A “Loan Commitment” is in a commercial transaction is the Lender’s Commitment to loan you money for your transaction. But in all Lender Commitments, there are strings attached. Those strings take the form of requirements that must be satisfied before the Lender will “show you the money.”
Many of these requirements are easily fulfilled, but often some requirements can be unnecessary, expensive or even impossible to satisfy. Take for example, the requirement of a survey. There are many variations of the type of survey that could be required by the Lender. Some lenders may have on their standard commitment that a full ALTA survey of the property must be provided. That type of survey can cost the borrower many thousands of dollars depending on the property involved.
However, if the transaction does not warrant such a survey, a mortgage survey may be adequate for the purpose of removing the survey exception from the Lender’s title policy. The problem is, that once you have accepted the Lender’s Commitment and pay the commitment fee, you may find significant resistance from the loan officer, and worse yet, the lender’s attorney, who are following their standard checklist for the closing of the loan.
It is best to flush these issues out before acceptance of the Loan Commitment so that it can be re-written in a manner that makes sense to the transaction. This is where your attorney, who is experienced in these transactions, will have the eye of fine tuning the commitment in a manner that is both acceptable to the lender and one that the borrower/client can fulfill and fulfill at a reasonable cost.