Tips for Negotiating Defeasance in Conduit Loans – Part 2

The “Payment Date” Definition:

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While it may seem like a minor detail, the wording of the “Payment Date” definition in a lender’s CMBS loan documents can have a big impact on the price a Borrower pays for the Defeasance Collateral when the Borrower sells or refinances. Ideally (from a defeasance standpoint), the Payment Date definition should state that a payment due on a Payment Date that is not a Business Day will be made on the immediately succeeding Business Day (not the immediately preceding Business Day).
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Tips for Negotiating Defeasance in Conduit Loans – Part 1

The “Defeasance Collateral” Definition In the past few years, some lenders’ CMBS loan documents have been revised to allow the defeasance collateral to include agency securities.  However, other lenders have been slow to adopt such a change even though REMIC regulations allow it.