The number and nature of the issues raised by a Waiver are limited only by the particular provisions and language the Waiver contains. Most Landlords are more interested in a successful Tenant at their project than in a first lien position in that Tenant’s personal property and so will agree to subordinate their lien position. A Standard Document given by a property landlord to a tenant's lender in which the landlord waives its legal and contractual lien rights to a tenant's non-real estate collateral for nonpayment of rent under a written lease. In this webinar, you’ll learn how to negotiate a landlord lien waiver and collateral access agreement. Access rights to the leased premises for the lender to remove or auction off (whether through public or private sale) the collateral if necessary. Landlord’s Waivers are intercreditor agreements for the benefit of the tenant’s lender or equipment lessor, stipulating the landlord’s and the lender’s respective rights in certain property owned by the tenant. In some instances those liens could be superior to a lien created by a security interest in favor of the tenant’s lender. The landlord consent and waiver subordinates the landlord's lien rights and allows the lender to remove the collateral. Whether you're a lender, tenant or landlord, you can use a Landlord's Waiver to enable a lender to legally enter rented property to access collateral. This could present a significant issue for the landlord especially, as discussed below, if the Waiver applies to liens other than statutory or common law landlord’s liens. And, does it mean that the landlord effectively has waived its right to recov… Landlords can use it to waive their own rights to a tenant's property. The landlord may want to stipulate that the lender can only enter the leased premises while a representative of the landlord is present or only during business hours. Collateral Access Agreements means any landlord waivers, mortgagee waivers, bailee letters and any similar usage, access or acknowledgment agreements of any Person, such as a warehouseman, processor, lienholder or lessor, in possession of any assets of any Borrower or any other Credit Party, in each case in form and substance reasonably satisfactory to the Agent. What Commercial Landlords Need To Know About Landlord Lien Waivers Or Landlord Subordination Agreements. If the collateral is all of the tenant’s assets and the landlord waives all of its lien rights, the landlord could find itself in a position where it is unable even to attach the tenant’s bank accounts after obtaining a judgment. The importance of the notice issue is hard to overstate. While the lender may prefer that the landlord waive its lien, it may well accept subordination in lieu of waiver. It was intended to affect a waiver only of a landlord’s State statutory or common law lien rights (lien rights vary considerably from State to State). Landlord agrees that any lien or claim it may now have or may hereafter have in the Collateral will be subject at all times to Lender's security interest (or other present or future interest) in the Collateral and will be subject to the rights granted by Landlord to Lender in this Agreement. In any event, the landlord should request that the collateral covered by the Waiver exclude the tenant’s leasehold interest, sublease revenue, landlord financed tenant improvements and the tenant’s interest in building service equipment or fixtures. Under the laws of many states, landlords also have the benefit of a statutory landlord’s lien. For example, a lender’s right of access should be time limited. If you send this email, you confirm that you have read and understand this notice. The landlord should attempt to limit its exposure expressly or by agreeing to use “reasonable efforts” to send notice. Often, the lender would have provided financing for the tenant to purchase inventory or certain equipment and would require that its purchase money security interest in those items be superior to any statutory or common law lien available to the landlord. The waiver and subordination agreement contained typical provisions, including the following: [T]he parties agree as follows: 1. The lender will want a period of time during which it can enter upon the leased premises and either sell its collateral on site or remove the collateral for sale elsewhere. When a lender and a landlord are extending credit to the same borrower-tenant, they often enter int But, what if the Waiver applies to “all present and future property of the tenant”. But, what if the Waiver applies to “all present and future property of the tenant”. When drafting your commercial property lease, you (or your attorney) may have had the astute notion to include a provision which … These Waivers are often not limited to identifiable items or classes of the tenant’s property, but rather attach to “all present and future property of the tenant”. Waivers in use today, however, are often not confined to purchase money security interests in inventory or specific equipment. These rights should be sufficient to protect the lender. This Standard Document discusses when to use a lien waiver and collateral access agreement and highlights the rights and waivers granted by this agreement. Landlord Concerns . A collateral access agreement gives the tenant`s lender the right to access the security on the landlord`s property and ensures that guarantees will be retained if the tenant is late in the loan. In any event, whenever a landlord reviews a Waiver it should read the Waiver carefully, consider the issues mentioned above and consider also obtaining the assistance of counsel. Not only is the landlord exposed to the possibility of lender damages, but if the landlord discovers after the lease has terminated or expired that it needs to allow the lender a 60 to 90 day period of time to control the leased premises, the landlord may be unable to deliver the leased premises to a new tenant on the date agreed to in that new tenant’s lease. Subordination would leave the landlord’s lien intact, which may prove important for any number or reasons (e.g., the landlord would retain its ability to force a sale of the collateral, the landlord would be better off being a secured creditor if the tenant files for bankruptcy and the landlord would have a superior position vis a vie other creditors of the tenant). Whether or not the landlord executes a Waiver and what the landlord agrees to in the Waiver are primarily dependent upon the benefit the landlord anticipates to receive from the tenant’s financing and the landlord’s negotiating position. Does it apply to cash? be sure its lien on the collateral is superior to any lien of the landlord, and; have the right to enter the premises to remove the collateral in case the tenant defaults on its loan. Tenants, in the course of obtaining financing, often ask their Landlords to sign a Landlord’s Waiver. There are nuances involved in negotiating this issue with the lender, but typically the landlord and the lender can agree upon mutually acceptable language. The Waiver sets forth a number of specific rights that the lender will have with respect to its collateral. Structuring Landlord Lien Waivers and Collateral Access Agreements: Navigating Competing Interests of Tenant's Lender and Landlord Today’s faculty features: 1pm Eastern | 12pm Central | 11am Mountain | 10am Pacific TUESDAY, AUGUST 15, 2017 Andrea Campbell Davison, Esq., Shareholder, Bean Kinney & Korman, Arlington, Va. John G. Kelly, Shareholder, Bean Kinney & Korman, Arlington, Va. Landlord notification obligations present several issues for the landlord, the most obvious of which is: What happens if the landlord forgets or otherwise fails to notify the lender - does the landlord incur liability for failure to send a timely notice? A landlord would not want to be faced one day with trying to figure out which assets of the tenant are or are not available to the landlord. These reasonable desires of the lender can present a number of issues for the landlord, particularly in the context of a very lender-friendly Waiver. A more difficult question is when the period of occupancy begins; because this question is usually tied to notification obligations of the landlord. A Perfection Certificate completed and executed by each Loan Party. In this webinar, you`ll find out how to negotiate a waiver of party rights and a collateral access agreement. In addition, the lender will want to make sure that the expiration or termination of the lease, particularly if it is accelerated because of a default by the tenant, does not deprive it of its opportunity to do so. The form of this agreement often has the landlord waiving its lien rights against the collateral and consenting to the lender’s rights to enter the premises and remove the collateral. Those mentioned above are common to most Waivers. There are other issues related to the lender’s right of occupancy: The landlord should be certain that the occupancy is not exclusive so the landlord can simultaneously enter the leased premises to prepare the leased premises for the occupancy of the next tenant. A landlord, however, would rather subordinate its lien to the lender’s lien, as opposed to waiving its lien. This would make for a very unhappy landlord and would be particularly unfortunate if the financing related to the Waiver were not used by the tenant to acquire or refinance any of the collateral and/or if the financing caused the tenant to become overleveraged and contributed to the tenant’s lease default. Another frequently negotiated section of any landlord subordination agreement is lender’s right to access and occupy the premises in order to inspect and/or remove collateral. Ideally, the lender’s collateral, which is the subject of the Waiver, would be limited in scope and easily identified. Tenants might use it to let lenders access to personal property. Moreover, Waivers are often sought in a variety of circumstances, including highly leveraged financings where the lender’s collateral has not been acquired with proceeds of the loan. Ideally, the lender’s collateral, which is the subject of the Waiver, would be limited in scope and easily identified. For instance, if the lender agrees to pay rent during its period of occupancy and is allowed to occupy the leased premises for, say, 60 days after the landlord notifies the lender that the tenant is in default or the lease has been terminated, the landlord may think it is going to get rent for the period beginning with the notice and ending when the lender removes its collateral and leaves the leased premises. If a lender occupies the leased premises during a period in which the tenant has failed to pay rent, it would seem reasonable for the lender to agree to pay the landlord for that privilege. 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