Structural Considerations for Ground Lease Financings: What Lenders Want and Why

This article will identify and analyze several key provisions of a financeable ground lease and why such provisions are important to commercial lenders. Section I of this article is an introduction to ground leases and the financiability of grounds leases generally. Section II of this article details the important terms lenders look for when reviewing and negotiating a ground lease as part of a leasehold financing transaction. Section III of this article discusses the different methods of correcting certain financing deficiencies in the ground lease. Section IV of this article provides an overview of the main protections that lenders typically include in their loan documents when financing the leasehold estate under a ground lease. Attached as Exhibit A to this article is a sample due diligence form of abstract that lenders’ counsel typically uses to review a ground lease for financiability purposes.

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