Transfer of Mortgage Reserve Funds Clause Samples
The Transfer of Mortgage Reserve Funds clause governs the movement of funds held in reserve for mortgage-related obligations from one party to another, typically during the sale or assignment of a property. In practice, this clause specifies how any escrowed amounts or reserve balances—such as those set aside for property taxes or insurance—are to be transferred to the new owner or lender at closing. Its core function is to ensure that all parties are clear on the disposition of these funds, preventing disputes and ensuring that the new responsible party has the necessary resources to meet ongoing obligations.
Transfer of Mortgage Reserve Funds. If Mortgage Lender waives any reserves or escrow accounts required in accordance with the terms of the Mortgage Loan Agreement, which reserves or escrow accounts are also required in accordance with the terms of this Article VII, or if the Mortgage Loan is paid off in full (without a prepayment of the Loan in full), then Borrowers shall cause any amounts that had been, or would have been, deposited into any reserves or escrow accounts in accordance with the terms of the Mortgage Loan Agreement to be deposited or transferred to Lender in accordance with the terms of this Article VII (and Borrowers shall enter into a cash management and lockbox agreement for the benefit of Lender substantially similar to the arrangement entered into between Mortgage Borrowers and Mortgage Lender at the time of the closing of the Mortgage Loan).