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

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resemblance test enunciated in Reves v. Ernst & Young 159 to be securities
for such purposes when sold to individuals. 160
5.19 Clogging Equity of Redemption -- Equitable Mortgages. Although a deed in
favor of a lender that has been escrowed subject to being recorded in the event of
a default by the grantor borrower will usually be treated as a "equitable
mortgage", 161 courts have on occasion enforced such arrangements when entered
into following a default as part of a work-out arrangement. 162
5.20 Rent Assignments. 163
5.20.1 In the bankruptcy context Sec. 552(b) of the Bankruptcy Code now makes
it clear that post-petition rents are cash collateral for a mortgage holding a
valid pre-petition assignment. Certain hotel revenues may also be treated
as post-petition rent. 164 Broad language has in the non-bankruptcy context
been held to cover such items. 165
5.20.2 In Credit Lyonnais v. Getty Sq. Assoc. 166 the collateral assignment in
present tense was construed to be effective immediately upon the
occurrence of the default and result in the general partner of the exculpated
borrower being personally liable as a trustee of the diverted rents.
5.21 FIRREA Claim Procedure 167 Claims against depository institutions for which
RTC or F.D.I.C. is receiver must be presented through administrative claims
procedures with a very short bar date. RTC and F.D.I.C. may repudiate
burdensome contracts and leases of failed financial institutions. 168
159 494 U.S. 56 (1990), 110 S.Ct. 945, 108 L.Ed. 2d 47 (1990).
160 Pollack v. Laidlaw Holding, Inc., 27 F.3d 808 (2nd Cir. 1994).
161 See Star Enterprises v. Thomas, 783 F.Supp 1564 (D.R.I. 1992).
162 See Ringling Joint Venture II v. Huntington National Bank, 595 So.2d 180 (Fla. 1992).
163 See discussion at 9.0 below on assignment of future rents in context of a Bankruptcy Code proceeding.
164 See Bankruptcy Code Sec. 552(b).
165 Great-West Life Assur. Co. v. Raintree Inn, 837 P.2d 267 (Colo.App. 1992).
166 876 F. Supp. 517 (S.D.N.Y. 1995)
167 12 USCA §1821(d)(6)(A) and (d)(13)(D). See §14.02[5] “Claims Against Institutions Liquidated by Receiver” in
Dunaway, FIRREA Law and Practice (Clark Boardman Callaghan 1992-1994) and §31.11[4] “Claims Procedures”. In
Dunaway, The Law of Distressed Real Estate (Clark Boardman Callaghan 1985-1996.
168 12 U.S.C.A. §1821(e)(1). See Chapter 16 “Repudiation Under 12 U.S.C. §1821(e) of Contracts and Leases” in
Dunaway, FIRREA Law and Practice (Clark Boardman Callaghan 1992-1994). In Resolution Trust Corp. v. Diamond,
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