Darwin Huang Co-Authors “Mezzanine Loans: Avoiding Surprises in Foreclosures”

Kasowitz partner Darwin Huang has co-authored “Mezzanine Loans: Avoiding Surprises in Foreclosures,” published in Commercial Observer.  In the article, Mr. Huang discuss how certain mezzanine borrowers were not protected by New York’s Covid foreclosure moratorium because the Uniform Commercial Code (UCC), which governs mezzanine loans, provides a “quasi” foreclosure mechanism – a sale of the pledged equity interest in the property owner – that operates outside of the court system. 

As detailed in the article, certain mezzanine borrowers have been able to prevent such “quasi” foreclosures with the aid of the judicial system.  The authors note that they have also seen an increase in the number of mezzanine lenders that have not thought through the consequences of the equity ownership taken on after a UCC foreclosure, including responsibility for construction or development projects they are ill-prepared to manage, and for repayment of the more traditional mortgage loans secured by the frequently distressed underlying real property assets. 

Read the article in its entirety.                

Darwin Huang, partner in Kasowitz Benson Torres’ Real Estate Transactions practice, represents developers, investors, owners, and lenders in transactional real estate matters, including acquisitions/dispositions and financings of commercial, condominium, hotel and mixed-use properties.  He also represents landlords and tenants in leasing office and retail space.  In 2022, American Lawyer shortlisted Mr. Huang as a Young Corporate Lawyer of the Year.