Most commercial real estate loan documents give meaning to the phrase “real estate is old as dirt.”  Why? Because just as dirt doesn’t change, commercial mortgage loan documents largely ignore the impact of technology on the physical attributes, use and operations of the property.             

Take another look at your mortgage loan forms with these questions in mind, and ask yourself if the forms are “as old as dirt.”

My bet is that you won’t like the answers to the question.  (Yes, it’s even embarrassing.)

Do your mortgage loan documents cover:

• third party (or “cloud”) documents storage?
• require lender consent to any use of electronic (eSign) documents with tenants and vendors?
• address use or surrender of internet or social media tools (such as websites, Facebook, etc.) upon a loan default?
• turnover of hardware and data used in the operation of the property?
• due diligence (check list items) on technology contracts used in the operations, marketing or leasing of the property?
• continuation of these contracts following foreclosure (or deed in lieu)?
• what kind of new defaults and remedies are needed?
• annual listing of technology contracts and third-party services?
• using e-mail as a permitted method of giving “notice?”
• require a borrower to cooperate if and when lender implements new technology tools (such as online reporting)?

Of course, this is not an exhaustive list.  My list seems to grow every few weeks.

I recently spoke on this topic at the Texas Bar Advanced Real Estate Drafting Course, and later this summer, I plan to do a webinar series on this topic.