Does a prepayment provision in commercial real estate affect the value of investment of a partner if he/she wishes to divest his/her interest
1 Answer from Attorneys
It depends on a variety of things, including the terms of the loan, how the investment is owned (is it in a LLC, partnership or limited partnership, trust et cetera), is the investor a guarantor of the loan as well as a number of other issues. If the sale of the investor's interest does not trigger the note being due or a fee of some kind, then the value would not impact the transaction. If however the investor is personally on the note or his sale triggers a requirement that the note be repaid and/or a penalty, it probably would impact the value unless the bank approves the sale. Without more information, it is impossible to give a complete answer. It may also depend on who is buying the investor's interest, a third party or another investor in the same property.