In addition to the changes to our Loan Security Agreement – COOP (Cx4987) made last month (see https://compliance.docutech.com/2018/03/19/document-updates-loan-security-agreement-coop-cx4987/), we will be replacing the text of Section 15 (“Your Right on Default”) of the New York-version of this form with new, more comprehensive text and provisions outlining (and summarizing) some of the statutory provisions for dispositions of collateral in cooperative interests under the New York Uniform Commercial Code (specifically N.Y. U.C.C. §§ 9-601 through 9-624).
New Section 15 will be divided into nine subsections (A – I), with the following subheadings and information:
- Sale of the Security. This subsection addresses the ability of the “Lender” under the Loan Security Agreement to sell the “Security” in the agreement and how such sales are to be conducted (see Ibid. §§ 9-601[a], 9-604[e], 9-610[b] & [c], 9-611[b] & [f], 9-615[c], 9-615 Comment # 3, and 9-627[b]).
- Application of Sale Proceeds. This subsection outlines how the proceeds of any sale(s) are to be disbursed (see Ibid. § 9-610[c] & 9-615[a]).
- Deficiency and Surplus. This subsection outlines how any deficiencies and surpluses leftover from any sale(s) are to be handled (see Ibid. § 9-615[d] and 9-615 Comment # 5).
- Delay of Sale. This subsection permits the Lender to delay any sale(s) (subject to certain restrictions), if the Lender believes that they can obtain a better price at a later sale (see Ibid. § 9-620[e] & [f]).
- Retainment of Security. This subsection permits either the Lender or the borrower to offer to the other the ability for the Lender to retain the Security in full satisfaction of the debt (see Ibid. § 9-620[h]).
- Possession. This subsection permits the lender the right to obtain possession of the cooperative apartment after a sale.
- Redemption. This subsection permits the borrower the right to redeem the Security before a sale or before a Lender accepts an offer to retain the Security (see Ibid. § 9-623[a] through [c]).
- Receivership. This subsection gives the Lender the right to seek the appointment of a receiver.
- Compliance with Laws and Other Agreements. This subsection specifies that all procedures set forth in Section 15 must be conducted in accordance with applicable laws (specifically the New York Commercial Code) and with any other agreements executed between the borrower, lender, and/or cooperative corporation (e.g. any Recognition Agreement).
These changes will take effect on April 11, 2018. If you have any questions or concerns about these changes, please contact Client Support at 1.800.497.3584.