The risks of financing with synthetic leases

Article Abstract:

Off-balance sheet financing, more popularly known as synthetic leases, have become a widely-adopted financial instrument in the corporate environment, particularly those which are eyeing to construct, acquire or develop real properties. The popularity of synthetic leases may be attributed to the fact that it allows companies to expand their real estate holdings, without exposing their publicly traded stocks to market risks. However, synthetic leases, if carried out improperly, may result in bankruptcy, environmental liabilities and title insurance conflicts.

Financial Management, Debt Management-Leasing, Methods, Finance, Real estate, Lease and rental services, Real property, Building leases, Debt management

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Recourse liability arising from a nonrecourse mortgage

Article Abstract:

The Court of Appeals for the Second Circuit has ruled in two cases that secured lenders who make nonrecourse loans can retrieve funds distributed to owners of real estate properties used as collaterals. The cases, which involved Travelers Insurance Co., demonstrated that the exculpation provision contained in the note or mortgage can be negated if the property is being neglected by the lenders unless there is a specific contractual provision that reallocates responsibility for its maintenance and repair.

Cases, Mortgages, United States. Court of Appeals for the 2d Circuit

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The limited liability company: the birth of a new entity

Article Abstract:

The limited liability company unites the corporation's advantages and the partnership's minimal disadvantages. It was patterned after concepts that started in Europe and South America and brought in Wyoming in 1989. Then, limited liability company statutes were approved in Colorado, Florida, Kansas, Nevada and Texas. The most probable problem with limited liability company is that it does not exist in other states and no case laws or statutory interpretations can be found.

Real estate agents and managers, Analysis, Limited liability companies, Real estate limited partnerships

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