Re: Subj 2 on 21 properties…16 on one loan? - Posted by JT-IN
Posted by JT-IN on March 06, 2002 at 07:06:11:
The best option would be to have the individual refi the two props that they want to keep, getting a partial release on the existing note, and a new mtg for them.
The seperate land trusts is OK, and would be simpler when/if you go to sell them, if you were doing subj 2 sales, by assigning beneficial interest. Now, if you are planning to do cash sales, this is where you will run amuck with this deal, and the lender.
Once you begin requesting the bank to provide a partial release for one of the props that you are selling, they will likely become aware of the fact that something has changed. They will/could refuse to provide a partial release, and then the only way you could sell them would be to refi all of them.
So, it depends greatly on your exit strategy here. Also, it depends on whether you could go to the bank and refi all of them yourself, if need-be. If you could not, then I would run away from this deal; don’t walk, run!
Why do I say that…? Here is why… The liability here could be horrific. Let’s say you sold several of them on subj 2, and then the bank calls due, (and I agree with David A. that there is a much higher probability of of due-on-sale probs with a comm’l loan), you now have yourself promised to the seller, and out on a big limb, and the same with some buyers. Let’s say that one or more of the buyers now have successful business’s up and running, and now the bank is calling the mtg due, because you bought all these and violated the DOS clause. You are a sitting duck for a multiple plaitiff lawsuit.
Well, I have just talked myself out of it, but I don’t know about you. The only way here, is out of a matter of convenience and cost, you keep the loan in place, but have the wear-with-all to refi, without question, would I proceed ahead with this deal.
Just the way that I view things…