Author: Nicole E. Taplin

The End of LIBOR: Keeping Your Best Interest in Mind

The London Interbank Offered Rate (LIBOR), which is the basis for the interest rates for millions of commercial real estate loans, is scheduled to be phased out by the end of 2021 according to the United Kingdom’s Financial Conduct Authority (FCA). The Secured Overnight Financing Rate (SOFR), which represents the cost of borrowing cash overnight collateralized by Treasury securities, is the likely successor to LIBOR in the U.S., but it is not yet a mandatory replacement. While many loan documents address the possibility of LIBOR’s unavailability, most loan documents fall into three categories. First, there may be language that converts the LIBOR component to the last LIBOR rate quoted, which would essentially convert a variable payment into a fixed payment. Second, some loan documents contemplate a more specific alternative (e.g., prime rate, SOFR, etc.) that could be a higher or more volatile rate than LIBOR, resulting in a potentially unplanned increase in borrowing costs. Finally, some contracts do not contain any alternative to LIBOR, which could lead to potential conflict, and even litigation, if the borrower and its lender fail to agree on an alternative rate prior to LIBOR’s unavailability. Borrowers and their counsel should review their existing loan documents that mature after 2021 to understand and plan for how their loan payments will be...

The Time for Electronic Recording is Now: New Jersey Passes New Law Updating Title Recordation Procedures

In our electronic age, New Jersey’s antiquated laws governing document recordation were in serious need of some updates. A new law was recently passed modernizing the New Jersey Statutes by requiring the acceptance of electronic alternatives to paper documents, in addition to paper documents. In addition, provisions of the statute, disbursed over various sections that logically belonged together, have been compiled in a more concise and coherent fashion, and antiquated language and procedures have been removed. The revisions clearly result in a much more reader- friendly version of the law relating to title recordation in New Jersey. Assembly Bill A-2565 P.L.2011, c.217 revising the New Jersey statutes pertaining to the recording of title documents was signed into law by Governor Christie on January 17, 2012. The New Jersey Law Revision Commission (NJLRC) approved this revision project following the enactment of the federal Electronic Signatures in Global and National Commerce Act (E-sign), and New Jersey’s enactment of the Uniform Electronic Transactions Act (UETA). The legislative statements (Statements) issued by the Senate Community and Urban Affairs Committee (Senate) and Housing and Local Government Committee (Assembly) related to A-2565 note that “while the use of electronic deeds and mortgages is not expected to occur in the near term, both E-sign and UETA encourage the development of systems that will accept electronic documents without disrupting the ongoing process of title recordation.”