To Give or Not to Give a Partition Opinion?

April 2022

Publication| Real Estate Services

It was April 2018 and my office was lead counsel to three (3) tenant in common (“TIC”), borrowers/ owners. My client was entering into a $30,000,000.00 non-recourse loan intended to be secured by a commercial retail shopping center. Closing was supposed to have occurred by first quarter end but due to some delays (estoppels and SNDAs, and KYC ), closing had slipped so we were all pushing for an early April close. The loan itself was fairly routine. All three of our TIC borrowers were single asset, Delaware limited liability companies. And while all three were recycled entities, they were all able to make the requisite backward representations. Other than having TICs as the co-borrowers, the transaction was relatively straightforward and consistent with other non-recourse loans our client and our office had closed with the lender and its counsel in the past. Loan document negotiation had gone smoothly, title and survey were approved, the tenant documents had been received and were in satisfactory form and the signature pages were signed and in escrow. The Tenant in Common Agreement (“TIC Agreement”) needed to be amended and restated to incorporate some negotiated edits requested by lender’s counsel, including a requirement that the waiver of partition be memorialized in a recorded memorandum, but even this process– required as a result of the TIC co-borrower structure, did not, in my view, overly complicate what was, at its core, a fairly routine, non-recourse loan closing

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