Commercial cash management loans are loans that generally have extremely onerous terms for the commercial borrower. Often even if you make the payments on these loans, you can find a commercial loan in default. For example, if your cash flow is not compliant with the terms of the mortgage, the loan servicer can transfer your loan to special servicing. They can usually also place the loan in special servicing if the rented space falls below a specified percentage of rentable space. For example, if occupancy falls below 80% (or some other number specified in the mortgage), they can declare a default. Either of these examples may be enough to put the loan into cash management status and incur special servicing fees. Again, this can occur if you never missed a payment, and certainly can occur if you have missed a payment.
Special servicing fees can run thousands of dollars per month and completely bury your property. Often, the investors in these loans employ a “loan to own” strategy. They bury the property in special servicing fees and default interest, even if you never missed a payment. Once they have buried the property with ridiculous, but often legal, fees and charges, they eat up all of your equity making the property have no net value. They then try to foreclose causing the commercial property owner to incur tens of thousands in legal fees while also running up a massive bill on their side. Then they try to convince you to deed the property to them or they proceed to foreclosure and buy the property at auction.
If you find yourself in default or in foreclosure in a commercial cash management loan, do not roll over and do not allow the loan servicer to take advantage of you. There may be a real defense that you can assert to turn the tables on the loan predator, I mean loan servicer. You cannot just turn to any law firm though. You need an aggressive law firm that specializes in defending foreclosures and has experience in defending cash management loan foreclosures.
One of the defenses that you may be able to assert is the negotiability of the promissory note. These commercial cash management mortgages are extremely complex legal instruments that often span dozens, if not hundreds, of total pages. A promissory note that is a simple promise to pay a fixed sum of money is a negotiable instrument in Florida. This means that the loan can be sole multiple times and any company that is in possession of the note indorsed in blank may enforce the note. Often, these commercial cash management loan foreclosures have promissory notes that are indorsed in blank. However, cash management loans are anything but simple promises to pay. They contain provisions as I have eluded to above, like occupancy and cash flow requirements that can trigger a default. This may make the loan a non-negotiable instrument. If that is all the loan servicer has to prove it has the right to enforce the note, they may have a real problem on their hands and you may have a real defendable case.
Negotiability is only one of the myriad of issues that may be raised in defense of a cash management mortgage loan. It is certainly not advisable to roll over and give up nor is it advisable to use a lawyer who is not well versed in these types of mortgages. Finding a lawyer who understands these loans and has experience in defending defaults and foreclosures relating to these loans may make the difference between saving your commercial property and losing it entirely.
Further, these loans often have personal guarantees that could leave the guarantors liable for hundreds of thousands of dollars, or even millions of dollars, of liability. These mortgages are terrible and are generally full of terms that only benefits the lender and their successors. There is too much at stake to leave the defense of these defaults and foreclosures to amateurs. Call loan Lawyers today for your free consultation to discuss your commercial cash management mortgage loan and let’s see how we may be able to help you.