Commercial Investment Real Estate July/August 2016 | Page 17

Commercial real estate professionals
should insist that the lender at least strike the
references to affiliates. Failure to do so leaves
commercial real estate professionals open to
the risk that an action that has no effect on
the loan or the lender’s security nevertheless
puts the loan into default.
One-sided Provisions
Designed for the lending institutions that
buy them, form loan documents tend to
be one-sided and can hide some nasty sur-
prises in what appear at first glance to be
boilerplate provisions. The “Miscellaneous
Provisions” of one loan document for one of
my clients recently contained this provision:
Notice of Lender’s Breach. Borrower
must notify Lender in writing of any
breach of this Agreement or the
Related Documents by Lender and
any other claim, cause of action or
offset against Lender within thirty
(30) days after the occurrence of
such breach or after the accrual of
such claim, cause of action or offset.
Borrower waives any claim, cause of
action, or offset for which notice is not
given in accordance with this para-
graph. Lender is entitled to rely on
any failure to give such notice.
The borrower has only 30 days after the
lender commits a bad act to place the lender
on notice, and failure to deliver that notice
means the claim is lost. Absent that provision,
you would have four years to bring a claim
based on the lender’s breach of contract. I have
yet to see a loan document that similarly limits
the lender’s right to bring action of its own.
These are just a few of the issues to be wary
when dealing with form documents.
Jerome Grossman serves as senior counsel
at Gresham Savage, a law firm in Southern
California. Contact him at Jerome.Grossman@
GreshamSavage.com.
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Visit www.CCIM.com/community-caring to get involved.
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July | August | 2016
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