You have no items in your shopping cart.
Search
Filters

California Real Estate Finance Practice: Strategies and Forms

Successfully negotiate loan documents favorable to your client.

Successfully negotiate loan documents favorable to your client.

  • Easy-to-use, integrated commercial loan document forms
  • Coverage of securitized mortgages and other debt obligations
  • Expert guidance on cross-collateralization
  • Advice on loans with assignments of rents and personal property collateral
  • Drafting strategies for both lender’s and borrower’s counsel
  • Writing legal opinions
  • Advising on construction loans
  • Advice and protection for loan guarantors in and out of bankruptcy
OnLAW RE94180

Web access for one user.

 

$ 455.00
Print RE33180

2 looseleaf volumes, updated 1/20

$ 455.00
Add Forms CD to Print RE23181
$ 99.00

Successfully negotiate loan documents favorable to your client.

  • Easy-to-use, integrated commercial loan document forms
  • Coverage of securitized mortgages and other debt obligations
  • Expert guidance on cross-collateralization
  • Advice on loans with assignments of rents and personal property collateral
  • Drafting strategies for both lender’s and borrower’s counsel
  • Writing legal opinions
  • Advising on construction loans
  • Advice and protection for loan guarantors in and out of bankruptcy

1

Introduction to Real Property Financing and Negotiating Techniques

Charles Locko

  • I.  SCOPE AND LIMIT OF CHAPTER
    • A.  Overview of Commercial Loan Process  1.1
    • B.  Residential Loans  1.2
  • II.  LOAN BROKERS AND OTHER CONSULTANTS  1.3
    • A.  Role of Broker  1.4
      • 1.  Fees and Costs Charged by Broker  1.5
      • 2.  Loan Packaging  1.6
      • 3.  Broker as Negotiator on Borrower’s Behalf  1.7
    • B.  Other Consultants and Professionals  1.8
  • III.  TYPES OF FINANCING TRANSACTIONS  1.9
    • A.  Acquisition  1.10
      • 1.  Checklist: Due Diligence  1.11
      • 2.  Seller Financing  1.12
      • 3.  Ground Leases  1.13
    • B.  Refinancing  1.14
    • C.  Bridge and Gap Financing  1.15
    • D.  Mezzanine Financing  1.16
  • IV.  SOURCES OF FINANCING  1.17
    • A.  Main Street Versus Wall Street: Portfolio Versus Conduit Lending  1.18
    • B.  Commercial Banks  1.19
      • 1.  Traditional Regulation of Commercial Banks  1.19A
      • 2.  Regulation After the Dodd-Frank Wall Street Reform and Consumer Protection Act  1.19B
    • C.  Savings and Loans; Savings Banks; Thrifts  1.20
    • D.  Life Insurance Companies  1.21
      • 1.  State Regulation of Insurance Companies  1.21A
      • 2.  Dodd-Frank Wall Street Reform and Consumer Protection Act  1.21B
    • E.  Pension Plans  1.22
    • F.  Mortgage REITs  1.23
    • G.  Industrial Loan Companies; Finance Lenders; Other Lenders  1.24
  • V.  TERMS USED IN REAL PROPERTY FINANCING  1.25
    • A.  Adjustable (or Variable) Pay Loan  1.26
    • B.  Adjustable (or Variable) Rate Loan  1.27
    • C.  Amortization  1.28
    • D.  Basis Points  1.29
    • E.  Mortgage/Deed of Trust  1.30
    • F.  Bowtie Loan  1.31
    • G.  Bullet Loan  1.32
    • H.  Conduit Loan/Securitized Loan  1.33
    • I.  Convertible Loan  1.34
    • J.  Cross-Collateral/Cross-Default  1.35
    • K.  Debt Service Coverage Ratio  1.36
    • L.  Earnout/Holdback  1.37
    • M.  Grace Period  1.38
    • N.  Guaranty  1.39
    • O.  Impound Account  1.40
    • P.  Interest  1.41
    • Q.  Loan Participation/Loan Syndicate  1.42
    • R.  Loan Servicing  1.43
    • S.  Loan-to-Cost Ratio  1.43A
    • T.  Loan-to-Value Ratio  1.44
    • U.  Lock Box  1.45
    • V.  Lock-In Clause  1.46
    • W.  Mezzanine Financing  1.47
    • X.  Pay Rate  1.48
    • Y.  Points/Loan or Origination Fees  1.49
    • Z.  Prepayment  1.50
    • AA.  Recourse/Nonrecourse  1.51
    • AB.  Release Price  1.51A
    • AC.  Remargining  1.51B
    • AD.  Shared Appreciation Loan  1.52
    • AE.  Wraparound Deed of Trust/All-Inclusive Deed of Trust  1.53
  • VI.  ROLE OF COUNSEL
    • A.  Importance of Early Involvement  1.54
      • 1.  Structuring the Transaction  1.55
      • 2.  Preparing Initial Drafts  1.56
      • 3.  Use of Standard and Computerized Forms  1.57
    • B.  Usury  1.58
    • C.  Credit Enhancement  1.59
    • D.  Concerns of Lender’s Counsel  1.60
      • 1.  Title Matters  1.61
        • a.  Preliminary Report  1.62
        • b.  ALTA Survey  1.63
        • c.  Common Endorsements  1.64
      • 2.  Hazardous Substances  1.65
      • 3.  Borrowing Entity  1.66
    • E.  Concerns of Borrower’s Counsel  1.67
      • 1.  Exit Strategy  1.68
      • 2.  Borrowing Entity  1.69
      • 3.  Title Issues; Environmental Concerns; Due Diligence  1.70
      • 4.  Other Issues of Concern to Borrower  1.71
  • VII.  NEGOTIATING TECHNIQUES
    • A.  Commonly Negotiable Terms  1.72
    • B.  Negotiating Mindset: Basic Goals of Lender and Borrower  1.73
    • C.  Loan Amount  1.74
    • D.  Interest Rate  1.75
      • 1.  Fixed Versus Variable Interest Rate  1.76
      • 2.  Advantages and Risks of Variable Rates  1.77
    • E.  Amortization  1.78
    • F.  Maturity Date  1.79
    • G.  Grace Periods  1.80
    • H.  Notice and Cure Periods  1.81
    • I.  Credit Enhancement  1.82
    • J.  Personal Liability: Exceptions to Nonrecourse Provisions  1.83
    • K.  Due-on-Sale (Transfer of Interests in the Property)  1.84
    • L.  Transfers of Interests in Borrower  1.85
    • M.  Prepayment  1.86
    • N.  Operating Covenants  1.87
    • O.  Impound Accounts  1.88
    • P.  Reserves  1.89
  • VIII.  CONDUIT FINANCING; A SUMMARY
    • A.  Wall Street Comes to a Bank Near You  1.90
    • B.  Advantages of Conduit Financing  1.91
    • C.  Disadvantages of Conduit Financing  1.92
    • D.  Role of Rating Agencies  1.93
    • E.  Threshold Requirements  1.94
      • 1.  Uninterrupted Cash Flow to Lender  1.95
        • a.  Single-Purpose, Bankruptcy-Remote Borrower Entity  1.96
        • b.  Impound and Reserve Accounts  1.97
        • c.  Lock Box System  1.98
        • d.  Operating Covenants  1.99
        • e.  No Subordinate Debt  1.100
        • f.  Credit Enhancement  1.101
      • 2.  Prepayment Restrictions  1.102
        • a.  Prohibition of Prepayment  1.103
        • b.  Prepayment Premium  1.104
        • c.  Defeasance  1.105
      • 3.  Assuring Repayment at Maturity  1.106
      • 4.  Hyperamortization: The Prepackaged Workout  1.107

2

The Loan Commitment

M. J. Pritchett

Gregg J. Loubier

  • I.  ROLE OF THE LOAN COMMITMENT  2.1
  • II.  NEGOTIATING THE LOAN COMMITMENT
    • A.  Negotiating Leverage  2.2
    • B.  Basic Loan Terms  2.3
    • C.  Closing Conditions  2.4
      • 1.  Due Diligence Items  2.5
      • 2.  Legal Opinions  2.6
    • D.  Preclosing Rights and Obligations  2.7
      • 1.  Lender’s Obligations  2.8
      • 2.  Borrower’s Obligations  2.9
      • 3.  Fees  2.10
  • III.  FORM COMMITMENT LETTER  2.11
    • A.  Body of Letter
      • 1.  Form: Introduction and Recitals  2.12
      • 2.  Form: Loan Terms  2.13
      • 3.  Form: Closing Conditions  2.14
      • 4.  Form: Expiration Date  2.15
      • 5.  Form: Commitment Fee  2.16
      • 6.  Form: Lender’s Costs  2.17
      • 7.  Form: Report Deposit  2.18
      • 8.  Form: Loan Brokerage and Other Fees  2.19
      • 9.  Form: Liquidated Damages  2.20
      • 10.  Form: Termination Events  2.21
      • 11.  Form: Indemnity  2.22
      • 12.  Form: Assignment  2.23
      • 13.  Form: Miscellaneous  2.24
      • 14.  Form: Acceptance and Signatures  2.25
    • B.  Optional Provisions for Commitment Letter
      • 1.  Form: Early Rate Lock  2.25A
      • 2.  Form: Subordinate Financing  2.25B
      • 3.  Form: Transfers  2.25C
      • 4.  Form: Recourse Carveouts  2.25D
      • 5.  Form: Loan Assumptions  2.25E
      • 6.  Form: Securitization Cooperation  2.25F
    • C.  Exhibits
      • 1.  Form: Exhibit A (Summary of Loan Terms)  2.26
      • 2.  Form: Exhibit B (Conditions of Lender’s Obligation to Fund Loan)  2.27
    • D.  Checklist: Due Diligence  2.28

3

The Promissory Note

Randy P. Orlik

Anthony Theophilos

  • I.  SCOPE AND LIMIT OF CHAPTER  3.1
  • II.  DISTINGUISH CONSTRUCTION FROM PERMANENT LOANS
    • A.  Construction Loans  3.2
    • B.  Permanent Loans  3.3
  • III.  PRACTICAL AND LEGAL CONSIDERATIONS
    • A.  Negotiability
      • 1.  Personal Defenses; Statute of Limitations  3.4
      • 2.  Writing  3.5
      • 3.  Language  3.6
    • B.  Drafting Considerations for Promissory Note
      • 1.  Loan Commitment  3.7
      • 2.  Timing and Mode of Payment
        • a.  Equal Periodic Payments
          • (1)  Fully Amortizing Payments  3.8
          • (2)  Balloon Payments  3.9
        • b.  Variable Payments  3.10
      • 3.  Variable Interest Rates
        • a.  Index Rate  3.11
        • b.  Interest Rate Based on Contingency  3.12
        • c.  Variable Payments With Constant Interest Rate  3.13
      • 4.  Calculation of Interest  3.14
      • 5.  Late Payment Charges
        • a.  Purpose of Late Charge  3.15
        • b.  Validity of Late Charges  3.16
        • c.  Assessment of Late Charges  3.17
      • 6.  Forbearance Not a Waiver; Extension; Partial Payments; Subordination
        • a.  Forbearance  3.18
        • b.  Modification; Extension  3.19
        • c.  Partial Payments  3.20
        • d.  Subordination Agreements  3.21
      • 7.  Prepayment  3.22
        • a.  Prepayment Privilege and Refinancing  3.23
        • b.  Lock-In Provisions
          • (1)  Absolute Prepayment Prohibitions  3.24
          • (2)  Defeasance  3.24A
        • c.  Validity of Prepayment Fee or Charge  3.25
          • (1)  Nondefault Prepayments  3.26
            • (a)  Involuntary Prepayments  3.27
            • (b)  Partial Reconveyances  3.28
            • (c)  Balloon Payments  3.29
          • (2)  Prepayment on Default  3.30
        • d.  Prepayment on Transfer  3.31
        • e.  Calculation of Prepayment Charge  3.32
        • f.  Payoff Demand or Short-pay Request  3.33
        • g.  Order of Application of Payments  3.34
      • 8.  Acceleration on Default and Reinstatement  3.35
      • 9.  Default Interest  3.36
      • 10.  Usury  3.37
        • a.  Definition of Interest  3.38
        • b.  List of Exemptions  3.39
        • c.  Loans Made or Arranged by Brokers  3.40
        • d.  Certain Commercial Loan Exemptions  3.40A
        • e.  Date for Determining Applicable Maximum Interest Rate  3.41
        • f.  Successor Holders  3.42
        • g.  Choice-of-Law Considerations; Waiver  3.43
        • h.  Usury Savings Clause  3.44
      • 11.  Attorney Fees  3.45
      • 12.  Waiver of Presentment, Notice of Dishonor, and Protest  3.46
      • 13.  Joint and Several Liability  3.47
      • 14.  Governing Law  3.48
      • 15.  Nonrecourse  3.49
        • a.  Tax Considerations of Nonrecourse Financing  3.50
        • b.  Limitations on Nonrecourse Provisions  3.51
      • 16.  Cross-Default  3.52
      • 17.  Waiver of Statute of Limitations  3.53
      • 18.  Severability  3.54
      • 19.  Time of the Essence  3.55
  • IV.  SIMPLE FIXED INTEREST PROMISSORY NOTE
    • A.  Drafting Assumptions  3.56
    • B.  Form: Simple Promissory Note  3.57
  • V.  COMMERCIAL PROMISSORY NOTE SECURED BY DEED OF TRUST  3.58
    • A.  Form: Caption  3.59
    • B.  Form: Promise to Pay: Place of Payment  3.60
    • C.  Form: Interest  3.61
    • D.  Form: Payment  3.62
    • E.  Form: Method of Calculating Interest  3.63
    • F.  Form: Time and Mode of Payment—Equal Consecutive Installments of Principal and Interest  3.64
    • G.  Form: Default  3.65
    • H.  Form: Late Charge; Percentage Amount  3.66
    • I.  Form: Default Interest on Outstanding Principal  3.67
    • J.  Form: Interest on Interest  3.68
    • K.  Form: Attorney Fees  3.69
    • L.  Form: Waiver of Presentment, Notice of Dishonor, and Protest  3.70
    • M.  Form: Manner of Notification  3.71
    • N.  Form: Statement That Note Is Secured by Deed of Trust  3.72
    • O.  Form: Forbearance Not a Waiver  3.73
    • P.  Form: Assignment  3.74
    • Q.  Form: Governing Law  3.75
    • R.  Form: Usury  3.76
    • S.  Form: Time of the Essence  3.77
    • T.  Form: Signature  3.78
    • U.  Additional or Alternative Provisions  3.79
      • 1.  Form: Joint and Several Liability  3.80
      • 2.  Form: Interest Rate Based on Reference Rate  3.81
      • 3.  Form: Interest Rate Based on Contingency  3.82
      • 4.  Form: Interest-Only for All or Part of Term  3.83
      • 5.  Form: Increasing Fixed Installment Payments  3.84
      • 6.  Form: Fixed Principal Plus Accrued Interest  3.85
      • 7.  Form: Payment on Demand  3.86
      • 8.  Form: Prepayment Charge Following Acceleration on Default  3.87
      • 9.  Form: Lock-In  3.88
      • 10.  Form: Phased Lock-In  3.89
      • 11.  Form: Prepayment With Charge  3.90
      • 12.  Form: Prepayment Privilege Without Charge  3.91
      • 13.  Form: Limited Prepayment Privilege Without Charge  3.92
      • 14.  Form: Limited Prepayment  3.93
      • 15.  Form: Prepayment Application  3.94
      • 16.  Form: Optional Due Date  3.95
      • 17.  Form: Subordination  3.96
      • 18.  Form: Disclaimer of Personal Liability  3.97
      • 19.  Form: Cross-Default  3.98
      • 20.  Form: Waiver of Statute of Limitations  3.99
      • 21.  Form: Severability  3.100
      • 22.  Form: Waiver of Statutory Regulation  3.101
      • 23.  Form: Representation on Use of Proceeds  3.102
      • 24.  Form: Waiver of Jury Trial  3.103
      • 25.  Form: Financial Covenant  3.104

4

The Deed of Trust

C. Darrell Sooy

Morgan T. Jones, III

  • I.  SCOPE OF CHAPTER
    • A.  Deed of Trust Versus Mortgage  4.1
    • B.  Institutional Lender’s Forms; Uniformity; Capital Markets Mortgage (CMM)  4.2
  • II.  PARTIES TO THE DEED OF TRUST
    • A.  Trustor  4.3
    • B.  Beneficiary  4.4
    • C.  Trustee  4.5
  • III.  LEGAL REQUIREMENTS FOR VALIDITY
    • A.  Description of Debt  4.6
    • B.  Recordation  4.7
  • IV.  COMMONLY NEGOTIATED TERMS  4.8
    • A.  Time Periods  4.9
    • B.  Lender’s Discretion  4.10
    • C.  Cost of Compliance  4.11
  • V.  DRAFTING TIPS  4.12
  • VI.  CROSS-COLLATERALIZATION  4.13
  • VII.  COMMERCIAL DEED OF TRUST
    • A.  Basic Form  4.14
    • B.  Title of Document  4.15
    • C.  Introductory Paragraphs  4.16
    • D.  Definitions (Paragraph 1 of Deed of Trust)  4.17
      • 1.  Fixtures, Improvements, Land, Leases, Mortgaged Property, Personalty, Rents  4.18
      • 2.  Indebtedness and Obligations  4.19
      • 3.  Permitted Encumbrance(s)  4.20
    • E.  Covenants in Deed of Trust  4.21
      • 1.  Repair and Maintenance (Paragraph 2 of Deed of Trust)  4.22
      • 2.  Use of Mortgaged Property (Paragraph 3 of Deed of Trust)  4.23
      • 3.  Insurance (Paragraph 4 of Deed of Trust)
        • a.  Basic Requirements  4.24
        • b.  Lender’s Remedies for Borrower’s Failure to Procure Insurance  4.25
        • c.  Additional Types of Insurance Required  4.26
      • 4.  Application of Condemnation Awards and Hazard Insurance Proceeds (Paragraph 5 of Deed of Trust)
        • a.  Impairment of Security  4.27
        • b.  Funds: Disbursement and Collection  4.28
      • 5.  Obligation to Pay Taxes and Other Sums Due (Paragraph 6 of Deed of Trust)  4.29
      • 6.  Leases of Mortgaged Property (Paragraph 7 of Deed of Trust)  4.30
        • a.  Attornment Clauses  4.31
        • b.  Subordination of Lease to Deed of Trust  4.32
      • 7.  Right to Collect and Receive Rents (Paragraph 8 of Deed of Trust)  4.33
      • 8.  Tax and Insurance Impounds (Paragraph 9 of Deed of Trust)  4.34
      • 9.  Assignment of Causes of Action, Awards, and Damages (Paragraph 10 of Deed of Trust)  4.35
      • 10.  Protecting the Security; Litigation; Fees and Costs of Lender (Paragraphs 11 and 12 of Deed of Trust)  4.36
      • 11.  Sums Advanced to Bear Interest and to Be Secured by Deed of Trust (Paragraph 13 of Deed of Trust)  4.37
      • 12.  Reciprocal Right to Attorney Fees  4.38
      • 13.  Financial Statements; Estoppel Certificates (Paragraph 15 of Deed of Trust)  4.39
    • F.  Uniform Commercial Code Security Agreement (Paragraphs 16 and 17 of Deed of Trust)  4.40
    • G.  Waiver of Statute of Limitations (Paragraph 18 of Deed of Trust)  4.41
    • H.  Events of Default (Paragraph 19 of Deed of Trust)  4.42
    • I.  Acceleration on Transfer or Encumbrance (Paragraph 20 of Deed of Trust)
      • 1.  Due-on-Sale Clause  4.43
      • 2.  Due-on-Encumbrance Clause  4.44
    • J.  Acceleration and Sale on Default (Paragraph 21 of Deed of Trust)  4.45
    • K.  Waiver of Marshaling (Paragraph 23 of Deed of Trust)  4.46
    • L.  Environmental Matters (Paragraph 24 of Deed of Trust)  4.47
    • M.  Trustee, Power of Trustee, and Reconveyance (Paragraphs 25, 26, and 27 of Deed of Trust)  4.48
    • N.  Substitution of Trustee (Paragraph 28 of Deed of Trust)  4.49
    • O.  Consents and Modifications (Paragraph 30 of Deed of Trust)  4.50
    • P.  Waiver of Right of Offset (Paragraph 31 of Deed of Trust)  4.51
    • Q.  Future Advances (Paragraph 32 of Deed of Trust)  4.52
    • R.  Prepayment (Paragraph 33 of Deed of Trust)  4.53
    • S.  Additional Borrower Representations (Paragraph 34 of Deed of Trust)  4.54
    • T.  Miscellaneous Provisions
      • 1.  Governing Law (Paragraph 35 of Deed of Trust)  4.55
      • 2.  Request for Notice of Default (Paragraph 36 of Deed of Trust)  4.56
      • 3.  Delegation of Authority (Paragraph 48 of Deed of Trust)  4.57
    • U.  Waiver of Right to Jury Trial (Paragraph 49 of Deed of Trust)  4.58
    • V.  Additional Provisions
      • 1.  Leasehold Estate as Mortgaged Property  4.59
      • 2.  Partial Release; Suretyship Waivers  4.60
  • VIII.  SATISFACTION OF THE OBLIGATION  4.61
  • IX.  COMMERCIAL DEED OF TRUST FORM
    • A.  Introductory Paragraphs
      • 1.  Form: Recording Format  4.62
      • 2.  Form: Title; Parties  4.63
      • 3.  Form: Grant of Mortgaged Property; Execution of Documents; Assignment of Rents  4.64
      • 4.  Form: Borrower’s Covenants  4.65
      • 5.  Form: Definitions  4.66
      • 6.  Form: Repair and Maintenance of Mortgaged Property  4.67
      • 7.  Form: Use of Mortgaged Property  4.68
      • 8.  Form: Insurance  4.69
      • 9.  Form: Condemnation and Insurance Proceeds  4.70
      • 10.  Form: Taxes and Other Sums Due  4.71
      • 11.  Form: Leases of Mortgaged Property by Borrower  4.72
      • 12.  Form: Borrower’s Right to Collect and Receive Rents  4.73
      • 13.  Form: Funds for Taxes and Insurance  4.74
      • 14.  Form: Assignment of Causes of Action, Awards, and Damages  4.75
      • 15.  Form: Defense of Deed of Trust; Litigation  4.76
      • 16.  Form: Lender’s Rights on Borrower’s Default  4.77
      • 17.  Form: Sums Advanced  4.78
      • 18.  Form: Inspection  4.79
      • 19.  Form: Financial Statements; Estoppel Certificates  4.80
    • B.  Uniform Commercial Code
      • 1.  Form: Security Agreement  4.81
      • 2.  Form: Financing Statement  4.82
    • C.  Form: Waiver of Statute of Limitations  4.83
    • D.  Form: Events of Default  4.84
    • E.  Acceleration
      • 1.  Form: Transfer or Encumbrance  4.85
      • 2.  Form: Acceleration and Sale on Default  4.86
    • F.  Form: Notification Obligation  4.87
    • G.  Form: Waiver of Marshaling  4.88
    • H.  Form: Environmental Matters  4.89
    • I.  Form: Trustee  4.90
      • 1.  Form: Power of Trustee to Reconvey or Consent  4.91
      • 2.  Form: Duty to Reconvey  4.92
      • 3.  Form: Substitution of Trustee  4.93
    • J.  Form: No Waiver by Lender  4.94
    • K.  Form: Lender’s Rights to Modify Loan  4.95
    • L.  Form: Borrower’s Waiver of Right of Offset  4.96
    • M.  Form: Future Advances  4.97
    • N.  Form: Prepayment  4.98
    • O.  Form: Additional Borrower Representations  4.99
    • P.  Miscellaneous
      • 1.  Form: Governing Law  4.100
      • 2.  Form: Request for Notice of Default  4.101
      • 3.  Form: Taxation  4.102
      • 4.  Form: Mechanics Liens  4.103
      • 5.  Form: Financial Covenant [Deleted]  4.104
      • 6.  Form: Brokerage  4.105
      • 7.  Form: Liability for Acts or Omissions  4.106
      • 8.  Form: Notices  4.107
      • 9.  Form: Statement of Obligations  4.108
      • 10.  Form: Application of Payments  4.109
      • 11.  Form: Remedies Are Cumulative  4.110
      • 12.  Form: Joint and Several Obligations  4.111
      • 13.  Form: Severability  4.112
      • 14.  Form: Delegation of Authority  4.113
      • 15.  Form: General Provisions  4.114
    • Q.  Form: Dispute Resolution: Waiver of Right to Jury Trial; Alternatives  4.115
    • R.  Form: Signatures  4.116
    • S.  Form: Acknowledgment  4.117
    • T.  Exhibit A  4.118
    • U.  Additional Provisions  4.119
      • 1.  Form: Leasehold Lending Provisions  4.120
      • 2.  Form: Partial Releases  4.121
      • 3.  Form: Third Party Trustor/Suretyship Waivers  4.122

5

The Assignment of Rents

C. Gregg Ankenman

  • I.  INTRODUCTION
    • A.  Assignment Requires Agreement  5.1
    • B.  Abolishment of Absolute Assignment  5.2
  • II.  LEGAL AND PRACTICAL CONSIDERATIONS
    • A.  Revised CC §2938  5.3
    • B.  Creation and Perfection  5.4
    • C.  Enforcement  5.5
    • D.  Right to Rents  5.6
    • E.  Application of Rent  5.7
    • F.  Lender Approval of Leases  5.8
    • G.  Cash Management Provisions  5.9
  • III.  FORM FOR ASSIGNMENT OF BORROWER’S INTEREST IN LEASES
    • A.  Form: Recording Format  5.10
    • B.  Form: Title; Opening Clauses; Identification of Parties and Loan Documents  5.11
    • C.  Form: Assigning Clause  5.12
    • D.  Form: Borrower’s Representations, Warranties, and Covenants  5.13
    • E.  Form: Permitted Leases  5.14
    • F.  Form: Term  5.15
    • G.  Form: Borrower’s Right to Collect Rents  5.16
    • H.  Form: Termination of Borrower’s Rights  5.17
    • I.  Form: Enforcement Actions  5.18
    • J.  Form: Collection by Lender  5.19
    • K.  Form: Application of Rents; Security Deposits  5.20
    • L.  Form: Tenants’ Obligations and Rights  5.21
    • M.  Form: Further Assurances  5.22
    • N.  Form: Indemnity  5.23
    • O.  Form: Scope of Lender Responsibility  5.24
    • P.  Form: Covenants Running With Land  5.25
    • Q.  Form: Bankruptcy  5.26
    • R.  Form: Governing Law  5.27
    • S.  Form: Limitation on Lender’s Liability  5.28
    • T.  Form: Remedies Are Cumulative  5.29
    • U.  Form: Severability  5.30
    • V.  Form: General Provisions  5.31
    • W.  Form: Signature  5.32
    • X.  Form: Acknowledgment  5.33
    • Y.  Form: Legal Description of Property (Exhibit A)  5.34

5A

The Environmental Indemnity

Thomas G. Roberts

Gary York

  • I.  INTRODUCTION
    • A.  Scope and Limit of Chapter  5A.1
    • B.  Lender’s Concerns  5A.2
  • II.  LEGAL AND PRACTICAL CONSIDERATIONS
    • A.  Impact of California Antideficiency Laws and One-Action Rule
      • 1.  Limits Imposed  5A.3
      • 2.  Legislative Response  5A.4
        • a.  Contract Action (CCP §736)  5A.5
        • b.  Waiver of Security Interest (CCP §726.5)  5A.6
    • B.  Types of Environmental Indemnity  5A.7
      • 1.  Secured Indemnities  5A.8
      • 2.  Unsecured Indemnities  5A.9
      • 3.  Third Party Indemnities  5A.10
    • C.  Borrower’s Drafting Strategy  5A.11
  • III.  FORM: ENVIRONMENTAL INDEMNITY AGREEMENT  5A.12

6

The Guaranty

Peter S. Muñoz

Michael A. Kvarme

  • I.  INTRODUCTION
    • A.  Scope and Limit of Chapter  6.1
    • B.  Nature of Guaranty  6.2
      • 1.  Terminology  6.3
      • 2.  Separate Obligation  6.4
      • 3.  Third Party Collateral  6.5
      • 4.  Commercial Code Classification  6.6
    • C.  Distinguishing Guaranty From Similar Financial Accommodations  6.7
      • 1.  Indemnity Agreements  6.8
      • 2.  Letters of Credit  6.9
      • 3.  Note Purchase Agreements  6.10
    • D.  Reasons for Selecting Guaranty Arrangement  6.11
  • II.  LEGAL AND PRACTICAL CONSIDERATIONS
    • A.  Creation of Guaranty Relationship  6.12
      • 1.  Writing  6.13
      • 2.  Consideration/Reliance
        • a.  Requirement for Enforceability  6.14
        • b.  Voidable Transaction Issues  6.15
      • 3.  Scope of Guaranty  6.16
        • a.  Payment Versus Performance
          • (1)  Distinction  6.17
          • (2)  Completion Guaranty  6.18
        • b.  Payment Versus Collection  6.19
        • c.  Obligation Guarantied  6.20
        • d.  Continuing Guaranties  6.21
        • e.  Maximum Liability  6.22
        • f.  Attorney Fees  6.23
          • (1)  State Law  6.24
          • (2)  Federal Bankruptcy Law  6.25
    • B.  Rights, Protections, and Liabilities of Guarantors  6.26
      • 1.  Guarantor Rights  6.27
      • 2.  Guarantor Protections
        • a.  Limitation on Extent of Liability  6.28
        • b.  Benefit of Any Form of Payment  6.29
        • c.  Alteration of Debt or Creditor Remedies  6.30
        • d.  Disclosure of Crucial Information  6.31
        • e.  Misrepresentation and Fraud  6.31A
      • 3.  Guarantors and the One-Action Rule
        • a.  Code of Civil Procedure §726 Generally Not Applicable to Guarantors  6.32
        • b.  Code of Civil Procedure §726 Applies to Certain Partner Guarantors  6.33
      • 4.  Guarantors and the Antideficiency Statutes  6.34
        • a.  Code of Civil Procedure §580a—The “Fair Value” Rule  6.35
        • b.  Code of Civil Procedure §580b—Guarantors and the Purchase Money Limitation  6.36
        • c.  CCP §580d—Limitation on Deficiency After Trustee’s Sale  6.37
      • 5.  True Guaranties and Purported or Sham Guaranties  6.38
        • a.  Partner Guarantors of Partnership Obligations
          • (1)  Traditional Analysis Before RUPA  6.39
          • (2)  Analysis Under RUPA  6.40
          • (3)  Validity of Partner’s Subsequent Guaranty [Deleted]  6.41
          • (4)  Limited Partners  6.42
          • (5)  Limited Liability Partnerships  6.43
        • b.  Owner Guarantors of Entity Obligations  6.44
        • c.  Guarantors of Nonrecourse Loans  6.44A
      • 6.  Impact of Bankruptcy on Guaranty  6.45
        • a.  Discharge Under Chapter 11 Plan of Reorganization  6.45A
        • b.  Rent Cap Under 11 USC §502(b)(6)  6.45B
        • c.  Springing and Exploding Guaranties  6.45C
    • C.  Waivers  6.46
      • 1.  Waiver of Diligence and Demand  6.47
      • 2.  Waiver of Notice and Disclosure  6.48
      • 3.  Exhaustion of Security; Proceeding Against Borrower; Exercise of Rights and Remedies Under Loan Documents  6.49
      • 4.  Modifying the Obligation  6.50
      • 5.  One-Action and Antideficiency Waivers  6.51
        • a.  Background of CC §2856
          • (1)  Bank of S. Cal. v Dombrow  6.52
          • (2)  Legislative Response  6.53
          • (3)  Former CC §2856  6.54
        • b.  Civil Code §2856  6.55
          • (1)  Retroactivity  6.56
          • (2)  Antideficiency Waivers  6.57
          • (3)  Model Waivers  6.58
          • (4)  Requisite Waiver Language  6.59
      • 6.  Other Waivers/Releases  6.60
    • D.  Subordination of Guarantor’s Rights  6.61
      • 1.  Impact of Bankruptcy
        • a.  Deprizio Waivers  6.62
        • b.  Disadvantages of Deprizio Waivers  6.63
        • c.  Distinguishing Subordination From Waiver [Deleted]  6.64
      • 2.  Special Qualifications for Corporate Obligations  6.65
    • E.  Reinstatement of Guaranty After Refund of Payment  6.66
  • III.  GUARANTY AGREEMENT
    • A.  Elements of Enforceable Guaranty  6.67
    • B.  Basic Guaranty Form
      • 1.  Form: Introduction and Recitals  6.68
      • 2.  Form: Guaranty Agreement  6.69
      • 3.  Form: Additional Credit  6.70
      • 4.  Form: Guaranty of Payment and Performance  6.71
      • 5.  Form: Cessation of Liability  6.72
      • 6.  Form: Signature  6.73
    • C.  Additional Guaranty Provisions
      • 1.  Form: Absolute Nature of Guaranty  6.74
      • 2.  Form: Maximum Liability  6.75
      • 3.  Form: Authorization of Lender  6.76
      • 4.  Waivers and Subordination
        • a.  Form: Simple Statutory Waivers  6.77
        • b.  Form: Special Descriptive Text  6.78
        • c.  Form: Detailed Waivers  6.79
      • 5.  Form: Subordination  6.80
      • 6.  Form: Bankruptcy  6.81
      • 7.  Form: Claims in Bankruptcy  6.82
      • 8.  Form: Application of Payments and Refunds  6.83
      • 9.  Form: Representations and Warranties  6.84
      • 10.  Form: Information  6.85
      • 11.  Form: Partner Liability  6.86
      • 12.  Form: Revival of Guaranty  6.87
      • 13.  Form: Waiver of Jury Trial  6.88
      • 14.  Form: Submission to Jurisdiction  6.89
      • 15.  Additional Miscellaneous Clauses  6.90
        • a.  Form: Notice  6.91
        • b.  Form: No Waiver  6.92
        • c.  Form: California Law  6.93
        • d.  Form: Advice of Counsel  6.94
        • e.  Form: Attorney Fees  6.95
        • f.  Form: Assignability  6.96
        • g.  Form: Joint and Several Liability  6.97
        • h.  Form: Captions  6.98
        • i.  Form: Severability  6.99
        • j.  Form: Entire Agreement  6.100
        • k.  Form: Further Assurances  6.101
        • l.  Form: Gender and Number  6.102
        • m.  Form: Nonwaiver  6.103
        • n.  Form: Continuing Liability  6.104
        • o.  Form: Time of Essence  6.105
        • p.  Form: Cumulative Rights  6.106

7

Taking and Perfecting a Security Interest in Personal Property Collateral Under Commercial Code Division 9

James S. Cochran

  • I.  INTRODUCTION
    • A.  Scope of Chapter  7.1
    • B.  2001 and 2010 Revisions of Uniform Commercial Code Article 9  7.2
    • C.  Terminology
      • 1.  Parties  7.3
      • 2.  Authenticated Records  7.4
      • 3.  Collateral  7.5
  • II.  CREATION OF SECURITY INTEREST; THE SECURITY AGREEMENT
    • A.  Types of Security Agreement
      • 1.  Separate Security Agreement Versus Combined Deed of Trust/Security Agreement  7.6
      • 2.  Additional Security Agreements, Assignments, and Pledges  7.7
    • B.  Provisions Required for Validity of Security Agreement
      • 1.  Granting Language  7.8
      • 2.  Collateral Description; Coverage of Security Agreement
        • a.  Legal Requirements  7.9
        • b.  Real Property Rents Excluded From Division 9  7.10
        • c.  Practical Considerations  7.11
      • 3.  Authentication by Debtor  7.12
    • C.  Identification of Secured Obligation  7.13
    • D.  Protective Covenants  7.14
    • E.  Events-of-Default Provisions  7.15
    • F.  Remedies Provisions
      • 1.  Legal Considerations
        • a.  Personal Property Remedies  7.16
        • b.  Mixed Collateral Remedies  7.17
      • 2.  Negotiating and Drafting Considerations  7.18
    • G.  Miscellaneous Provisions  7.19
    • H.  Borrower Information Provisions  7.20
  • III.  PERFECTION OF SECURITY INTEREST; THE FINANCING STATEMENT
    • A.  General Principles
      • 1.  Attachment and Perfection  7.21
      • 2.  Methods of Perfection  7.22
    • B.  Collateral Types and Perfection Methods
      • 1.  Perfection by Filing  7.23
        • a.  Goods  7.24
        • b.  Accounts  7.25
        • c.  General Intangibles  7.26
        • d.  Other Collateral Types  7.27
      • 2.  Perfection Other Than by Filing  7.28
        • a.  Deposit Accounts  7.29
        • b.  Other Collateral Types  7.30
    • C.  Financing Statements
      • 1.  Required Contents; Official Forms  7.31
        • a.  Name of Debtor  7.32
          • (1)  Rule for Registered Organizations  7.32A
          • (2)  Rule for Decedents’ Estates  7.32B
          • (3)  Rule for Trusts  7.32C
          • (4)  Rule for Other Organizations  7.32D
          • (5)  Rule for Individuals  7.32E
          • (6)  Trade Names  7.32F
          • (7)  Errors in Debtor Name  7.32G
          • (8)  Postfiling Name Changes  7.32H
        • b.  Name of Secured Party  7.32I
        • c.  Indication of Collateral  7.33
      • 2.  Filing Initial Financing Statement
        • a.  Where to File
          • (1)  As Between Jurisdictions: General Rules  7.34
          • (2)  As Between Jurisdictions: Special Rules for Non-U.S. Debtors  7.34A
          • (3)  Within a State  7.35
        • b.  When to File  7.36
      • 3.  Filing Continuation Statements and Other Financing Statement Amendments  7.37
    • D.  Fixtures
      • 1.  General Principles  7.38
      • 2.  Perfecting a Security Interest in Fixtures
        • a.  Alternative Methods of Perfection  7.39
        • b.  Required Contents of a Fixture Filing  7.40
        • c.  Deed of Trust Effective as a Fixture Filing  7.40A
        • d.  Where to Make Fixture Filings
          • (1)  In Jurisdiction Where Fixtures Are Located  7.41
          • (2)  Special Rules for Transmitting Utilities  7.41A
    • E.  Transition Rules for Changed Perfection Requirements  7.42
    • F.  Due Diligence Regarding Priority of Lender’s Security Interest
      • 1.  Overview  7.43
      • 2.  Searches for Competing Interests  7.44
        • a.  Secretary of State Searches; Financing Statements and Liens  7.44A
        • b.  County Recorder Searches; Fixture Filings and Liens  7.44B
        • c.  Search Cautions  7.44C
      • 3.  Consequences of Discovering Senior Interest  7.45
  • IV.  SECURITY AGREEMENT FORM  7.46
    • A.  Form: Opening Clause and Recitals  7.47
    • B.  Form: Grant of Security Interest  7.48
    • C.  Description of Collateral
      • 1.  Form: Main Description of Collateral  7.49
      • 2.  Form: Description of Proceeds  7.50
      • 3.  Form: Optional Itemized Description  7.51
    • D.  Form: Identification of Secured Obligations  7.52
    • E.  Form: Protective Covenants  7.53
      • 1.  Form: Ownership, Maintenance, and Preservation of Collateral  7.54
      • 2.  Form: Entry and Inspections  7.55
      • 3.  Form: Taxes, Assessments, Liens, and Security Interests  7.56
      • 4.  Form: Insurance  7.57
      • 5.  Form: Litigation; Attorney Fees  7.58
      • 6.  Form: Lender’s Right to Perform for Borrower  7.59
      • 7.  Form: Third Party Agreements  7.60
      • 8.  Form: Borrower’s Additional Performance  7.61
      • 9.  Form: Financing Statements  7.62
      • 10.  Form: Indemnity  7.63
    • F.  Events of Default and Remedies
      • 1.  Form: Events of Default and Remedies  7.64
      • 2.  Form: Lender’s Remedies  7.65
      • 3.  Form: Use of Proceeds  7.66
    • G.  Miscellaneous Provisions
      • 1.  Form: Governing Law  7.67
      • 2.  Form: Entire Agreement; Modification  7.68
      • 3.  Form: Partial Invalidity  7.69
      • 4.  Form: Parties Benefited  7.70
      • 5.  Form: Headings  7.71
      • 6.  Form: Written Notice; Delivery  7.72
      • 7.  Form: Joint and Several Obligations  7.73
    • H.  Form: Borrower Identification Information; Nonconsumer Transaction; Changes in Name or State of Organization  7.74
    • I.  Form: Borrower’s Signature  7.75
    • J.  Exhibits
      • 1.  Real Property Description  7.76
      • 2.  Itemized Personal Property List  7.77
  • V.  FORM: STATUTORY FORM OF UCC1 FINANCING STATEMENT [Deleted]  7.78
  • VI.  FORM: COLLATERAL DESCRIPTION ADDENDUM TO FINANCING STATEMENT  7.79
  • VII.  FORM: DEPOSIT ACCOUNT CONTROL AGREEMENT  7.80
  • VIII.  FORM: FIXTURE FILING PROVISION FOR USE IN MORTGAGE OR DEED OF TRUST  7.81

8

The Legal Opinion

Roy S. Geiger

Thomas G. Roberts

Ira J. Waldman

  • I.  INTRODUCTION
    • A.  History of Opinion Letter  8.1
    • B.  Scope of Chapter  8.2
  • II.  STANDARDIZATION VERSUS CUSTOMARY PRACTICE; DEFINITIONS  8.3
    • A.  Reasons for Authors’ Use of ABA-ACREL Form  8.4
    • B.  “Universally Authoritative” Principles and Guidelines  8.5
  • III.  LIABILITY; MITIGATION; ETHICS  8.6
    • A.  Theories of Liability  8.7
      • 1.  Negligence or Legal Malpractice  8.8
      • 2.  Third Party Beneficiary  8.9
      • 3.  Negligent Misrepresentation  8.10
      • 4.  Reliance  8.11
      • 5.  Express Reliance Parties  8.11A
    • B.  Risk Mitigation  8.12
    • C.  Ethics and Clients  8.13
  • IV.  NEGOTIATING THE LEGAL OPINION  8.14
    • A.  Opinion Request: The Golden Rule and Other Principles  8.15
    • B.  Federal Agency Opinions  8.15A
    • C.  Negotiating the Legal Opinion: Timing and Client Concerns  8.16
  • V.  DUE DILIGENCE: DOCUMENT REVIEW, FACTUAL ASSUMPTIONS, AND DEFINING KNOWLEDGE  8.17
    • A.  Justifiable Reliance  8.18
    • B.  Knowledge as Limit to Due Diligence  8.19
    • C.  Accord’s Definition of Knowledge  8.20
    • D.  Assumptions and Disclaimers  8.21
    • E.  Qualifications
      • 1.  Generic Qualifications  8.22
      • 2.  California Qualifications
        • a.  List of Customary Qualifications  8.23
        • b.  Assignment-of-Rents Qualification  8.24
        • c.  Indemnification  8.25
    • F.  Certificates  8.26
  • VI.  ANATOMY OF A LEGAL OPINION FOR A REAL ESTATE SECURED LOAN  8.27
  • VII.  ISSUES COVERED IN TYPICAL REAL ESTATE FINANCING OPINION
    • A.  Legal Capacity of Individuals and Signatories  8.28
    • B.  Entity Formation and Status Opinion
      • 1.  Elements and Use  8.29
      • 2.  Due Diligence, Entity Formation, and Status Opinion  8.30
        • a.  Corporations  8.31
        • b.  Limited Partnerships  8.32
        • c.  Limited Liability Companies  8.33
        • d.  General Partnerships  8.34
        • e.  Trusts  8.34A
    • C.  Power and Authority  8.35
      • 1.  Documents to Review  8.36
      • 2.  Authorization to Execute and Deliver Loan Documents  8.37
        • a.  Corporations  8.38
        • b.  Limited Partnerships  8.39
        • c.  Limited Liability Companies  8.40
        • d.  General Partnerships  8.41
        • e.  Trusts  8.41A
    • D.  Multiple Tiered Entities  8.41B
    • E.  No-Conflict Opinion  8.41C
      • 1.  With Organizational Documents  8.42
      • 2.  With Laws  8.43
      • 3.  With Other Contracts  8.44
        • a.  Issues Confronting Opinion Giver  8.44A
        • b.  Opinion Formulation  8.44B
        • c.  Due Diligence Burden  8.44C
        • d.  Choice of Law in Other Agreements  8.44D
        • e.  The Unclear Provision  8.44E
          • (1)  Difficulty With Issuing “Clean” Opinion  8.44F
          • (2)  Contract Interpretation Process  8.44G
            • (a)  The Meaning of Words: Basic Contract Interpretation  8.44H
            • (b)  The Meaning of Words: Contract Interpretation and Legal Opinions  8.44I
      • 4.  With Court Orders  8.45
    • F.  No-Litigation Opinion  8.46
      • 1.  Scope of Due Diligence  8.47
        • a.  Court Docket Search  8.48
        • b.  Law Office Personnel and Files  8.49
      • 2.  Determination of Materiality  8.50
      • 3.  Real Property Collateral  8.51
    • G.  Remedies or Enforceability Opinion  8.52
      • 1.  Each and Every Approach  8.53
      • 2.  Essential Benefits Approach  8.54
      • 3.  Compromise Position  8.55
      • 4.  Qualifications  8.56
      • 5.  Limitations of Remedies Opinion  8.57
      • 6.  Implications of Remedies Opinion  8.58
      • 7.  Customary Documents and Remedies  8.58A
    • H.  Reasoned Opinion  8.59
    • I.  Opinions in Multistate Transactions  8.60
      • 1.  Comprehensive Choice-of-Law Opinion  8.61
        • a.  Use of Three-Prong Test  8.62
        • b.  Applicability and Limitations of Three-Prong Test  8.63
      • 2.  Single-Issue Choice-of-Law Opinion  8.64
        • a.  Usury  8.65
        • b.  Remedies  8.66
      • 3.  Incorporation by Reference of Documents Governed by Out-of-State Law  8.66A
      • 4.  Mixed Choice of Law in Opinion Documents  8.66B
      • 5.  Choice of Forum  8.66C
    • J.  Opinions Relating to Collateral  8.67
      • 1.  Opinions on Real Property Collateral
        • a.  Perfection of Real Property Liens  8.68
          • (1)  Limited Perfection Opinions  8.69
          • (2)  Contents of Lien Perfection Opinion  8.70
        • b.  Form of Documents Opinion  8.71
        • c.  Environmental and Land Use Opinion  8.72
      • 2.  Opinions on Leases and Rents Collateral  8.72A
      • 3.  Opinions on Personal Property Collateral  8.73
        • a.  Perfection Opinions for Personal Property Collateral
          • (1)  Requirements for Perfection; Impact on Opinion  8.74
          • (2)  Contents of Perfection Opinion  8.74A
        • b.  Priority Opinions for Personal Property Collateral
          • (1)  Limited Utility of Priority Opinion  8.75
          • (2)  Scope of Priority Opinion  8.75A
    • K.  Opinions on Loan Modifications and Assumption
      • 1.   Scope  8.75B
      • 2.  Enforceability Opinion  8.75C
  • VIII.  INCLUSIVE REAL ESTATE SECURED TRANSACTION OPINION FORM
    • A.  Form: Introduction  8.76
    • B.  Form: Background  8.77
    • C.  Form: Opinions  8.78
    • D.  Form: Qualifications: Assumptions  8.79
    • E.  Form: Qualifications: Exclusions  8.80
    • F.  Form: Qualifications: Bankruptcy and Insolvency Exception  8.81
    • G.  Form: Qualifications: Equitable Principles Limitation  8.82
    • H.  Form: Other Common Qualifications  8.83
    • I.  Form: California Qualifications  8.84
    • J.  Form: California Law Qualification  8.85
    • K.  Form: Generic Qualification  8.86
    • L.  Form: Choice-of-Law Qualification  8.87
    • M.  Form: Additional Confirmation  8.88
    • N.  Form: Use of This Opinion  8.89
    • O.  Form: Glossary  8.90

9

Construction Loans

Anne E. Klokow

  • I.  CONSTRUCTION LOANS  9.1
  • II.  NEGOTIATING CONSTRUCTION LOAN COMMITMENT
    • A.  Construction Loan Commitment Compared to Permanent Loan Commitment  9.2
    • B.  Basic Loan Terms Unique to Construction Loan Commitment  9.3
      • 1.  Maximum Loan Amount  9.4
      • 2.  Commencement and Completion Dates  9.5
      • 3.  Extensions of Maturity Date  9.6
      • 4.  Completion Guaranty  9.7
    • C.  Closing Conditions and Due Diligence Items  9.8
    • D.  Land Use Entitlements  9.9
  • III.  THE LOAN AGREEMENT
    • A.  Purpose of Loan Agreement  9.10
    • B.  Basic Form  9.11
    • C.  Drafting and Negotiating Considerations for Loan Agreement
      • 1.  Preexisting Loan Commitment  9.12
      • 2.  Payment, Maturity Date, Extension  9.13
      • 3.  Prepayment Rights  9.14
      • 4.  Interest Reserve and Application of Net Operating Income to Accrued Interest  9.15
      • 5.  Loan Fees and Exit Fees  9.16
      • 6.  Loan Documentation and Security  9.17
      • 7.  Borrower Representation and Warranties  9.18
      • 8.  Delivery of Documents  9.19
      • 9.  Conditions Precedent to Initial Advance  9.20
        • a.  Evidence of Zoning  9.21
        • b.  Property Reports  9.22
        • c.  Evidence of Borrower’s Equity  9.23
      • 10.  Conditions Precedent to Subsequent Advances  9.24
      • 11.  Conditions Precedent to Final Advance  9.25
      • 12.  Delays  9.26
      • 13.  Changes to Approved Plans and Construction Budget  9.27
      • 14.  Disbursement Limitations Relating to Percentage of Work Completed and Retainages  9.28
      • 15.  Reallocating Costs Between Line Items in Approved Budget and Use of Contingency Funds  9.29
      • 16.  Construction-Related Events of Default  9.30
  • IV.  THE COMPLETION GUARANTY
    • A.  Purpose of Completion Guaranty  9.30A
    • B.  Basic Form  9.30B
    • C.  Drafting and Negotiating Consideration for Completion Guaranty
      • 1.  Confirm Terms Conform to Loan Commitment  9.30C
      • 2.  Recitals  9.30D
      • 3.  Guaranteed Obligations  9.30E
      • 4.  Triggering Events  9.30F
      • 5.  Completion of Improvements by Guarantor  9.30G
      • 6.  Disbursement of Loan Proceeds to Guarantor  9.30H
      • 7.  Lender’s Right to Complete Construction of Improvements  9.30I
      • 8.  Lender’s Remedies  9.30J
      • 9.  Suretyship Waivers  9.30K
      • 10.  Termination  9.30L
      • 11.  Unsecured Guaranty  9.30M
  • V.  FORM: CONSTRUCTION LOAN CLOSING CHECKLIST  9.31
  • VI.  FORM: CONSTRUCTION LOAN AGREEMENT
    • A.  Form: Body of Agreement
      • 1.  Form: Introduction and Recitals  9.32
      • 2.  Form: Loan Terms  9.33
      • 3.  Form: Borrower’s Representations and Warranties  9.34
      • 4.  Form: Conditions Precedent to Loan Closing  9.35
      • 5.  Form: Conditions Precedent to Loan Advances  9.36
      • 6.  Form: Construction Loan Covenants  9.37
      • 7.  Form: Disbursement of Loan Funds  9.38
      • 8.  Form: Default and Remedies  9.39
      • 9.  Form: Miscellaneous  9.40
      • 10.  Form: Signatures  9.41
    • B.  Form: Exhibits to Loan Agreement
      • 1.  Form: Legal Description of Property (Exhibit A)  9.42
      • 2.  Form: Improvements and Plans (Exhibit B)  9.43
      • 3.  Form: Approved Budget (Exhibit C)  9.44
      • 4.  Form: Schedule of Loan Documents (Exhibit D)  9.45
      • 5.  Form: Tenant Leases (Exhibit E)  9.46
  • VII.  COLLATERAL ASSIGNMENTS
    • A.  Form: Collateral Assignment of Design Professional’s Contract, Plans and Specifications, and Tests, and Design Professional’s Agreement and Consent to Assignment  9.47
    • B.  Form: Collateral Assignment of Construction Contract and Permits, and Contractor’s Agreement and Consent to Assignment  9.48
  • VIII.  FORM: COMPLETION GUARANTY  9.49

10

Securitized Commercial Mortgage Loans

Maura B. O’Connor

James Bryce Clark

  • I.  SECURITIZATION AND CONDUIT LOANS; COMPARED TO TRADITIONAL LENDING  10.1
    • A.  Differing Economic and Regulatory Environments for Securitized Loans  10.2
      • 1.  Unbundling the Lenders’ Role  10.3
      • 2.  Lower Cost of Funds and Lower Quality Markets; Emergence and Difficulties of Subprime Loans  10.4
      • 3.  Different Regulatory Incentives and Requirements  10.5
      • 4.  Different Underwriting and Documentation Criteria  10.6
        • a.  Origination Approaches to Loan Applications and Timing  10.6A
        • b.  Impact of Rating Agency Criteria and Processing Loans in Bulk  10.7
        • c.  Further Assurances and Other Risk Controls  10.8
    • B.  Players and Goals During the Repayment Life of Securitized Loans  10.9
      • 1.  Discrete Monitoring and Administration Roles  10.10
      • 2.  Less Negotiation, More Formulas in Early-Stage Multi-Party Workouts  10.11
      • 3.  Securitizing Lenders’ Troubled Assets and REO Property; What Happens After (or Instead of) Foreclosure  10.12
  • II.  REQUIREMENTS FOR SECURITIZATION
    • A.  Getting the Asset “Off Balance Sheet”  10.13
    • B.  Special-Purpose Entities (SPEs)  10.14
      • 1.  Structure of SPEs
        • a.  Controls and Financial Covenants—The “Kon-Tiki Approach”  10.15
        • b.  Corporate Structuring  10.15A
        • c.  Bankruptcy-Remote Structures  10.16
        • d.  Income Tax Concerns; Real Estate Mortgage Investment Conduits   10.16A
        • e.  Accounting Concerns  10.16B
      • 2.  Evolution and Future of SPEs; “Bad Boys” and Potential Hazards  10.17
      • 3.  Evolution and Future of Bankruptcy-Remote Structures  10.17A
    • C.  Guaranties and Other Third Party Credit Enhancements  10.18
    • D.  Junior and Unsecured Debt  10.19
    • E.  Application of Insurance Proceeds  10.20
    • F.  Loan Prepayments, Breakage, and Yield Maintenance (Defeasance)  10.21
    • G.  Lenders’ Rights to Transfer Loans  10.22
    • H.  Restrictions on Borrower Rights to Transfer the Property  10.23
  • III.  DOCUMENTATION ISSUES FOR SECURITIZABLE LOANS
    • A.  Degrees of Freedom in Drafting Loan Documents  10.24
    • B.  Incomplete or Defective Documentation and Assignments  10.25
  • IV.  CURRENT AND FUTURE TRENDS  10.26
    • A.  Collateralized Debt Obligations  10.26A
    • B.  New Challenges and Tools in Loan Administration  10.26B
    • C.  New Challenges in Loan Underwriting and Rating Agency Services  10.26C
    • D.  Continuing Changes in Resurgent Lending Markets; “CMBS 2.0”  10.26D
  • V.  FORM CLAUSES: SECURITIZATION PROVISIONS  10.27
    • A.  Form: Cooperation and Further Assurances  10.28
    • B.  Form: Negative SPE Covenants  10.29
    • C.  Form: Defeasance  10.30
    • D.  Form: Hyperamortization  10.31
    • E.  Form: Change of Management  10.32
    • F.  Form: Restrictions on Transfer of Leveraged Asset  10.33

CALIFORNIA REAL ESTATE FINANCE PRACTICE: STRATEGIES AND FORMS

(1st Edition)

January 2020

TABLE OF CONTENTS

 

File Name

Book Section

Title

CH01

Chapter 1

Introduction to Real Property Financing and Negotiating Techniques

01-011

§1.11

Checklist: Due Diligence

CH02

Chapter 2

The Loan Commitment

02-012

§§2.12-2.27

Introduction and Recitals

 

§2.13

Loan Terms

 

§2.14

Closing Conditions

 

§2.15

Expiration Date

 

§2.16

Commitment Fee

 

§2.17

Lender’s Costs

 

§2.18

Report Deposit

 

§2.19

Loan Brokerage and Other Fees

 

§2.20

Liquidated Damages

 

§2.21

Termination Events

 

§2.22

Indemnity

 

§2.23

Assignment

 

§2.24

Miscellaneous

 

§2.25

Acceptance and Signatures

 

§2.25A

Early Rate Lock

 

§2.25B

Subordinate Financing

 

§2.25C

Transfers

 

§2.25D

Recourse Carveouts

 

§2.25E

Loan Assumptions

 

§2.25F

Securitization Cooperation

 

§2.26

Exhibit A (Summary of Loan Terms)

 

§2.27

Exhibit B (Conditions of Lender’s Obligation to Fund Loan)

02-028

§2.28

Checklist: Due Diligence

CH03

Chapter 3

The Promissory Note

03-057

§3.57

Simple Promissory Note

03-059

§§3.59-3.78

Caption

 

§3.60

Promise to Pay: Place of Payment

 

§3.61

Interest

 

§3.62

Payment

 

§3.63

Method of Calculating Interest

 

§3.64

Time and Mode of Payment—Equal Consecutive Installments of Principal and Interest

 

§3.65

Default

 

§3.66

Late Charge; Percentage Amount

 

§3.67

Default Interest on Outstanding Principal

 

§3.68

Interest on Interest

 

§3.69

Attorney Fees

 

§3.70

Waiver of Presentment, Notice of Dishonor, and Protest

 

§3.71

Manner of Notification

 

§3.72

Statement That Note Is Secured by Deed of Trust

 

§3.73

Forbearance Not a Waiver

 

§3.74

Assignment

 

§3.75

Governing Law

 

§3.76

Usury

 

§3.77

Time of the Essence

 

§3.78

Signature

03-080

§3.80

Joint and Several Liability

03-081

§3.81

Interest Rate Based on Reference Rate

03-082

§3.82

Interest Rate Based on Contingency

03-083

§3.83

Interest-Only for All or Part of Term

03-084

§3.84

Increasing Fixed Installment Payments

03-085

§3.85

Fixed Principal Plus Accrued Interest

03-086

§3.86

Payment on Demand

03-087

§3.87

Prepayment Charge Following Acceleration on Default

03-088

§3.88

Lock-In

03-089

§3.89

Phased Lock-In

03-090

§3.90

Prepayment With Charge

03-091

§3.91

Prepayment Privilege Without Charge

03-092

§3.92

Limited Prepayment Privilege Without Charge

03-093

§3.93

Limited Prepayment

03-094

§3.94

Prepayment Application

03-095

§3.95

Optional Due Date

03-096

§3.96

Subordination

03-097

§3.97

Disclaimer of Personal Liability

03-098

§3.98

Cross-Default

03-099

§3.99

Waiver of Statute of Limitations

03-100

§3.100

Severability

03-101

§3.101

Waiver of Statutory Regulation

03-102

§3.102

Representation on Use of Proceeds

03-103

§3.103

Waiver of Jury Trial

03-104

§3.104

Financial Covenant

CH04

Chapter 4

The Deed of Trust

04-062

§§4.62-4.117

Recording Format

 

§4.63

Title; Parties

 

§4.64

Grant of Mortgaged Property; Execution of Documents; Assignment of Rents

 

§4.65

Borrower’s Covenants

 

§4.66

Definitions

 

§4.67

Repair and Maintenance of Mortgaged Property

 

§4.68

Use of Mortgaged Property

 

§4.69

Insurance

 

§4.70

Condemnation and Insurance Proceeds

 

§4.71

Taxes and Other Sums Due

 

§4.72

Leases of Mortgaged Property by Borrower

 

§4.73

Borrower’s Right to Collect and Receive Rents

 

§4.74

Funds for Taxes and Insurance

 

§4.75

Assignment of Causes of Action, Awards, and Damages

 

§4.76

Defense of Deed of Trust; Litigation

 

§4.77

Lender’s Rights on Borrower’s Default

 

§4.78

Sums Advanced

 

§4.79

Inspection

 

§4.80

Financial Statements; Estoppel Certificates

 

§4.81

Security Agreement

 

§4.82

Financing Statement

 

§4.83

Waiver of Statute of Limitations

 

§4.84

Events of Default

 

§4.85

Transfer or Encumbrance

 

§4.86

Acceleration and Sale on Default

 

§4.87

Notification Obligation

 

§4.88

Waiver of Marshaling

 

§4.89

Environmental Matters

 

§4.90

Trustee

 

§4.91

Power of Trustee to Reconvey or Consent

 

§4.92

Duty to Reconvey

 

§4.93

Substitution of Trustee

 

§4.94

No Waiver by Lender

 

§4.95

Lender’s Rights to Modify Loan

 

§4.96

Borrower’s Waiver of Right of Offset

 

§4.97

Future Advances

 

§4.98

Prepayment

 

§4.99

Additional Borrower Representations

 

§4.100

Governing Law

 

§4.101

Request for Notice of Default

 

§4.102

Taxation

 

§4.103

Mechanics Liens

 

§4.105

Brokerage

 

§4.106

Liability for Acts or Omissions

 

§4.107

Notices

 

§4.108

Statement of Obligations

 

§4.109

Application of Payments

 

§4.110

Remedies Are Cumulative

 

§4.111

Joint and Several Obligations

 

§4.112

Severability

 

§4.113

Delegation of Authority

 

§4.114

General Provisions

 

§4.115

Dispute Resolution: Waiver of Right to Jury Trial; Alternatives

 

§4.116

Signatures

 

§4.117

Acknowledgment

04-120

§4.120

Leasehold Lending Provisions

04-121

§4.121

Partial Releases

04-122

§4.122

Third Party Trustor/Suretyship Waivers

CH05

Chapter 5

The Assignment of Rents

05-010

§§5.10-5.34

Recording Format

 

§5.11

Title; Opening Clauses; Identification of Parties and Loan Documents

 

§5.12

Assigning Clause

 

§5.13

Borrower’s Representations, Warranties, and Covenants

 

§5.14

Permitted Leases

 

§5.15

Term

 

§5.16

Borrower’s Right to Collect Rents

 

§5.17

Termination of Borrower’s Rights

 

§5.18

Enforcement Actions

 

§5.19

Collection by Lender

 

§5.20

Application of Rents; Security Deposits

 

§5.21

Tenants’ Obligations and Rights

 

§5.22

Further Assurances

 

§5.23

Indemnity

 

§5.24

Scope of Lender Responsibility

 

§5.25

Covenants Running With Land

 

§5.26

Bankruptcy

 

§5.27

Governing Law

 

§5.28

Limitation on Lender’s Liability

 

§5.29

Remedies Are Cumulative

 

§5.30

Severability

 

§5.31

General Provisions

 

§5.32

Signature

 

§5.33

Acknowledgment

 

§5.34

Legal Description of Property (Exhibit A)

CH05A

Chapter 5A

The Environmental Indemnity

05A-012

§5A.12

Form: Environmental Indemnity Agreement

CH06

Chapter 6

The Guaranty

06-068

§§6.68-6.73

Introduction and Recitals

 

§6.69

Guaranty Agreement

 

§6.70

Additional Credit

 

§6.71

Guaranty of Payment and Performance

 

§6.72

Cessation of Liability

 

§6.73

Signature

06-074

§6.74

Absolute Nature of Guaranty

06-075

§6.75

Maximum Liability

06-076

§6.76

Authorization of Lender

06-077

§6.77

Simple Statutory Waivers

06-078

§6.78

Special Descriptive Text

06-079

§6.79

Detailed Waivers

06-080

§6.80

Subordination

06-081

§6.81

Bankruptcy

06-082

§6.82

Claims in Bankruptcy

06-083

§6.83

Application of Payments and Refunds

06-084

§6.84

Representations and Warranties

06-085

§6.85

Information

06-086

§6.86

Partner Liability

06-087

§6.87

Revival of Guaranty

06-088

§6.88

Waiver of Jury Trial

06-089

§6.89

Submission to Jurisdiction

06-091

§6.91

Notice

06-092

§6.92

No Waiver

06-093

§6.93

California Law

06-094

§6.94

Advice of Counsel

06-095

§6.95

Attorney Fees

06-096

§6.96

Assignability

06-097

§6.97

Joint and Several Liability

06-098

§6.98

Captions

06-099

§6.99

Severability

06-100

§6.100

Entire Agreement

06-101

§6.101

Further Assurances

06-102

§6.102

Gender and Number

06-103

§6.103

Nonwaiver

06-104

§6.104

Continuing Liability

06-105

§6.105

Time of Essence

06-106

§6.106

Cumulative Rights

CH07

Chapter 7

Taking and Perfecting a Security Interest in Personal Property Collateral Under Commercial Code Division 9

07-047

§§7.47-7.75

Opening Clause and Recitals

 

§7.48

Grant of Security Interest

 

§7.49

Main Description of Collateral

 

§7.50

Description of Proceeds

 

§7.51

Optional Itemized Description

 

§7.52

Identification of Secured Obligations

 

§7.53

Protective Covenants

 

§7.54

Ownership, Maintenance, and Preservation of Collateral

 

§7.55

Entry and Inspections

 

§7.56

Taxes, Assessments, Liens, and Security Interests

 

§7.57

Insurance

 

§7.58

Litigation; Attorney Fees

 

§7.59

Lender’s Right to Perform for Borrower

 

§7.60

Third Party Agreements

 

§7.61

Borrower’s Additional Performance

 

§7.62

Financing Statements

 

§7.63

Indemnity

 

§7.64

Events of Default and Remedies

 

§7.65

Lender’s Remedies

 

§7.66

Use of Proceeds

 

§7.67

Governing Law

 

§7.68

Entire Agreement; Modification

 

§7.69

Partial Invalidity

 

§7.70

Parties Benefited

 

§7.71

Headings

 

§7.72

Written Notice; Delivery

 

§7.73

Joint and Several Obligations

 

§7.74

Borrower Identification Information; Nonconsumer Transaction; Changes in Name or State of Organization

 

§7.75

Borrower’s Signature

07-079

§7.79

Form: Collateral Description Addendum to Financing Statement

07-080

§7.80

Form: Deposit Account Control Agreement

07-081

§7.81

Form: Fixture Filing Provision For Use In Mortgage Or Deed Of Trust

CH08

Chapter 8

The Legal Opinion

08-076

§§8.76-8.90

Introduction

 

§8.77

Background

 

§8.78

Opinions

 

§8.79

Qualifications: Assumptions

 

§8.80

Qualifications: Exclusions

 

§8.81

Qualifications: Bankruptcy and Insolvency Exception

 

§8.82

Qualifications: Equitable Principles Limitation

 

§8.83

Other Common Qualifications

 

§8.84

California Qualifications

 

§8.85

California Law Qualification

 

§8.86

Generic Qualification

 

§8.87

Choice-of-Law Qualification

 

§8.88

Additional Confirmation

 

§8.89

Use of This Opinion

 

§8.90

Glossary

CH09

Chapter 9

Construction Loans

09-031

§9.31

Form: Construction Loan Closing Checklist

09-032

§§9.32-9.46

Introduction and Recitals

 

§9.33

Loan Terms

 

§9.34

Borrower’s Representations and Warranties

 

§9.35

Conditions Precedent to Loan Closing

 

§9.36

Conditions Precedent to Loan Advances

 

§9.37

Construction Loan Covenants

 

§9.38

Disbursement of Loan Funds

 

§9.39

Default and Remedies

 

§9.40

Miscellaneous

 

§9.41

Signatures

 

§9.42

Legal Description of Property (Exhibit A)

 

§9.43

Improvements and Plans (Exhibit B)

 

§9.44

Approved Budget (Exhibit C)

 

§9.45

Schedule of Loan Documents (Exhibit D)

 

§9.46

Tenant Leases (Exhibit E)

09-047

§9.47

Collateral Assignment of Design Professional’s Contract, Plans and Specifications, and Tests, and Design Professional’s Agreement and Consent to Assignment

09-048

§9.48

Collateral Assignment of Construction Contract and Permits, and Contractor’s Agreement and Consent to Assignment

09-049

§9.49

Form: Completion Guaranty

CH10

Chapter 10

Securitized Commercial Mortgage Loans

10-028

§10.28

Cooperation and Further Assurances

10-029

§10.29

Negative SPE Covenants

10-030

§10.30

Defeasance

10-031

§10.31

Hyperamortization

10-032

§10.32

Change of Management

10-033

§10.33

Restrictions on Transfer of Leveraged Asset

 

Selected Developments

January 2020 Update

The California Supreme Court, in Black Sky Capital, LLC v Cobb (2019) 7 C5th 156, held that “under the circumstances [of the case] section 580d does not preclude a creditor holding two deeds of trust on the same property from recovering a deficiency judgment on the junior lien extinguished by a nonjudicial foreclosure sale on the senior.” The court, in dictum, stated that “[w]here there is evidence of gamesmanship by the holder of senior and junior liens on the same property, a substantial question would arise whether the two liens held by the same creditor should—in substance, if not in form—be treated as a single lien within the meaning of 580d.” 7 C5th at 164. The court did not discuss what might constitute “gamesmanship” but did allude to “evasive loan splitting” and “recovery in excess of what any junior lienholder would be able to recover.” 7 C5th at 165. See §§4.1, 6.37.

In Citrus El Dorado, LLC v Chicago Title Co. (2019) 32 CA5th 943, the court held that the sole duties of the trustee of a deed of trust are: (1) on a default on the secured obligation and instruction from the beneficiary, to foreclose, and (2) on satisfaction of the secured obligation, to reconvey the deed of trust. See §4.5.

In Correia v NB Baker Elec., Inc. (2019) 32 CA5th 602, the court held that Private Attorney General Act (PAGA) (Lab C §§2698–2699.5) claims are not subject to preemption by the Federal Arbitration Act (FAA) (9 USC §§1–16) when a claim is brought on behalf of the government. See §6.88.

The Legal Opinions Committee of the Section of Business Law of the American Bar Association and the Working Group on Legal Opinions Foundation working through a committee composed of various bar and practice representatives adopted a Statement of Opinion Practices and a supplementary Core Opinion Principles based on the Statement, each of which can be found in Keller and Weise, Obtaining National Consensus on Key Opinion Practices: An Introduction to the Statement of Opinion Practices, 74 Bus Law 801 (2019) (the 2019 Opinion Practice Statement). The 2019 Opinion Practice Statement is intended to selectively update the Opinion Principles and certain of the Business Law Section Guidelines and also to expand upon the Statement on the Role of Customary Practice in the Preparation and Understanding of Third-Party Legal Opinions, 63 Bus Law 1277 (2008) (the Customary Practice Statement). See §§8.3–8.5.

In Obduskey v McCarthy & Holthus LLP (2019) ___ US ___, 139 S Ct 1029, the United States Supreme Court resolved an intercircuit conflict by ruling that the requirement of the Fair Debt Collection Practices Act (FDCPA) (15 USC §§1692–1692p) for an immediate freeze on collection of disputed payments, under §1692g(b) of the Act, does not apply to procedurally required nonjudicial real estate foreclosure actions. The Court did not rule out the application of other provisions of the FDCPA to foreclosing mortgage lenders—such lenders are specifically included by the statute for some other purposes, such as the behavior requirements of §1692f(6). See §10.26.

The court in Gottlieb v Elwood Assocs., LLC (Bankr CD Cal 2018) 2019 Bankr LEXIS 254, held that a junior lienholder who lost security as a result of the foreclosure did have standing to claim the foreclosure was void because title already had been transferred. See §10.26B.

About the Authors

MICHAEL T. ANDREW, original author of chapter 7, practiced in San Diego with Luce Forward Hamilton & Scripps LLP, its successor McKenna Long & Aldridge LLP, and its successor Dentons US LLP, from 1979 until retiring in 2016. Mr. Andrew specialized in the areas of business bankruptcy, commercial law, and secured lending. His primary practice was the representation of real property secured lenders in matters ranging from negotiation, structuring, and documentation of loan transactions to enforcement and bankruptcy. Mr. Andrew has been a frequent lecturer and writer on bankruptcy and commercial law and has taught at Stanford Law School, the University of Colorado School of Law, and the University of San Diego School of Law. He received his B.S. degree in 1974 from Regis College and his J.D. in 1979 from Stanford Law School.

C. GREGG ANKENMAN, author of chapter 5, is a partner in the firm of Wendel, Rosen, Black & Dean LLP in Oakland. Mr. Ankenman practices in the areas of real estate and business law, including commercial real estate leases, sales, exchanges, financing, and asset acquisitions. He is a frequent speaker and panelist for industry and bar organizations, including CEB, the International Council of Shopping Centers, and the National Retail Tenants Association. He is a coauthor of “Telecommunications” in Office Leasing: Drafting and Negotiating the Lease (Cal CEB); an author of the third edition of California Real Property Sales Transactions (3d ed Cal CEB); a chief consultant and author of Retail Leasing: Drafting and Negotiating the Lease (Cal CEB); and an author of Handling Real Property Sales Transactions (Cal CEB Action Guide). He received his B.A. from Brigham Young University in 1984 and his J.D. from the University of California, Berkeley, School of Law in 1988.

JAMES BRYCE CLARK, coauthor of chapter 10, is General Counsel of OASIS (Organization for the Advancement of Structured Information Standards) (https://www.oasis-open.org), one of the largest and oldest industry consortiums for Internet and XML standards. He is an e-commerce and information technology attorney, based in Los Angeles, who began his practice as a financing and corporate restructuring lawyer with Shearman & Sterling in New York in 1988. He represented banking and high technology companies in finance, acquisitions, and securities transactions throughout the 1990s and served two terms as chairman of the American Bar Association’s business law subcommittee on e-commerce. Before joining OASIS, he was vice president and general counsel of a health care e-commerce company, and corporate partner in a Los Angeles law firm. He also served as a contributor and co-editor of several standards projects, including ebXML (now ISO 15000), which he chaired in 2003. He is a member of the global “MoU Management Group” for coordinating e-commerce standards among ISO, ITU, IEC, the UN, and others; a U.S. delegate to the e-commerce panel of the United Nations Commission on International Trade Law (UNCITRAL); and an expert adviser on e-commerce law for the U.S. State Department. He holds J.D. (1988) and Sc.B. (1980) degrees from the University of Minnesota.

JAMES S. COCHRAN, update author of chapter 7, is a founding partner of O’Connor Cochran LLP, a real estate and finance law firm based in Los Angeles. Mr. Cochran represents institutional and other lenders in a wide variety of sophisticated commercial real estate financings, including mortgage loan transactions (both recourse and nonrecourse) and mezzanine loan transactions. In addition, he has expertise in loan portfolio reviews, secured financings, enforcement actions, and other matters involving Article 9 (Secured Transactions) of the Uniform Commercial Code. He has served as a co-chair of the Uniform Commercial Code Committee of the California State Bar Business Law Section, as a member of the Section’s Executive Committee, and as a member of the Section’s Opinions Committee. Mr. Cochran is a fellow of both the American College of Mortgage Attorneys and the American College of Commercial Finance Lawyers. He received his B.A., magna cum laude, from Wesleyan University in 1977 and a J.D., with honors, from the University of Texas School of Law in 1987.

ROY S. GEIGER, coauthor of chapter 8, is a partner in the Newport Beach office of Irell & Manella LLP. Mr. Geiger is a frequent contributor to the California Real Property Journal of which he was an Associate Editor and has lectured on legal opinions, including in CEB’s Advanced Course of Study “Attorney Opinion Letters: Legal Opinions in Real Estate Transactions.” Mr. Geiger practices in the area of real estate and commercial finance. He is a member of the American College of Real Estate Lawyers and co-chaired the State Bar Committee that prepared the 1995 California Real Property Legal Opinion Report. He received his B.A. from the University of California, Los Angeles, in 1972 and his J.D. from the University of California, Berkeley, School of Law in 1979.

MORGAN T. JONES, III, coauthor of chapter 4, is a shareholder in McDonough Holland & Allen PC and a member of the firm’s Real Estate Section and Banking and Financial Institutions Group. He has extensive experience in all aspects of real estate, real estate finance, and commercial lending, including workouts and debt restructuring. Mr. Jones received his B.A. from the University of California, Santa Barbara, in 1970, his M.A. from the University of California, Los Angeles, in 1975, and his J.D. from the University of California, Los Angeles, School of Law in 1981.

ANNE E. KLOKOW, author of chapter 9, is a partner with Allen Matkins Leck Gamble & Mallory LLP, in Irvine. Ms. Klokow concentrates her practice in real estate finance and development, and she has extensive experience representing institutional lenders, investors, and developers in commercial real estate transactions in California. She has structured and documented participating loans and ground leases, loans involving multistate collateral, guaranties, letters of credit, environmental indemnities, and mixed collateral as well as joint venture transactions involving institutional investors for development and/or acquisition of real estate projects. Ms. Klokow received her B.A. from the University of California, Santa Barbara, in 1976 and her J.D. from the University of Southern California School of Law in 1980.

MICHAEL A. KVARME, coauthor of chapter 6, is a senior shareholder of Weintraub Genshlea Chediak in Sacramento. He has a transactional real estate practice including finance, joint venture, and other aspects of commercial real estate. Mr. Kvarme is a frequent lecturer for CEB and other organizations. He received his B.A. in 1976 from the University of California, Berkeley, and his J.D. in 1979 from the University of California, Davis, School of Law.

CHARLES LOCKO, author of chapter 1, is a sole practitioner in Los Angeles. Mr. Locko practices in the areas of commercial real estate law, hotel, multifamily residential, and shopping center law (development, financing, acquisition, and management). He is past chairman of the Real Estate Section of the Beverly Hills Bar Association and is a frequent lecturer on commercial real estate topics before industry and bar organizations and for CEB on Secured Real Property Transactions programs. He received his B.A. in 1974 from the University of California, Los Angeles, and his J.D. from the University of Southern California School of Law in 1980.

GREGG J. LOUBIER, coauthor of chapter 2, is a partner of Allen Matkins Leck Gamble Mallory & Natsis LLP in Los Angeles. Mr. Loubier represents lenders and borrowers in commercial mortgage lending throughout the nation; represents servicers in general loan servicing matters, foreclosures, and workouts; and represents institutional and individual investors in the acquisition, development, management, and disposition of real estate investments. He writes and lectures frequently on real estate debt and equity finance, serves on the Executive Committee of the Los Angeles County Bar Association’s Real Property Section, and is a fellow in the American College of Mortgage Attorneys. Mr. Loubier graduated from Hampshire College with a B.A. and he received his J.D. from the University of California, Davis, School of Law.

PETER S. MUÑOZ, coauthor of chapter 6, is a partner in the firm of Reed Smith LLP in San Francisco. He practices in the area of banks and banking, bankruptcy, debtor and creditor, commercial law, and equipment financing and leasing. He is a frequent contributor to CEB, writing for the Real Property Law Reporter and book updates, and was a consulting editor for California Mortgage and Deed of Trust Practice (3d ed Cal CEB). Mr. Muñoz received his B.A. and M.A. from the University of California, Berkeley, in 1968 and 1970, respectively, and his J.D. from the University of California, Berkeley, School of Law in 1975.

MAURA B. O’CONNOR, coauthor of chapter 10, is a partner in the Los Angeles office of Seyfarth Shaw LLP. She focuses on real estate financing, acquisitions, development, and leasing. She has extensive experience in complex financing transactions, infrastructure, industrial projects, purchases of environmentally contaminated properties, and sophisticated real estate workouts and foreclosures. She has served as lead counsel for myriad senior and mezzanine loans, lease financings, securitized transactions, ground leases, and equity investments for a wide variety of investors, banks, insurance companies, and others. Ms. O’Connor received her B.A. from Carleton College in 1981. She was named one of the Distinguished Alumni of the University of Minnesota Law School, where she obtained her J.D., cum laude, in 1988.

RANDY P. ORLIK, coauthor of chapter 3, is a partner in the firm of Cox, Castle & Nicholson LLP in Los Angeles. Mr. Orlik practices in the areas of real estate finance, UCC-secured transactions, workouts, restructures, creditor and debtor rights, and bankruptcy. Mr. Orlik is a member of the American Bankruptcy Institute, the California Bankruptcy Forum, and the Financial Lawyers Conference. He has written for the California Bankruptcy Journal and other publications and has lectured on these subjects. He received his B.A. in 1974 from Amherst College, his M.B.A. in 1979 from the University of California, Berkeley, School of Business, and his J.D. from the University of California, Berkeley, School of Law in 1979.

M. J. PRITCHETT, coauthor of chapter 2, is a partner in Orrick, Herrington & Sutcliffe, LLP in San Francisco. Mr. Pritchett’s real estate practice includes all aspects of real estate secured lending, as well as real estate acquisitions, dispositions, and leasing. He has represented both borrowers and lenders in a broad range of complex real estate loan transactions. Mr. Pritchett received his B.A. from Brigham Young University in 1980 and his J.D. from the University of California, Berkeley, School of Law in 1983.

THOMAS G. ROBERTS, coauthor of chapter 5A and chapter 8, is a partner in the firm of Baker & Hostetler, LLP in Los Angeles. Mr. Roberts practices in the area of real estate law. He is a member of the American College of Real Estate Lawyers, currently serving on its Board of Governors, and is a member of the American College of Mortgage Attorneys. Mr. Roberts has lectured on legal opinions, including in CEB’s Advanced Course of Study “Attorney Opinion Letters: Legal Opinions in Real Estate Transactions.” He served on the seven-member Steering Committee of the American College of Real Estate Lawyers and the ABA that prepared the Report on Adaptation of the Legal Opinion Accord for Real Estate Secured Transaction. He co-chaired the State Bar Committee that prepared the 1995 California Real Property Legal Opinion Report. He received his B.A. and J.D. from the University of Southern California School of Law in 1971 and 1974, respectively.

C. DARRELL SOOY, coauthor of chapter 4, is a partner in Tobin & Tobin, a professional corporation, in San Francisco. He practices in the area of real estate finance. Mr. Sooy was the original author of “Escrow and Closing the Sale” in the third edition of California Real Property Sales Transactions (3d ed Cal CEB), and since 1995 he has been a contributing author on the annual updates for California Attorney’s Guide to Damages (2d ed Cal CEB). He is a frequent speaker at CEB programs on secured transactions. He received his B.S. from the University of California, Berkeley, in 1966 and his J.D. from the University of California, Hastings College of the Law, in 1969.

ANTHONY THEOPHILOS, coauthor of chapter 3, is a partner in the San Francisco office of Crosby, Heafey, Roach & May, a professional corporation. He practices in the areas of international real estate, real estate acquisitions, real estate finance, real estate investment trusts, and real estate joint ventures. Mr. Theophilos is the author of Statutory Regulation of Real Property Lending by Banks and Savings & Loans, 3 CEB Real Prop L Rep 113 (Aug. 1980) and The Installment Sales Revision Act of 1980 and Its Impact on Real Property Transactions, 1 CEB Real Prop L Rep 1 (Jan. 1981); was a consulting editor on California Mortgage and Deed of Trust Practice (3d ed Cal CEB); and was a contributor to California Real Property Sales Transactions (3d ed Cal CEB). He is also a frequent lecturer for CEB. He received his B.A. and J.D. from American University in 1970 and 1973, respectively.

IRA J. WALDMAN, coauthor of chapter 8, is a partner with Cox, Castle & Nicholson LLP in Los Angeles. He practices in the area of real property law and creditors’ rights law. Mr. Waldman is a frequent lecturer and author on many topics concerning real estate secured lending, including CEB’s Advanced Course of Study “Attorney Opinion Letters: Legal Opinions in Real Estate Transactions.” He is a member of the American College of Real Estate Lawyers and serves on the College’s Attorneys’ Opinions Committee that, jointly with the ABA Section of Real Property Probate and Trust Law Committee on Legal Opinions in Real Estate Transactions, prepared the Report on Adaptation of the Legal Opinion Accord for Real Estate Secured Transaction—Inclusive Real Estate Secured Transaction Opinion in Which Are Incorporated the Principal Concepts of the ABA Section of Business Law Legal Opinion Accord. He received his B.A. from Bates College in 1973 and his J.D. from the University of Maine in 1976.

GARY YORK, coauthor of chapter 5A, is a partner at Ballard Spahr LLP in Los Angeles. He specializes in real estate acquisitions, dispositions, financing, and leasing. He has particular expertise in complex financing transactions for insurance companies, banks, and other institutions. Mr. York has significant experience in the representation of special servicers in CMBS foreclosure matters, and sophisticated workouts involving A/B note structures and mezzanine loans. He is a member of the American College of Real Estate Lawyers and is recognized in the International Who’s Who of Real Estate Lawyers. He is a frequent speaker and contributor to CEB and other publications. He received his B.A., cum laude, from Pomona College in 1965 and his J.D. from Stanford Law School in 1968, where he was an editor of the Stanford Law Review.

About the 2020 Update Authors

C. GREGG ANKENMAN is the update author of chapter 5. See biography in About the Authors section.

CLAUDIO R. CHÁVEZ, update author of chapter 3, is chief executive officer of Arch Bay Capital, LLC, Irvine, an investment firm specializing in real estate and mortgage industries. Mr. Chávez received his B.A. degree in 1988 from Pitzer College and his J.D. degree in 1993 from the University of California, Berkeley, School of Law.

JAMES BRYCE CLARK, update coauthor of chapter 10, is currently with O’Connor Cochran LLP, Los Angeles. See also biography in About the Authors section.

JAMES S. COCHRAN is the update author of chapter 7. See biography in About the Authors section.

ROY S. GEIGER, update coauthor of chapter 8, is currently of counsel with King Parret & Droste LLP, Newport Beach. See also biography in About the Authors section.

MORGAN T. JONES, III, update author of chapters 1 and 4, is currently a partner resident in the San Francisco and Sacramento offices of Seyfarth Shaw LLP. His practice focuses on representing institutional lenders in all aspects of real estate finance and corporate lending, including workouts, debt restructuring, loan enforcement, and lender liability matters, as well as bond transactions. Mr. Jones is a fellow of the American College of Mortgage Attorneys. See also biography in About the Authors section.

ANNE E. KLOKOW, update author of chapter 9, is currently a partner with Allen Matkins, Irvine. See also biography in About the Authors section.

MICHAEL A. KVARME, update author of chapter 6, is currently a managing shareholder of Weintraub Tobin, Sacramento. See also biography in About the Authors section.

MAURA B. O’CONNOR, update coauthor of chapter 10, is the managing member and founder of O’Connor Cochran LLP, a certified women-owned real estate boutique law firm in Los Angeles. She is a fellow of the American College of Mortgage Attorneys. She focuses on real estate financing, acquisitions, development, and leasing. O’Connor Cochran LLP is a member of the International Network of Boutique Law Firms. See also biography in About the Authors section.

IRA J. WALDMAN is an update coauthor of chapter 8. See biography in About the Authors section.

GARY YORK is the update author of chapter 5A. See biography in About the Authors section.

OnLAW System Requirements:
Desktop: Windows XP, 7 or 8, Mac OS 10.8
Mobile: iOS6, iOS7, Android 4.2
Firefox, Chrome, IE and Safari browsers

Note: OnLAW may work with some devices running older versions of these Operating Systems or Windows RT; however, functionality is not guaranteed.

Please see FAQs for more details.
Products specifications
PRODUCT GROUP Publication
PRACTICE AREA Real Property
Products specifications
PRODUCT GROUP Publication
PRACTICE AREA Real Property