Material Adverse Change Clauses in Commercial Real Estate Loans and Loan Renewals

Negotiating and Managing Loans in a Distressed Credit Market

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

Conducted on Thursday, August 27, 2009

Course Materials

This seminar will explain how MAC clauses are currently being addressed and interpreted in commercial mortgage loans and provide best practices for counsel in negotiating and managing loans.


The real estate market crisis required commercial lenders to cancel or attempt to renegotiate risky mortgage loans. Material adverse change (MAC) clauses have become a common strategy to abandon lending commitments.

Questions about what constitutes a material adverse change have been at the center of several efforts to renegotiate mortgage loans. Unfortunately, the courts still have not provided clear guidance on the issue, leaving the interpretation of “material adverse change” up to lenders and borrowers.

It is important for counsel to lenders and borrowers to carefully negotiate the MAC clauses contained in mortgage loan agreements to protect their individual interests.

Listen as our panel of real estate finance attorneys discusses current trends surrounding MAC clauses in commercial mortgage loans and provides best practices for negotiating and managing loans.



  1. Common elements of MAC clauses
  2. Current trends
    1. Pending litigation
    2. Current state of case law
  3. Best practices for negotiating and managing commercial real estate loans
    1. Mitigating risks
      1. Be specific about conditions constituting a MAC
      2. Include reasonableness and good faith standards
      3. Include financial threshold for adverse change
      4. Watch language construction
      5. Include broad language to cover unknown risks
      6. Investors retain right to recover damages from lenders if loan is canceled
    2. Resolving conflicting positions


The panel will review these and other key questions:

  • How is the volatility of the current credit market impacting commercial real estate loans?
  • What is the current state of the law regarding MAC clauses?
  • How can counsel for lenders and borrowers best mitigate risk when negotiating MAC clauses and other loan terms in commercial mortgage loans?


Douglas S. Buck
Douglas S. Buck

Foley & Lardner

He has broad experience with real estate transactions involving lending and financing. He is experienced in...  |  Read More

Susan C. Tarnower
Susan C. Tarnower

She practices in the area of real estate finance, focusing on commercial real estate loans. She previously worked as...  |  Read More

Christopher T. Nixon
Christopher T. Nixon


He represents national CMBS and portfolio lenders in servicing loans for all types of income-producing properties...  |  Read More

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