Are you ready to jump on the tax-exempt bond bandwagon? Over the last eight years, the landscape of tax-exempt bond financing has changed and more and more bonds are being sold directly to banks across the nation.

Do you have customers or potential customers that are: hospitals, health centers, visiting nurses associations, nursing homes, assisted living facilities, continuing care retirement communities, child care organizations, colleges, universities, private independent schools, museums, theaters, zoos, adult day care facilities, boys & girls clubs, community action agencies, and social service agencies?

Continue Reading The Bond Bandwagon

Massachusetts is notorious for having hyper-technical rules about notarization.  The trouble started in 2009 with the bankruptcy case of Matthew H. Giroux.  Mr. Giroux signed a mortgage in front of a notary public.  He acknowledged to the notary public that he signed the mortgage voluntarily for its stated purpose.  The notary public signed where he was supposed to, affixed his notarial seal, and inserted the expiration of his commission.  The mortgage was then recorded in the appropriate registry of deeds.  The notary public, however, forgot to insert Mr. Giroux’s name in the certificate of acknowledgement (the notary block on the mortgage); so it said: “[B]efore me personally appeared _____________ to me known to be the person (or persons) described in and who executed the foregoing instrument . . . .”  The bankruptcy court didn’t like that and invalidated the mortgage.

Ok, lesson learned.  Notaries—don’t forget to fill in the name of the person who signed the mortgage.

Continue Reading New Forms May Alleviate Some Concerns About Massachusetts Notarizations

As I type this blog post, I am sitting at my desk with a four-inch-thick binder filled with title insurance forms—form policies, form endorsements, premium rate tables, survey requirements, etc.—and it occurs to me that many people who deal with real estate loans and title insurance on a daily basis may have never read a title insurance policy.

It’s probably not necessary for a loan officer involved in a real estate transaction to read the whole title insurance policy, but it may be helpful to have a basic understanding of the benefits and limitations of a lender’s title policy as well as some of the optional endorsements.  To provide a basic understanding of title insurance, this post is the first in what will be a series of articles on title insurance from a lender’s perspective.

Continue Reading Title Insurance: What is its Value?

Bankers and other professionals who have worked on construction loans in states other than Connecticut will know how much of a pain it can be to make construction loan advances. You usually need to perform a title update and obtain lien waivers and various indemnifications from contractors and borrowers. This is because many states give priority to liens for construction services and materials (i.e. mechanic’s liens) over subsequent construction loan advances.

This is not true in Connecticut.

Continue Reading Construction Financing and Mechanics’ Liens in Connecticut

On February 23, 2016, in the case of MERSCORP Holdings, Inc. et al. v. Dannel P. Malloy et al., the Connecticut Supreme Court upheld the constitutionality of certain state statutes which impose higher fees for mortgage nominees, such as MERSCORP Holdings, Inc. and Mortgage Electronic Registration Systems, Inc. (“MERS”), for recording documents in the public land records.

A brief history shows that back in 2013, the Connecticut legislature created a two-tiered system by which town clerks collect recording fees with the effect that mortgage nominees were obligated to pay up to three times more for recording documents than other filers.

In response, MERS commenced an action against state officials.

Continue Reading State Statutes Requiring MERS To Pay Higher Recording Fees Declared Constitutional

If I got paid a dollar for every time a client asks me “What is this property worth?” then I wouldn’t be writing this blog – I’d be fishing or playing golf.

As I tell my clients the market value of real property is what a knowledgeable, willing and able buyer would pay to an unpressured seller who is in the market to sell.

How does that apply to leases?

The Financial Accounting Standards Board on February 25, 2016 recently announced that the value of publicly traded companies must now include the value (as an asset and a liability) of its leases.  You may be thinking, “Why do I care?”

Currently, most companies do not report leases on their balance sheets.  Some argue this makes valuing a company that has extensive locations more difficult.

Supermarkets, drugstores, retailers, banks, hotels, restaurants and chains that have numerous locations will soon have larger balance sheets.  But will they accurately reflect the value of the company?

The Financial Accounting Standards Board thinks the balance sheet reporting of leases will result in a more accurate company value.  I am unconvinced.

Continue Reading How Much Is A Lease Worth?

Does a Lender really get any protection from a Negative Pledge provided by a Borrower?  In some situations where a Lender would like to have security for its loan but the Borrower cannot, or will not, grant a mortgage or security interest in or on its property, the Lender may settle for a Negative Pledge by the Borrower where the Borrower covenants not to sell or encumber certain assets without the consent of the Lender.  If the Borrower granted a mortgage or a security interest in the assets and the mortgage was properly recorded in the applicable land records or the security interest was perfected as required under the Uniform Commercial Code, the rights of the Lender with respect to the collateral and the Lender’s priority with respect to other creditors of the Borrower would be established by law; however, the same is not the case with the use of a Negative Pledge.  

As a general matter, Negative Pledges are enforceable only against the grantor thereof and not third parties who purchase assets or obtain mortgages or security interests in violation of the Negative Pledge.

Actions against Borrowers typically involve damages for breach of contract.  Negative Pledges give the Lender a cause of action but do not grant the Lender any rights in the assets themselves.  As a result, third parties are not bound by a Negative Pledge between a particular Lender and its Borrower.

Continue Reading Negative Pledge Pros and Cons