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Interesting Tale of a $160,000 Commercial Loan Fee Collection Case

<p>About six months ago one of my former <a title="Nine-hour video course - How to Broker Commercial Real Estate Loans" href="http://www.c-loans.com/video.html">commercial loan brokerage</a> students came to me and asked me to serve as an <a title="Expert witness testimony for commercial real estate financing matters." href="http://www.c-loans.com/expert_testimony.html">expert witness</a> in a commercial real estate loan fee collection case.&nbsp; <br /><br />My student had arranged for the delivery of an $8 million SBA loan commitment at a very favorable rate on a hotel near the Newark Airport.&nbsp; The hotel had been shut down by the city a year earlier for regularly renting rooms by the hour (yup, you guessed it), and the prior owner had lost the property in foreclosure.&nbsp; My student's client was buying the hotel from the bank.<br /><br />Fortunately my student had used our commercial loan brokerage <a title="Ninety minute commercial real estate loan fee collection course and fee agreement." href="http://www.c-loans.com/feeagree.html">fee agreement </a>that provided for arbitration.&nbsp; He was based in Florida, the borrower lived in New York, and the property was located in New Jersey.&nbsp; Per the terms of our agreement, the mortgage broker (my student) was allowed to file his Demand for Arbitration in Florida.&nbsp; He did not have to travel to New York to sue this borrower.<br /><br />This was a Florida action, and I am not licensed to practice law in Florida.&nbsp; Therefore the mortgage broker hired local Florida counsel, who in my opinion did a terrific job.&nbsp; <br /><br />I was called upon to testify as an <a title="Expert witness services for commercial real estate loan brokerage practice." href="http://www.c-loans.com/expert_testimony.html">expert witness</a> on matters pertaining to the practice of commercial real estate finance.&nbsp; Even though I live in Indiana, I was able to provide testimony through a deposition that was taken telephonically at the office of a court recorder in South Bend.&nbsp; It was not necessary for me to testify at the actual arbitration hearing.<br /><br />The borrower did not really dispute the mortgage broker on the facts.&nbsp; Instead, the borrower defended on the basis that&nbsp; the mortgage broker lacked a real estate broker's license in the State of New York.&nbsp; <br /><br />Licensing for commercial real estate loan brokers in the State of New York is quite confusing.&nbsp; The Department of Financial Institutions has adopted the position that out-of-state mortgage brokers do not need a New York real estate broker's license to broker fewer than five commercial loans per year in the state.&nbsp; The law, however, appears to require just such a license.<br /><br />The mortgage broker argued that he had never entered the State of New York, and that therefore the licensing laws of the state of Florida should apply.&nbsp; Since the commercial lender was an institution and the borrower was technically a limited liability company, Florida did not require a mortgage broker's license.<br /><br />The borrower's attorney argued that the contract was silent on the subject of choice of law.&nbsp; Since there was an ambiguity and since the mortgage broker had prepared the contract, the ambiguity should favor the borrower.<br /><br />The mortgage broker's fine attorney's argued that the borrower had already made a formal appearance in state court in Florida in connection with the case.&nbsp; By doing so that they had subjected themselves to the jurisdiction of Florida laws and had therefore waived this defense.<br /><br />The arbitrator agreed.&nbsp; Four days ago the arbitrator granted the mortgage broker an award of $160,0000 - plus $5,000 in arbitration costs.&nbsp; Hooray for the good guys.<br /><br />Now the mortgage broker will need to get the award of the arbitrator confirmed by a Florida state court.&nbsp; The borrower may choose to fight the licensing and choice of law issue again at this stage.&nbsp; Later, the mortgage broker will need to take his Florida judgment (assuming he prevails) and get it domesticated in New York.&nbsp; At this stage the borrower may choose to bring up the licensing and choice of law issues again.&nbsp;&nbsp; <br /><br />Collecting unpaid loan fees can sometimes be a long battle, but with $160,000 at stake, the mortgage broker was right not to give up.&nbsp; Fortunately the borrower is worth millions of dollars, so the mortgage broker should eventually collect every penny he was due.<br /><hr style="WIDTH: 100%; HEIGHT: 2px" />Do you need a commercial real estate loan?&nbsp; If so, you can apply to 750 different commercial real estate lenders with just one simple mini-app using <a title="Commercial real estate loan portal." href="http://www.c-loans.com/onlineapp">C-Loans.com</a>.&nbsp; It's free.</p> 9 application/xml false commercial financing commercial lenders commercial loan commercial loans commercial mortgage commercial mortgage rates commercial real estate financing commercial real estate loan commercial real estate loans expert witness Apply for a Commercial Real Estate Loan to 750 Commercial Lenders http://www.c-loans.com/onlineapp Mozilla/4.0 (compatible; MSIE 7.0; Windows NT 5.1; .NET CLR 1.0.3705; .NET CLR 1.1.4322; Media Center PC 4.0) 127.0.0.1 127.0.0.1 johngaudio 67.190.87.246 false true false false true 198508 false false true false false false true 78777 blog blogsite/CLoans/web