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

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5.5 Statutes Limiting Alleged Oral Modification of Loan Commitment 123 .
5.6 Multi-State Collateral. 124 Consider application of deficiency judgment statutes
and case law relating to recovery of deficiencies and enforcement of claims
against multiple collateral. 125 A detailed analysis has to be made of the law in
each jurisdiction in light of the choice of internal law applicable to the obligation
and to any guarantees and the order of realization on the actions in each
jurisdiction. 126
5.7 Partnership Issues.
5.7.1 Direct Action by Creditor Against General Partners. Many
jurisdictions have interpreted the Uniform Partnership and the Uniform
Limited Partnership Act to permit an action by a creditor directly against a
general partner without the need for the creditor to first proceed against the
partnership. 127
5.8 Additional Advances to Protect Collateral. Although as between lender and
borrower future advances will generally be secured if the parties so agree the law
is diverse and often confused among the jurisdictions as to the rights of those
recording liens after recording of a mortgage but prior to specific advances by
such mortgagee. 128
5.9 Fair Debt Collection Practices Act. 15 U.S.C. §1692 relates to abusive debt
collection practices and includes lawyers as "debt collectors" subject to the Act.
123 See discussion at Item 7.1.13 below
124 See Restatement (Second) Conflict of Laws §229.
125 See Annotation, 44 ALR 3rd 922 (1972). Although the prevailing rule generally looks for conflict purposes to the
deficiency law of the situs of the foreclosed property, this rule is subject to exceptions and is not universally followed.
See United States v. Stewart, 523 F.2d 1070 (9th Cir. 1975) (California law applied by Washington court where
property was located in California, Contra, Gate City Federal Sav. & Loan Asso. v. O'Connor, 410 N.W. 2d 448 (Minn
App. (1987) (although land located in Minnesota the law of North Dakota applied. The parties were North Dakota
residents); Ould v. Stoddard, 54 Cal 613 (1980); (plaintiff that sued in Ohio on note was barred from foreclosing in
California under the California "one action" rule.
126 See Guttenberg and Sherlin, a Lender's Guide to California Antideficiency Laws in Multistate Transactions, 14
CEB Real Prop. L. Rep. 1, 54 (Jan,Feb 1991).
127 See Revised Uniform Limited Partnership Act §403 See U.S. Trust Co. of N.Y. v. Bamco, 183 A.D.2d 549, 585
N.Y. Supp. 2d 186 (App. Div. 1992), TPS Technologies, Inc. v. Rodin Enterprises Inc.,816 F.Supp. 345 (E.D. Pa.
1993)..
128 See Chapter 2 of the Restatement of the Law Property-Security (Mortgages) and especially the statutory note at 60.
Nelson & Whitman, Real Estate Finance Law §12.7 (1993); §27.05 “‘Future Advances’ Clauses” .
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