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

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3.9.4 Lease Assignment Issues.
Consider issues arising from rejection in a bankruptcy code proceeding of
lease by assignee debtor. These include claim against assignor and ability
of assignor to do something other than pay the lost rent to the landlord.
3.9.5 Collateral Rent Assignment.
See §5.20 below.
3.10 Notice and Other Procedural Requirements.
Examine licensor and franchisor nondisturbance and recognition agreement where
collateral includes hotel, fast food restaurant, etc. to determine the specifics of
notice and other procedural requirements and lender's rights and procedures.
3.11 Assembly of Client's Document
3.11.1 If the closing binder consists of copies of executed documents compare the
documents in the binder with the actual executed documents, if available.
Determine if client's personnel maintain "working" or other personnel files. If so
review these files for possible basis of debtor claims or defenses. 67 Also check
copies of computer mail that may be retained in lender' computer system or PC
hard disks or on storage disks including any notes, files and backup disks on
which old items may not have been deleted. 68
3.12 Partially or Wholly Unfunded Loan Commitments.
Review to determine if a reasonable basis exists for lender to avoid funding. Be
careful of lender liability claims if funding is stopped. If the lender does make
additional advances, will it be entitled to its lien priority for funds so advanced. 69
Is there an appropriate future advance statute Is it necessary in order for the
lender to secure priority over liens subordinate to initial mortgage that the
advances be "obligatory"
67 See item 7.0 below
68 "Documents" for discovery purposes under current practice may include all written, recorded, or graphic materials of
any kind including memoranda, reports, studies, contracts, letters, telegrams, diaries, meeting minutes, pamphlets,
handwritten notes, charts, tabulations, records of telephone conversations, maps, photographs, tapes, slides, and any
information, including data and software, stored in or accessible through any computer or other information retrieval
system, together with all instructions and other materials necessary to use or interpret such documents.
69 See discussion at item 5.8 below and statutory note on future advances at Restatement of the Law of Property-Security
(Mortgages) 57, Tentative Draft No. 1 (March 22, 1991).
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4/4/2006 3:55 PM Copyright 1996 - 2002 Marvin Garfinkel
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