What are my options when my commercial real estate lender has acted in bad faith

What are my options when my commercial real estate lender has acted in bad faith?

With its business-friendly culture and positive tax environment, Florida can be an excellent place to invest. For both new and expanding commercial ventures, commercial real estate lending is often a critical part of a company being able to achieve substantial growth and prosperity. However, when a commercial real estate lender acts in bad faith with a borrower, it can be ruinous. In this situation, a business owner needs to know his or her options.

Both parties entering into a commercial real estate lending agreement are committing to specific terms.  As the terms of their contract bind both, there will be consequences should either fail to uphold their end of the bargain. Typically, the borrower will supply collateral, and in exchange, the lender will extend money for the business venture.  If the borrower fails to make payments as agreed, the lender will have certain rights to charge fees and ultimately seize the collateral.  However, the borrower will also have rights if the lender breaches or acts in bad faith.

A lender may be acting in bad faith if it deceives the borrower in some way into entering into the agreement without fully disclosing all of the terms. A lender could also be acting in bad faith when improperly selling collateral used to secure a loan.  A lender who breaches a commercial loan agreement in bad faith may be liable for damages incurred by the borrower.

The type of loan agreement at issue will depend on the borrower and lender and their specific needs. The implications of a lender’s bad faith in a commercial real estate venture can be severe for both parties. To be effective, these and other real estate documents must be carefully negotiated and drafted beforehand.  Often, parties can avoid problems by reviewing their business loan and other real estate agreements with an experienced attorney prior to signing.

At Rabideau Klein, we have extensive reviewing and drafting commercial real estate agreements.  Guy Rabideau, Esq. and David E. Klein, Esq. are Florida Board-Certified Real Estate Attorneys with the experience you need for your South Florida commercial real estate transactions. We have the expertise and local knowledge you need to ensure that your interests are protected.  Contact Rabideau Klein today to discuss your real estate legal needs.



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