Section 16 Problems of Lenders

• Library: Real Estate Leasing and Landlord-Tenant Actions and Remedies 2011

Institutional lenders such as pension trusts and life insurance companies, as well as more recent lending entities such as REMICs (real estate mortgage investment conduits) and REITs (real estate investment trusts), impose certain requirements when loans are secured by properties that are subject to leases. Because these entities are generally desired as lenders, it is worthwhile to consider some of the more common of these requirements.

· If the loan is to be made in reliance on certain leases, the unilateral right of a tenant to cancel the lease may, under certain circumstances, destroy one of the important security elements that justify the making of the loan. Lenders will impose limits on the right of the tenant to terminate leases.

The lender must be able to exercise control over the proceeds...