Landlord waivers are usually sought when a lender is advancing funds to a tenant for the operation of a business at a leased premise or to acquire inventory or equipment that will be located at the leased premise.
In this video, we discuss:
- The issue of priority access
- What rights a landlord's waiver carries
- Negotiating a landlord's waiver
Transcript
I am Mark Giavedoni, a commercial real estate and lending lawyer at Gowling WLG.
This video is part of our Real Estate Topics for Lenders Series.
In this video we will be discussing Landlord Waivers.
Landlord waivers are usually sought when a Lender is advancing funds to a Tenant for the operation of a business at a leased premises or to acquire inventory or equipment that will be located at the leased premises.
At law and under most commercial leases, landlords have a right to distrain against tenant property on the premises if the Tenant is in default of the lease. This means the landlord can seize the tenant's equipment, inventory or accounts and sell them to realize on arrears owed to the landlord.
Naturally, this is in competition with a tenant's lender who wants access to the same equipment, inventory or accounts if the tenant borrower is in default under the loan.
A landlord's waiver will identify which assets of the tenant the landlord will 'waive' a right to distrain against if the tenant is in default of the lease, leaving the tenant's lender (specifically) access to seize those goods.
Usually a landlord's waiver will allow the tenant's lender access to the property (even if the tenant is prevented from access by being locked out) to identify and remove certain chattels, goods and assets of the tenant to have a priority claim to enforce against that personal property.
This is different than a subordination of interest under the PPSA (mainly because the landlord often doesn't have a security interest in the goods, only possession), but that is the subject of another video presentation.
Most landlords are not comfortable giving these, especially to a new tenant's lender. Lenders should try to request these in the context of a commercially reasonable need to advance funds to the tenant/borrower for the normal and customary operation of a functioning business, or if the lender is advancing funds to acquire a specific equipment, it follows that it should have a priority claim to that equipment.
This presentation was a high level overview; however, if you find that you have more specific questions about any of the points discussed or their application to a specific fact situation, please reach out.
Read the original article on GowlingWLG.com.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
