Financing – Should I Have a Loan Review Performed?

Based on the loan forms from various lenders, which have become tougher against borrowers over time, the firm strongly recommends that clients have a loan review performed on any loan documents they are asked to sign, including for refinancing a project. Assuming a letter of intent has been adequately prepared to cover the business terms, the following represent areas that usually require modification on behalf of a borrower: modify the default sections as they are usually onerous; change the due on sale clause in the deed of trust to allow certain transfers of the property without it being considered and assignment; limit any personal payment and carve-out guaranties as much as possible; limit any clause relating to owner liability for hazardous substances to the period of ownership; scrutinize any pre-payment provisions; avoid tax and insurance reserves; and revise the conditions necessary for funding the loan.