(309) 740-4033 tom@collateralbase.com
Commercial Mortgages

Commercial Mortgages

Commercial Mortgages & Foreclosure

commercial mortgage foreclosure

commercial mortgage foreclosure

  • Commercial Mortgage Foreclosure

The main collateral for many people and businesses is the real estate it owns.

A commercial mortgage is a grant of a security interest on a parcel of the business’ real estate.

Commercial mortgages allow for greater rights for the bank as compared to residential mortgages, which have greater consumer protections at both state and federal levels.

Drafting best practices for your commercial mortgages are discussed in the video below: be advised – the terms must be in the mortgage BEFORE the foreclosure begins to maximize recovery and control costs.

“A conspicuous Cross-Collateralization clause is only one part of it.”.

A buy sell agreement claims your rights when it comes to difficult situations. Your partner can fall ill or become unable to operate the business the right way. In that case, a buy sell agreement lowers your financial risks of bankrupt or debt. You can protect yourself by signing an agreement that will keep your business intact.

Comparing a buy sell agreement with a prenuptial agreement is the most accurate comparison. In a prenuptial agreement, you can get out of the marriage under certain conditions. At the same time, you can protect your financial operations. A buy sell agreement offers the same rights, just with one small difference. In a buy sell agreement, you can cover all the financial transactions between the business partners. This makes a buy sell agreement more reliable and more effective in terms of financial stability.

Picture of Collateral with foreclosure risk

Here’s the bullet point take aways from the video above.

  • waiver of the right of redemption – very often lenders that do not get deep in the weeds of commercial lending for get this – looking at you credit unions –  While redemption cannot be waived by consumer mortgages (residential mortgages) commercial mortgages – but if it is just business – you get what you negotiate.
  • cross-collateralization languages why – to stave off a 2nd mortgage coming in and having its hand out when other debts secure your mortgage for more on this on our case law update series – PNB v. Banterra Bank. But we stress the 2 points any good cross-collateralization clause requires.  
    • conspicuous cross-collateral clause on the first page of the document that refers to all debt then or thereafter arising, related or unrelated to the mortgage debt;
    • Define indebtedness to include the note amount and all amounts that may be indirectly secured by the cross-collateralization provision.
  • Define maximum indebtedness of the mortgage to be twice the mortgage debt to add more strength to cross-collateralization clause.
  • Acceleration and deceleration clauses.  Our Section council was discussing this last meeting and some were of the opinion that if the bank permits the borrower to reinstate – bring the loan entirely current – it can do so, but there should be some modification that provides for such – in addition to any judicial finding that permits the reinstatement as a borrower only gets one – for 5 years from the date of the dismissal.
  • Link to the quoted material regarding recession risk related to rise in credit spread of investment grad bonds from Bloomberg.
How to Use Options and Convertible Notes to Raise Money

How to Use Options and Convertible Notes to Raise Money

If you want to know how to use options to raise money for your business, you've come to the right place. In this article, you'll find out how to use options and convertible notes to raise funds for your business. You have multiple solutions and one of them is trading...

Thomas Howard

Thomas Howard

Real Estate Lawyer

Whether this is your first land use issue or most recent, our office has helped people and businesses alike.

Thomas Howard was on the ball and got things done. Easy to work with, communicates very well, and I would recommend him anytime.
R. Martindale

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Uniform Fraudulent Transfer Act

Uniform Fraudulent Transfer Act

Uniform Fraudulent Transfer Act

Uniform Fraudulent Transfer Act

Uniform Fraudulent Transfer Act – stops lies

A new Uniform Fraudulent Transfer Act Third District Appellate case that is of interest to secured lenders.

The case of Pluciennik v. Vandenberg provided the first time that Illinois applied the Uniform Fraudulent Transfer Act (UFTA) and its definition of “asset” on an encumbered piece of real estate.

Plaintiffs filed a UFTA action seeking to avoid transfers of three parcels of real estate from companies owned and managed by Defendant to companies held in irrevocable trusts for the benefit of his minor daughters. Valid mortgages encumbered all the real estate transferred.

The Trial Court erred in determining, as a matter of law, that the real estate were not assets under the UFTA because they were fully encumbered because no evidence of the fair market value of the real estate was considered in granting a motion to dismiss the UFTA complaint.

“That the fair market value of encumbered property that exceeds the value of a valid lien qualifies as an asset under Illinois’s Uniform Fraudulent Transfer Act. “

Picture of Collateral with low risk

Photograph by Lorem Ipsum via Stencil

The trail court made a mistake by not taking evidence on the fair market value of the real estate transferred.

As a result, there continued to be a material issue of fact as to the reasonable value of the properties and whether, in light of the fair market value, the properties were fully encumbered.

Therefore, Illinois law recognizes the value of the asset over and above the encumbrance upon it to be subject to the UFTA.

Look at the both the fair market value, and the payoff of the debt before determining if there is a UFTA claim.

How to Use Options and Convertible Notes to Raise Money

How to Use Options and Convertible Notes to Raise Money

If you want to know how to use options to raise money for your business, you've come to the right place. In this article, you'll find out how to use options and convertible notes to raise funds for your business. You have multiple solutions and one of them is trading...

Thomas Howard

Thomas Howard

Real Estate Lawyer

Whether this is your first land use issue or most recent, our office has helped people and businesses alike.

Thomas Howard was on the ball and got things done. Easy to work with, communicates very well, and I would recommend him anytime.
R. Martindale

Need A Business Lawyer?

Call our law offices with your legal questions for help on:

  1. real estate contracts
  2. business contract disputes
  3. Shareholder litigation
  4. cannabis business
  5. fraud actions
  6. mechanic's liens

 

REACH US BY EMAIL