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… 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… 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… 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… 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… 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.
Recently, I dealt with an issue while acting as borrower’s counsel related to a waste carve-out in a non-recourse loan. Under the law of this particular state, “waste” was defined under state law to automatically include the failure to pay taxes and insurance. As you may know, “waste” is often a partial recourse carve-out under a non-recourse loan. A careful borrower’s lawyer will attempt to delete waste from a carve-out guaranty given the treatment of waste in certain recourse guaranty litigation (which is not always possible to accomplish given the market on this subject).
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