Cash Management Structures, Waterfall Provisions and Reserves in Commercial Real Estate Finance Transactions

Negotiating Lockboxes, Waterfalls and Deposit Account Control Agreements

Recording of a 90-minute CLE webinar with Q&A

Conducted on Tuesday, June 27, 2017
Recorded event now available

This CLE webinar will discuss a variety of lockbox/cash management structures, how to structure waterfall provisions in cash management agreements and drafting the ancillary agreements for cash management.


In the immediate aftermath of the credit crisis, borrowers experienced the tightening of cash management arrangements in real estate loans, particularly for those loans intended to be securitized. With the improvement of the commercial real estate market, borrowers have seen less stringent cash management structures, but cash management remains an integral part of commercial real estate finance.

Terms and conditions of cash management systems are often very heavily negotiated. Lenders seek to ensure that debt service, property expenses and reserves are paid prior to funds being dispersed to the borrower. Hard lockboxes offer the most protection to the lender.

Borrowers, on the other hand, want the most control over the revenues that flow from the property. Springing lockboxes allow the borrower more control over rents or revenues since they require the use of a deposit account only upon occurrence of a specified triggering event, such as loan default.

Listen as our authoritative panel of real estate finance practitioners guides you through current terms and trends in lockbox/cash management systems. The panel will discuss structuring waterfall provisions in cash management agreements and drafting ancillary agreements, including the deposit control account agreement.


  1. Types and terminology of lockbox/cash management structures
    1. Hard lockboxes
    2. Soft or springing lockboxes
  2. Typical cash management waterfall provisions
  3. Negotiating and drafting cash management agreements and deposit account control agreements
  4. Cash management in mezzanine and non-securitized loans
  5. Reserve funds, cash collateral and pledged accounts


The panel will review these and other key issues:

  • Current terms and trends in cash management systems and waterfall provisions
  • Hard lockboxes vs. springing lockboxes
  • Key documents and accounts involved in cash management structures
  • Drafting the cash management agreement and the deposit account control agreement


Christopher J. Fernandez, Counsel
Kilpatrick Townsend & Stockton, Charlotte, N.C.

Mr. Fernandez represents financial institutions and loan portfolio servicers in a variety of transactions. A primary focus of his practice is the servicing of defaulted commercial loans, including the representation of lenders and special servicers in workouts, restructurings, foreclosures and bankruptcy. He has experiencing assisting loan servicers with structuring and implementation of cash management, identifying bankruptcy risks in lending transactions and corporate structures and assisting lenders with risk mitigation strategies in connection with loan originations and restructurings, and representing loan servicers in connection with all aspects of litigation in state, federal and bankruptcy court.

Sally M. Ridenour, Counsel
Kilpatrick Townsend & Stockton, Atlanta

Ms. Ridenour concentrates her practice on the representation of lenders in connection with the origination and servicing of commercial mortgage loans, with particular emphasis on securitized lending. She previously managed legal services for the origination and purchase of commercial real estate loans and handled servicing and legal compliance for the commercial mortgage securitization group of a national bank. She has also served as corporate counsel with a real estate services company engaged in all facets of real estate ownership, operation and servicing nationwide.

David H. Simpkins, Esq.
Kilpatrick Townsend & Stockton, Charlotte, N.C.

Mr. Simpkins focuses his practice on real estate finance and commercial mortgage-backed securities transactions, including representation of financial institutions and special servicers in connection with distressed real estate loans and the disposition of commercial properties. In addition, Mr. Simpkins has experience representing property management organizations and community associations in a wide range of activities that include initial organization, document preparation and analysis, daily operations, and collections.

Susan C. Tarnower, Counsel
Kilpatrick Townsend & Stockton, Atlanta and Charlotte, N.C.

Ms. Tarnower concentrates her practice in the area of commercial real estate. She focuses on special servicing and servicing issues and the resolution of non-performing and sub-performing loans. Her experience ranges from forbearances, work-outs, deeds-in-lieu, short sales and discounted pay-offs to receiverships, foreclosures, confirmation hearings and the pursuit of deficiencies against borrowers and guarantors. She has extensive experience in loan originations, including conduit and agency loans and securitizations. She also handles commercial leasing transactions.


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Real Estate Law Advisory Board

David A. Barksdale


Ballard Spahr

Jacob Bart


Stroock & Stroock & Lavan

Brian W. Blaesser


Robinson & Cole

Ronald B. Grais


Sugar Felsenthal Grais & Hammer

Ren R. Hayhurst


Bryan Cave

Thomas C. Homburger

Of Counsel

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Susan C. Tarnower


Kilpatrick Townsend & Stockton

Clark T. Thiel


Pillsbury Winthrop Shaw Pittman

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