Structuring Landlord Lien Waivers and Collateral Access Agreements

Description

When a lender finances a tenant's business using the tenant's property as collateral, the lender, or equipment lessor, must ensure it has first rights to the tenant's collateral if the tenant defaults on the loan. Thus, the lender will require the landlord to execute a lien waiver and/or a collateral access agreement.

Why are landlord lien waivers needed? In many states, landlords are granted liens against some of the tenant's property. Even in non-lien states, landlords also have remedies for arrears of rent that may subject the tenant's property to a judgment lien.

Thus, for the same reason that a landlord's lender requires the tenant to subordinate its lease to the lender's mortgage by executing an SNDA, the tenant's lender will require the landlord's subordination to its interests.

Collateral access agreements assure that the tenant's lender has rights to access the collateral located on the landlord's property and will preserve the collateral if the tenant defaults on the loan and the lender forecloses.

Listen as our authoritative panel of real estate practitioners discusses the competing interests of the tenant's lender and the landlord concerning the tenant's collateralized property on the landlord's premises. The panel will provide practical suggestions for structuring and negotiating landlord lien waivers and collateral access agreements from both the lender's and the landlord's perspectives.