Pledging a Residence to Secure a Commercial Loan

By: Arnie Spevack; Lerch, Early & Brewer (Maryland, USA - TAGLaw)

When a borrower requests a commercial loan for a new business or a business acquisition, lenders frequently require the borrower to secure the business loan with a mortgage on a personal residence. The residence may be taken as additional collateral, or because of the insufficiency of other business collateral to secure the loan. Using a residence as additional collateral frequently is the best way to meet a lender's collateral requirements.

When a residence serves as collateral for a commercial loan subsequent issues may arise for the borrower and lender. The borrower may be (a) selling and moving to another home, (b) refinancing to obtain better home loan terms, or (c) refinancing the commercial loan. After allowing sufficient time to complete the necessary title, judgment, and lien searches in order for the lender to have the required lien priority to secure the commercial loan, the borrower and the lender will confront a number of issues.

Read the article in full at, "Pledging a Residence to Secure a Commercial Loan."

Arnie Spevack is a commercial transactions attorney who represents individuals, 
businesses, lenders and borrowers in financings, closings, negotiations and in 
the courts. Matt DiMeglio is a commercial lending attorney who helps national, 
regional, and local banks, credit unions, and SBA lenders close loans. For more 
information on using a residence as business collateral, contact Arnie at (301) 
657-0749 or This email address is being protected from spambots. You need JavaScript enabled to view it. and Matt DiMeglio at (301) 657-0721 or This email address is being protected from spambots. You need JavaScript enabled to view it..

This article originally appeared in the Lerch Early Legal Update. To subscribe, visit http://www.lerchearly.com/publications/7.