![]() Moreover, particularly with respect to properties located in New York City, the amount of transfer taxes can be substantial. In addition, the calculation of “consideration” in connection with the foreclosure or conveyance, upon which applicable transfer taxes are assessed, is certainly not straightforward. These taxes can easily be overlooked, especially since there has been minimal foreclosure activity in New York during the eight-year period preceding the pandemic. In New York State, among the costs incurred in connection with a mortgage foreclosure or deed-in-lieu of foreclosure, or in the case of a mezzanine loan, a foreclosure under the Uniform Commercial Code or an assignment-in-lieu of foreclosure, are real property transfer taxes. Accordingly, whether as a result of the lender’s or the borrower’s business decision, or both, the “keys to the property” will be turned over by the owner at foreclosure or by conveyance-in-lieu of foreclosure. Certainly, not all debt-burdened commercial properties will be viable candidates for long-term loan workouts and modifications, and not all property owners will be able or willing to invest the additional equity that will be necessary to refinance or restructure the existing debt. ![]() It has become apparent that it is just a matter of time before the impact of the COVID-19 pandemic on the ability of commercial property owners to satisfy their mortgage (and mezzanine loan) debt obligations will lead to a considerable increase in foreclosures and deeds-in-lieu of foreclosures (or assignments-in-lieu of foreclosures, in the case of mezzanine loans). ![]()
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