Commercial Mortgage Modifications: Lien Priority, Title Insurance, and Bankruptcy Issues
Structuring Modification Agreements While Avoiding Legal Pitfalls
Recording of a 90-minute premium CLE video webinar with Q&A
This CLE course will guide lenders' and borrowers' counsel on negotiating and documenting commercial mortgage modifications while protecting their clients' interests against potential lien priority challenges, title pitfalls, and bankruptcy issues.
Outline
- Popular objectives and current trends for loan modifications
- Modifying loans for construction that stalled then restarted
- Extending maturity date; changing or removing extension options
- Adjusting loan amount; obligatory vs. optional advances
- Changing interest rate; bifurcating the rate
- Modifying payment provisions
- Changing, adding, or releasing collateral securing the loan
- Modifying disbursement provisions to restart a dormant construction project
- Key legal considerations to address with a loan modification
- Priority issues, including the impact of intercreditor agreements and lien bifurcation
- Title insurance: creditors' rights exclusions and available endorsements
- Title insurance: changes in mechanics' lien protections for lenders and related issues impacting borrowers and guarantors
- The threat of bankruptcy and documenting the possibility
- Pre-negotiation agreements
- Governing law in multi-property transactions
- Documentation strategies
- Role of third parties and estoppels
- Recordable and non-recordable documents
- Loan cleanup and clarification
Benefits
The panel will review these and other noteworthy questions:
- When amending or modifying a commercial mortgage loan, what lien enforceability issues must lenders consider?
- How has discontinuation of creditors' rights coverage in title insurance policies impacted mortgage modification transactions?
- What is the optimal title insurance coverage in a modification transaction?
- What bankruptcy issues should lenders and borrowers anticipate and proactively protect against in the mortgage modification documents?
Faculty
Micah J. Halverson
Partner
Kutak Rock
Mr. Halvorson focuses his practice on real estate and corporate finance matters, and he serves as a member of the... | Read More
Mr. Halvorson focuses his practice on real estate and corporate finance matters, and he serves as a member of the firm's Executive Committee. He has worked on teams tasked with review and negotiation of commercial office leases including non-REIT landlords and has represented REITs in healthcare real estate acquisition, development and leasing. Mr. Halvorson leads a team of lawyers who serve as lead counsel to a national bank, assisting their community development lending platform to provide comprehensive lending services in affordable multifamily housing construction utilizing LIHTCs. His banking team also represents multiple super-regional banks in their general commercial lending and healthcare lending platforms, including loans to finance senior living, skilled-nursing, retirement communities and healthcare mergers and acquisitions.
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Brandon C. Marchiafava
Attorney
Kutak Rock
Mr. Marchiafava represents commercial lenders and developers in a variety of financial transactions, including... | Read More
Mr. Marchiafava represents commercial lenders and developers in a variety of financial transactions, including commercial lending, real estate development projects, sales and acquisitions, and leasing. He has served as counsel to several national banks, assisting their community development lending platforms to provide comprehensive lending services on predevelopment, construction, bridge and permanent loans on multifamily housing projects using Low Income Housing Tax Credits. Mr. Marchiafava also represents regional banks in their general commercial lending and healthcare lending platforms, including: asset based loans, revolving lines of credit, senior housing loans, skilled nursing loans, and other business loans. He routinely represents commercial real estate lenders who originate loans on projects including multifamily housing, condominiums, industrial and self-storage utilizing mortgage, mezzanine and C-PACE financing structures.
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