CONSIDER ADVANCE PERMISSION FOR UTILITY EASEMENTS: The grant of utility easements, even if within the ordinary course of business or beneficial to a property, may fall within a transfer restriction, or other restriction, in loan/financing documents. Consider whether the following language (or other language appropriate in your circumstances) might be a helpful addition to your borrower/owner client’s loan documents to avoid an unintentional default under a loan or recourse liability under a non-recourse carve-out guaranty. Often times, a non-recourse carve-out guaranty will provide for full recourse in the event of a prohibited Transfer (which may technically include the grant of... View Article
Trending Report Archives for Jennifer Kasman
Before our clients sign contracts for the purchase or sale of commercial real estate, we confirm with local counsel what the real estate tax adjustment or proration will consist of. Many parties will stick to a general boilerplate provision in a contract providing that real estate taxes will be adjusted as of the closing date. However, the standard boilerplate provision may not work well in certain jurisdictions depending on when taxes are assessed and what the local custom is. For example, we recently worked on a sales contract in the Midwest where it is customary for only taxes that become... View Article
Picture it — your client is in a rush to complete diligence on a potential acquisition and hates to pay for the cost of an ALTA survey in the event they decide not to move forward. I know many acquisition lawyers have experienced this at least once (particularly on mid-market deals). Some may assume that what appear to be standard utility easements are innocuous. However, utility easements must be reviewed carefully to assess risk. It is always best to review utility easements with a current ALTA survey in hand. Here are a few things your lawyer may look for: 1.... View Article
In this installment of our Transaction Tip series, we offer a reminder about owner’s title insurance policies. When you (or your client) plans to transfer real estate to a wholly owned subsidiary, remember to read your ALTA title insurance jacket to confirm coverage will continue. Section 1(d) of the 2016 ALTA Title Insurance Jacket defines “Insured” to include “a grantee of an Insured under a deed delivered without payment of actual valuable consideration conveying the Title: (1) if the stock, shares, memberships, or other equity interests of the grantee are wholly-owned by the named Insured, (2) if the grantee wholly... View Article
In this installment of our Transaction Tip series, we share a list of some questions to consider when drafting and revising notice provisions in contracts. Are the maximum number of delivery options included? Overnight courier (without naming a specific courier), hand delivery, certified mail, fax and/or email are commonly included. In all cases, it is always best to make sure hand delivery is an option for possible emergency situations. Have all parties included an address where overnight courier and certified mail can actually be delivered? For example, Federal Express may not deliver to a P.O. Box address. Some institutions have... View Article
The word “herein” is ubiquitous in contracts. When time permits, and your client allows, it is best practice to search for the term before executing a draft of any form of contract — loan documents, joint venture agreements etc. Often times, the word “herein” is contained in an enumerated section, paragraph or sub-section. Without using the term “this Agreement” or this “section” (as applicable) in lieu of “herein”, it may be unclear whether herein is referring only to the specific section or sub-section it appears in or the entire contract. As lawyers, we know that not every client permits time... View Article
We are pleased to announce that our Trending Report will include a series of “transaction tips” for drafting and reviewing commercial real estate and business contracts. Our first transaction tip in this series concerns representations and warranties in recorded documents. A variety of documents may be recorded in the land records where a property is located in connection with commercial real estate transactions. For example, a lender will record a mortgage or deed of trust (and sometimes a separate assignment of leases and rents) at the closing of a loan transaction. Often times, when a commercial loan is made, an... View Article
The scope of restrictions that will cause a loan default or the borrower or guarantor to have partial or full recourse liability for a loan—otherwise known as non-recourse carve-outs—has evolved and expanded, according to JR Kasman founder Jennifer Kasman. Since these transactions can have such high stakes, Jennifer gave us five tips for negotiating entity transfer restrictions in your loan documents.
Most acquisition lawyers are well-versed in the variety of “permitted exception” provisions that appear in seller friendly contracts. For the most part, the provisions are consistent and reasonable parties agree to “market” revisions when negotiating a purchase contract. On occasion, a seller will offer a contract providing that, in addition to items not objected to during the study period, “Permitted Exceptions” will include a list of enumerated items. Such a list of enumerated items may include:
In certain cases, loan documents include a one-time right of transfer or other provision allowing the purchaser of encumbered commercial real estate to assume the subject loan from a borrower that desires to sell the property. One-time right of transfer or permitted assumption provisions always include certain conditions that must be satisfied in order for the lender to consider, and possibly approve, the assumption request. For example, conditions may include (among other things) requirements that: (i) the proposed borrower be experienced in the ownership and management of properties similar to the subject property, (ii) certain loan to value requirements for the subject property are satisfied and (iii) the lender's standard underwriting requirements be satisfied. There are certain issues related to the loan assumption process that sellers and purchasers should be aware of before negotiating a purchase and sale contract that contemplates a loan assumption.