My commercial renter is now acquiring another loan and the company is asking for me (landlord) to let them obtain said equipment in the event of default. But, the list of equipment is the exact same that was on a previous lender's paperwork that I OKd' back in September.
I have not been faced with this before and am researching my obligations - any experience out there with this one?
At one point the renter mentioned that it's a consolidated loan but it's vague and before I go further I need to know what my obligations are.
OK this has to do with first lender getting first rights and then before I sign to allow second lender to obtain said collateral, the second lender needs to be the subordinate. I'm turning over the leg work to my renter as this is his finances and I'm just responsible for the end game. I hope this helps another renter/landlord.
Why dont you get him to sign for you to be the first holder . If he doesnt pay the loan he isnt going to pay the rent .
Great question - because of the nature of his business equipment, I'd rather not have the equipment and in the unfortunate event he defaults, it makes the most sense for another to remove it. He has been renting for a year with never a late payment. If he is late paying rent, then I am to notify the first lender - so in addition to having landlord rights on my side, I have the lender too. Thankfully that has not been an issue.
You must be a BiggerPockets member to post on the forums
Join the world's largest, most open Real Estate Investing Community online, 100% free forever!