What is the minimum amount of the mortgage required by Epcon Communities to secure payment of fees?
Epcon_Communities Franchise · 2025 FDDAnswer from 2025 FDD Document
plicable | | hh. | Obligations concerning the collateral. | Paragraph 8 of the Security Agreement | Not Applicable |
ITEM 10. FINANCING
To secure payment of all fees that you owe us, you must provide us with a mortgage in a minimum amount of $200,000 against the real property upon which your project will be constructed (see the basic form of mortgage attached as Exhibit L to this disclosure document.) If you increase the number of Units in your project, we may require an increase in the amount of the mortgage and/or require other additional security.
You must sign and deliver the mortgage to us so that it can be recorded within 15 days after you close on the purchase of your property, or if you already own your property, no later than 30 days after you sign the Franchise Agreement.
In our sole discretion, we may accept or require a deed of trust, letter of credit, security agreement or other security instrument in substitution of a mortgage.
We may also require you to sign a security agreement granting us an interest in your personal property at your project (a form of security agreement is attached as Exhibit M to this disclosure document).
The security interests you grant to us, regardless if granted pursuant to a mortgage, security agreement, deed of trust, letter of credit or other security instrument (collectively referred to in this Item 10 as "Security Instruments"), may only be subject and junior to the mortgage or personal property lien(s) granted by you to lenders providing land acquisition and construction financing for your project.
You must reimburse us for all expenses and fees incurred by us in subordinating the Security Instruments at the same time you close on any financing with your lender or within 15 days of our delivering an invoice to you. You must reimburse us for all expenses and fees (including legal fees, and filing and recording fees) incurred by us in obtaining, filing and/or recording the Security Instruments.
Although we have never done so, we have the right to assign our interests in the Security Instruments to a third party without your consent. The third party may be immune under the law to any defenses to payment you may have against us. If the Security Instruments are assigned to a third party by us, as long as the Franchise Agreemen
Source: Item 10 — FINANCING (FDD pages 38–39)
What This Means (2025 FDD)
According to Epcon Communities' 2025 Franchise Disclosure Document, to secure payment of all fees owed to them, a franchisee must provide Epcon Communities with a mortgage in a minimum amount of $200,000 against the real property where the project will be constructed. The basic form of the mortgage is attached as Exhibit L to the FDD. If the franchisee increases the number of units in their project, Epcon Communities may require an increase in the amount of the mortgage and/or require other additional security.
The franchisee must sign and deliver the mortgage to Epcon Communities so that it can be recorded within 15 days after closing on the purchase of the property. If the franchisee already owns the property, the mortgage must be delivered no later than 30 days after signing the Franchise Agreement. Epcon Communities, in its sole discretion, may accept or require a deed of trust, letter of credit, security agreement, or other security instrument in substitution of a mortgage.
Epcon Communities may also require the franchisee to sign a security agreement granting them an interest in the franchisee's personal property at the project. The security interests granted to Epcon Communities may only be subject and junior to the mortgage or personal property lien(s) granted by the franchisee to lenders providing land acquisition and construction financing for the project. The franchisee must reimburse Epcon Communities for all expenses and fees incurred by them in subordinating the Security Instruments at the same time the franchisee closes on any financing with their lender or within 15 days of Epcon Communities delivering an invoice to them. The franchisee must also reimburse Epcon Communities for all expenses and fees (including legal fees, and filing and recording fees) incurred by them in obtaining, filing, and/or recording the Security Instruments.
Although Epcon Communities has never done so, they have the right to assign their interests in the Security Instruments to a third party without the franchisee's consent. If the Security Instruments are assigned to a third party by Epcon Communities, as long as the Franchise Agreement is effective, they will remain primarily obligated to provide the assistance to the franchisee for which they are obligated under the Franchise Agreement.