ALI-ABA Course of Study Commercial Real Estate Defaults ...

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58 REAL ESTATE DEFAULTS INVESTIGATION CHECK LIST AND ISSUE SUMMARY FOR LENDER'S COUNSEL (ANNOTATED) 1 TABLE OF CONTENTS PAGE 0.0...................................................................................................................Immediate Attention 0.1 Collateral 0.1.1 Primary Collateral 0.1.2 Ancillary Collateral 0.2 Conflicts Issues 0.3 Letters of Credit 0.4 Guarantees - Third Party Liability 0.5 Notice Requirements 0.6 File Assembly 0.7 Environmental Risks 0.8 Rent Assignment - Tenant Issues 0.9 Information To Be Requested from Borrower 0.10 Personal Liability 0.11 Estoppel - Nondisturbance & Attornment 0.12 Related Projects 0.13 Lender's Past Experience with Borrower 0.14 Participation Issues 0.15 Existence of Default 0.16 Wrap-Around Mortgages - Calculation of Deficiency 0.17 Debt Assignment Notice 0.18 Interim Advances from the Mortgage Lender 0.19 Mortgagee in Possession and Receivership Issues 0.20 Escrows 0.21 Transfer Taxes on Foreclosure 1.0 Parties 1.1 Owner of Property 1.2 Secured Creditors 1.3 Unsecured Creditors 1.4 Recorded and Potential Mechanics' Lien Claims 1 This checklist is regularly updated by the author Marvin Garfinkel to reflect his own experience and that of users of this checklist. Comments are therefore solicited since this document is continuously being revised. At any time there may be incomplete references and footnotes, unofficial citations that should be superseded with official citations, etc. DSC:767996.4 4/4/2006 3:55 PM Copyright 1996 – 2002 Marvin Garfinkel All Rights Reserved
59 1.5 Other Lenders and Participants 1.6 Title Insurer 1.7. Closing Attorneys 1.8 Bonding Company 1.9 Casualty and Property Loss Insurance Carriers of Borrower 1.10 Tenants 1.11 Guarantors 1.12 Any F.D.I.C. or RTC 1.13 Partners, Shareholders, Directors, and Officers of Owner 1.13.1 Corporate Veil Piercing 1.14 Lessors 1.15 Appraisers 2.0 Public Record Searches 2.1 Title Reports and U.C.C. Searches 2.2 Partnership and Other Entity Filings 3.0 Document Assembly and Examination 3.1 Mortgages, Deeds of Trust and Loan Agreements 3.2 Notes and Other Evidences of Indebtedness 3.3 Guarantees and Surety Documents 3.4 Legal and Any Other Closing Opinions 3.5 Closing Attorneys Summary of Transaction 3.6 Construction Documents 3.6.1 Cost To Complete Estimates 3.6.2 Construction Quality 3.6.3 Assignment of Construction Document 3.6.4 Lien Priority Issues 3.6.5 Claims to Unpaid Proceeds and Retainage Under Construction Contract 3.7 Permits, Governmental Licenses and Approvals, Zoning, Subdivision, Environmental and Other Land Use Documentation. 3.8 Title Insurance Policy and Marked Up Title Report or Commitment. 3.8.1 Review 3.8.2 Liability Theories 3.8.3 Rights of Parties in Possession 3.9 Leases and Lease Related Documents. 3.9.1 Generally 3.9.2 Application of Rents 3.9.3 Sublease Issues 3.9.4 Lease Assignment Issues. 3.9.5 Collateral Rent Assignment 3.10 Notice and Other Procedural Requirements 3.11 Assembly of Client's Document DSC:767996.4 ii 4/4/2006 3:55 PM Copyright 1996, 2002 Marvin Garfinkel All Rights Reserved
Page 1: 57 ALI-ABA Course of Study Commerci
Page 5 and 6: 61 5.0.............................
Page 7 and 8: 63 8.0 Relevant Bankruptcy Consider
Page 9 and 10: 65 REAL ESTATE DEFAULTS INVESTIGATI
Page 11 and 12: 67 available Is it feasible in cont
Page 13 and 14: 69 both for payment on demand and a
Page 15 and 16: 71 1.6 Title Insurer Consider possi
Page 17 and 18: 73 3.1 Mortgages, Deeds of Trust an
Page 19 and 20: 75 3.3.1 Are guarantor's liabilitie
Page 21 and 22: 77 those jurisdictions that permit
Page 23 and 24: 79 3.5 Closing Attorneys Summary of
Page 25 and 26: 81 3.8.3 Rights of Parties in Posse
Page 27 and 28: 83 Will the purpose of the proposed
Page 29 and 30: 85 the issuer must honor the draft
Page 31 and 32: 87 full disclosure to the borrower
Page 33 and 34: 89 4.2.3 Security Deposits - Determ
Page 35 and 36: 91 4.7.1 Contamination - Hazardous
Page 37 and 38: 93 to cure or mitigate and construc
Page 39 and 40: 95 5.3.3 Determine whether under th
Page 41 and 42: 97 5.10 Right to Financial Privacy
Page 43 and 44: 99 5.13.3 D'Oench has been held not
Page 45 and 46: 101 5.17 Choice of Forum and of Law
Page 47 and 48: 103 5.22 Amount Due Issues. 5.22.1
Page 49 and 50: 105 further a corporate purpose or
Page 51 and 52: 107 of substantial punitive damages
Page 53 and 54:
109 (3) The trend of the cases may
Page 55 and 56:
111 (1) Equal Credit Opportunity Ac
Page 57 and 58:
113 also establish that the lender
Page 59 and 60:
115 7.1.16 Loan Prohibited by Borro
Page 61 and 62:
117 7.11.1 If the dispute involves
Page 63 and 64:
119 See 9.0 below on effect of assi
Page 65 and 66:
121 362(b)(4) exempt from the stay.
Page 67 and 68:
123 8.6.5 Although foreclosures 283
Page 69 and 70:
125 whether partial interest deferr
Page 71 and 72:
127 8.9.2. §506(b) Fees and Costs
Page 73 and 74:
129 8.11.4 Successive Chapter 11 fi
Page 75 and 76:
131 8.13.7 New Value Rule. 332 8.14
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133 false representation or actual
Page 79 and 80:
135 (2) Compensate non-debtor party
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137 8.26 Ipso Facto Clauses. Under
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139 mortgage that has obtained an a
Page 85 and 86:
141 10.2 Mortgagee Provisions. Desc
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