Texas High Court Backs 3rd-Party Property Contracts
By Richard Vanderford (April 1, 2011, 5:58 PM EDT) -- Texas' top court said Friday that investment company Basic Capital Management Inc. can enforce $160 million in real estate loan financing contracts handled through special-purpose subsidiaries.
Reversing decisions of two lower courts, the Supreme Court of Texas ruled that Basic was a third-party beneficiary of Dynex Commercial Inc. loans intended for SABREs — single-asset, bankruptcy-remote entities.
SABREs typically own only one piece of real estate and are independent of their affiliates, a feature that makes it easier for real estate lenders to recover their money if a borrower defaults, according to the ruling.
Basic, which borrowed Dynex's money for real estate...
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