PRIVILEGED AND CONFIDENTIAL ATTORNEY WORK PRODUCT
MEMORANDUM
TO: Douglas Fairchild, Responsible Partner, Real Estate Practice Group Cynthia Ho, Lead Associate, Real Estate Practice Group
FROM: Grace Nakamura, Working Associate, Real Estate Practice Group
DATE: April 28, 2025
RE: Title Review Memorandum — Meridian Parcel (19.4 Acres), Loudoun County, Virginia
CLIENT: Ironhaven Data Centers LLC
MATTER NO.: 1043-00002
Right-click to update Table of Contents
I. EXECUTIVE SUMMARY
This memorandum summarizes my review of the title commitment issued for the 19.4-acre parcel commonly known as the "Meridian Parcel" located in unincorporated Loudoun County, Virginia (near Ashburn, VA 20148), in connection with the proposed acquisition of the Meridian Parcel by our client, Ironhaven Data Centers LLC ("IHDC"), for development of the Stonebridge Data Center Campus (the "Campus"). The Campus, upon completion, is designed to provide approximately 96 MW of critical IT load capacity across four data center buildings situated on a combined 81.4-acre site comprising the Meridian Parcel and the adjacent 62.0-acre Stonebridge Parcel.
The title commitment (Commitment No. FTE-2025-04-00732) was issued by Fidelitas Title & Escrow, Inc. ("Fidelitas"), as agent for Sovereign Title Insurance Company ("Sovereign"), with an effective date of April 10, 2025 (the "Commitment"). A copy of the Commitment is appended hereto as Attachment A.
The proposed insured under the owner's policy is Ironhaven Data Centers LLC, a Delaware limited liability company, or its permitted assignee, Stonebridge Campus Holdings LLC, a to-be-formed single-purpose Virginia limited liability company that will serve as the borrower entity under the construction financing. The owner's policy amount is $19,400,000, corresponding to the agreed purchase price under the Purchase and Sale Agreement for the Meridian Parcel (the "Meridian PSA"), which was executed on April 22, 2025, between Meridian Acres LLC, a Virginia limited liability company managed by Theodore Ashford ("Seller"), and IHDC.
For coordination purposes, I note that a separate lender's title insurance policy in the amount of $390,000,000 will be required in connection with the construction loan closing with Summit National Bank, N.A. ("Summit"), as Administrative Agent. The lender's policy will encumber both the Meridian Parcel and the Stonebridge Parcel as security for the construction facility. The lender's policy is not the subject of this memorandum; however, certain observations herein are relevant to the lender's policy requirements and have been flagged accordingly.
Seller's counsel is Fiona Dunleavy of Dunleavy & Marsh, PLLC.
Overall Assessment: Based on my review, title to the Meridian Parcel is insurable, subject to the Schedule B-II exceptions discussed in detail in Section V below. Several of those exceptions require curative action or further investigation prior to the anticipated closing date of September 15, 2025. In particular, the following matters warrant prompt attention:
• The existing deed of trust encumbering the Meridian Parcel must be released and satisfied at or prior to closing.
• The recorded Declaration of Covenants, Conditions, and Restrictions must be reviewed in full to determine whether it restricts data center use or imposes architectural review requirements inconsistent with the planned development.
• Any mineral rights reservation with surface entry rights must be investigated and addressed.
• Standard printed exceptions should be deleted upon delivery of the ALTA/NSPS survey, owner's affidavit, and other customary deletion requirements.
I recommend that a title objection letter be transmitted promptly to Dunleavy & Marsh, PLLC to preserve our client's rights under the Meridian PSA and to provide adequate time for seller's response and curative actions before the closing target. A draft of the title objection letter is appended hereto as Attachment D for your review and comment.
This memorandum should be read in conjunction with the companion Title Review Memorandum for the Stonebridge Parcel (62.0 acres, Blackthorn Realty Group, Inc. as seller, commitment effective date April 3, 2025, owner's policy amount $58,500,000), which has been circulated separately.
II. PROPERTY DESCRIPTION
The Meridian Parcel is described in the Commitment by reference to a metes and bounds legal description set forth in Schedule A thereof, which in turn references the subdivision plat recorded as Instrument No. 201809170045871 in the land records of the Circuit Court of Loudoun County, Virginia (the "Land Records"). The legal description identifies the Meridian Parcel as Lot 2 on the plat of subdivision entitled "Subdivision of Meridian Acres," prepared by Dominion Land Surveying, LLC, dated June 8, 2018, and recorded among the aforesaid Land Records.
Loudoun County Tax Map Reference: /95-4A-2///
Acreage: Approximately 19.4 acres, as depicted on the recorded subdivision plat and reflected in the Loudoun County real property tax records.
General Location: The Meridian Parcel is situated in unincorporated Loudoun County, Virginia, near Ashburn, VA 20148. The parcel is bounded on the east by the Stonebridge Parcel (Loudoun County Tax Map Reference /95-4A-1///), which is being acquired simultaneously by IHDC from Blackthorn Realty Group, Inc. under a separate purchase and sale agreement. The combined 81.4-acre site formed by the Meridian Parcel and the Stonebridge Parcel will constitute the Stonebridge Data Center Campus.
Current Zoning: The Meridian Parcel is currently zoned PD-IP (Planned Development – Industrial Park) under the Loudoun County Revised 1993 Zoning Ordinance. A Zoning Modification application ("ZMOD") for data center use is expected to be filed with the Loudoun County Department of Planning and Zoning on or before May 30, 2025. The anticipated docket number for the application is ZMOD-2025-0038. Cornerstone Land Use Consulting (Alan Mercer) is coordinating the ZMOD application in conjunction with our firm's land use team. The zoning entitlement process is the subject of a separate memorandum and is not addressed in detail herein, except to the extent that zoning status is relevant to the ALTA 3.1 Zoning endorsement discussed in Section VII.
Intended Use: The Meridian Parcel is intended to serve multiple critical functions within the Campus, including: (a) utility routing corridors connecting the Campus to the regional electric transmission grid; (b) a dedicated substation easement area for the planned 230kV/34.5kV substation to be constructed by and for Vantage Power Cooperative ("VPC") pursuant to a Substation Easement Agreement currently being drafted; and (c) additional building pads for data center structures that, together with the buildings on the Stonebridge Parcel, will comprise the four-building Campus designed to deliver 96 MW of critical IT load.
ALTA/NSPS Survey: An ALTA/NSPS Land Title Survey of the Meridian Parcel is being prepared by Lumen Ridge Engineering, PLLC, under the direction of Carlos Esteban, PE. The target completion date for the survey is June 15, 2025. A separate Survey Review Memorandum will be prepared upon receipt of the completed survey. The survey will be prepared in accordance with the 2021 ALTA/NSPS Minimum Standard Detail Requirements for ALTA/NSPS Land Title Surveys, including Table A optional items as required by Summit (through its counsel, Redmond & Calloway LLP) and by Sovereign for deletion of the standard survey exception.
Important Note: The legal description set forth in the Commitment should be compared against the ALTA survey upon receipt. Any discrepancies between the metes and bounds description in the Commitment and the field survey must be identified and resolved prior to closing. If discrepancies exist, it may be necessary to obtain a corrective instrument or an updated legal description for use in the deed and the owner's policy.
III. SCHEDULE A — COMMITMENT DETAILS
A. Commitment Information
The key details of the Commitment are as follows:
The Commitment proposes to issue an ALTA Owner's Policy of Title Insurance in the 2006 form, as modified for use in the Commonwealth of Virginia. The policy amount of $19,400,000 corresponds to the purchase price agreed upon under the Meridian PSA executed April 22, 2025. No issues have been identified with respect to the Commitment form or the proposed policy type.
B. Current Vesting
According to the Commitment, fee simple title to the Meridian Parcel is currently vested in:
Meridian Acres LLC, a Virginia limited liability company EIN: 84-6120983
Vesting is based on a Special Warranty Deed recorded in the Land Records of the Circuit Court of Loudoun County, Virginia, as Instrument No. 201809240046203, dated September 20, 2018, from Ashford Rural Holdings, LP, a Virginia limited partnership, to Meridian Acres LLC (the "Vesting Deed"). The Vesting Deed conveyed the Meridian Parcel (Lot 2 on the subdivision plat referenced above) to Meridian Acres LLC for recorded consideration of $3,250,000.
I have confirmed that the vesting entity reflected in the Commitment — Meridian Acres LLC — is consistent with the entity identified as "Seller" under the Meridian PSA. The Meridian PSA identifies Meridian Acres LLC as a Virginia limited liability company managed by Theodore Ashford, which is consistent with the organizational records available through the Virginia State Corporation Commission ("Virginia SCC"). According to Virginia SCC records, Meridian Acres LLC (SCC Entity ID: S5827491) is in active status, with Theodore Ashford listed as the registered agent and manager. No discrepancy has been identified between the vesting information in the Commitment and the party to the Meridian PSA.
C. Proposed Insured
The Commitment identifies the proposed insured as:
Ironhaven Data Centers LLC, a Delaware limited liability company Virginia SCC Entity ID: S7491283 EIN: 84-3291057
The Meridian PSA permits assignment of the buyer's interest to Stonebridge Campus Holdings LLC, a to-be-formed Virginia limited liability company that will be wholly owned by IHDC and will serve as the single-purpose borrower entity for the Summit construction loan. If the PSA is assigned prior to closing, the owner's policy should name Stonebridge Campus Holdings LLC as the insured. I recommend coordinating with the entity formation workstream (currently led by Priya Dasgupta's office in conjunction with our corporate team) to confirm the timing of formation and to ensure that the final policy names the correct insured entity.
The earnest money deposit in the amount of $970,000 (representing 5% of the $19,400,000 purchase price) was deposited at PSA execution on April 22, 2025, with Fidelitas Title & Escrow, Inc. serving as escrow agent, in accordance with Section 3.2 of the Meridian PSA. Fidelitas has confirmed receipt of the deposit by written acknowledgment dated April 23, 2025.
IV. SCHEDULE B-I — REQUIREMENTS
Schedule B-I of the Commitment sets forth the requirements that must be satisfied prior to issuance of the owner's policy. Each requirement is analyzed below.
Requirement 1: Execution and Recording of Deed
The Commitment requires the execution and recording of a deed conveying fee simple title to the Meridian Parcel from Meridian Acres LLC to the proposed insured.
A Special Warranty Deed is being prepared by our firm for execution by Meridian Acres LLC, by Theodore Ashford, as Managing Member, conveying the Meridian Parcel to the buyer (anticipated to be Stonebridge Campus Holdings LLC, if the PSA assignment is effectuated prior to closing, or IHDC if the assignment is not completed). The deed will convey the Meridian Parcel for stated consideration of $19,400,000 and will be recorded in the Land Records of the Circuit Court of Loudoun County, Virginia. The draft deed will be circulated to seller's counsel, Fiona Dunleavy at Dunleavy & Marsh, PLLC, for review and comment in advance of closing.
Under Virginia law, a Special Warranty Deed is the customary form of conveyance for commercial real estate transactions. The deed will contain covenants of special warranty (i.e., the grantor warrants title against claims arising by, through, or under the grantor, but not otherwise). The conveyance form is consistent with the requirements of the Meridian PSA, which obligates the Seller to deliver a Special Warranty Deed at closing.
Status: In preparation. No issues identified with this requirement.
Requirement 2: Payment of Consideration and Settlement
The Commitment requires payment of the full purchase price and completion of settlement through the title company.
The agreed purchase price is $19,400,000, to be paid in immediately available funds at closing. Settlement will be conducted through Fidelitas Title & Escrow, Inc. The closing target date is September 15, 2025, as set forth in Section 8.1 of the Meridian PSA. Fidelitas will prepare the settlement statement (HUD-1 or equivalent closing disclosure), which will reflect the purchase price, prorations, closing costs, and any credits or adjustments.
Status: To be satisfied at closing. No issues identified with this requirement.
Requirement 3: Real Estate Tax Proration / Payment
The Commitment requires that all real estate taxes, assessments, and charges against the Meridian Parcel be paid or prorated current through the closing date.
Loudoun County real estate taxes are assessed on a calendar year basis and are payable in two installments (June 5 and December 5). Based on preliminary review of the Loudoun County Treasurer's Office online records, the 2024 real estate taxes for the Meridian Parcel (Tax Map /95-4A-2///) appear to be current, with no delinquencies reflected. The 2025 first-half installment (due June 5, 2025) will need to be confirmed as paid or, if unpaid at the time of closing, prorated on the settlement statement. Standard proration methodology (per diem basis, with Seller responsible through the day preceding closing and Buyer responsible from the closing date forward) will be applied, consistent with Section 9.3 of the Meridian PSA.
I recommend that we obtain a tax certificate from the Loudoun County Treasurer's Office closer to the closing date to confirm the absence of any delinquent taxes, penalties, interest, or special assessments against the Meridian Parcel. This is a routine step that Fidelitas will typically coordinate as part of the closing process.
Status: To be satisfied at closing. Confirm absence of delinquencies; standard proration to be reflected on settlement statement.
Requirement 4: Evidence of Authority — Seller
The Commitment requires Meridian Acres LLC to provide satisfactory evidence of Theodore Ashford's authority, as Managing Member, to execute the deed and related closing documents on behalf of the entity.
The following items will need to be obtained from the Seller or from public records:
(a) Articles of Organization of Meridian Acres LLC, as filed with the Virginia SCC;
(b) Operating Agreement of Meridian Acres LLC (or relevant excerpts thereof), confirming that Theodore Ashford is the Managing Member and is authorized to execute instruments conveying real property on behalf of the company without the consent of any other member (or, if other member consent is required, evidence of such consent);
(c) Certificate of Good Standing (or Certificate of Fact of Existence) for Meridian Acres LLC from the Virginia SCC, dated not more than thirty (30) days prior to the closing date; and
(d) A certificate or resolution of the members of Meridian Acres LLC authorizing the sale of the Meridian Parcel and the execution of the deed and all related closing documents by Theodore Ashford.
We have included a request for these items in the draft title objection letter (Attachment D). Seller's counsel should be able to produce these items in the ordinary course. I note that under Virginia law, a limited liability company's operating agreement governs the authority of its members and managers, and the title company will want to see satisfactory evidence that the person executing the deed has been duly authorized.
Status: Pending. Include in title objection letter.
Requirement 5: Evidence of Authority — Buyer
If the buyer at closing is Stonebridge Campus Holdings LLC (the anticipated single-purpose borrower entity), the following items will need to be provided to the title company:
(a) Articles of Organization of Stonebridge Campus Holdings LLC, as filed with the Virginia SCC;
(b) Operating Agreement of Stonebridge Campus Holdings LLC, confirming that IHDC is the sole member and identifying the authorized signatories;
(c) Certificate of Good Standing (or Certificate of Fact of Existence) for Stonebridge Campus Holdings LLC from the Virginia SCC; and
(d) An authorizing resolution from IHDC, as sole member of Stonebridge Campus Holdings LLC, authorizing the acquisition of the Meridian Parcel and the execution of the closing documents.
A Secretary's Certificate from IHDC is currently under preparation, which will identify Marcus Thorne (CEO) and Priya Dasgupta (CFO) as authorized signatories for the transaction. The entity formation documents for Stonebridge Campus Holdings LLC are being prepared by our corporate group and are expected to be filed with the Virginia SCC in advance of the closing date.
If the PSA is not assigned and IHDC acquires the Meridian Parcel directly, evidence of IHDC's authority (as a Delaware LLC registered to do business in Virginia) will be required in lieu of the items listed above. IHDC's Delaware Certificate of Good Standing and Virginia Certificate of Registration, together with the Secretary's Certificate referenced above, should satisfy this requirement.
Status: In preparation. Coordinate with entity formation workstream.
Requirement 6: Mechanic's Lien Affidavit / No-Lien Affidavit
The Commitment requires the Seller to provide an affidavit confirming that there has been no labor performed or materials furnished on the Meridian Parcel within the applicable statutory period that remains unpaid and could give rise to a mechanic's lien under the Virginia Mechanic's Lien Statute (Va. Code § 43-1 et seq.).
Under Virginia law, a mechanic's lien may be filed within 90 days after the last day of the month in which the lienor last performed work or furnished materials. The affidavit should cover the period extending at least 90 days prior to the closing date. We have included a request for this affidavit in the draft title objection letter. This is a standard requirement for commercial real estate transactions in Virginia.
Status: Pending. Include in title objection letter.
Requirement 7: FIRPTA / Withholding Certificate
The Commitment requires the Seller to provide a non-foreign person affidavit (also known as a FIRPTA affidavit) pursuant to Section 1445 of the Internal Revenue Code, certifying that Meridian Acres LLC is not a "foreign person" as defined thereunder. If Meridian Acres LLC is a disregarded entity for federal tax purposes, the affidavit should be provided by the entity's owner.
The affidavit must include the Seller's name, address, and taxpayer identification number, and must be signed under penalties of perjury. If the Seller is unable or unwilling to provide the affidavit, the buyer may be required to withhold 15% of the amount realized (i.e., $2,910,000) and remit it to the Internal Revenue Service.
Based on our understanding, Meridian Acres LLC is a domestic Virginia limited liability company with no foreign ownership, and the FIRPTA affidavit should be readily obtainable. Should any questions arise regarding the application of FIRPTA or related withholding requirements, we recommend coordinating with Robert Fielding at Fielding & Associates, CPAs, who serves as IHDC's tax advisor for this transaction.
Status: Pending. Include in title objection letter.
Requirement 8: Gap Indemnity / Title Bring-Down
The Commitment indicates that Sovereign will provide gap coverage or a bring-down search from the effective date of the Commitment (April 10, 2025) through the date of recording of the deed. This is a standard requirement to ensure that no adverse matters are recorded against the Meridian Parcel in the interval between the effective date of the Commitment and the actual closing and recording.
We will coordinate with Fidelitas to obtain a bring-down title search closer to the September 15, 2025 closing date. The cost of the bring-down search is typically nominal and is borne by the buyer or split between the parties, as provided in the Meridian PSA.
Status: To be satisfied at closing. Coordinate with Fidelitas for bring-down search.
V. SCHEDULE B-II — EXCEPTIONS FROM COVERAGE
Schedule B-II of the Commitment sets forth the exceptions from coverage under the proposed owner's policy. Each exception is analyzed below, together with my recommendation for treatment in the title objection letter and at closing.
Exception 1: Standard Exceptions (Printed Exceptions)
Description: The Commitment includes the standard printed exceptions from coverage that appear in the ALTA Owner's Policy (2006 form), including:
(a) Any facts, rights, interests, or claims that are not shown by the public records but that could be ascertained by an inspection of the land or by making inquiry of persons in possession thereof;
(b) Easements, or claims of easements, not shown by the public records;
(c) Encroachments, overlaps, boundary line disputes, and any other matters that would be disclosed by an accurate survey and inspection of the premises;
(d) Any lien, or right to a lien, for services, labor, or material heretofore or hereafter furnished, imposed by law and not shown by the public records; and
(e) Taxes or assessments that are not shown as existing liens by the public records.
Recommendation: We should request deletion of all standard printed exceptions. This is customary for a commercial transaction of this size and nature. Deletion of the standard exceptions will require:
(i) Delivery of the completed ALTA/NSPS survey (expected June 15, 2025 from Lumen Ridge Engineering, PLLC), which will address items (a), (b), and (c) above;
(ii) Delivery of an owner's affidavit (to be executed by the buyer at closing) confirming the absence of unrecorded easements, boundary disputes, parties in possession other than the buyer, and other matters not shown by the public records;
(iii) Delivery of a mechanic's lien affidavit (see Requirement 6 above) to address item (d); and
(iv) Delivery of a tax certificate or other evidence confirming the status of real estate taxes and assessments, to address item (e).
I note that Summit National Bank, N.A. will also require deletion of standard exceptions for the lender's policy. Lender's counsel (Victor Redmond at Redmond & Calloway LLP) has not yet circulated the specific title insurance requirements under the construction loan commitment, but deletion of standard exceptions is expected to be a mandatory requirement.
Action Required: Request deletion; satisfy title company requirements upon receipt of survey and other documentation.
Exception 2: Real Estate Taxes and Assessments
Description: The Commitment excepts from coverage the lien of real estate taxes and assessments for the year 2025 and subsequent years, described as a lien not yet due and payable.
Recommendation: This is a standard exception and is not objectionable, provided that all real estate taxes and assessments for prior years are confirmed as paid in full and that the 2025 taxes are prorated at closing. As noted in the discussion of Requirement 3 above, preliminary review of the Loudoun County Treasurer's Office records indicates no delinquencies for the Meridian Parcel. A tax certificate should be obtained prior to closing to confirm the absence of any outstanding taxes, penalties, interest, or special assessments.
I also recommend confirming whether the Meridian Parcel is subject to any special tax districts, proffers, or special assessments imposed by Loudoun County in connection with the original subdivision or rezoning. If any such obligations exist, they should be identified, quantified, and addressed in the settlement statement.
Action Required: No objection to exception as worded; confirm no delinquencies; standard proration at closing.
Exception 3: Existing Utility Easements
Description: The Commitment identifies the following existing utility easements encumbering the Meridian Parcel:
(a) Overhead Electric Transmission Easement in favor of Vantage Power Cooperative ("VPC"), recorded as Instrument No. 201504120022318 in the Land Records, dated April 8, 2015, granting VPC a perpetual easement for the construction, operation, maintenance, repair, and replacement of overhead electric transmission lines and related facilities over, across, and along a strip of land approximately thirty (30) feet in width along the northern boundary of the Meridian Parcel, as more particularly described and depicted on the exhibit attached to said instrument (the "VPC Transmission Easement").
(b) Underground Water and Sewer Utility Easement in favor of Loudoun Water (Loudoun County Sanitation Authority), recorded as Instrument No. 201810050047691 in the Land Records, dated September 28, 2018, granting a perpetual easement for the installation, operation, maintenance, and replacement of water and sewer lines and related infrastructure within a strip of land twenty (20) feet in width along the eastern boundary of the Meridian Parcel, as more particularly described and depicted on the exhibit attached to said instrument (the "Loudoun Water Easement").
Recommendation: These existing utility easements require careful review in the context of the planned Campus development.
With respect to the VPC Transmission Easement along the northern boundary: This easement may be beneficial to the project, given that the Meridian Parcel is intended to host a dedicated 230kV/34.5kV substation for VPC. However, the exact location and dimensions of the existing easement must be confirmed against the ALTA survey to determine whether the existing easement area encompasses the planned substation footprint. If the existing easement is limited to overhead transmission lines and does not cover the substation itself, a new or amended easement agreement will be required. The Substation Easement Agreement is currently being drafted by our firm and will need to be coordinated with VPC's counsel. I recommend that Carlos Esteban at Lumen Ridge Engineering be instructed to specifically locate and depict the VPC Transmission Easement on the ALTA survey, and to confirm whether the easement area is sufficient for the planned substation infrastructure.
With respect to the Loudoun Water Easement along the eastern boundary: This easement should be reviewed against the proposed site plan to confirm that it does not conflict with planned building pad locations or utility routing corridors. Given that the eastern boundary of the Meridian Parcel is adjacent to the Stonebridge Parcel, the Loudoun Water Easement may be relevant to the Cross-Access and Utility Easement Agreement being prepared for the combined Campus. I recommend coordinating with Alan Mercer at Cornerstone Land Use Consulting and with Carlos Esteban at Lumen Ridge Engineering to confirm that the easement location is compatible with the Campus site plan.
Neither easement is objectionable in principle, provided that neither conflicts with the planned building pad locations, utility routing, or substation footprint. These easements should remain as exceptions to the policy, as they constitute valid encumbrances that benefit the property and/or the public utility infrastructure.
Action Required: Review against ALTA survey and site plan upon receipt; coordinate with Lumen Ridge Engineering and Cornerstone Land Use Consulting; confirm compatibility with planned substation and Campus layout. No objection anticipated, subject to confirmation.
Exception 4: Restrictive Covenants / Declarations
Description: The Commitment identifies the following recorded restrictive covenants encumbering the Meridian Parcel:
Declaration of Covenants, Conditions, and Restrictions (the "Declaration"), recorded as Instrument No. 201809240046205 in the Land Records, dated September 20, 2018, imposed by Ashford Rural Holdings, LP (as declarant) in connection with the subdivision of the original Ashford tract into Lot 1 (now the Stonebridge Parcel) and Lot 2 (now the Meridian Parcel). The Declaration contains provisions relating to, among other things: (i) permitted uses of the parcels; (ii) minimum building setbacks; (iii) architectural review and approval requirements; (iv) landscaping and screening standards; (v) signage restrictions; and (vi) assessment obligations for shared infrastructure maintenance.
Recommendation: This is a critical review item that warrants immediate attention. The Declaration was imposed at the time of the original subdivision by Ashford Rural Holdings, LP, which is the predecessor entity to the Seller (Meridian Acres LLC) and is associated with Theodore Ashford. The following concerns have been identified based on a preliminary review of the summary information available:
(a) Permitted Use Restrictions. The Declaration may restrict the permissible uses of the Meridian Parcel to categories that do not include data center use. If the Declaration limits use to agricultural, residential, or certain categories of commercial or light industrial activity, data center use may be prohibited or restricted. Any such restriction would be fundamentally inconsistent with the planned Campus development and must be addressed prior to closing.
(b) Architectural Review Requirements. The Declaration appears to impose architectural review and approval requirements, potentially subject to the approval of the declarant or an architectural review committee. If such requirements remain in effect, they could delay or complicate the construction of data center buildings on the Meridian Parcel. We need to determine (i) whether the architectural review provisions are still operative, (ii) who has authority to approve building plans under the Declaration, and (iii) whether such approval can be obtained or the provisions waived or amended.
(c) Building Setback Requirements. The Declaration may impose minimum building setbacks that differ from those applicable under the Loudoun County zoning ordinance. If the Declaration setbacks are more restrictive than the zoning setbacks, the effective buildable area of the Meridian Parcel may be reduced, potentially impacting the planned building pad locations.
(d) Assessment Obligations. The Declaration may impose assessment obligations for shared infrastructure maintenance. The nature, amount, and applicability of such assessments should be reviewed to understand any ongoing financial obligations that would be assumed by the buyer.
I have not yet obtained a complete copy of the recorded Declaration from the Land Records. A full copy must be obtained and reviewed promptly. The abstract provided in the Commitment is insufficient to evaluate the scope and impact of the restrictions.
If the Declaration contains restrictions that are inconsistent with data center use or the planned Campus development, curative action will be required. Options may include:
(i) An amendment to the Declaration, executed by the declarant (or its successor), modifying or eliminating the conflicting restrictions. Since Theodore Ashford appears to control both the declarant entity (Ashford Rural Holdings, LP) and the Seller (Meridian Acres LLC), it may be possible to obtain an amendment as a condition of closing.
(ii) A release or termination of the Declaration, if all parties with enforcement rights consent.
(iii) A title endorsement (such as the ALTA 9 — Comprehensive endorsement) providing affirmative insurance against loss arising from a violation of the covenants.
This item has been included in the draft title objection letter (Attachment D). I also recommend flagging this issue for Thomas Ashcroft at Ashcroft & Wynn, P.C., who is advising on the ZMOD process, as the Declaration may interact with the zoning entitlements being sought.
Action Required: Obtain and review full recorded Declaration immediately; include in title objection letter; evaluate curative options; coordinate with land use counsel.
Exception 5: Access Easement / Private Road
Description: The Commitment identifies the following access easement encumbering the Meridian Parcel:
Non-Exclusive Ingress and Egress Easement, recorded as Instrument No. 201809240046204 in the Land Records, dated September 20, 2018, granting a non-exclusive easement for vehicular and pedestrian ingress and egress over and across a private access road (approximately twenty-four (24) feet in width) along the southern boundary of the Meridian Parcel, for the benefit of Lot 1 (now the Stonebridge Parcel, Tax Map /95-4A-1///) and Lot 2 (now the Meridian Parcel, Tax Map /95-4A-2///), and any future subdivision thereof (the "Access Easement").
Recommendation: The Access Easement provides reciprocal access rights between the Meridian Parcel and the Stonebridge Parcel via a private road along the southern boundary of the Meridian Parcel. On its face, this easement appears to be consistent with — and potentially beneficial to — the planned Campus development, as it provides a basis for cross-parcel access between the two parcels that will constitute the Campus.
However, the following items require further review:
(a) The exact location of the Access Easement area must be confirmed against the ALTA survey and the proposed Campus site plan to ensure that the easement does not conflict with planned building pads, parking areas, or utility infrastructure.
(b) The terms of the Access Easement should be reviewed to confirm that the easement rights are sufficient for the type and volume of traffic anticipated for the Campus (including heavy construction vehicle access during the construction phase and tractor-trailer access during the operational phase).
(c) The Access Easement should be coordinated with the Cross-Access and Utility Easement Agreement currently being prepared for the multi-parcel Campus. It may be desirable to incorporate the existing Access Easement by reference into the new Cross-Access Agreement or to supersede it with a more comprehensive instrument.
(d) The Access Easement should also be reviewed to determine whether it benefits (or burdens) any parcels other than the Stonebridge and Meridian Parcels. If third-party parcels have rights under the easement, those rights could affect Campus operations and security.
This exception is not objectionable in principle but requires verification against the survey and site plan. I do not recommend including this item as a formal objection in the title objection letter at this time, but I recommend reserving the right to object if the survey reveals a conflict.
Action Required: Review location against ALTA survey and site plan; coordinate with Cross-Access and Utility Easement Agreement drafting; confirm no third-party beneficiaries.
Exception 6: Deed of Trust / Mortgage Lien
Description: The Commitment identifies the following deed of trust encumbering the Meridian Parcel:
Deed of Trust dated March 14, 2022, from Meridian Acres LLC (Grantor/Borrower) to First Colony Trustees, Inc. (Trustee), for the benefit of Shenandoah Valley Community Bank (Lender/Beneficiary), securing a promissory note in the original principal amount of $2,800,000, recorded as Instrument No. 202203180012847 in the Land Records, together with all modifications, extensions, and amendments thereof (the "Existing Deed of Trust").
Recommendation: The Existing Deed of Trust constitutes a mandatory curative item. The Meridian Parcel must be conveyed to the buyer free and clear of all monetary liens at closing, as required by the Meridian PSA. The Existing Deed of Trust must be released and satisfied of record at or prior to closing.
The following steps are required:
(a) Seller's counsel (Fiona Dunleavy at Dunleavy & Marsh, PLLC) must coordinate with Shenandoah Valley Community Bank to obtain a payoff letter reflecting the outstanding balance of the loan secured by the Existing Deed of Trust as of the anticipated closing date (September 15, 2025), together with per diem interest and any prepayment penalties or fees.
(b) At closing, proceeds from the purchase price will be applied to satisfy the outstanding balance of the loan. Fidelitas will coordinate the payoff and ensure that a Certificate of Satisfaction or Release of Deed of Trust is executed by Shenandoah Valley Community Bank (or its trustee) and recorded in the Land Records promptly following closing.
(c) Under Virginia law (Va. Code § 55.1-339), the lender is required to execute and deliver a certificate of satisfaction within 90 days after full payment of the obligation secured by the deed of trust. We should confirm with Fidelitas that the release will be recorded within a reasonable time after closing.
Section 7.1(c) of the Meridian PSA obligates the Seller to deliver title to the Meridian Parcel free and clear of all monetary liens and encumbrances (other than the Permitted Exceptions specified in the PSA). The Existing Deed of Trust is not identified as a Permitted Exception. Accordingly, Seller is contractually obligated to cause the release of this lien at or prior to closing. I recommend confirming with Fidelitas that the payoff can be coordinated through the closing escrow, with the release instrument recorded simultaneously with (or promptly following) the deed.
Action Required: Include in title objection letter as mandatory curative item; obtain payoff letter from Shenandoah Valley Community Bank through seller's counsel; coordinate payoff and release through closing escrow.
Exception 7: Judgment Liens / UCC Filings
Description: The Commitment reflects the following UCC financing statement filed against Meridian Acres LLC as debtor:
UCC Financing Statement filed with the Virginia SCC on July 9, 2022, File No. 2207-1894627, naming Meridian Acres LLC as Debtor and Shenandoah Valley Community Bank as Secured Party, covering "all equipment, fixtures, and personal property now or hereafter located on or affixed to the real property described herein" (the "UCC Filing").
No judgment liens against Meridian Acres LLC or Theodore Ashford individually were identified in the Commitment or in the title search. The Commitment does not reflect any federal tax liens or Virginia state tax liens against the Seller or the property.
Recommendation: The UCC Filing appears to be associated with the Shenandoah Valley Community Bank loan secured by the Existing Deed of Trust (Exception 6). To the extent that the UCC Filing covers fixtures or real-property-related collateral, it constitutes a potential cloud on title that must be addressed at or prior to closing. Specifically:
(a) The UCC Filing must be terminated by the Secured Party (Shenandoah Valley Community Bank) at or prior to closing. A UCC-3 Termination Statement should be filed with the Virginia SCC, and Fidelitas should receive confirmation of the termination prior to recording the deed.
(b) If the UCC Filing covers only personal property that is not fixtures, it may not constitute a title encumbrance. However, given that the description of collateral includes "fixtures" and "personal property now or hereafter located on or affixed to the real property," the filing appears to relate to real-property-related collateral and should be treated as a title matter.
(c) Seller's counsel should be asked to confirm that the UCC Filing will be terminated simultaneously with the satisfaction of the Existing Deed of Trust and that no other UCC filings exist against Meridian Acres LLC that relate to the Meridian Parcel.
Action Required: Include in title objection letter; require termination of UCC Filing at or prior to closing; coordinate with seller's counsel and Fidelitas.
Exception 8: Mineral Rights Reservation
Description: The Commitment notes the following reservation in the chain of title:
Reservation of mineral rights (including all coal, oil, gas, and other minerals in, on, or under the Meridian Parcel) contained in a deed dated November 3, 1947, from Eldon R. Ashford to James M. Ashford, recorded in Deed Book 289, Page 412, in the Land Records (the "Mineral Reservation"). The Mineral Reservation reserved to the grantor (Eldon R. Ashford), and his heirs and assigns, all mineral rights in, on, and under the property, together with the right of ingress and egress to and from the surface for the purpose of exploring, mining, and removing such minerals.
Recommendation: Mineral rights reservations are common in Virginia properties, particularly in rural areas with historical agricultural or extractive uses. The Mineral Reservation dates from 1947 and has been carried forward through subsequent conveyances in the chain of title. Two distinct issues must be evaluated:
(a) Ownership of Mineral Rights. The reserved mineral rights are currently owned by the heirs or assigns of Eldon R. Ashford. Given the passage of approximately 78 years since the original reservation, the ownership of the mineral rights may have passed through multiple generations or transfers. Identifying the current owner(s) of the reserved mineral rights may require genealogical research and/or a search of the Land Records for subsequent conveyances of the mineral estate. This investigation should be coordinated with Fidelitas and may require the engagement of a title abstractor with expertise in severed mineral estates.
(b) Surface Entry Rights. The Mineral Reservation expressly includes "the right of ingress and egress to and from the surface for the purpose of exploring, mining, and removing such minerals." This surface entry right poses a significant risk for the planned Campus development. If the mineral rights holder (or their successors) were to exercise the right of surface entry, it could disrupt data center operations, damage infrastructure, or interfere with the substation and utility improvements on the Meridian Parcel. For a mission-critical data center facility, any potential for surface disruption is unacceptable.
I recommend the following approach:
(i) Include the Mineral Reservation as an objection item in the title objection letter, requesting that the Seller obtain a quitclaim deed or waiver of surface entry rights from the current holder(s) of the reserved mineral rights.
(ii) Request the ALTA 35 — Minerals and Other Subsurface Substances endorsement (and/or the ALTA 9 — Comprehensive endorsement, which also addresses minerals) to provide affirmative insurance coverage against loss arising from the exercise of mineral rights, including surface entry.
(iii) If a quitclaim or waiver cannot be obtained, evaluate the feasibility of alternative risk mitigation measures, such as a surface use agreement, a title insurance endorsement with an increased policy amount, or an indemnity from the Seller.
(iv) Consult with Douglas Fairchild regarding the risk tolerance of IHDC and Summit with respect to the severed mineral estate. The lender's counsel (Victor Redmond at Redmond & Calloway LLP) is likely to flag this issue as well, given the size of the construction facility.
Action Required: Include in title objection letter; investigate current ownership of mineral rights; request quitclaim or waiver of surface entry rights; request ALTA 35 endorsement; coordinate with lender's counsel.
Exception 9: Environmental Matters
Description: The Commitment does not include a specific environmental exception, as title insurance policies generally exclude from coverage losses arising from environmental contamination, hazardous substances, or similar conditions. However, for completeness and to ensure coordination across all due diligence workstreams, I note the following:
Pendleton Environmental Associates, Inc. ("Pendleton"), under the direction of Dr. Renata Volkov, is conducting a Phase I Environmental Site Assessment ("Phase I ESA") on the Meridian Parcel in accordance with ASTM Standard E1527-21. The Phase I ESA has a target completion date of June 1, 2025. The Phase I ESA will evaluate the Meridian Parcel for the presence or likely presence of recognized environmental conditions ("RECs"), controlled recognized environmental conditions ("CRECs"), and historical recognized environmental conditions ("HRECs").
If the Phase I ESA identifies any RECs, a Phase II Environmental Site Assessment (involving subsurface investigation and sampling) may be warranted, which could extend the environmental due diligence timeline. Any environmental issues identified would need to be addressed separately from the title insurance process, as environmental conditions are not insurable under the title policy.
In connection with the construction loan closing, an Environmental Indemnity Agreement will be delivered by the borrower (Stonebridge Campus Holdings LLC or IHDC) and the guarantor(s) in favor of Summit National Bank, N.A., addressing environmental liability with respect to both the Meridian Parcel and the Stonebridge Parcel. The Environmental Indemnity Agreement is being drafted by our firm and will be circulated for review in connection with the loan closing documentation.
Action Required: No title objection required. Monitor Phase I ESA progress; coordinate with Pendleton Environmental Associates; flag any RECs for further evaluation.
VI. CHAIN OF TITLE REVIEW
I have reviewed the chain of title for the Meridian Parcel as reflected in the Commitment and the supporting title search documentation provided by Fidelitas. The following is a summary of the ownership history:
The chain of title appears regular and continuous. Each conveyance was effected by a recorded deed, and the property descriptions across the deeds in the chain are consistent with one another and with the legal description set forth in the Commitment. No gaps, irregularities, or unexplained transfers have been identified.
I note the following observations regarding the chain of title:
(a) James M. Ashford to Theodore R. Ashford and Margaret L. Ashford (1989). The 1989 deed appears to be an intrafamily transfer from father to son (and son's spouse), conveying the property as tenants by the entirety. No consideration was recited in the deed, consistent with an intrafamily gift. No issues identified.
(b) Theodore R. Ashford and Margaret L. Ashford to Ashford Rural Holdings, LP (2003). The 2003 deed transferred the property from the Ashfords individually to a Virginia limited partnership in which Theodore Ashford appears to have been the general partner. This transfer was likely for estate planning or asset protection purposes. No issues identified, provided the transfer was properly authorized (which the title company has accepted in issuing the Commitment).
(c) Ashford Rural Holdings, LP to Meridian Acres LLC (2018). The 2018 deed is the Vesting Deed and was executed in connection with the subdivision of the original Ashford tract into Lot 1 (Stonebridge Parcel) and Lot 2 (Meridian Parcel). The Vesting Deed conveyed Lot 2 to Meridian Acres LLC for recorded consideration of $3,250,000. Concurrently, Lot 1 was conveyed to a third party (which later conveyed to Blackthorn Realty Group, Inc., the current owner of the Stonebridge Parcel). No issues identified.
(d) Mineral Rights Reservation (1947). As discussed in Exception 8 above, the 1947 deed from Eldon R. Ashford to James M. Ashford reserved mineral rights with surface entry rights. This reservation has been carried forward through each subsequent conveyance in the chain and remains in effect.
I have confirmed the absence of the following matters through the title search:
• Lis Pendens: No lis pendens filings were identified against the Meridian Parcel or against Meridian Acres LLC or Theodore Ashford in the Land Records or the Circuit Court records for Loudoun County.
• Federal Tax Liens: No federal tax liens were identified against Meridian Acres LLC or Theodore Ashford in the Land Records or in the records of the U.S. District Court for the Eastern District of Virginia.
• Virginia State Tax Liens: No Virginia state tax liens were identified against Meridian Acres LLC or Theodore Ashford in the Land Records or in the records of the Virginia SCC.
• Bankruptcy Filings: No bankruptcy petitions were identified against Meridian Acres LLC or Theodore Ashford in the records of the U.S. Bankruptcy Court for the Eastern District of Virginia.
The property description has been reviewed across the deeds in the chain and found to be consistent. However, as noted in Section II above, the legal description should be confirmed against the ALTA survey upon receipt.