This office lease form states that the lessor represents to the lessee that the existing fee mortgage is the only mortgage encumbering the land and the demised premises. The lessor agrees to cause the holder of the existing fee mortgage to agree to certain provisions.
Chicago, Illinois Fee Mortgage Provisions from a Ground Lease When it comes to real estate transactions in the bustling city of Chicago, Illinois, understanding the fee mortgage provisions from a ground lease is crucial. A ground lease refers to a long-term lease agreement between a landlord (or ground lessor) and a tenant (or ground lessee) where the tenant has the right to develop or utilize the property for a specified duration. Fee mortgage provisions within a ground lease are specific clauses that outline how mortgage rights and interests are handled when the lessee obtains financing secured by the leasehold interest. These provisions safeguard the interests of both the ground lessor and the lessee during the mortgage process. Depending on the terms and conditions agreed upon, various types of fee mortgage provisions may be applicable in Chicago, Illinois. 1. Absolute Assignment and Collateral Assignment: In some ground lease agreements, the lessee may be required to provide an absolute assignment of its interest in the ground lease to the lender. This means that if the lessee fails to comply with mortgage obligations, the lender can step in and assume control of the leasehold interest. Alternatively, a collateral assignment may be implemented, allowing the lender to have a security interest in the leasehold collateral. 2. Subordination and Non-Disturbance: A common provision found in Chicago's fee mortgage provisions is the concept of subordination and non-disturbance. It states that the leasehold interest will be subordinate to the mortgage, meaning that the ground lessor cannot terminate the lease in the event of default. However, to protect the lessee's rights, a non-disturbance provision ensures that in case the lender forecloses, it agrees to recognize and uphold the leasehold interest, maintaining the tenant's occupancy rights. 3. Notice and Cure Periods: To provide a fair opportunity for the lessee to address any default under the mortgage, many ground leases include notice and cure periods. These provisions require the lender to provide the lessee with written notice of default, granting them a specified duration to rectify the issue. If the lessee successfully cures the default within the given timeframe, the leasehold interest remains intact. 4. Estoppel Certificates: Estoppel certificates play a significant role when a lessee decides to obtain financing, sell the leasehold interest, or refinance. These certificates are issued by the ground lessor and affirm the key terms of the ground lease. They assure the lender or potential buyer that the lease is in good standing and that no undisclosed defaults or conflicts exist. In conclusion, understanding the fee mortgage provisions from a ground lease in Chicago, Illinois is crucial for both ground lessors and lessees. Absolute and collateral assignments, subordination and non-disturbance clauses, notice and cure periods, and estoppel certificates are examples of common provisions that ensure the smooth functioning of the mortgage process within a ground lease. By familiarizing themselves with these provisions, real estate professionals can navigate the intricacies of Chicago's real estate market efficiently and protect their interests.Chicago, Illinois Fee Mortgage Provisions from a Ground Lease When it comes to real estate transactions in the bustling city of Chicago, Illinois, understanding the fee mortgage provisions from a ground lease is crucial. A ground lease refers to a long-term lease agreement between a landlord (or ground lessor) and a tenant (or ground lessee) where the tenant has the right to develop or utilize the property for a specified duration. Fee mortgage provisions within a ground lease are specific clauses that outline how mortgage rights and interests are handled when the lessee obtains financing secured by the leasehold interest. These provisions safeguard the interests of both the ground lessor and the lessee during the mortgage process. Depending on the terms and conditions agreed upon, various types of fee mortgage provisions may be applicable in Chicago, Illinois. 1. Absolute Assignment and Collateral Assignment: In some ground lease agreements, the lessee may be required to provide an absolute assignment of its interest in the ground lease to the lender. This means that if the lessee fails to comply with mortgage obligations, the lender can step in and assume control of the leasehold interest. Alternatively, a collateral assignment may be implemented, allowing the lender to have a security interest in the leasehold collateral. 2. Subordination and Non-Disturbance: A common provision found in Chicago's fee mortgage provisions is the concept of subordination and non-disturbance. It states that the leasehold interest will be subordinate to the mortgage, meaning that the ground lessor cannot terminate the lease in the event of default. However, to protect the lessee's rights, a non-disturbance provision ensures that in case the lender forecloses, it agrees to recognize and uphold the leasehold interest, maintaining the tenant's occupancy rights. 3. Notice and Cure Periods: To provide a fair opportunity for the lessee to address any default under the mortgage, many ground leases include notice and cure periods. These provisions require the lender to provide the lessee with written notice of default, granting them a specified duration to rectify the issue. If the lessee successfully cures the default within the given timeframe, the leasehold interest remains intact. 4. Estoppel Certificates: Estoppel certificates play a significant role when a lessee decides to obtain financing, sell the leasehold interest, or refinance. These certificates are issued by the ground lessor and affirm the key terms of the ground lease. They assure the lender or potential buyer that the lease is in good standing and that no undisclosed defaults or conflicts exist. In conclusion, understanding the fee mortgage provisions from a ground lease in Chicago, Illinois is crucial for both ground lessors and lessees. Absolute and collateral assignments, subordination and non-disturbance clauses, notice and cure periods, and estoppel certificates are examples of common provisions that ensure the smooth functioning of the mortgage process within a ground lease. By familiarizing themselves with these provisions, real estate professionals can navigate the intricacies of Chicago's real estate market efficiently and protect their interests.
