On July 18, 2024, the Consumer Financial Protection Bureau (CFPB) issued an interpretive rule (Proposed Rule) applying the Truth in Lending Act (TILA) and Regulation Z (collectively referred to hereafter as Regulation Z) to...more
In an appeal heard by the Appellate Division of the Supreme Court in the First Judicial Department of New York, the Court recently ruled that a court may reform a guaranty after the statute of limitations for a reformation of...more
Borrower / Guarantor Liability Recourse – The borrower (or guarantor) is personally liable for the full amount of the loan, including any debt remaining after the collateral is foreclosed upon and sold. To satisfy the...more
The Federal Reserve's most recent Financial Stability Report addressed what many industry watchers had been convinced of for some time: the commercial real estate sector is in a precarious state. The Federal Reserve Bank...more
Losses Weren’t Always Bad- Most tax advisers are aware that, prior to the Tax Reform Act of 1986 (the “TRA”),[i] the Code placed few limitations on the ability of an individual taxpayer to use deductions from a particular...more
Arizona Attorney General Mark Brnovich released opinion No. 22-(R22-011), concluding earned wage access (EWA) products that are fully non-recourse and no-interest are not “consumer lender loans” under Arizona law. Thus, those...more
On December 18, the Arizona Attorney General issued an opinion on earned wage access (EWA), which determined that fully non-recourse EWA products do not constitute consumer loans subject to consumer loan regulations, and...more
Mark Brnovich, the Arizona Attorney General, recently issued an opinion regarding whether earned wage access (EWA) products are “consumer lender loans” under the state’s Consumer Lenders Act (CLA) such that a person who...more
In Part Two of our series on limited recourse finance in the European real estate finance market, we look at the structural features....more
Limited recourse financing (also sometimes referred to as “non-recourse”) is a very common structure adopted in real estate financing transactions in Europe. The principle around limited recourse financing is essentially...more
When engaging in real estate loan transactions, insurance company lenders often undertake a robust underwriting process that focuses on the value and marketability of the real property that serves as collateral for the loan....more
In a deed in lieu of foreclosure, a defaulting borrower agrees to convey the mortgaged property to the mortgage lender. But handing over the keys can raise a number of potential pitfalls. Below, we discuss some of these...more
Real estate borrowers often prefer nonrecourse loans, which can eliminate or reduce the risk of having to satisfy a deficiency judgment if a project goes bad. However, most nonrecourse loans have carve-outs or exceptions to...more
Many commercial real estate loans are “non-recourse,” which means in general terms that foreclosing on the real estate securing the loan is the lender’s sole remedy for a borrower’s failure to repay the loan. The lender is...more
On November 8, 2018, the United States Bankruptcy Court for the Southern District of New York (the “Bankruptcy Court”) issued a decision dismissing an involuntary chapter 11 case filed against Taberna Preferred Funding IV,...more
The Bottom Line - The Bankruptcy Court for the Southern District of New York recently held in Taberna Preferred Funding IV, Ltd. v. Opportunities II Ltd. (In re Taberna Preferred Funding IV, Ltd.), No. 17-11628 (MKV),...more
The facts in Salamon are straightforward. Salamon (“Buyer”) purchased real property from Behrend (“Seller”) that was already subject to two liens (the “Preexisting Debt”). Instead of paying cash at closing, the Buyer executed...more
New final, temporary and proposed regulations address leveraged transactions, “bottom-dollar” guarantees and other issues, but postpone action on some key questions. On October 4, 2016, the Internal Revenue Service (IRS)...more
On October 4, 2016, the Internal Revenue Service and the Treasury Department issued a sweeping package of proposed, temporary and final regulations under the Internal Revenue Code that, among other things, significantly...more
I spent most of last week discussing California Corporations Code Section 315. As a reminder, that statute prohibits a corporation (Section 162) from making a loan of money or property to, or guaranteeing the obligation of,...more
On April 15, 2016, the IRS released a generic legal advice memorandum (GLAM 2016-001) (the “April GLAM”) addressing the impact of so-called “bad boy” guarantees (also known as nonrecourse carve-out guarantees) on the...more
IRS Reevaluates "Bad Boy" Carve-Outs - Before providing a non-recourse loan to a Limited Liability Company (LLC) – i.e., one for which the LLC members do not bear the risk of economic loss – a lender often will require...more
The IRS Office of Chief Counsel recently released a memorandum (#AM2016-001) addressing the proper tax treatment of nonrecourse carve-outs (or bad boy guarantees) in the partnership context. According to the memorandum, such...more
On April 15, 2016 the IRS reversed its controversial position that bad boy guarantees may convert nonrecourse debt into recourse debt. General Legal Advice Memorandum Number AM2016-001 released April 15, 2016 effectively...more
Earlier this year, the IRS issued Chief Counsel Advice 201606027 (February 5, 2016) concluding that, for purposes of the basis and at-risk limitations, an LLC member’s guarantee of entity-level nonrecourse debt conditioned...more