PRIVILEGED AND CONFIDENTIAL ATTORNEY-CLIENT PRIVILEGE / ATTORNEY WORK PRODUCT
MEMORANDUM
From: Marcus Leung, Calderwood & Harkness LLP
To: Lisa Morrow and Philip Hartmann, Calderwood & Harkness LLP
Date: October 25, 2025
Re: Title and Survey Review — Sun Belt Portfolio (14 Properties); $240,000,000 Permanent CMBS Mortgage Loan; Fairwater Real Estate Investment Trust; Calderwood & Harkness Matter No. 1036-00001
Client: Fairwater Real Estate Investment Trust
Proposed Lender: Clarendon Metropolitan Insurance Company
Title Insurer: Marlowe Asset Management Title Insurance Group, Inc.
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I. Executive Summary
This memorandum sets forth the results of our review and analysis of the pro forma title insurance commitments and ALTA/NSPS land title surveys for all fourteen (14) properties comprising the "Sun Belt Portfolio" in connection with the proposed $240,000,000 permanent CMBS mortgage loan (the "Permanent Loan") to be originated by Clarendon Metropolitan Insurance Company ("Clarendon Metropolitan" or the "Lender"). The Permanent Loan is anticipated to be pooled into the CLRN 2025-C14 CMBS securitization trust (the "Trust"). This memorandum is prepared for the use of the deal team at Calderwood & Harkness LLP ("C&H") in its capacity as counsel to Fairwater Real Estate Investment Trust (the "Sponsor" or "Fairwater") and is protected by the attorney-client privilege and the attorney work product doctrine.
The title insurance commitments under review were issued by Marlowe Asset Management Title Insurance Group, Inc. ("Marlowe Asset Management Title"), located at 901 Main Street, Suite 1100, Dallas, Texas 75202, through its national commercial division. Each commitment was issued in the ALTA 2021 Commitment for Title Insurance form and proposes issuance of an ALTA 2006 Loan Policy (06-17-06, with subsequent amendments) in favor of Clarendon Metropolitan and its successors and assigns, including the Trust.
The fourteen properties span five states: Texas (5 properties), Georgia (3 properties), Florida (3 properties), North Carolina (2 properties), and Tennessee (1 property). All properties are multifamily residential communities ranging in size from 256 to 380 units, with construction dates between 2014 and 2021. The properties are held by fourteen separate special-purpose Delaware limited liability companies (Fairwater Sun Belt I LLC through Fairwater Sun Belt XIV LLC, each an "SPE Borrower" and collectively, the "SPE Borrowers"), each wholly owned by Fairwater Operating Partnership, L.P., a Delaware limited partnership (the "Operating Partnership"). The SPE structure is designed to satisfy standard CMBS single-purpose entity requirements.
The aggregate appraised value of the Sun Belt Portfolio is approximately $385,000,000, and the aggregate proposed loan allocation is $240,000,000, resulting in a combined loan-to-value ratio of approximately 62.34%. Each SPE Borrower's allocated loan amount is determined on a pro rata basis relative to the appraised value of its property.
The Sun Belt Portfolio was originally acquired from Meridian Sunstone Holdings LLC ("Meridian Sunstone") in a portfolio transaction that closed on June 30, 2025 (the "Acquisition Closing"). Bridge financing for the acquisition was provided by a syndicate of lenders led by Kensington National Bank, N.A. ("KNB") as administrative agent, pursuant to a senior secured credit facility (the "Bridge Facility"). As a result, each of the fourteen properties is currently encumbered by first-priority mortgage liens (in the applicable form for each state) in favor of KNB as administrative agent. These existing liens must be released simultaneously with the recording of the new mortgage instruments in favor of Clarendon Metropolitan, and coordination of such releases represents the single most significant logistical requirement for closing. KNB's outside counsel is Halcourt Briggs & Devlin LLP ("HBD"), and our primary contact at that firm is Kenneth R. Delacroix.
Summary Finding: Based on our review, we have identified no material title defects that would preclude closing of the Permanent Loan. However, several requirements and objections have been flagged for resolution prior to closing, including (a) the mandatory release and reconveyance of all fourteen existing KNB bridge facility liens, (b) certain flood zone issues at three properties requiring further investigation and potential flood insurance coverage, (c) a minor survey discrepancy at one Texas property requiring a corrective instrument, (d) a retaining wall encroachment at one Georgia property requiring affirmative title coverage, and (e) confirmation of recording tax credits and exemptions available in Florida, Georgia, and North Carolina for refinancing transactions, which could yield meaningful cost savings. Additionally, the Lender's endorsement package must be finalized with Marlowe Asset Management Title to satisfy CMBS securitization requirements. A draft permitted exceptions schedule is attached as Exhibit A for review by Lender's counsel.
II. Scope and Methodology
In preparing this memorandum, we reviewed the following materials and undertook the following diligence steps:
1. Title Insurance Commitments. We reviewed fourteen (14) pro forma title insurance commitments issued by Marlowe Asset Management Title Insurance Group, Inc., each in the ALTA 2021 Commitment for Title Insurance form. The commitments bear effective dates on or about October 10–15, 2025, reflecting searches of the applicable county land records through those dates. Each commitment includes a Schedule A (describing the proposed insured, proposed policy form, proposed insured amount, and record ownership), a Schedule B-I (setting forth requirements to be satisfied prior to issuance of the policy), and a Schedule B-II (listing exceptions from coverage that would appear in the proposed policy).
2. ALTA/NSPS Land Title Surveys. We reviewed fourteen (14) ALTA/NSPS land title surveys (the "Surveys"), each of which is an updated version of the survey obtained in connection with the Acquisition Closing. The Surveys have been re-certified to Clarendon Metropolitan Insurance Company, Marlowe Asset Management Title Insurance Group, Inc., and the respective SPE Borrowers. Each Survey includes the Table A optional items required by the Lender, including items 1 through 11, 13, 14, 16, 17, 18, 19, and 20 of Table A. The Surveys were prepared by licensed professional land surveyors in the respective states and bear dates of certification in September 2025.
3. Cross-Reference to Acquisition Title Policies. We cross-referenced each title commitment against the corresponding bridge-loan title policy (ALTA Loan Policy) issued at the June 30, 2025 Acquisition Closing in favor of KNB as administrative agent. This cross-referencing enabled us to identify any new encumbrances, exceptions, or changes in the status of title that have arisen since the Acquisition Closing.
4. Applicable Recording Statutes. We reviewed the applicable state recording statutes and requirements for each of the five states in which properties are located: Texas, Georgia, Florida, North Carolina, and Tennessee. This review included analysis of mortgage/deed of trust/security deed recording requirements, documentary stamp taxes, intangibles taxes, mortgage recording taxes, and refinancing credits or exemptions available under applicable law.
5. Lender's Title Requirements Letter. We consulted the title requirements letter dated September 22, 2025, issued by Clarendon Metropolitan through its outside counsel, Ashworth McPhail LLP (attention: Joanna C. Wexler) (the "Title Requirements Letter"), which specifies the endorsements and coverage required for CMBS securitization, including specific endorsement forms and policy provisions necessary for the anticipated pooling into CLRN 2025-C14.
6. Methodology. This memorandum is organized as follows: a property-by-property analysis arranged by state, commencing with the five Texas properties, followed by the three Georgia properties, the three Florida properties, the two North Carolina properties, and the one Tennessee property. Each property analysis addresses the title commitment, vesting, Schedule B-II specific exceptions, survey matters, and outstanding requirements. Following the property-by-property analysis, we present a cross-cutting analysis of standard exceptions, required endorsements, and the recommended permitted exceptions schedule. An action items table summarizing all open issues and responsible parties is provided in Section XII.
III. Summary of Title Insurance Commitments — Overview
A. Commitment Structure
Each of the fourteen title insurance commitments was issued in the ALTA 2021 Commitment for Title Insurance form. The commitments propose the issuance of an ALTA 2006 Loan Policy (06-17-06, with subsequent amendments) in favor of Clarendon Metropolitan Insurance Company, as the proposed insured, and its successors and assigns, including the CMBS trust CLRN 2025-C14 and any subsequent assignees of the loan or the beneficial interest therein. This assignment provision is critical for CMBS securitization purposes and ensures that the policy will remain effective as the loan is transferred into the Trust and potentially further assigned.
The proposed insured amount for each property is equal to the allocated loan amount for that property, determined on a pro rata basis relative to the property's appraised value as a percentage of the aggregate appraised value of the portfolio. The aggregate proposed insured amount across all fourteen policies is $240,000,000. The following table sets forth the property name, location, and proposed insured amount for each commitment:
B. Vesting / Record Ownership
Each title commitment confirms that the applicable property is vested in the correct SPE Borrower entity — that is, Fairwater Sun Belt I LLC through Fairwater Sun Belt XIV LLC, as applicable. The vesting deeds from Meridian Sunstone Holdings LLC (or its property-level subsidiaries, as applicable) to the respective SPE Borrowers were recorded in the applicable county land records on or about July 1, 2025, promptly following the June 30, 2025 Acquisition Closing. We have confirmed that the chain of title for each property is complete and unbroken from Meridian Sunstone through the current SPE Borrower, and we have identified no gaps, wild deeds, or other irregularities in the chains of title. Any property-specific vesting matters are noted in the property-by-property analysis below.
C. Schedule B-I: Requirements
The Schedule B-I of each commitment sets forth the requirements that must be satisfied prior to issuance of the proposed loan policy. While certain requirements are property-specific and are addressed in the property-by-property analysis, the following standard requirements appear across all fourteen commitments:
1. Payment of Title Insurance Premiums. Payment of the applicable title insurance premiums and endorsement charges for the proposed loan policy. Premium amounts are set forth in the estimated closing costs memorandum being prepared separately.
2. Recording of Mortgage/Deed of Trust/Security Deed. Recording of the mortgage (in Florida), deed of trust (in Texas, North Carolina, and Tennessee), or deed to secure debt (in Georgia), as applicable, in favor of Clarendon Metropolitan Insurance Company, in the appropriate county land records for each property. Each instrument must be in recordable form, properly executed and acknowledged, and must comply with all applicable state recording requirements.
3. Recording of Assignment of Leases and Rents. Recording of the assignment of leases and rents for each property, assigning the SPE Borrower's interest in all existing and future leases and rental income to Clarendon Metropolitan as additional collateral for the Permanent Loan.
4. Evidence of Authority and Good Standing. Delivery of satisfactory evidence of the authority and good standing of each SPE Borrower (as a Delaware limited liability company) and, where applicable, evidence that each SPE Borrower is qualified to do business and in good standing in the state in which its property is located. This will require certificates of good standing from the Delaware Secretary of State and certificates of authority or registration from the applicable Secretary of State or other filing office in Texas, Georgia, Florida, North Carolina, and Tennessee, as applicable.
5. Release of Existing Bridge Facility Liens. Satisfactory evidence of the release and reconveyance of all existing mortgage liens, deeds of trust, and security deeds in favor of Kensington National Bank, N.A. as administrative agent for the Bridge Facility syndicate. This is a critical closing requirement and represents the most complex logistical element of the title closing process, as it requires coordinated preparation and delivery of release instruments across five states and fourteen properties. The release process must be coordinated with HBD (Kenneth R. Delacroix), and we discuss this requirement in detail in Section IX.A below.
6. Payment of Real Property Taxes. Payment of all real property taxes and assessments that are due and payable through the closing date of the Permanent Loan. Current tax certificates from the applicable county tax collector or assessor's office will be required for each property.
7. UCC Search Results. Receipt of UCC search results (both at the state level in Delaware, where each SPE Borrower is organized, and at the state and county level in the property state) showing no prior security interests in fixtures or other personal property that would constitute a lien on the collateral. UCC filings are addressed separately in the UCC filing memorandum.
8. Delivery of ALTA Survey. Delivery of a satisfactory ALTA/NSPS land title survey for each property, certified to Clarendon Metropolitan, Marlowe Asset Management Title, and the SPE Borrowers, meeting the minimum standards set forth in the Title Requirements Letter.
9. Corrective Instruments. Execution and recording of any required corrective instruments identified in the property-specific requirements of each commitment, including but not limited to corrective deeds, corrective affidavits, and gap indemnities, as applicable.
D. Schedule B-II: Standard / General Exceptions
Each commitment includes standard printed exceptions in Schedule B-II that appear in substantially identical form across all fourteen commitments. These standard exceptions, and the proposed treatment of each, are as follows:
1. Rights or Claims of Parties in Possession. Each commitment excepts from coverage any rights or claims of parties in possession of the property not shown by the public records. This standard exception is to be deleted upon receipt of a satisfactory ALTA/NSPS survey and delivery by the SPE Borrower of an owner's affidavit confirming that there are no parties in possession other than tenants under written residential leases.
2. Survey Matters. Each commitment excepts from coverage any encroachments, overlaps, boundary line disputes, or other matters that would be disclosed by an accurate survey and inspection of the property. This exception is to be deleted upon receipt of the ALTA/NSPS Survey and issuance of the ALTA 9.0 series endorsement (Comprehensive or Restrictions, Encroachments, Minerals endorsement), which affirmatively covers survey-related matters.
3. Unrecorded Easements. Each commitment excepts from coverage any easements or claims of easements not shown by the public records. This exception is to be narrowed through the delivery of an owner's affidavit by the SPE Borrower confirming that the SPE Borrower has no knowledge of any unrecorded easements affecting the property, other than those disclosed by the Survey.
4. Taxes Not Yet Due. Each commitment excepts from coverage liens for real property taxes or assessments that are not yet due and payable. This is a standard permitted exception for all commercial real estate loan transactions and will be included in the permitted exceptions schedule as a matter of course.
5. Mechanic's and Materialmen's Liens. Each commitment excepts from coverage any mechanic's or materialmen's liens, or liens arising from the furnishing of labor or materials, that are not of record. This exception is to be addressed through the delivery of lien waivers from contractors and material suppliers (to the extent any work has been performed within the applicable statutory lien period) and/or through a gap indemnity from the SPE Borrower and Sponsor.
6. Rights of Tenants. Each commitment excepts from coverage the rights of tenants under unrecorded leases. Because each property is a multifamily residential community, this is a standard permitted exception, and the proposed loan documents will permit this exception in the form: "Rights of tenants under residential leases, as tenants only, without any option to purchase or right of first refusal." The assignment of leases and rents to be recorded in connection with the Permanent Loan will assign the SPE Borrower's landlord interest in all such leases to the Lender as additional collateral.
In addition to these standard printed exceptions, each commitment includes property-specific exceptions (recorded instruments, easements, restrictions, and other matters particular to the individual property) that are addressed in the property-by-property analysis set forth in Sections IV through VIII below.
IV. Property-by-Property Title and Survey Analysis — Texas Properties (5)
A. Fairwater Sun Belt I LLC — Ridgewater at Lakeline, Austin, TX
Property Description: Ridgewater at Lakeline is a 320-unit garden-style multifamily community located in the Lakeline area of Austin, Texas. The property was constructed in 2018 and has a current appraised value of $32,500,000. The allocated loan amount is $20,259,740.
County: Williamson County. Although the Lakeline area of Austin straddles the Travis County–Williamson County border, the legal description and recorded instruments confirm that the property is located entirely within Williamson County. All recording and title matters are governed by Williamson County records.
Title Commitment: Commitment No. VTI-TX-001, issued by Marlowe Asset Management Title Insurance Group, Inc., with an effective date of October 12, 2025.
Vesting: The commitment confirms that title to the property is vested in Fairwater Sun Belt I LLC, a Delaware limited liability company. The vesting deed, a special warranty deed from Meridian Sunstone Holdings LLC to Fairwater Sun Belt I LLC, was recorded in the Official Public Records of Williamson County on July 1, 2025, as Document No. 2025-078413. The chain of title has been reviewed and confirmed as complete and unbroken.
Schedule B-II Specific Exceptions:
(a) Utility Easements (Electric, Water, Sewer). The commitment excepts from coverage various utility easements granted to Northgate & Co., the Williamson County Municipal Utility District, and the City of Austin for water and sewer service. These easements are standard for multifamily developments in the Austin metropolitan area. The Survey confirms that no improvements encroach upon any of the identified utility easement areas. We recommend that these utility easements be included as permitted exceptions.
(b) Subdivision Plat Restrictions. The commitment references the subdivision plat recorded in Cabinet , Slide of the Williamson County Plat Records, together with the associated restrictive covenants. We have reviewed the plat and covenants and have identified no violations of any plat restrictions. The plat expressly permits multifamily residential use, and there are no restrictions that would impair the property's operations or the Lender's collateral interest. We recommend inclusion as a permitted exception.
(c) Drainage Easement Along Northern Boundary. The commitment identifies a recorded drainage easement running along the northern boundary of the property, with a width of fifteen (15) feet. The Survey confirms that no improvements — including buildings, parking structures, or other permanent structures — are located within the drainage easement area. The easement serves a stormwater drainage function for the broader subdivision and does not interfere with the property's operations. We recommend inclusion as a permitted exception.
(d) Recorded Access Easement Benefiting Adjacent Parcel. The commitment identifies a non-exclusive access easement benefiting the adjacent parcel to the west, providing vehicular and pedestrian access across a defined portion of the property's internal drive aisle. The easement is reciprocal in nature and was created as part of the original subdivision development. It does not impair the property's use, operations, or access to public roads. We recommend inclusion as a permitted exception.
Survey Matters:
The ALTA/NSPS Survey for this property is dated September 2025 and has been certified to Clarendon Metropolitan Insurance Company, Marlowe Asset Management Title Insurance Group, Inc., and Fairwater Sun Belt I LLC. The Survey includes all required Table A optional items.
(a) Minor Fence Encroachment. The Survey discloses a minor fence encroachment from the adjacent property to the east, where a wooden privacy fence extends approximately 0.8 feet onto the insured property along the eastern boundary. This encroachment is immaterial and does not affect any improvements on the insured property. We have discussed this matter with Marlowe Asset Management Title, and the title company has agreed to insure over this encroachment through the ALTA 9.0 series endorsement (survey endorsement) without additional premium. We recommend that the Lender accept this encroachment as a permitted survey matter.
(b) Improvement Location. All buildings, parking structures, swimming pools, clubhouse, and other permanent improvements are confirmed to be located within the property's lot lines and within all applicable setback lines as established by the subdivision plat and local zoning ordinance.
(c) Flood Zone Determination. The Survey and corresponding FEMA flood zone determination confirm that the property is located entirely within Zone X (area of minimal flood hazard), as shown on the applicable FEMA Flood Insurance Rate Map (FIRM) panel. No flood insurance is required under CMBS requirements for properties located entirely within Zone X.
Requirements to Resolve:
(i) Release of the existing deed of trust in favor of Kensington National Bank, N.A. as administrative agent, recorded in the Official Public Records of Williamson County on July 1, 2025. Coordination with HBD (Kenneth R. Delacroix) is required for preparation of the release of lien instrument.
(ii) Confirmation of current real property tax payments through the closing date from the Williamson County Tax Assessor-Collector. Tax receipts or a current tax certificate must be obtained.
B. Fairwater Sun Belt II LLC — Sagebrush Commons, San Antonio, TX
Property Description: sagebrush Commons is a 288-unit garden-style multifamily community located in San Antonio, Texas. The property was constructed in 2016 and has a current appraised value of $24,800,000. The allocated loan amount is $15,461,039.
County: Bexar County.
Title Commitment: Commitment No. VTI-TX-002, issued by Marlowe Asset Management Title Insurance Group, Inc., with an effective date of October 12, 2025.
Vesting: The commitment confirms that title to the property is vested in Fairwater Sun Belt II LLC, a Delaware limited liability company. The chain of title has been reviewed and confirmed as complete and unbroken. The vesting deed from Meridian Sunstone was recorded in the Official Public Records of Bexar County on July 1, 2025.
Schedule B-II Specific Exceptions:
(a) Standard Utility Easements. The commitment identifies utility easements granted to CPS Energy and San Antonio Water System (SAWS). The Survey confirms that no improvements encroach upon any utility easement area. We recommend inclusion as permitted exceptions.
(b) HOA/Property Owners Association Declaration. The commitment references a Declaration of Covenants, Conditions, and Restrictions establishing a property owners association responsible for common area maintenance, including shared landscaping, entrance features, and stormwater infrastructure serving multiple parcels within the original development. We have reviewed the Declaration and confirmed that there are no restrictions on multifamily operations, no restrictions on refinancing or encumbering the property, and that all assessments are current as of the effective date of the commitment. We recommend inclusion as a permitted exception.
(c) Restrictive Covenants (2015). The commitment identifies restrictive covenants recorded in 2015 in connection with the original development of the property. We have reviewed these covenants in detail and have determined that there are no present violations. Notably, the architectural review provisions contained in the covenants have lapsed by their own terms, as the developer's architectural review period expired in 2020. The remaining provisions (relating to use restrictions, maintenance standards, and signage) are standard for multifamily developments and do not impair the property's operations or the Lender's collateral interest. We recommend inclusion as a permitted exception.
Survey Matters:
(a) No Encroachments. The Survey confirms that all improvements are located within the property boundary and within all applicable setback lines. No encroachments by or onto the property were identified.
(b) Parking Lot. An initial review of the Survey raised a question as to whether the parking area along the southern boundary extended beyond the property line. Upon closer examination and consultation with the surveyor, we have confirmed that the parking area is entirely within the property boundary. The asphalt edge is located approximately 1.3 feet inside the property line. This concern has been fully resolved.
(c) Flood Zone. The property is located entirely within Zone X (area of minimal flood hazard). No flood insurance is required.
Requirements to Resolve:
(i) Release of the existing deed of trust in favor of KNB recorded in Bexar County.
(ii) Updated tax certificate from the Bexar County Tax Assessor-Collector confirming current status of all real property taxes.
C. Fairwater Sun Belt III LLC — Cypress Bend, Katy, TX
Property Description: Cypress Bend is a 340-unit garden-style multifamily community located in Katy, Texas. The property was constructed in 2019 and has a current appraised value of $30,200,000. The allocated loan amount is $18,826,494.
County: Fort Bend County. Although the Katy area straddles Harris County and Fort Bend County, the legal description and recorded instruments confirm that the property is located entirely within Fort Bend County. All recording and title matters are governed by the records of the Fort Bend County Clerk.
Title Commitment: Commitment No. VTI-TX-003, issued by Marlowe Asset Management Title Insurance Group, Inc., with an effective date of October 13, 2025.
Vesting: The commitment confirms that title to the property is vested in Fairwater Sun Belt III LLC, a Delaware limited liability company. The vesting deed was recorded in the Official Public Records of Fort Bend County on July 1, 2025.
Schedule B-II Specific Exceptions:
(a) Utility and Drainage Easements. The commitment identifies standard utility easements granted to Fenmore Corporation and Fort Bend County Municipal Utility District No. __ for water, sewer, and drainage purposes. The Survey confirms that no improvements encroach upon any identified utility or drainage easement area. We recommend inclusion as permitted exceptions.
(b) Municipal Utility District (MUD) Assessments. The property is located within a MUD, and the commitment identifies the lien of MUD assessments as an exception. MUD assessments are common for developments in the Greater Houston/Katy area and function similarly to ad valorem taxes. We have confirmed that all MUD assessments are current as of the effective date of the commitment, and that no delinquencies exist. The lien for future MUD assessments is a standard permitted exception in Texas real estate transactions. We recommend inclusion as a permitted exception, provided that Marlowe Asset Management Title delivers a current MUD assessment status letter confirming no delinquency.
(c) Recorded Pipeline Easement. The commitment identifies a recorded pipeline easement with a width of twenty (20) feet running along the southwestern boundary of the property. The Survey confirms that the pipeline easement does not affect any improvements on the property — all buildings, parking areas, and amenity structures are located well outside the easement area. We recommend this easement as a permitted exception; however, we flag it for the Lender's specific review given CMBS sensitivity to environmental adjacency issues associated with pipeline operations. Although the Phase I Environmental Site Assessment obtained at the Acquisition Closing did not identify any recognized environmental conditions associated with the pipeline, Clarendon Metropolitan may request updated environmental diligence or a supplemental environmental screening.
Survey Matters:
(a) Improvement Location. The Survey confirms that all improvements are located clear of all identified easement areas. Buildings, parking structures, and amenity facilities are within the property boundaries and setback lines.
(b) Detention Pond / Stormwater Management Facility. The Survey depicts a detention pond and stormwater management facility in the northwest corner of the property. This facility is maintained pursuant to an agreement with the MUD and serves as part of the regional stormwater management infrastructure. We have confirmed that the detention pond does not conflict with any improvements and that the maintenance obligation does not create an unreasonable burden on the property owner.
(c) Flood Zone — Partial Zone AE. This is a flagged issue. The Survey and corresponding FEMA Flood Insurance Rate Map indicate that the property is partially located within Zone AE (100-year floodplain, with base flood elevations determined) along the property's western edge. However, all buildings and other improvements are located outside Zone AE and within Zone X, as confirmed by the Survey and a supporting elevation certificate. We recommend that the Lender obtain a FEMA flood zone determination letter to formally confirm the zoning of the improvement areas. Although the improvements are in Zone X, flood insurance may be required for the portion of the property mapped in Zone AE under the Lender's CMBS flood compliance requirements. This matter should be presented to Clarendon Metropolitan for determination. We further recommend that a flood endorsement be obtained from Marlowe Asset Management Title.
Requirements to Resolve:
(i) FEMA flood zone determination letter confirming the flood zone designation for the property, with particular attention to the Zone AE / Zone X boundary.
(ii) Flood insurance binder if required by the Lender for the Zone AE portion of the property.
(iii) Release of the existing deed of trust in favor of KNB recorded in Fort Bend County.
(iv) MUD assessment current status letter from the applicable municipal utility district confirming no delinquency.
D. Fairwater Sun Belt IV LLC — Willowbrook Terrace, Sugar Land, TX
Property Description: Willowbrook Terrace is a 310-unit garden-style multifamily community located in Sugar Land, Texas. The property was constructed in 2017 and has a current appraised value of $29,100,000. The allocated loan amount is $18,140,779.
County: Fort Bend County.
Title Commitment: Commitment No. VTI-TX-004, issued by Marlowe Asset Management Title Insurance Group, Inc., with an effective date of October 12, 2025.
Vesting: The commitment confirms that title to the property is vested in Fairwater Sun Belt IV LLC, a Delaware limited liability company. The vesting deed was recorded in the Official Public Records of Fort Bend County on July 1, 2025.
Schedule B-II Specific Exceptions:
(a) Utility Easements. Standard utility easements are identified in the commitment. The Survey confirms no encroachments by improvements upon any utility easement area. We recommend inclusion as permitted exceptions.
(b) Levee Improvement District Assessment. The property is located within a levee improvement district, and the commitment identifies the lien of levee improvement district assessments as an exception. Assessments are current. The lien for future assessments is a standard permitted exception in the Sugar Land area. We recommend inclusion as a permitted exception.
(c) Deed Restriction — Landscaping Maintenance. The commitment references a deed restriction requiring maintenance of minimum landscaping standards, including maintenance of street-facing landscaped buffers and common area plantings. We have confirmed that the property is currently in compliance with these standards. The restriction does not impair operations or the Lender's collateral interest. We recommend inclusion as a permitted exception.
Survey Matters:
(a) No Encroachments. All improvements are confirmed to be within the property boundaries and setback lines. No encroachments were identified.
(b) Signage Easement. The Survey depicts a signage easement for a shared monument sign located at the entrance to the property. The sign is shared with an adjacent development and is maintained pursuant to a recorded shared access and signage agreement. The easement does not impair the property's operations or access.
(c) Flood Zone. The property is located entirely within Zone X (area of minimal flood hazard). The property benefits from the levee system maintained by the levee improvement district. A Letter of Map Amendment (LOMA) is on file with FEMA confirming the Zone X designation. No flood insurance is required.
Requirements to Resolve:
(i) Release of the existing deed of trust in favor of KNB recorded in Fort Bend County.
(ii) Updated tax certificate from the Fort Bend County Tax Assessor-Collector.
E. Fairwater Sun Belt V LLC — Heritage at Stonebriar, Frisco, TX
Property Description: Heritage at Stonebriar is a 342-unit garden-style multifamily community located in Frisco, Texas. The property was constructed in 2020 and has a current appraised value of $35,800,000. The allocated loan amount is $22,316,883. This property has the highest allocated loan amount in the portfolio, reflecting its relatively recent construction and strong market position in the Frisco/Collin County submarket.
County: Collin County. Although the City of Frisco straddles Collin County and Denton County, the legal description and recorded instruments confirm that this property is located entirely within Collin County. All recording and title matters are governed by the records of the Collin County Clerk.
Title Commitment: Commitment No. VTI-TX-005, issued by Marlowe Asset Management Title Insurance Group, Inc., with an effective date of October 13, 2025.
Vesting: The commitment confirms that title to the property is vested in Fairwater Sun Belt V LLC, a Delaware limited liability company. The vesting deed was recorded in the Official Public Records of Collin County on July 1, 2025.
Schedule B-II Specific Exceptions:
(a) Standard Utility Easements. The commitment identifies utility easements granted to Granite Harbor Corporation and the North Texas Municipal Water District. The Survey confirms that no improvements encroach upon any utility easement area. We recommend inclusion as permitted exceptions.
(b) Planned Development District Zoning Conditions. The commitment references the conditions of the City of Frisco's planned development district (PD) zoning classification applicable to the property. We have reviewed the PD ordinance and conditions and confirmed that the property is in full compliance with all PD district requirements, including density limitations, open space requirements, building height restrictions, and parking ratios. No waivers or variances are outstanding. We recommend inclusion as a permitted exception.
(c) Reciprocal Easement Agreement. The commitment identifies a Reciprocal Easement Agreement ("REA") between the property and an adjacent retail property, providing for a shared access drive and cross-parking arrangement. We have reviewed the REA in detail and confirmed that the ongoing obligations (including maintenance contributions, insurance requirements, and operating standards) are standard for mixed-use developments in the Frisco area. The REA does not restrict the property's multifamily operations, does not grant any party an option to purchase or right of first refusal, and does not create any subordination issues. We recommend inclusion as a permitted exception.
Survey Matters:
(a) Legal Description Discrepancy. This is a flagged issue. The Survey identified a minor discrepancy in the property's metes and bounds legal description: the closure calculation is off by approximately 0.02 feet. While this discrepancy is immaterial in practical terms and does not create any ambiguity regarding the property boundaries, it is a technical deficiency that should be cured prior to closing to avoid any question from the Lender or the Trust. We recommend that the surveyor prepare a corrective affidavit or an updated survey with a corrected metes and bounds description. Marlowe Asset Management Title should be requested to accept the corrective instrument and delete any related requirement from Schedule B-I.
(b) Improvement Location. All buildings, parking structures, and amenity facilities are confirmed to be within the property boundaries and setback lines.
(c) Flood Zone. The property is located entirely within Zone X (area of minimal flood hazard). No flood insurance is required.
Requirements to Resolve:
(i) Correction of the metes and bounds legal description closure discrepancy, either through a corrective affidavit executed by the surveyor and accepted by Marlowe Asset Management Title, or through an updated and re-certified Survey with the corrected description.
(ii) Release of the existing deed of trust in favor of KNB recorded in Collin County.
F. Texas Properties — State-Specific Recording Considerations
The following state-specific recording considerations apply to all five Texas properties:
Security Instrument. Texas utilizes deeds of trust (rather than mortgages) as the standard form of real property security instrument. Each deed of trust must comply with the requirements of the Texas Property Code, including provisions for non-judicial foreclosure under Chapter 51 of the Texas Property Code. The deeds of trust will be recorded in the office of the county clerk of each applicable county: Williamson County (Sun Belt I), Bexar County (Sun Belt II), Fort Bend County (Sun Belt III and IV), and Collin County (Sun Belt V).
Documentary Stamp Taxes / Recording Taxes. Texas does not impose a documentary stamp tax, transfer tax, or mortgage recording tax on the recording of deeds of trust. This is a significant advantage relative to the Florida, Georgia, and North Carolina properties, where substantial recording taxes apply as discussed below.
Franchise Tax / State Registration. Each SPE Borrower that is a Delaware limited liability company doing business in Texas must be registered with the Texas Comptroller of Public Accounts and must be current on its Texas franchise tax obligations. While Texas does not require a tax lien certificate as a condition of recording real property instruments, we recommend obtaining confirmation from each SPE Borrower that its Texas franchise tax is current and that no franchise tax lien has been filed. This is a standard diligence step for CMBS transactions involving Texas properties.
V. Property-by-Property Title and Survey Analysis — Georgia Properties (3)
A. Fairwater Sun Belt VI LLC — Peachtree Crossings, Alpharetta, GA
Property Description: Peachtree Crossings is a 296-unit garden-style multifamily community located in Alpharetta, Georgia, within the northern suburbs of metropolitan Atlanta. The property was constructed in 2015 and has a current appraised value of $28,600,000. The allocated loan amount is $17,829,091.
County: Fulton County.
Title Commitment: Commitment No. VTI-GA-001, issued by Marlowe Asset Management Title Insurance Group, Inc., with an effective date of October 14, 2025.
Vesting: The commitment confirms that title to the property is vested in Fairwater Sun Belt VI LLC, a Delaware limited liability company. The vesting deed (a limited warranty deed under Georgia law) from Meridian Sunstone's property-level subsidiary was recorded in the records of the Fulton County Clerk of Superior Court on July 1, 2025.
Schedule B-II Specific Exceptions:
(a) Utility Easements. The commitment identifies utility easements granted to Drayton Holdings (for electric distribution) and the Fulton County Department of Public Works (for water and sewer service). The Survey confirms that no improvements encroach upon any utility easement area. We recommend inclusion as permitted exceptions.
(b) Restrictive Covenants. The commitment references restrictive covenants recorded in connection with the original development of the property. We have reviewed the covenants in their entirety and have determined that (i) no violations of the covenants exist, (ii) the covenants expressly permit multifamily residential use, and (iii) the covenants do not restrict refinancing, encumbering, or transfer of the property. We recommend inclusion as a permitted exception.
(c) Stormwater Management Easement. The commitment identifies a recorded stormwater management easement benefiting Fulton County, requiring the property owner to maintain certain stormwater management facilities (detention/retention ponds and bioswales) located on the property. The Survey confirms that no building improvements conflict with the stormwater management easement area. The property owner's maintenance obligations are ongoing and are factored into the property's operating budget. We recommend inclusion as a permitted exception.
Survey Matters:
(a) ALTA/NSPS Survey. The Survey has been updated and re-certified to the required parties and is dated September 2025.
(b) Retaining Wall Encroachment. This is a flagged issue. The Survey discloses that a retaining wall located along the western boundary of the property encroaches approximately 1.2 feet onto the adjacent property. The retaining wall is a pre-existing condition that was in place at the time of the Acquisition Closing and was noted on the original acquisition survey. No objection was raised by the adjacent property owner at the time of acquisition or subsequently. We have requested that Marlowe Asset Management Title provide affirmative title coverage for this encroachment via an endorsement to the loan policy, confirming that the policy will provide coverage against loss or damage arising from the encroachment. Marlowe Asset Management Title has indicated its willingness to provide such coverage, subject to receipt of an owner's affidavit confirming the pre-existing nature of the encroachment and the absence of any dispute with the adjacent property owner. We recommend that the Lender accept this matter with the benefit of the affirmative endorsement.
(c) Flood Zone. The property is located entirely within Zone X (area of minimal flood hazard). No flood insurance is required.
Requirements to Resolve:
(i) Release of the existing security deed (deed to secure debt) in favor of KNB as administrative agent, recorded in the records of the Fulton County Clerk of Superior Court. Under Georgia law, the release instrument is a cancellation of security deed, which must be recorded in the same records.
(ii) Affirmative title coverage / endorsement from Marlowe Asset Management Title for the retaining wall encroachment onto the adjacent property, as described above.
(iii) Updated ad valorem tax certificate from the Fulton County Tax Commissioner confirming current status of all real property taxes.
B. Fairwater Sun Belt VII LLC — Cumberland Ridge, Smyrna, GA
Property Description: Cumberland Ridge is a 264-unit garden-style multifamily community located in Smyrna, Georgia, within the Cumberland/Vinings submarket of metropolitan Atlanta. The property was constructed in 2014 and has a current appraised value of $24,200,000. The allocated loan amount is $15,087,013. This is the oldest property in the Sun Belt Portfolio.
County: Cobb County.
Title Commitment: Commitment No. VTI-GA-002, issued by Marlowe Asset Management Title Insurance Group, Inc., with an effective date of October 14, 2025.
Vesting: The commitment confirms that title to the property is vested in Fairwater Sun Belt VII LLC, a Delaware limited liability company.
Schedule B-II Specific Exceptions:
(a) Standard Utility Easements. The commitment identifies utility easements granted to Drayton Holdings and the Cobb County Water System. The Survey confirms no encroachment of improvements upon any utility easement area. We recommend inclusion as permitted exceptions.
(b) Cobb County Sanitary Sewer Easement. The commitment identifies a twenty-five (25) foot wide sanitary sewer easement running along the rear (northern) portion of the property, granted to Cobb County for the operation and maintenance of a sanitary sewer main. The Survey confirms that all building improvements are located clear of this easement. The easement is a standard infrastructure servitude and does not impair the property's operations. We recommend inclusion as a permitted exception.
(c) Declaration of Covenants, Conditions, and Restrictions. The commitment references a Declaration of CC&Rs recorded in connection with the original development of the property. We have reviewed the Declaration and confirmed that it contains standard multifamily development restrictions relating to maintenance standards, signage, and use restrictions. The property is in compliance with all requirements of the Declaration. No restrictions on refinancing or encumbering the property were identified. We recommend inclusion as a permitted exception.
Survey Matters:
(a) No Encroachments. The Survey confirms that no encroachments of improvements onto adjoining properties, or of neighboring improvements onto the insured property, were identified.
(b) Dumpster Pad. The Survey shows a concrete dumpster pad located partially within the Cobb County sanitary sewer easement area along the rear of the property. This is a removable structure (not a permanent building improvement), and Marlowe Asset Management Title has confirmed its willingness to insure over this matter without additional endorsement. The dumpster pad does not create a material risk, as Cobb County could require its removal only in the event of sewer main maintenance, at which time the pad could be readily relocated at minimal cost.
(c) Flood Zone. The property is located entirely within Zone X. No flood insurance is required.
Requirements to Resolve:
(i) Release of the existing security deed in favor of KNB recorded in Cobb County.
(ii) Current ad valorem tax certificate from the Cobb County Tax Commissioner.
C. Fairwater Sun Belt VIII LLC — Sugarloaf Station, Duluth, GA
Property Description: Sugarloaf Station is a 260-unit garden-style multifamily community located in Duluth, Georgia, within the Gwinnett County submarket of metropolitan Atlanta. The property was constructed in 2016 and has a current appraised value of $23,400,000. The allocated loan amount is $14,588,571.
County: Gwinnett County.
Title Commitment: Commitment No. VTI-GA-003, issued by Marlowe Asset Management Title Insurance Group, Inc., with an effective date of October 14, 2025.
Vesting: The commitment confirms that title to the property is vested in Fairwater Sun Belt VIII LLC, a Delaware limited liability company.
Schedule B-II Specific Exceptions:
(a) Standard Utility and Access Easements. The commitment identifies utility easements granted to Drayton Holdings and Gwinnett County Department of Water Resources, as well as an access easement providing ingress and egress to the property from the adjacent public right-of-way. These are standard servitudes and do not impair the property's operations. We recommend inclusion as permitted exceptions.
(b) Gwinnett County Stormwater Management Easement and Maintenance Agreement. The commitment references a recorded stormwater management easement and maintenance agreement requiring the property owner to maintain stormwater best management practices (BMPs) on the property, subject to annual inspection by Gwinnett County. We have confirmed that the property is in compliance with all requirements of the agreement and that the most recent annual inspection (conducted in August 2025) resulted in a satisfactory finding. We recommend inclusion as a permitted exception.
(c) Pedestrian Trail Easement. The commitment identifies a recorded easement for a pedestrian trail connecting the property to an adjacent Gwinnett County park. The easement runs along the eastern boundary of the property and is approximately ten (10) feet in width. The Survey confirms that no building improvements or parking areas encroach upon the trail easement. The trail is maintained by Gwinnett County Parks and Recreation and does not impose a maintenance obligation on the property owner. We recommend inclusion as a permitted exception.
Survey Matters:
(a) All Improvements Within Boundaries. The Survey confirms that all buildings, parking areas, and other improvements are located within the property boundaries and setback lines.
(b) Pool/Amenity Area. The Survey confirms that the swimming pool and amenity area (including the clubhouse, pool deck, and associated landscaping) are located within the property boundaries and outside all identified easement areas. No issues were identified.
(c) Flood Zone. The property is located entirely within Zone X. No flood insurance is required.
Requirements to Resolve:
(i) Release of the existing security deed in favor of KNB recorded in Gwinnett County.
(ii) Updated ad valorem tax certificate from the Gwinnett County Tax Commissioner.
D. Georgia Properties — State-Specific Recording Considerations
The following state-specific recording considerations apply to all three Georgia properties:
Security Instrument. Georgia utilizes deeds to secure debt (commonly referred to as "security deeds") rather than mortgages or deeds of trust. Each security deed must comply with the requirements of O.C.G.A. § 44-14-60 et seq. and must be recorded in the office of the Clerk of Superior Court of each applicable county: Fulton County (Sun Belt VI), Cobb County (Sun Belt VII), and Gwinnett County (Sun Belt VIII).
Georgia Intangibles Tax. Georgia imposes an intangibles tax at the rate of $1.50 per $500.00 (or $3.00 per $1,000.00) of the face amount of new indebtedness secured by real property, payable at the time of recording a new security deed. Based on the allocated loan amounts for the three Georgia properties, the estimated intangibles tax liability is as follows:
Potential Intangibles Tax Credit for Refinancing. Under O.C.G.A. § 48-6-65, Georgia permits a credit against the intangibles tax for the amount of intangibles tax previously paid on the same indebtedness when the original indebtedness is being refinanced, provided that the new indebtedness does not exceed the principal amount of the original indebtedness. Because the Bridge Facility was secured by security deeds on these three Georgia properties, and because intangibles tax was presumably paid at the time of the recording of the Bridge Facility security deeds on July 1, 2025, a credit may be available to offset the intangibles tax due on the new security deeds being recorded in connection with the Permanent Loan. We must coordinate with Marlowe Asset Management Title to confirm: (i) the amount of intangibles tax previously paid on the Bridge Facility security deeds, (ii) whether the allocated Permanent Loan amounts for each Georgia property exceed the allocated Bridge Facility amounts (which would reduce the available credit), and (iii) the documentation required to claim the credit (typically a copy of the prior intangibles tax payment receipt and a sworn statement from the borrower). This credit could significantly reduce the closing costs for the Georgia properties.
VI. Property-by-Property Title and Survey Analysis — Florida Properties (3)
A. Fairwater Sun Belt IX LLC — Bayshore Landings, Tampa, FL
Property Description: Bayshore Landings is a 308-unit garden-style multifamily community located in Tampa, Florida. The property was constructed in 2017 and has a current appraised value of $33,800,000. The allocated loan amount is $21,069,870. This is the highest-value property among the three Florida assets and the third-highest-value property in the portfolio overall.
County: Hillsborough County.