Agreement regarding Construction Loan with a Bank

Agreement regarding Construction Loan with a Bank

Date ……….… 2000

The Agent

Bank of ………….

(Address) ………………………

Dear Sir

I agree to grant to the Bank of Jaipur (hereinafter referred to as the bank) a lease of my building bearing No….. situated in the main bazar owned by me and already in use of the bank for its branch.

2. I agree to carry out at my cost all the necessary additions and alterations to the premises by attaching further portion owned by me to the entire satisfaction of the bank in accordance with the attached plan. The following covered accommodation would be available to the bank after completion of the additions and alterations:

Ground Floor:

(a)  Banking hall

(b)  Agent’s room

(c)  R.C.C. locker room (existing strong room)

(d)  R.C.C. strong room (to be constructed)

(e)  Passage

(Steel flexible gates would be provided in the entrance doors)

First Floor:

(a)  Staff lunch room

(b)  Stationery room

(c)  Record room

(d)  Guard room

(e)  Toilet

(f)  Covered verandah

(Skylight vents would be provided in the ceiling of banking hall for light and ventilation)

3. I will commence the said work within 30 days and will carry out and complete the same within four months from the date hereof.

4. The bank will grant me a construction loan of Rs. …….…… @ ……….. p.a. against a registered mortgage of the property, which will be repaid within five years by adjustment of Rs. ………… per month out of the monthly rent payable by the bank. The loan will be granted by the bank in the following four instalments dependant on the basis of progress in construction work, as under:

(a)  1st instalment of Rs. ………..: To be allowed after the mortgage is registered in favour of the bank and other prescribed documents / certificates produced to the branch and the construction work is taken up in hand.

(b)  2nd instalment of Rs. ……..:  To be allowed when the construction of R.C.C. strong room is completed.

(c)  3rd instalment of Rs. ……..: To be allowed when the entire construction work of the ground floor is completed.

(d)  4th instalment of Rs. ……..: To be allowed when the construction jobs relating to 1st floor are completed and the building handed over to the bank complete in all respects with water connection/ sanitary and electric fittings, etc., and the prescribed lease deed is executed by me.

5. I shall arrange to get the building properly insured against fire and earthquake risk, and the insurance cover will be renewed every year till the entire loan is repaid in full. In the absence of my doing this, the bank is fully authorised to get the insurance done at my cost.

6. I will, at my cost, do white washing/colour washing and painting/varnishing on the wood work of the premises agreed to be demised to the bank and deliver vacant possession of the same to the bank not later than ……….. as soon as it is approved by the bank.

7. The bank will pay or cause to be paid to me a monthly rent of Rs. …..…… only payable on or before the fifth day of every month for the preceding month. The said monthly rent will be payable from the date the said premises are ready for occupation and are complete in all respects and vacant possession is delivered to the bank. The part amount of monthly rent, viz., Rs. ……………. shall, however, be deposited by the Agent direct into my construction loan account towards its payment till the entire loan is liquidated with interest.

8. I will bear and pay and discharge all existing and future taxes, rates, charges and assessments payable by the owners of the said property. The bank will pay only electricity, water and education taxes as per their actual consumption as shown in the meter/bills.

9. I will provide electic fittings, fixtures and sanitary equipment in accordance with a layout to be given by the bank. I will also provide tap water facility in the building with an overhead tank.

10. I will construct a pucca strong room as per specifications supplied by the bank. The work of construction of the pucca strong room will be done by me under the direct supervision of a P.W.D. official whose supervision and other charges will be borne by me. The strong room doors will, however, be provided by the bank but affixed at my cost.

11. I will produce a certificate from the Executive Engineer, P.W.D., on completion of the work of construction of the pucca strong room to the effect that the strong room constructed in the premises is in accordance with the bank’s standard specifications and plans. The Executive Engineer will certify that the strong room is duly reinforced with iron bars, cement and concrete from all sides including ceiling and floor, and it is fire and burglary-proof and quite safe and suitable for housing of currency chest and small coin depot.

12. The bank shall be at liberty to remove at any time all materials employed by the bank in the construction of the strong room and all counters, strong room doors, safes, steel fittings, expanded metal apartments and temporary constructions which may have been brought in, fixed or erected by the bank in the said premises during the continuance of the period of lease agreed to be granted by me to the bank.

13. I will, during the terms of the lease, keep the said premises wind and watertight and will every year carry out white washing/colour washing and execute necessary repairs to the said premises as well as to any additions thereto, if any, erected and made by the bank, at my cost. The oil painting/varnishing on wood work will be done every alternate year at my cost.

14. I will execute a deed of lease in favour of the bank on the bank’s standard form as per specimen enclosed for a period of five years with two options in favour of the bank of renewing the said lease for a further period of five years each time, on the same terms and conditions. The cost of stamps for the lease deed and registration charges shall be borne by me and the bank equally.

15. I will, in the event of my deciding to sell the said premises during the currency of the lease or at the expiration of the same, offer the same in the first instance to the bank at the lowest price which I will be prepared to accept for myself and the bank will, within one calendar month from the date of receipt of such offer, accept or reject such offer.

16. If I commit any breach of any of the terms and conditions herein to be observed and performed by me and if such breach is not remedied by me on a written requisition from the bank within the time stipulated by the bank in such written requisition, the bank shall have an option to rescind this agreement and I shall be liable for payment of any loss or damage or compensation which the bank may suffer either directly or indirectly or remotely as a result of such breach on my part.

Yours faithfully