Commercial real estate loans are long documents written around a few hard questions: what the lender can reach, when cash gets trapped, and who is personally on the hook if something goes wrong. We represent owners, developers, investors, and lenders on acquisition, construction, bridge, and permanent financing for office, industrial, multifamily, and mixed-use property, with a particular focus on data centers and buildings leased to technology tenants. Our litigators work on the same matters, so the guaranty and cash management provisions we negotiate are written with an eye to how they will read in a courtroom if the loan ever goes into default.
Mortgage And Mezzanine Structures
A typical capital stack has a senior mortgage loan secured by the property and, above it, a mezzanine loan secured by a pledge of the equity in the property-owning entity. The difference matters at default. A mortgage lender forecloses under state real property law, which may mean a judicial process taking a year or more, or a nonjudicial power of sale in states such as Tennessee and Texas. A mezzanine lender forecloses on personal property under UCC Article 9, through a commercially reasonable disposition that can happen in weeks. An intercreditor agreement governs how the two lenders interact, including cure rights, purchase options, and the qualifications a mezzanine lender must meet to take over the borrower.
CMBS Loans And Their Constraints
Loans destined for commercial mortgage-backed securitization are pooled into a trust, usually structured as a REMIC for tax purposes, and administered by a master servicer and a special servicer under a pooling and servicing agreement. That structure brings rigidity. Borrowers must be single-purpose entities with separateness covenants, prepayment typically requires defeasance or yield maintenance, and lockbox and cash management arrangements sweep rents when debt service coverage drops. Once the loan is securitized, modifications go through a servicer bound by the REMIC rules and the PSA, which limits what can be negotiated. We explain those constraints before a borrower signs a term sheet, because many of them cannot be changed after closing.
Guaranties And Recourse Carve-Outs
Most commercial real estate loans are non-recourse, with exceptions. A carve-out guaranty, often called a bad-boy guaranty, makes a sponsor personally liable for losses caused by fraud, waste, misapplied rents, or environmental problems, and liable for the whole loan if springing events occur, such as a voluntary bankruptcy filing or an unpermitted transfer. Courts tend to enforce these provisions as written. In Wells Fargo Bank v. Cherryland Mall, a Michigan court held that a solvency covenant in a separateness clause triggered full recourse, which prompted the Michigan legislature to pass a statute limiting that result. We negotiate carve-outs tied to conduct the guarantor controls and scaled to actual losses wherever the lender will allow it.
Defaults, Workouts, And Enforcement
When a loan goes bad, the first decisions usually happen before anyone files suit: whether to sign a pre-negotiation letter, whether to accept a forbearance, and what the borrower is giving up in exchange. We represent borrowers, guarantors, and lenders in workouts and loan modifications, and in the litigation that follows when talks fail. That includes judicial and nonjudicial foreclosure, mezzanine UCC sales and challenges to them, motions to appoint a receiver to collect rents, guaranty enforcement actions, and lender liability claims. We read the loan documents, the guaranty, and the intercreditor agreement together, since a defense available under one of them often depends on language buried in another.
Data Centers And Tech-Tenant Facilities
Data center financings have their own problems. Value depends on utility power capacity, interconnection and fiber, and long-term leases with hyperscale or enterprise tenants who demand strong protections. Lenders want subordination, non-disturbance, and attornment agreements and estoppels from those tenants, while the tenants want assurance that a foreclosure will not interrupt service. Equipment inside the building may be owned by the tenant, leased, or financed separately, so fixture filings and collateral descriptions need care. Construction loans for powered shells and build-to-suit projects turn on power delivery dates that the borrower does not fully control. Our technology background helps us read the service-level, power, and cooling commitments that drive the credit.
