JR KASMAN, PLLC TRANSACTION TIP SERIES: CONSIDER ADVANCE PERMISSION FOR UTILITY EASEMENTS

February 12, 2018 | by

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 a utility easement).

The granting of easements for public utilities or for other public purposes consistent with the intended use of the [Property/Common Elements] shall not be deemed a transfer within the meaning of this clause.

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