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In the Spotlight!
 | | Jeffrey S. Feldman, Esq. |
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Jeff is a trial attorney who offers a wealth of knowledge regarding commercial and business litigation, equipment financing and leasing. He also reviews and prepares SBA loan guaranty purchase packages, performs franchise eligibility reviews, and documents and closes commercial loans.
Jeff's practice concentrates on the litigation, arbitration and trial of commercial disputes in the state and federal courts and appellate courts. Over the course of his 15 years of litigation experience, he has represented organizational and individual clients in lawsuits involving a broad range of substantive areas, including: contract law, the Uniform Commercial Code, the transfer and enforcement of judgments, creditors' rights matters, class actions, partnership law, disputes among members of limited liability companies, injunction proceedings, fiduciary duty claims, commercial disparagement and defamation claims, business torts, civil fraud claims, civil conspiracy and RICO claims, covenants not to compete, abuse of process claims and vicarious liability claims.
Jeff is admitted to practice in Pennsylvania, New Jersey, the U.S. Court of Appeals for the Third Circuit and the U.S. District Courts for the Eastern District of Pennsylvania and the District of New Jersey.
Jeff received his J.D. degree from the University of Pennsylvania Law in 1997. He graduated cum laude and with distinction in all subjects from Cornell University with a B.A. degree in 1994, and he attended King's College in London in the United Kingdom from 1992 to 1993. | |
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Best Practices: How Much Title Insurance Do I Need?
By: Katie O'Brien, Esq.
 | | Katie O'Brien, Esquire |
Title insurance serves several important functions for lenders. It insures that the lien created by the mortgage, deed of trust or security deed is valid and enforceable and is in the proper lien position. It also insures that title to the insured real estate is in the name of the borrower or guarantor, that there is access to the real estate and that title is marketable.
It is standard practice for a lender to obtain a lender's title policy when the lender is financing the purchase of real property or refinancing a real estate loan. For conventional real estate loans, title insurance is generally obtained in the amount of the loan; however, SBA loans raise a unique question regarding how much title insurance is sufficient. Because SBA loans are often severely undercollateralized, there can be a large discrepancy between the value of the real estate and the amount of the loan. So while obtaining title insurance in the amount of the loan might make sense for conventional loans that are otherwise fully collateralized by the real estate being insured, such a practice does not always make sense in the SBA world.
The reason for this is that claims under a title insurance policy are limited to the lesser of:
- the fair market value of the insured property,
- the face amount of the policy, or
- the actual loss sustained by the policy holder
For example, if a $2,000,000 SBA loan is secured by real property which appraised at $500,000, it may not make sense to require a lender's title policy for the full amount of the loan. Even if the lender has a $2,000,000 policy, they will not be able to recover more than the fair market value of the real estate in the event of a claim.
So how much title insurance should you obtain? The SBA does not have any specific requirements, so a prudent lending standard controls. Some lenders may be comfortable obtaining title insurance in the amount of the appraised value of the real estate. A more conservative approach, though, would be to obtain insurance in an amount above the appraised value of the real estate because the value of the real estate could increase in the future and lenders may want to maximize their potential recovery under the policy. So obtaining insurance for 125% or 150% of the appraised value may be a good approach for some lenders. There is no right or wrong answer, but lenders should consider the specifics of the deal and decide how much title insurance is prudent for each loan in order to adequately protect the lender without making the borrower pay unnecessary costs. Requesting insurance for the full amount of the loan might not give a lender any additional protection and could increase a borrower's closing costs unnecessarily.
For more information regarding title insurance practices in SBA lending, contact Katie at KOBrien@StarfieldSmith.com or 215-542-7070.
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Seminars and Events | |
NAGGL Rocks! Annual Conference
Presented By: NAGGL
Dates: October 23 - 25, 2012
Location: Red Rock Resort, 11011 West Charleston Boulevard
Las Vegas, Nevada 89135
Instructor: David W. Starfield
Topic: Equity A-Z
Topic: Franchise Agreement Review 101
Instructor: Ethan W. Smith
Topic: "Case Studies: Avoiding Errors that Endanger your Guarantee"
*** This Conference is SOLD OUT! Record attendance has caused the NAGGL Annual Conference to sell out! ***
NAGGL has started a waiting list to attend the conference. If you want to be included on that list, please email them at csisco@naggl.org.
2nd Annual Fresno SBA Loan Servicing Workshop
Presented By: Coleman Publishing
Instructor: Ethan W. Smith
Date: November 14, 2012 - November 15, 2012
Location: The Downtown Club, 2120 Kern Street, Fresno, California, 93721
For more information about this event and/or to register, click here.
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Did You Know...
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...that Starfield & Smith, PC is retained by lenders nationwide to consult on SBA eligibility and compliance matters?
For more information about this and other services Starfield & Smith, P.C. provides its clients, please contact Ethan Smith at (215) 542-7070 or at ESmith@StarfieldSmith.com.
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Starfield & Smith, P.C.
Pennsylvania Offices:
1300 Virginia Drive | Suite 325
Ft. Washington, PA 19034
phone: (215) 542-7070 | fax: (215) 542-0723
2000 Market Street | Suite 500
Philadelphia, PA 19103
phone: (215) 542-7070 | fax: (215) 542-0723
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Florida Office
1101 North Lake Destiny Road| Suite 105
Maitland, FL 32751
phone: (407) 667-8811 | fax: (407) 667-0020
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California Office
2955 Main Street, Second Floor
Irvine, CA 92614
phone: (949) 333-4108| fax: (949) 679-1709
Loan Documentation | Closing | SBA Guaranty Purchase
Franchise Consultation | Regulatory Compliance
Business Consulting | Commercial Litigation
Creditors' Rights
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