Real Estate Loan Commitment Letters and Terms Sheets: Negotiating Key Terms

Structuring Binding Finance Commitments and Balancing Interests of Both Lenders and Borrowers

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

Conducted on Thursday, April 17, 2014

Recorded event now available

This CLE course will provide guidance to real estate finance counsel for lenders and borrowers on negotiating loan term sheets, proposal letters and loan commitments. The panel will outline best practices for negotiating these preliminary loan documents to prevent subsequent disputes.

Description

Real estate financing begins with a non-binding term sheet, or proposal letter, that clarifies the terms of potential financing. At this stage, the borrower needs to carefully consider and include key points that it wants to be part of the financing deal.

Non-binding term sheets have been subject to litigation, and as the 2013 SIGA Technologies case illustrates, can be held in limited circumstances to be enforceable, presenting risk for unprepared lenders. 

In most jurisdictions, the commitment letter is an enforceable document. Careful and strategic negotiation of key provisions in the commitment letter by both parties can result in cost savings to the borrower and ensure adequate protections and remedies for the lender.

Listen as our authoritative panel of real estate finance attorneys offers effective approaches for borrowers' and lenders' counsel for negotiating term sheets, proposal letters and loan commitments. The panel will provide negotiation points to both parties to protect their interests and minimize subsequent disputes.

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Outline

  1. Legal developments
    1. Recent case law trends
    2. Challenges to enforceability of “non-binding” term sheets
  2. Negotiating key terms
    1. Loan amount
    2. Collateral
    3. Interest rate
    4. Prepayment penalty
    5. Guaranties
    6. Financial covenants
    7. Default provisions
    8. Affirmative and negative covenants
  3. Enforcing loan commitments and minimizing disputes

Benefits

The panel will review these and other key questions:

  • What benefits do term sheet negotiations offer borrowers in framing a subsequent financing deal?
  • What should be key deal terms in a loan commitment—and how can the borrower and lender each minimize risk through these provisions?
  • What lessons can be learned from recent case law developments on enforceability of loan commitment letters and term sheets?

Following the speaker presentations, you'll have an opportunity to get answers to your specific questions during the interactive Q&A.

Faculty

Jennifer Bojorquez
Jennifer Bojorquez
Partner
Troutman Sanders

Ms. Bojorquez counsels lenders, developers and investors on real estate finance transactions, including loan...  |  Read More

Martin W. Taylor
Martin W. Taylor
Partner
Troutman Sanders

Mr. Taylor focuses his practice on representing financial institutions, borrowers, principals, guarantors and other...  |  Read More