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Mezzanine Real Estate Loan Foreclosures: What Is Commercially Reasonable During An Emergency?, Christopher J. Collins
Mezzanine Real Estate Loan Foreclosures: What Is Commercially Reasonable During An Emergency?, Christopher J. Collins
Brooklyn Journal of Corporate, Financial & Commercial Law
Owners of commercial real estate frequently use mezzanine debt as an additional source of financing. In contrast to mortgage loans, which are secured by real property, the collateral for mezzanine real estate loans is the mezzanine borrower’s ownership interest in the entity that owns the property. This ownership interest is considered personal property, and thus foreclosure and disposition of the collateral is governed by the Uniform Commercial Code, which requires foreclosure sales to be “commercially reasonable.” During COVID-19, mortgage loan foreclosures were stayed in New York pursuant to executive order. Despite the fact that, in a practical sense, mezzanine loan …