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Lending

The key to drafting and negotiating a commercial lending transaction for an attorney is understanding the transaction; this is most critical for the lender’s and the borrower’s counsels. Without an understanding of the transaction at hand, an attorney cannot properly and thoroughly negotiate or document the transaction for the respective clients. Commercial loans of many types and purposes exist (i.e. acquisition of commercial property, new construction, rehabilitation and build-out of existing commercial property, business lines of credit or straight commercial loans secured and unsecured, to name a few). Each loan type and purpose presents different negotiation and documentation challenges and the loan documents represent the instructions, plan and specifications of the lender/borrower contractual relationship. Lender’s counsel must adapt loan documents to properly reflect the terms and conditions of the specific transaction while incorporating all of the more “general” conditions and clauses of commercial lending. Therefore the primary goal in drafting the “contract” between lender and borrower is clarity. Clarity can only be attained when the parties have an understanding of the transaction. From the lender’s counsel’s view, at the end of the day, the lender needs to walk away with a duly authorized and fully enforceable debt obligation, secured by a first-priority mortgage and security interest/lien on real estate and other pledged security which will allow the lender to enforce its rights and remedies in the event of a default by the borrower. Ambiguity only invites dispute. Understanding the purpose of the “papers” allows the parties to craft suitable documents to properly and thoroughly reflect the loan arrangement.

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