New Jersey Real Estate Lawyer Blog

Richard S. Fries and Todd B. Marcus present the key concepts and provisions that should be included in effective commercial real estate loan forbearance agreements in their New York Law Journal article "A Primer on Today's Commercial Loan Forbearance Agreement."

First and foremost, a pre-workout agreement is required prior to the actual commercial loan workout, because this agreement establishes the rules and certain protections for the lender such as that (i) no communications between the parties will constitute an agreement by the lender, or a waiver, forbearance or estoppels, by the lender, of any of its rights and remedies and (ii) no negotiations will be binding on either party until the parties memorialize their agreement in writing.

Second, the purpose of a forbearance agreement is to grant the borrower legal/economic concessions in exchange for increased collateral and the right to invoke its remedies. Certain concessions and enhancements must be negotiated by the parties.
Lender's concessions may include some of the following:

Concession #1: Forbearance from accelerating the loan and pursuing foreclosure and other remedies;

Concession #2: Extension of maturity date;

Concession #3: Economic or covenant default waivers;

Concession #4: Suspension of required principal amortization and interest installment payments and

Concession #5: Partial release of real estate collateral or agreement to accept release prices.

Continue reading "New York Commercial Real Estate Loan Forbearance Agreements" »

Last month in "New Construction Contract Termination: New Yorkers Use a Federal Law to Escape," I wrote about how creative practitioners are seeking ways to help their clients break new construction contracts by using the (the "Act") as a weapon. Mark Fass explains in his New York Law Journal article "Buyers' Bid to Rescind Condo Purchases Under Land Sales Law Fails" that this argument failed in the case of Romero v. Border East River Realty LLC ("Romero").

This is one of the first cases to address the issue of whether buyers can use the requirements of the Act against developers to rescind contracts. The Act requires developers to register subdivisions of 100 or more lots with the Secretary of Housing and Urban Development ("HUD") and to deliver a disclosure document, called a property report, to each purchaser prior to executing the purchase agreement. In Romero the developers did not satisfy either obligation. However, the court found that two of the Act's exceptions combined exempted the developers from the registration and disclosure requirement.

Continue reading "New York Condo Purchaser Denied Rescission under Federal Law" »

The Wall Street Journal reported in its article "Farkas Scoops Up Centerline Holding" that Andrew Farkas's Island Capital Group ("Farkas") has purchased Centerline Holding Co. ("Centerline"). Farkas recapitalized the company with $100 million in new equity while also assuming $180 million in debt; preventing Centerline from falling into bankruptcy. Centerline is one of the largest commercial-mortgage servicing specialists.

Farkas purchased the Centerline unit which specializes in restructuring poorly performing mortgages that were previously packaged into bonds. This particular unit is a designated special servicer for about $110 billion of loans that were bundled into commercial-mortgage backed securities or CMBS. A special servicer decides whether to modify loan terms or foreclose on property once a loan goes into default.

Continue reading "New York Real Estate Investor Purchases Centerline Holding" »

When working to remedy a problem between a landlord and a tenant the first question that one should ask is whether a written lease exists between the parties. The absence of a written lease does not mean that a tenancy does not exist. If one lives on someone else's property and the parties exchange funds, there most likely is a landlord-tenant agreement. Written leases must comply with New Jersey's Plain Language Law (N.J.S.A. 56:12-1), which requires that the language be simple and understandable. However, if a written lease exists it should contain the following provisions:

Provision #1: Term and Rental - reservation of the rent should be made by stating the amount due for the year and the amount for each monthly installment

Provision #2: Sublet Clause - negotiation should be undertaken to require that the landlord accept any reasonable sublessee

Provision #3: Pet Clause - a provision should be made to allow a tenant to keep a pet or the landlord to exclude said pet

Provision #4: Late Charge - a reasonable late charge should be negotiated to protect the landlord

Provision #5: Attorney's Fees - a provision should be made for reasonable attorney's fees to be paid to the prevailing party should a dispute arise between said parties

Provision #6: Rent Due Date - this provision can be combined with Provision #1, but if not then a date certain should be set for when rent is due

Continue reading "New Jersey Landlord Tenant Law: Residential Lease Provisions" »