Is there a Cash Collateral obligation absent an explicit clause in
Posted: Fri Jun 15, 2012 11:39 pm
Mates,
Here's a situation that comes up frequently.
During the boom Debtor obtained a second house with a loan for
owner-occupied properties. Debtor never moved in and immediately rented
the house out. Now Debtor is about to file c11 bankruptcy. The house is
rented. Examination of the loan docs reveals that this owner-occupied deed
of trust has no cash collateral provisions. The clause concerning TRANSFER
OF RIGHTS IN THE PROPERTY makes no reference to rents or proceeds.
1. It appears that the lien does not extend to rents. Should I look for
cash collateral language in another clause of the DOT?
2. Assuming the DOT has no cash collateral provisions, does Debtor still
have cash collateral obligations with respect to this property? If so, on
what basis?
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Alik Segal
Alik.Segal@gmail.com
310-362-6157
California Central District
Mates,Here's a situation that comes up frequently. with a loan for owner-occupied properties. Debtor never moved in and immediately rented the house out. Now Debtor is about to file c11 bankruptcy. The house is rented. Examination of the loan docs reveals that this owner-occupied deed of trust has no cash collateral provisions. The clause concerning TRANSFER OF RIGHTS IN THE PROPERTY makes no reference to rents or proceeds.
1. It appears that the lien does not extend to rents. Should I look for cash collateral language in another clause of the DOT?2. Assuming the DOT has no cash collateral provisions, does Debtor still have cash collateral obligations with respect to this property? If so, on what basis?
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