A knock on the door interrupts the banter of the cooperative’s board of directors, who are sitting around the living room of the president’s apartment. It’s the fourth member at the door, who will make up the quorum necessary for this month’s matters to be resolved. Before voting on the approval of an applicant or discussing the proposed capital improvements, the members want to finalize the lease of the commercial storefront owned by the cooperative. While none of the members are lawyers or landlords by trade, they nonetheless have managed to negotiate a simple 10 year lease of a gluten-free vegan smoothie health bar. The new lessee recently mailed a check for the security deposit which now sits in front of the board members. After some discussion, one of the unwitting members suggests depositing the security deposit check into an interest bearing account which he uses for his own personal motorcycle repair business. Although the board’s actions may appear legitimate on the surface, they are about to make a fatuous mistake which carries with it serious legal consequences.
Category: Commercial Corner
Last week, after 70 years of serving Manhattan’s midtown crowd, the New York institution known as The Primeburger closed.
It was known as much for its 1950’s high school swing out seats as for its delicious burgers. When they announced the closing saddened crowds of long time faithful customers gathered to eat their last meal. Continue reading »
As interest rates for commercial loans remain low, many property owners will pursue financing for their businesses or seek to refinance their current loans. The first document that a borrower is asked to sign in connection with a commercial loan is the loan commitment letter. The main goal of the loan commitment letter is to set forth the basic terms of the loan (how much, for how long, at what rate) as well as outline some other critical provisions (e.g., prepayment rights, transfer rights and required escrows).
Here are some points to keep in mind when negotiating a loan commitment letter: Continue reading »