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Florida Banking Law Blog

Legal developments impacting banking, finance and loan enforcement in Florida

Welcome to the Florida Banking Law Blog!

Posted in Uncategorized

Rogers Towers, P.A. welcomes you to its Florida Banking Law Blog! A product of the firm’s Banking and Financial Services Practice Group, the blog will serve as a convenient way for us to share our expertise in banking-related legal issues. We represent banks and other providers of financial services in a broad range of matters throughout the state of Florida. As a result of our significant experience, we will have much to share in the upcoming blog posts and we hope that you will find these posts to be informative and beneficial to you in your respective positions in the industry. We appreciate your interest in the field and in Rogers Towers, P.A., and we look forward to your comments in response to our blog.

Landlord Lien Waivers and Tenant Subordinations Explained

Posted in Commercial Lending

Commercial loan structures frequently call for either landlord lien waivers or tenant subordination agreements. In a situation where the collateral is real property that is already subject to a leasehold interest, the proper document will be a tenant subordination agreement. This document will contractually alter the priority of the interests in the collateral real property. That is, the existing leasehold interest will be subordinated to the newly acquired mortgage interest. The typical tenant subordination form will also include attornment language by which the landlord agrees to leave the tenant in place under its lease in situations where the landlord might otherwise lawfully be able to remove the tenant (e.g. a foreclosure suit following loan default) and the tenant agrees to acknowledge the lender as new landlord under the lease agreement. Without this agreement, it may very well be the case that the lease interest cannot be foreclosed in the event of a mortgage foreclosure.

A loan to a borrower that leases its business premises calls for a landlord lien waiver document. Florida Statute Section 83.08 creates a statutory lien for unpaid rent in favor of a landlord. The lien attaches to a variety of property including “… property of the lessee or his or her sublessee or assigns, usually kept on the premises.” Finally, that lien is given a priority above that of a subsequent lien such as a mortgage lien. In order to insure that the bank’s mortgage lien will take priority, the landlord must agree to waive its statutory lien or, at a minimum, subordinate it to the mortgage lien.


Posted in Bankruptcy

Trustees, creditors and other interested parties are responsible for reviewing a chapter 13 Debtor’s plan and schedules to determine whether the Debtor’s plan complies with the Bankruptcy Code. This point is illustrated in a recent case out of the Middle District of Florida, Bankruptcy Court.

In In re Ford, the chapter 13 Debtor’s schedules reflected $5,125.49 in monthly disposable income. Debtor’s plan proposed no payments to unsecured creditors in the first two months, payments of $1,312 to unsecured creditors in months 3 through 23, and payments of $2,408 to unsecured creditors in months 24 through 60 of the plan. Neither the Trustee nor any other party objected to confirmation of the Debtor’s plan. Therefore, despite not proposing to pay all of his disposable income into the plan, as required by the Bankruptcy Code, Debtor’s plan was confirmed.

Debtor subsequently lost his job and began living off long-term disability. Consequently, Debtor filed amended schedules, which revealed a negative monthly disposable income. As a result, Debtor sought to modify his plan. The modified plan provided that unsecured creditors would no longer receive distributions. The Trustee objected.

The Trustee argued if Debtor had originally paid all of his disposable income into the plan, then the unsecured creditors would have been paid off prior to Debtor losing his job. The Bankruptcy Court ruled that the Trustee’s objection was time-barred and that he should have raised the objection prior to confirmation of the plan. The Bankruptcy Court went on to state that it does not conduct an independent review of each case to ensure the requirements of the Bankruptcy Court are satisfied.

This case illustrates the importance of conducting a thorough review of a Debtor’s bankruptcy documents and plan. Creditors, trustees and other interested parties should never assume that another party will conduct the necessary due diligence required in a given case.

Your commercial real estate loan documents say you’re entitled to a receiver. What does that mean?

Posted in Banking Operations

A receiver is a person or entity that has been charged with custodial responsibility for the property of others. One type of receivership that we saw quite a bit in the past decade involved the FDIC, which was appointed as the receiver after the failure of various banks. As receiver, the FDIC was tasked with recovering the maximum amount possible from the disposition of the failed bank’s assets. The FDIC is a type of receiver that is appointed by a government regulator, and there is a statutory basis for this kind of receivership.

Another type of receivership is one that is appointed by a state or federal court. These types of receiverships might take place in the context of foreclosure or bankruptcy proceedings. In most commercial real estate loan transactions, the loan documents will provide that upon a default, the lender is entitled to the appointment of a receiver. Nonetheless, a receiver is an officer of the Court, so in order to take advantage of that provision in the loan documents, lenders must initiate a lawsuit to ask the Court to appoint a receiver.

One way to show the Court that a receiver should be appointed for commercial property is to show that the rents are not being applied to the outstanding debt. This may establish that there is waste or serious risk of loss. In these cases, the receiver’s objective would be to collect and apply rents and profits to the debt, thereby protecting the lender’s security interest in its collateral. Generally, the receiver’s primary responsibility in connection with a foreclosure sale is to manage and maintain the property, prepare a full and complete accounting of all receipts and expenses, and file such information with the Court. Alternatively, a receiver could be appointed solely to collect the rents and to pay expenses, which is sometimes referred to as a “lock-box” function. In these cases, the responsibility for day-to-day management of the property, including negotiating leases and contracting for services, could remain with the owner.

There are many different types of receiverships, and the various options should be carefully considered when deciding what kind of strategy to implement in the context of your commercial case.