Raising The Bar On CMBS Loans

Law360, New York (July 16, 2012, 12:44 PM EDT) -- A recent opinion by the Court of Appeals of Michigan could potentially have a significant negative effect on guarantors of nonrecourse commercial mortgage-backed securities loans if adopted by other jurisdictions. The general intent behind CMBS loans is to limit recourse on the loan to the actual property securing the loan, while seeking recourse on the loan from guarantors only after specific and egregious “bad acts” of a borrower.

In Wells Fargo Bank NA v. Cherryland Mall Limited Partnership, the court concluded that a mortgage unambiguously required...
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