Commercial Real Estate Financing 2017

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1 REAL ESTATE LAW AND PRACTICE Course Handbook Series Number N-652 Commercial Real Estate Financing 2017 Co-Chairs Steven R. Davidson Joshua Stein Everett S. Ward To order this book, call (800) 260-4PLI or fax us at (800) Ask our Customer Service Department for PLI Order Number , Dept. BAV5. Practising Law Institute 1177 Avenue of the Americas New York, New York 10036

2 9 Model Mortgage Loan Opinion Gregory P. Pressman Schulte Roth & Zabel LLP If you find this article helpful, you can learn more about the subject by going to to view the on demand program or segment for which it was written. 257

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4 MODEL MORTGAGE LOAN OPINION [Letterhead of Law Firm] [Date] [Addressed to Lender] Gentlemen: Re: $ Mortgage Loan to We have acted as counsel to, a [corporation] [general partnership] [joint venture] [limited partnership] ( Borrower ), in connection with that certain $ mortgage loan (the Loan ) being made this day by ( Lender ) to Borrower. In such capacity, we have reviewed the following documents dated as of, as executed in connection with the Loan: a) Mortgage Note [use exact title] (the Note ) made by Borrower to the order of Lender in the principal amount of $; b) Mortgage [use exact title] (the Mortgage ) made by Borrower in favor of Lender as security for the Note and covering the premises located at, New York (the Premises ); c) Assignment of Leases and Rents [use exact title] (the Assignment of Leases ) made by Borrower in favor of Lender as further security for the Note; d) UCC-1 Financing Statements (the Financing Statements ) made between Borrower as Debtor and Lender as Secured Party; e) Loan Agreement [use exact title] (the Loan Agreement ) made between Borrower and Lender with respect to the Loan; and (if applicable) f) Guaranty of [Payment] [Completion] [use exact title] (the Guaranty ) made by and (collectively, the Guarantors ) in favor of Lender (if applicable). The Note, the Mortgage, the Assignment of Leases, and the Financing Statements [if applicable: add the Loan Agreement and any other pertinent documents] are hereinafter collectively referred to as the Loan Documents. In rendering our opinion we have also examined such certificates of public officials, [corporate] [partnership] [joint venture] documents and records and other certificates and instruments as we have deemed 3 259

5 necessary for the purposes of the opinion herein expressed. As to various questions of fact material to our opinion, we have relied upon certificates and written statements of [officers of] [partners in] Borrower. We have assumed that the Mortgage will be duly recorded in the Office of the [Clerk] [Register] of the county in which the Premises are located and that all applicable mortgage recording tax imposed thereon will be paid. We understand that with respect to title matters you will be relying on the title insurance commitment issued to you by [title company], bearing Title No., dated as of and redated as of today. We have not made any investigation of, and do not express an opinion as to, any matters of title to or the descriptions of any property (whether real, personal or mixed) or priority of liens. We express no opinion with respect to the effect of any law other than the law of the State of New York and the federal law of the United States. [Insofar as our opinion pertains to matters of (foreign state) law, we have relied upon the opinion of (foreign state) counsel, Messrs. (foreign counsel), dated, a copy of which is attached hereto.] In addition, wherever in this opinion any statement is made to our actual knowledge, such knowledge shall be deemed to mean and shall be limited to the actual, present and conscious knowledge (without having made any independent inquiry) of, who are the only lawyers in our firm who have worked on this matter. Based on the foregoing and upon such investigation as we have deemed necessary, and subject to the qualifications and exceptions herein contained, we are of the opinion that: 1. Borrower is a [corporation duly organized, validly existing and in good standing] [general partnership/limited partnership duly formed and validly existing] [joint venture duly formed and validly existing as a partnership] under the law of the [State of New York] [State of (foreign state)] [if a foreign corporation or foreign limited partnership, add: and is duly qualified to do business (if foreign corporation, also say: and is in good standing as a foreign corporation) (if foreign limited partnership, also say: as a foreign limited partnership) under the law of the State of New York]. [Add similar statements in respect of any Guarantor which is an entity, except that the statements as to qualification to do business and good standing in New York of a foreign entity may be omitted on the ground that executing a guarantee does not ordinarily constitute doing business in New York such as to require qualification.] 4 260

6 2. Borrower has the [corporate] [partnership] power and authority to [own] [lease] [and operate] the Premises and to execute and deliver, and to perform Borrower s obligations under, the Loan Documents. [For Guarantor, if applicable, say: Guarantor has the (corporate) (partnership) power and authority to execute and deliver the Guaranty and to perform Guarantor s obligations under the Guaranty.] 3. The execution and delivery of the Loan Documents by Borrower and the performance of Borrower s obligations under the Loan Documents have been duly authorized by all requisite action of Borrower, and the Loan Documents have been duly executed and delivered by Borrower. [Add similar statements for entity Guarantor. For individual Guarantor simply say: The Guaranty has been duly executed and delivered by Guarantor.] 4. The Loan Documents are the valid and binding obligations of Borrower, enforceable against Borrower in accordance with their terms, except as may be limited by (i) bankruptcy, insolvency or other similar laws affecting the rights of creditors generally, and (ii) general principles of equity (regardless of whether considered in a proceeding in equity or at law). The aforesaid opinion as to enforceability of the Loan Documents is also subject to the qualification that certain remedies, waivers and other provisions contained in the Loan Documents may not be enforceable, but (subject to the limitations set forth in clauses (i) and (ii) of the preceding sentence) such unenforceability will not render the Loan Documents invalid as a whole or substantially interfere with the realization of the principal benefits and security provided thereby. [Add similar statement in respect of Guarantors and Guaranty.] 5. The execution and delivery by Borrower of the Loan Documents do not, and the payment by Borrower of the indebtedness evidenced by the Note will not, (a) conflict with or violate any provision of the [the Certificate of Incorporation or By-Laws] [the Partnership Agreement] of Borrower or (b), to our actual knowledge, (i) conflict with or violate or result in a breach of any of the provisions of, or constitute a default under, or result in the creation or imposition of a lien, charge or encumbrance upon any of the properties or assets of Borrower pursuant to, any agreement or instrument to which Borrower is a party or by which any of its properties is bound, or (ii) conflict with or violate any judgment, order, writ, injunction or 5 261

7 decree binding on Borrower, or (c) conflict with or violate any law, rule, regulation or ordinance applicable to Borrower. [Insert comparable paragraph for Guarantor, if applicable.] 6. We have no actual knowledge of any material pending or threatened lawsuits, claims or criminal proceedings against Borrower [or Guarantor] or specifically applicable to the Premises [except as set forth in this opinion or a schedule hereto]

8 NOTES 263

9 NOTES 264

, Note (the Note ) made by Borrower in the amount of the Loan payable to the order of Lender.

, Note (the Note ) made by Borrower in the amount of the Loan payable to the order of Lender. , 201 Re:, Illinois (the Project ) Ladies and Gentlemen: We have served as [general] [special] [local] counsel to (A), a partnership ( Beneficiary ), the sole beneficiary of ( Trustee ), as Trustee under