securing the $_____ promissory note shall contain the same provisions as the deed of trust described in paragraph 4 of the master agreement. In addition to the provisions of the deed of trust described in paragraph 4 of the master agreement, this deed of trust will also contain the following provision: This deed of trust shall secure, in addition to any other sums, such additional amounts, for whatever purposes, owed by trustor to beneficiary, when evidenced by an additional promissory note or notes reciting the same to be secured by this agreement. Without limitation to the foregoing, this deed of trust, will secure any losses from agricultural operations on the real property covered by this deed of trust, in the event that beneficiary loans trustor an amount to cover all, or a portion of, those losses. The deed of trust will be recorded immediately after the deed of trust described in the master agreement. 4. Incorporation by Reference. This agreement incorporates by reference all of paragraphs _________ of the master agreement as fully as though set forth in this agreement.
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