Shartsis Friese Real Estate Partner David Egdal and Family Wealth Planning Partner Danielle Zaragoza co-presented the Barbri webinar “Structuring Real Estate Financing with Foreign Borrowers, Trusts, and Tenants in Common” on June 23.
The program, currently available on demand, covered issues related to the due diligence and structuring requirements for borrowers with foreign investors. They addressed key questions, including:
- Why are U.S. assets and a U.S. agent for service important for loans with foreign guarantors?
- How should TIC borrowers be structured, and what provisions are critical in the TIC agreement and the loan documents?
- What are the key issues that arise in lending to trusts, and how should those transactions be documented?
Program Description
Nonstandard borrowers and guarantors present underwriting and documentation challenges for lenders. Counsel must know how to structure loans with each type of borrower and guarantor. For borrowers that include foreign investors, lenders will require foreign as well as domestic anti-terrorism, anti-money laundering, and credit/litigation searches on each investor.
To allow for suit and collection in the U.S., foreign guarantors should be underwritten based on U.S.-held assets and agree to maintain a minimum U.S. net worth and liquidity throughout the loan term. If the borrower is a TIC, then there must be a TIC agreement, which may appoint a managing agent, subordinates TIC claims to the loan, and addresses the parties’ relationship to each other and the lender.
Trusts require special attention. Counsel must identify the assets in the trust, determine whether the trust is revocable, and understand conditions for removal of the trustee and how death or insolvency of the trustee or beneficiaries impacts control. Beneficiaries, as well as the trustees, may have to be underwritten as principals in the transaction.
Listen as our authoritative panel prepares lender’s and borrower’s counsel to structure transactions where borrowers are either foreign investors and guarantors, trusts as investors or guarantors, and/or TICs. The panel will review due diligence concerns with foreign investors, the role of U.S. assets and U.S. agents for foreign guarantors, subordination and other TIC agreement provisions, the trustee-beneficiary relationship of the trustee, revocable trusts, U.S. SPE borrowers in these transactions, and more.
Barbri is a leading provider of legal continuing education. Additional information about the program can be found on the Structuring Real Estate Financing With Foreign Borrowers, Trusts, and Tenants in Common event web page.
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