The instructors have negotiated and documented hundreds of mortgage loans of all sizes and levels of complexity, representing lenders such as banks and S&Ls, individual lenders, insurance companies, real estate developers and sellers of real estate. They have also represented borrowers of all types, from the very sophisticated to those taking out their first real estate loan. Over their 45-plus aggregate years of experience, they have learned not only the legal and economic dynamics of mortgage lending, but also the secrets of how to make the process go more quickly and smoothly and keep transaction costs down.
- Simple ways to avoid common pitfalls, surprises, missed opportunities, unwarranted assumptions, sources of friction and reasons for delay
- Getting under the hood: A Mechanic's Guide to loan documents
- How to eliminate unnecessary documentation
- How to save time and legal fees by not trying to negotiate non-negotiable items
- When to dig in your heels; when to concede: What's really important in managing risks
- How regional/local banks differ from national or institutional lenders in what they require and how they do business: What is the right borrower/lender fit?
- Using legal counsel effectively
- How to think like a lender; how to think like a borrower
- Demystifying SBA Loans
8:30 a.m. - 9:30 a.m.
A. The Lender As An Investor In The Borrower's Company: Fixed Preferred Return
B. The Lender As Temporary Board Member In The Borrower's Company
C. Thinking Like A Lender: Assessing And Managing Risk When Your Upside Is Fixed
D. Thinking Like A Borrower: Retaining Control And Flexibility
E. Real Estate As Collateral: What Makes It Unique
F. Types Of Lenders And How They Differ:
1. Regional/Local Banks
2. National Banks And Institutional Lenders Such As Insurance Companies
G. Types Of Loans To Be Covered In Course:
1. Acquisition Loans
3. SBA Loans
4. Term Loans And Revolving Credit Loans
H. Types Of Loans That Will Not Be Covered
1. Construction Loans
2. Tax-Exempt Financing
3. Leasehold Mortgages
9:30 a.m. - 10:00 a.m.
II. Anatomy Of A Mortgage Loan
A. Summary Of The Process From Application Through Pay-Off
B. List And Description Of Loan Documents And What They're For
1. Term Sheet/Commitment
2. Loan Agreement
5. Assignment Of Rents And Leases
6. Security Agreement
7. UCC Financing Statement
8. Assignment Of Third-Party Contracts
9. Environmental Guaranty
10. Personal Guaranty
11. SNDAs For Tenants
12. Corporate Resolutions
13. Attorney's Opinion
10:00 a.m. - 10:10 a.m.
10:10 a.m. - 11:30 a.m.
III. The Loan Commitment
A. What Is The Loan Commitment?
B. Illinois Law On Loan Commitments
C. Front-Loading Negotiations: Using The Loan Commitment To Cut The Deal
D. Items To Be Addressed In The Loan Commitment (Each Briefly Discussed):
1. Loan Amount
3. Interest Rate (Fixed, Variable)
4. Periodic Payment Terms
5. Prepayment Penalties
6. Need For Guarantee(s)
8. Use Of Proceeds
9. Name Of Borrowing Entity (New? Existing? Single Purpose?)
10. Financial Covenants
12. Special Events Of Default
13. Specify Which Leases Will Need SNDAs
11:30 a.m. - 12:00 p.m.
IV. The Checklist: An Essential Tool For Avoiding
Surprises And Staying On Schedule
A. Making The Checklist An Item To Be Negotiated Up Front
B. Spells Out All Required Submissions
C. Defines Division Of Labor
D. Should Be Mutually Discussed By Lender And Borrower Regularly Up Until Closing
E. Walk-Through Of A Typical Checklist
12:00 p.m. - 1:00 p.m.
Lunch (On Your Own)
1:00 p.m. - 1:45 p.m.
V. The Due Diligence Process
B. Typical Due Diligence Items
2. ALTA Survey
3. Title Commitment And Exception Documents
4. UCC Searches
5. Good Standing Certificate/Certified Articles/By-Laws/Partnership Agreement/Operating Agreement
6. Evidence Of Insurance
9. Management Agreements, Franchise Agreements, Long-Term Contracts With Third-Parties
10. Other Operating Agreements
12. Permits And Licenses
1:45 p.m. -2:30 p.m.
VI. Lead-Time And Items Of Particular Concern:
A. ALTA Survey
B. Title (Exceptions And Endorsements)
C. Environmental Assessments
D. SNDAs And Estoppel Certificates With Existing Tenants
E. Other Third-Party Consents To Assignments And Subordinations
2:30 p.m. - 2:45 p.m.
VII. Loan Documents (Part I): General Observations
A. What Form They Will Take
1. Computer Form Documents, Such As LaserPro
2. Custom-Drafted By Law Firm For Each Deal
3. Pluses And Minuses Of Each
B. Timing: When First Drafts Are Delivered
2:45 p.m. - 3:00 p.m.
3:00 p.m. - 3:30 p.m.
VIII. Loan Documents (Part II): Negotiating Advice
A. What Is Worth Fighting Over
B. Sprinkling Documents With 'Reasonables'
C. Recognizing The Parties' Natural Incentives, Disincentives, Interests And Motives
D. Working With A Party's Self-Interest To Decide What To Prohibit; Require
E. Staying In The Real World: What Is Horizon Of Loan? Sale Of Property? What Is Likelihood Of Certain Things Coming Up?
F. Exit Strategies
G. What Lenders' Lawyers Never Give, And Why
3:30 p.m. - 4:30 p.m.
IX. Loan Documents (Part III): Frequently Encountered
Issues And How To Resolve Them
A. Events Of Default:
1. Monetary: Notice-And-Cure
2. 'Deemed Insecure'
3. 'Adverse Change In Financial Condition'
4. Death Or Bankruptcy Of Guarantor
5. Due On Sale
6. Financial Covenants
B. Degree Of Borrower's Freedom To Make Basic Decisions Without Lender's Consent (e.g., Leasing; Alterations)
D. Environmental Covenants: Wording, Wording, Wording
E. Reps And Warranties: Risk-Shifting Tool
F. Assignment Of Leases And Rents
G. Tenant-Related Issues
4:30 p.m. - 5:00 p.m.
X. Questions And Answers