Real Estate Borrower Representative

Lending transactions to finance commercial real estate purchases present numerous legal challenges to businesses seeking to structure an advantageous transaction. These complicated transactions will often require the attorney representing the borrower to have a knowledge of real estate, banking, finance, and securities law.

A commercial real estate loan agreement is essentially a contract between the borrower and the lender. However, the terms of the loan are often complex and may run more than 100 pages long. They usually include documents related to payment schedules, fees, insurance clauses, lease approval issues, and more.

While a commercial real estate purchase can be financed in a variety of ways, most of the transactions fall into one of the following categories:

• Commercial mortgage-backed securities (CMBS) loans are commercial real estate loans secured by a first mortgage on a commercial property. They are also sometimes known as “conduit loans.”
• Acquisition and development loans, known as “A&D loans,” cover the cost of acquiring the land, the cost of improving and developing it, interest, sales commissions, and a contingency reserve.
• Construction loans finance construction on a commercial property.
• Bridge loans are short-term loans offering financing to provide the buyer with cash flow until it secures a long-term financing deal. Bridge loans are usually for one year or less, have high interest rates, and are typically backed by collateral.
• Mezzanine financing provides a short-term loan to a developer in return for a partial interest in the company as collateral. Mezzanine loans are often used to provide extra money that will allow a developer to complete a project.
• Small Business Administration (SBA) loans are offered through federal and state programs to eligible borrowers that cannot meet standard commercial loan requirements. An SBA loan makes a commercial borrower more attractive to lenders by guaranteeing the loan.

Lenders may require the borrower’s legal representative  to provide legal opinion letters at closing to assure there are no open legal issues at the time of closing. In the letter, the borrower’s attorney will address each of the lender’s financing requirements, demonstrate that the borrower is in good standing, and inform the lender that the financing terms are valid and legally enforceable. These letters make it harder for the borrower to claim the loan documents are unenforceable. 

The attorneys at Thomas H. Curran Associates represent borrowers in a broad cross-section of industries in commercial real estate financing transactions. Our lawyers will work to help the client both effectively negotiate a loan agreement and properly structure the transaction. The attorneys at the law firm of Thomas H. Curran Associates have extensive experience in commercial real estate financing law and utilize it to ensure the best possible results for our clients.