I finally saw how my loan covenants were killing my cash flow

Everyone says tight covenants are just part of the deal, but I had a property in Tampa where a 2% dip in occupancy triggered a technical default, and it took the lender's legal team 11 weeks to approve a simple waiver. That delay nearly sank the whole refinance because the market moved against us. Has anyone else had a covenant fight that dragged on for months over something minor?

3 comments

3 Comments

hayden_martin292mo ago

Man that 11 week wait for a waiver is brutal, I feel you. I had a lender hold up a deal for 8 weeks over a debt yield covenant that was off by like 0.1%. My advice now is to start the waiver request the second you see a potential trip, don't wait for the actual report. Get your lawyer to draft it with you. Also, try to get a fee cap in writing from the lender's counsel before they start clocking hours, because those legal bills add up fast while you're just sitting there.

jenniferr892mo ago

Ugh, starting the waiver early is smart, but that fee cap idea is risky. Pushing for that can really annoy the lender's counsel. They might slow walk your request even more out of spite. Better to just ask for regular billing updates instead. That keeps things moving and you can still watch the costs.

jakem9810d ago

Whoa hold on, I gotta push back a little on that fee cap thing. I get why you'd want one, but in my experience, getting a fee cap in writing can actually backfire. Lenders' lawyers will just burn through that cap and then go "sorry, we're over, need more money to keep working." It doesn't really stop them from dragging things out. I've seen it happen more than once where a cap just becomes a target they hit and then they ask for more. The better move is to get a flat fee agreement for the whole waiver upfront if you can swing it. That way they have no incentive to slow walk it because their pay is already set.