March 28, 2005

Commercial Financing and Single Asset Entities

Most Large Commercial Lenders Prefer Properties to be Owned by a Single Asset Entity

A single asset entity (SAE) is usually a limited liability company (LLC) that owns only one commercial or multi-family property. You will often see Subchapter S corporations formed to own a single property, especially in New York where a New York state court case from the 1970's imputed personal liability to the owner when a tenant was injured. A regular C-corporation or a limited partnership will sometimes be formed to hold title to commercial property, although the limited liability company (LLC) is now far more common.

The reason why major commercial mortgage lenders prefer SAE's is because if the borrower files a personal bankrupty, perhaps as a result of a traffic accident, the commercial mortgage lender is not "stayed" (ordered to refrain) from commencing or completing its foreclosure.


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Topic Tags: commercial construction lender, commercial construction loan, commercial financing, commercial loan, commercial mortgage, commercial real estate loan, mezzanine lender, mezzanine loan, preferred equity

by George Blackburne

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