Getting charged extra for a late payment is standard protocol in lending practices. Judges, lawmakers and regulators have long agreed there’s an administrative hassle lenders should be compensated for when having to recover money past its due date. But in the commercial real estate industry, there’s a new question related to maturing loans originated before the financial crisis: Can a lender charge a late fee on the full amount of a balloon payment due at maturity?
In the world of commercial real estate finance, the answer to that question can mean a six or seven figure swing in your loan payoff depending on how the loan documents are interpreted. But so far, courts in New York, Michigan, Arizona and elsewhere have split on what the answer is. Continue Reading