Commercial real estate investors often want to assume a seller’s existing loan, either to avoid a pre-payment penalty or to take advantage of a low interest rate loan. Loan assumptions can be challenging, and borrowers need guidance and representation throughout the process. While “loan expeditors” and other loan assumption “specialists” will claim to add value to the process by shortening timeframes and increasing the likelihood of success through their “industry relationships,” commercial real estate investors are well served by the representation of an attorney who can achieve those goals while also providing critical legal guidance. Balancing business objectives with risk mitigation requires the expertise of an experienced commercial real estate attorney. Additionally, the firm assists borrowers in preparing financial information packages required by lenders when considering loan assumption requests.
Loan Workouts, Loan Modifications and Loan Extensions
When negotiating a loan workout, modification or extension, experienced legal counsel is critical. Whether a borrower is in default, or a default is imminent, it is important to work with legal counsel as early as possible to navigate the various options. Discounted payoffs, A/B note structured transactions, loan modifications and extensions, recapitalizations, loan sales and deed-in-lieu of foreclosure solutions are complex transactions which require experienced legal counsel. Too often, borrowers seek the assistance of loan “specialists,” when, in fact, an experienced commercial real estate attorney will provide far more comprehensive representation and assistance throughout the process. These transactions are not only financial in nature, but also include a significant legal component. The firm assists borrowers in preparing financial information requested by lenders when working through these matters.
Commercial real estate lenders have many advantages over borrowers when they originate loans. Even in aggressive lending markets, when lenders are competing with each other, lenders require the use of their own form loan documents, regardless of whether it’s a bank loan, a life insurance company loan, or a CMBS (securitized) loan. Those loan documents are drafted and negotiated by experienced legal counsel on behalf of the lender in any given transaction. Every borrower procuring a commercial real estate loan should level the playing field, to the extent possible, by retaining experienced legal counsel to represent it in loan negotiation and documentation.
Keith Sherry, the principal of Sherry Law Ltd., has over 16 years of experience in representing and assisting borrowers in loan matters.