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Lender Liability in Real Estate Finance: Origination, Administration, Modification, and Bankruptcy Considerations

Lessons From Recent Litigation; Best Practices for Minimizing Claims

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

This program is included with the Strafford CLE Pass. Click for more information.
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Conducted on Thursday, June 29, 2023

Recorded event now available

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This CLE webinar will analyze the most common types of lender liability claims, discuss how they are being asserted in various phases of the lending cycle, and explain lessons learned from recent financial litigation. The panel will outline best practices to minimize and avoid the risk of lender liability claims.


Lender liability issues can arise at any stage in the loan cycle. Breach of contract claims may arise from lenders' refusal to advance funds, failure to provide new financing, or alleged breach of loan commitments. Tort claims range from constructive fraud based on fiduciary duty to duress or tortious interference.

Loan documentation should be drafted in anticipation of potential lender liability claims, with jury waiver, arbitration, statute of limitations, damages limitations, and attorneys' fees language satisfactory to the lender. In administering a loan, all communications and demands of the borrower and guarantor should be clearly expressed in writing and made in compliance with loan documents. In a default scenario, the lender should avoid the appearance of improper control over the borrower and avoid becoming a mortgagee in possession through the appointment of a receiver.

Listen as our authoritative panel of practitioners reviews various theories of lender liability, including a litigator's perspective on these cases. The panel will offer best practices for handling loan origination and administration, as well as workouts, modifications, and defaults while minimizing lender liability claims.



  1. Phases of the loan cycle where liability may arise
    1. Advertising
    2. Standards of conduct/code of ethics
    3. Underwriting
      1. Predatory lending and loan-to-own
      2. Conflicts of interest
    4. Loan origination
      1. Documentation
      2. Payment structure practices
      3. Know your customer
    5. Syndication/participation
    6. Loan administration
    7. Restructuring of defaulted loans
    8. Foreclosure
    9. Bankruptcy
  2. Theories of lender liability
    1. Breach of contract
    2. Fraud, duress, and misrepresentation
    3. Negligence
    4. Infliction of emotional distress (on an individual borrower)
    5. Violation of statutory duties
    6. Breach of fiduciary duty
    7. Improper control of the borrower
    8. Breach of the covenant of good faith and fair dealing


The panel will review these and other key issues:

  • What are the common mistakes lenders make at origination, in loan administration, or in loan workouts that can lead to lender liability claims?
  • What theories of lender liability are most often asserted by borrowers after a loan default?
  • What theories of lender liability are asserted by junior or participating lenders against senior lenders?
  • How are lender liability claims being asserted in bankruptcy and what steps can lenders take to survive a challenge in bankruptcy?


Goldstein, Jason
Jason E. Goldstein

Shareholder, Co-Chair Mortgage Banking Group

Mr. Goldstein specializes in resolving complex business disputes for a diverse cross-section of clients, ranging from...  |  Read More

Hosack, John
John L. Hosack


Mr. Hosack focuses his transactional practice on commercial real property loan documentation, loan workouts, REO sales...  |  Read More

Long, Joffrey
Joffrey G. Long

Private Money Lender

Mr. Long has been active as a private money lender for more than 41 years. He has also been qualified by numerous...  |  Read More

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