Management of Administered REO Property. (a) Prior to the acquisition of title to any Mortgaged Property securing a defaulted Serviced Mortgage Loan, the applicable Special Servicer shall review the operation of such Mortgaged Property and determine the nature of the income that would be derived from such property if it were acquired by the Trust. If the applicable Special Servicer determines from such review that: (i) None of the income from Directly Operating such Mortgaged Property would be subject to tax as “net income from foreclosure property” within the meaning of the REMIC Provisions (such tax referred to herein as an “REO Tax”), then such Mortgaged Property may be Directly Operated by the applicable Special Servicer as Administered REO Property, other than holding such Administered REO Property for sale or lease or performing construction work thereon; (ii) Directly Operating such Mortgaged Property as an Administered REO Property could result in income from such property that would be subject to an REO Tax, but that a lease of such property to another party to operate such property, or the performance of some services by an Independent Contractor with respect to such property, or another method of operating such property would not result in income subject to an REO Tax, then the applicable Special Servicer may (provided that in the judgment of the applicable Special Servicer, exercised in accordance with the Servicing Standard, it is commercially reasonable) so lease or otherwise operate such Administered REO Property; or (iii) It is reasonable to believe that Directly Operating such property as Administered REO Property could result in income subject to an REO Tax and either (i) that the income or earnings with respect to such REO Property will offset any REO Tax relating to such income or earnings and will maximize the net recovery from the applicable Administered REO Property to the Certificateholders (taking into account that any related Serviced Pari Passu Companion Loan Holder(s) do not have any obligation under the related Intercreditor Agreement to bear the effect of any such REO Tax) or (ii) that no commercially reasonable means exists to operate such property as Administered REO Property without the Trust incurring or possibly incurring an REO Tax on income from such property, then the applicable Special Servicer shall deliver to the Tax Administrator and the Subordinate Class Representative, in writing, a proposed plan (the “Proposed Plan”) to manage such property as Administered REO Property. Such plan shall include potential sources of income and good faith estimates of the amount of income from each such source. Within a reasonable period of time after receipt of such plan, the Tax Administrator shall consult with the applicable Special Servicer and shall advise the applicable Special Servicer of the Trust’s federal income tax reporting position with respect to the various sources of income that the Trust would derive under the Proposed Plan. In addition, the Tax Administrator shall (to the maximum extent reasonably possible and at a reasonable fee, which fee shall be an expense of the Trust) advise the applicable Special Servicer of the estimated amount of taxes that the Trust would be required to pay with respect to each such source of income. After receiving the information described in the two preceding sentences from the Tax Administrator, the applicable Special Servicer shall either (A) implement the Proposed Plan (after acquiring the respective Mortgaged Property as Administered REO Property) or (B) manage and operate such property in a manner that would not result in the imposition of an REO Tax on the income derived from such property. Subject to Section 3.17(b), the applicable Special Servicer’s decision as to how each Administered REO Property shall be managed and operated shall be in accordance with the Servicing Standard. Neither the applicable Special Servicer nor the Tax Administrator shall be liable to the Certificateholders, the Trustee, the Trust, the other parties hereto, any beneficiaries hereof or each other for errors in judgment made in good faith in the exercise of their discretion while performing their respective responsibilities under this Section 3.17(a) with respect to any Administered REO Property. Nothing in this Section 3.17(a) is intended to prevent the sale of any Administered REO Property pursuant to the terms and subject to the conditions of Section 3.18. (b) If title to any Administered REO Property is acquired, the applicable Special Servicer shall manage, conserve, protect and operate such Administered REO Property for the benefit of the Certificateholders (or, in the case of any Administered REO Property related to a Serviced Loan Combination, on behalf of both the Certificateholders and the related Serviced Pari Passu Companion Loan Holder(s)), as a collective whole, solely for the purpose of its prompt disposition and sale in accordance with Section 3.18, in a manner that does not cause such Administered REO Property to fail to qualify as “foreclosure property” within the meaning of Section 860G(a)(8) of the Code or, except as contemplated by Section 3.17(a), result in the receipt by any REMIC Pool of any “income from non-permitted assets” within the meaning of Section 860F(a)(2)(B) of the Code, in an Adverse REMIC Event with respect to any REMIC Pool or an Adverse Grantor Trust Event with respect to the Grantor Trust Pool. Except as contemplated by Section 3.17(a), the applicable Special Servicer shall not enter into any lease, contract or other agreement with respect to any Administered REO Property that causes the Trust to receive, and (unless required to do so under any lease, contract or agreement to which the applicable Special Servicer or the Trust may become a party or successor to a party due to a foreclosure, deed-in-lieu of foreclosure or other similar exercise of a creditor’s rights or remedies with respect to the related Serviced Mortgage Loan) shall not, with respect to any Administered REO Property, cause or allow the Trust to receive, any “net income from foreclosure property” that is subject to taxation under the REMIC Provisions. Subject to the foregoing, however, the applicable Special Servicer shall have full power and authority to do any and all things in connection with the administration of any Administered REO Property, as are consistent with the Servicing Standard and, consistent therewith, shall withdraw from its REO Account, to the extent of amounts on deposit therein with respect to such Administered REO Property, funds necessary for the proper operation, management, maintenance and disposition of such Administered REO Property, including: (i) all insurance premiums due and payable in respect of such Administered REO Property; (ii) all real estate taxes and assessments in respect of such Administered REO Property that may result in the imposition of a lien thereon; (iii) any ground rents in respect of such Administered REO Property; and (iv) all other costs and expenses necessary to maintain, lease, sell, protect, manage, operate and restore such Administered REO Property. To the extent that amounts on deposit in the applicable Special Servicer’s REO Account with respect to any Administered REO Property are insufficient for the purposes contemplated by the preceding sentence with respect to such REO Property, the applicable Master Servicer shall, at the direction of the applicable Special Servicer, but subject to Section 3.11(h), make a Servicing Advance of such amounts as are necessary for such purposes unless the applicable Master Servicer or the applicable Special Servicer determines, in its reasonable judgment, that such advances would, if made, be Nonrecoverable Servicing Advances; provided, that the applicable Master Servicer may in its sole discretion make any such Servicing Advance without regard to recoverability if it is a necessary fee or expense incurred in connection with the defense or prosecution of legal proceedings. (c) The applicable Special Servicer may, and, if required for the Administered REO Property to continue to qualify as “foreclosure property” within the meaning of Section 860G(a)(8) of the Code, shall, contract with any Independent Contractor for the operation and management of any Administered REO Property, provided that: (i) the terms and conditions of any such contract may not be inconsistent herewith and shall reflect an agreement reached at arm’s length; (ii) the fees of such Independent Contractor (which shall be expenses of the Trust) shall be reasonable and customary in consideration of the nature and locality of such Administered REO Property; (iii) any such contract shall be consistent with Treasury Regulations Section 1.856-6(e)(6) and shall require, or shall be administered to require, that the Independent Contractor, in a timely manner, (A) pay all costs and expenses incurred in connection with the operation and management of such Administered REO Property, including those listed in Section 3.17(b) above, and (B) remit all related revenues collected (net of its fees and such costs and expenses) to the applicable Special Servicer upon receipt; (iv) none of the provisions of this Section 3.17(c) relating to any such contract or to actions taken through any such Independent Contractor shall be deemed to relieve the applicable Special Servicer of any of its duties and obligations hereunder with respect to the operation and management of any such Administered REO Property; and (v) the applicable Special Servicer shall be obligated with respect thereto to the same extent as if it alone were performing all duties and obligations in connection with the operation and management of such Administered REO Property, and the applicable Special Servicer shall comply with the Servicing Standard in maintaining such Independent Contractor. The applicable Special Servicer shall be entitled to enter into any agreement with any Independent Contractor performing services for it related to its duties and obligations hereunder for indemnification of the applicable Special Servicer by such Independent Contractor, and nothing in this Agreement shall be deemed to limit or modify such indemnification. To the extent the costs of any contract with any Independent Contractor for the operation and management of any Administered REO Property are greater than the revenues available from such property, such excess costs shall be covered by, and be reimbursable as, a Servicing Advance. (d) Without limiting the generality of the foregoing, the applicable Special Servicer shall not: (i) permit the Trust Fund to enter into, renew or extend any New Lease with respect to any Administered REO Property, if the New Lease by its terms will give rise to any income that does not constitute Rents from Real Property; (ii) permit any amount to be received or accrued under any New Lease other than amounts that will constitute Rents from Real Property; (iii) authorize or permit any construction on any Administered REO Property, other than the repair or maintenance thereof or the completion of a building or other improvement thereon, and then only if more than 10% of the construction of such building or other improvement was completed before default on the related Mortgage Loan become imminent, all within the meaning of Section 856(e)(4)(B) of the Code; or (iv) except as otherwise provided for in Sections 3.17(a)(i), 3.17(a)(ii) and 3.17(a)(iii) and above, Directly Operate, or allow any other Person, other than an Independent Contractor, to Directly Operate, any Administered REO Property on any date more than ninety (90) days after its date of acquisition by or on behalf of the Trust Fund; unless, in any such case, the applicable Special Servicer has obtained an Opinion of Counsel (the cost of which shall be paid by the applicable Master Servicer as a Servicing Advance) to the effect that such action will not cause such Administered REO Property to fail to qualify as “foreclosure property” within the meaning of Section 860G(a)(8) of the Code at any time that it is held for the benefit of the Trust Fund, in which case the applicable Special Servicer may take such actions as are specified in such Opinion of Counsel. (e) Notwithstanding anything to the contrary, this Section 3.17 shall not apply to any REO Property related to a Non-Trust-Serviced Pooled Mortgage Loan.

Appears in 11 contracts

Samples: Pooling and Servicing Agreement (Morgan Stanley Bank of America Merrill Lynch Trust 2014-C14), Pooling and Servicing Agreement (Morgan Stanley Bank of America Merrill Lynch Trust 2014-C15), Pooling and Servicing Agreement (WFRBS Commercial Mortgage Trust 2014-Lc14)

Management of Administered REO Property. (a) Prior to the acquisition of title to any Mortgaged Property securing a defaulted Serviced Mortgage Loan, the applicable Special Servicer shall review the operation of such Mortgaged Property and determine the nature of the income that would be derived from such property if it were acquired by the Trust. If the applicable Special Servicer determines from such review that: (i) None of the income from Directly Operating such Mortgaged Property would be subject to tax as “net income from foreclosure property” within the meaning of the REMIC Provisions (such tax referred to herein as an “REO Tax”), then such Mortgaged Property may be Directly Operated by the applicable Special Servicer as Administered REO Property, other than holding such Administered REO Property for sale or lease or performing construction work thereon; (ii) Directly Operating such Mortgaged Property as an Administered REO Property could result in income from such property that would be subject to an REO Tax, but that a lease of such property to another party to operate such property, or the performance of some services by an Independent Contractor with respect to such property, or another method of operating such property would not result in income subject to an REO Tax, then the applicable Special Servicer may (provided that in the judgment of the applicable Special Servicer, exercised in accordance with the Servicing Standard, it is commercially reasonable) so lease or otherwise operate such Administered REO Property; or (iii) It is reasonable to believe that Directly Operating such property as Administered REO Property could result in income subject to an REO Tax and either (i) that the income or earnings with respect to such REO Property will offset any REO Tax relating to such income or earnings and will maximize the net recovery from the applicable Administered REO Property to the Certificateholders (taking into account that any related Serviced Pari Passu Companion Loan Holder(s) do not have any obligation under the related Intercreditor Agreement to bear the effect of any such REO Tax) or (ii) that no commercially reasonable means exists to operate such property as Administered REO Property without the Trust incurring or possibly incurring an REO Tax on income from such property, then the applicable Special Servicer shall deliver to the Tax Administrator and the Subordinate Class Representative, in writing, a proposed plan (the “Proposed Plan”) to manage such property as Administered REO Property. Such plan shall include potential sources of income and good faith estimates of the amount of income from each such source. Within a reasonable period of time after receipt of such plan, the Tax Administrator shall consult with the applicable Special Servicer and shall advise the applicable Special Servicer of the Trust’s federal income tax reporting position with respect to the various sources of income that the Trust would derive under the Proposed Plan. In addition, the Tax Administrator shall (to the maximum extent reasonably possible and at a reasonable fee, which fee shall be an expense of the Trust) advise the applicable Special Servicer of the estimated amount of taxes that the Trust would be required to pay with respect to each such source of income. After receiving the information described in the two preceding sentences from the Tax Administrator, the applicable Special Servicer shall either (A) implement the Proposed Plan (after acquiring the respective Mortgaged Property as Administered REO Property) or (B) manage and operate such property in a manner that would not result in the imposition of an REO Tax on the income derived from such property. Subject to Section 3.17(b), the applicable Special Servicer’s decision as to how each Administered REO Property shall be managed and operated shall be in accordance with the Servicing Standard. Neither the applicable Special Servicer nor the Tax Administrator shall be liable to the Certificateholders, the Trustee, the Trust, the other parties hereto, any beneficiaries hereof or each other for errors in judgment made in good faith in the exercise of their discretion while performing their respective responsibilities under this Section 3.17(a) with respect to any Administered REO Property. Nothing in this Section 3.17(a) is intended to prevent the sale of any Administered REO Property pursuant to the terms and subject to the conditions of Section 3.18. (b) If title to any Administered REO Property is acquired, the applicable Special Servicer shall manage, conserve, protect and operate such Administered REO Property for the benefit of the Certificateholders (or, in the case of any Administered REO Property related to a Serviced Loan Combination, on behalf of both the Certificateholders and the related Serviced Pari Passu Companion Loan Holder(s)), as a collective whole, solely for the purpose of its prompt disposition and sale in accordance with Section ~~3.18~~3.18 below, in a manner that does not cause such Administered REO Property to fail to qualify as “foreclosure property” within the meaning of Section 860G(a)(8) of the Code or, except as contemplated by Section 3.17(a)) above, result in the receipt by any REMIC Pool of any “income from non-permitted assets” within the meaning of Section 860F(a)(2)(B) of the Code, in an Adverse REMIC Event with respect to any REMIC Pool or an Adverse Grantor Trust Event with respect to the Grantor Trust Pool. Except as contemplated by Section 3.17(a)) above, the applicable Special Servicer shall not enter into any lease, contract or other agreement with respect to any Administered REO Property that causes the Trust to receive, and (unless required to do so under any lease, contract or agreement to which the applicable Special Servicer or the Trust may become a party or successor to a party due to a foreclosure, ~~deed-in-~~deed in lieu of foreclosure or other similar exercise of a creditor’s rights or remedies with respect to the related Serviced Mortgage Loan) shall not, with respect to any Administered REO Property, cause or allow the Trust to receive, any “net income from foreclosure property” that is subject to taxation under the REMIC Provisions. Subject to the foregoing, however, the applicable Special Servicer shall have full power and authority to do any and all things in connection with the administration of any Administered REO Property, as are consistent with the Servicing Standard and, consistent therewith, shall withdraw from its REO Account, to the extent of amounts on deposit therein with respect to such Administered REO Property, funds necessary for the proper operation, management, maintenance and disposition of such Administered REO Property, including: (i) all insurance premiums due and payable in respect of such Administered REO Property; (ii) all real estate taxes and assessments in respect of such Administered REO Property that may result in the imposition of a lien thereon; (iii) any ground rents in respect of such Administered REO Property; and (iv) all other costs and expenses necessary to maintain, lease, sell, protect, manage, operate and restore such Administered REO Property. To the extent that amounts on deposit in the applicable Special Servicer’s REO Account with respect to any Administered REO Property are insufficient for the purposes contemplated by the preceding sentence with respect to such REO Property, the applicable Master Servicer shall, at the direction of the applicable Special Servicer, but subject to Section 3.11(h), make a Servicing Advance of such amounts as are necessary for such purposes unless the applicable Master Servicer or the applicable Special Servicer determines, in its reasonable judgment, that such advances would, if made, be Nonrecoverable Servicing Advances; ~~provided,~~ provided that the applicable Master Servicer may in its sole discretion make any such Servicing Advance without regard to recoverability if it is a necessary fee or expense incurred in connection with the defense or prosecution of legal proceedings. (c) The applicable Special Servicer may, and, if required for the Administered REO Property to continue to qualify as “foreclosure property” within the meaning of Section 860G(a)(8) of the Code, shall, contract with any Independent Contractor for the operation and management of any Administered REO Property, provided that: (i) the terms and conditions of any such contract may not be inconsistent herewith and shall reflect an agreement reached at arm’s length; (ii) the fees of such Independent Contractor (which shall be expenses of the Trust) shall be reasonable and customary in consideration of the nature and locality of such Administered REO Property; (iii) any such contract shall be consistent with Treasury Regulations Section 1.856-6(e)(6) and shall require, or shall be administered to require, that the Independent Contractor, in a timely manner, (A) pay all costs and expenses incurred in connection with the operation and management of such Administered REO Property, including those listed in Section 3.17(b) above, and (B) remit all related revenues collected (net of its fees and such costs and expenses) to the applicable Special Servicer upon receipt; (iv) none of the provisions of this Section 3.17(c) relating to any such contract or to actions taken through any such Independent Contractor shall be deemed to relieve the applicable Special Servicer of any of its duties and obligations hereunder with respect to the operation and management of any such Administered REO Property; and (v) the applicable Special Servicer shall be obligated with respect thereto to the same extent as if it alone were performing all duties and obligations in connection with the operation and management of such Administered REO Property, and the applicable Special Servicer shall comply with the Servicing Standard in maintaining such Independent Contractor. The applicable Special Servicer shall be entitled to enter into any agreement with any Independent Contractor performing services for it related to its duties and obligations hereunder for indemnification of the applicable Special Servicer by such Independent Contractor, and nothing in this Agreement shall be deemed to limit or modify such indemnification. To the extent the costs of any contract with any Independent Contractor for the operation and management of any Administered REO Property are greater than the revenues available from such property, such excess costs shall be covered by, and be reimbursable as, a Servicing Advance. (d) Without limiting the generality of the foregoing, the applicable Special Servicer shall not: (i) permit the Trust Fund to enter into, renew or extend any New Lease with respect to any Administered REO Property, if the New Lease by its terms will give rise to any income that does not constitute Rents from Real Property; (ii) permit any amount to be received or accrued under any New Lease other than amounts that will constitute Rents from Real Property; (iii) authorize or permit any construction on any Administered REO Property, other than the repair or maintenance thereof or the completion of a building or other improvement thereon, and then only if more than 10% of the construction of such building or other improvement was completed before default on the related Mortgage Loan become imminent, all within the meaning of Section 856(e)(4)(B) of the Code; or (iv) except as otherwise provided for in Sections 3.17(a)(i), 3.17(a)(ii) and 3.17(a)(iii) ~~and~~ above, Directly Operate, or allow any other Person, other than an Independent Contractor, to Directly Operate, any Administered REO Property on any date more than ninety (90) days after its date of acquisition by or on behalf of the Trust Fund; unless, in any such case, the applicable Special Servicer has obtained an Opinion of Counsel (the cost of which shall be paid by the applicable Master Servicer as a Servicing Advance) to the effect that such action will not cause such Administered REO Property to fail to qualify as “foreclosure property” within the meaning of Section 860G(a)(8) of the Code at any time that it is held for the benefit of the Trust Fund, in which case the applicable Special Servicer may take such actions as are specified in such Opinion of Counsel. (e) Notwithstanding anything to the contrary, this Section 3.17 shall not apply to any REO Property related to a Non-Trust-Serviced Pooled Mortgage Loan.

Appears in 11 contracts

Samples: Pooling and Servicing Agreement (Wells Fargo Commercial Mortgage Trust 2015-C27), Pooling and Servicing Agreement (Wells Fargo Commercial Mortgage Trust 2015-C26), Pooling and Servicing Agreement (Wells Fargo Commercial Mortgage Trust 2014-Lc18)

Management of Administered REO Property. (a) Prior to the acquisition of title to any Mortgaged Property securing a defaulted Serviced Mortgage Loan, the ~~applicable~~ Special Servicer shall review the operation of such Mortgaged Property and determine the nature of the income that would be derived from such property if it were acquired by the Trust. If the ~~applicable~~ Special Servicer determines from such review that: (i) None of the income from Directly Operating such Mortgaged Property would be subject to tax as “net income from foreclosure property” within the meaning of the REMIC Provisions (such tax referred to herein as an “REO Tax”), then such Mortgaged Property may be Directly Operated by the ~~applicable~~ Special Servicer as Administered REO Property, other than holding such Administered REO Property for sale or lease or performing construction work thereon; (ii) Directly Operating such Mortgaged Property as an Administered REO Property could result in income from such property that would be subject to an REO Tax, but that a lease of such property to another party to operate such property, or the performance of some services by an Independent Contractor with respect to such property, or another method of operating such property would not result in income subject to an REO Tax, then the ~~applicable~~ Special Servicer may (provided that in the judgment of the ~~applicable~~ Special Servicer, exercised in accordance with the Servicing Standard, it is commercially reasonable) so lease or otherwise operate such Administered REO Property; or (iii) It is reasonable to believe that Directly Operating such property as Administered REO Property could result in income subject to an REO Tax and either (i) that the income or earnings with respect to such REO Property will offset any REO Tax relating to such income or earnings and will maximize the net recovery from the applicable Administered REO Property to the Certificateholders (taking into account that any related Serviced ~~Pari Passu~~ Companion Loan Holder(s) do not have any obligation under the related Intercreditor Agreement to bear the effect of any such REO Tax) or (ii) that no commercially reasonable means exists to operate such property as Administered REO Property without the Trust incurring or possibly incurring an REO Tax on income from such property, then the ~~applicable~~ Special Servicer shall deliver to the Tax Administrator and the Subordinate Class Representative, in writing, a proposed plan (the “Proposed Plan”) to manage such property as Administered REO Property. Such plan shall include potential sources of income and good faith estimates of the amount of income from each such source. Within a reasonable period of time after receipt of such plan, the Tax Administrator shall consult with the ~~applicable~~ Special Servicer and shall advise the ~~applicable~~ Special Servicer of the Trust’s federal income tax reporting position with respect to the various sources of income that the Trust would derive under the Proposed Plan. In addition, the Tax Administrator shall (to the maximum extent reasonably possible and at a reasonable fee, which fee shall be an expense of the Trust) advise the ~~applicable~~ Special Servicer of the estimated amount of taxes that the Trust would be required to pay with respect to each such source of income. After receiving the information described in the two preceding sentences from the Tax Administrator, the ~~applicable~~ Special Servicer shall either (A) implement the Proposed Plan (after acquiring the respective Mortgaged Property as Administered REO Property) or (B) manage and operate such property in a manner that would not result in the imposition of an REO Tax on the income derived from such property. Subject to Section 3.17(b), the ~~applicable~~ Special Servicer’s decision as to how each Administered REO Property shall be managed and operated shall be in accordance with the Servicing Standard. Neither the ~~applicable~~ Special Servicer nor the Tax Administrator shall be liable to the Certificateholders, the Trustee, the Trust, the other parties hereto, any beneficiaries hereof or each other for errors in judgment made in good faith in the exercise of their discretion while performing their respective responsibilities under this Section 3.17(a) with respect to any Administered REO Property. Nothing in this Section 3.17(a) is intended to prevent the sale of any Administered REO Property pursuant to the terms and subject to the conditions of Section 3.18. (b) If title to any Administered REO Property is acquired, the ~~applicable~~ Special Servicer shall manage, conserve, protect and operate such Administered REO Property for the benefit of the Certificateholders (or, in the case of any Administered REO Property related to a Serviced Loan Combination, on behalf of both the Certificateholders and the related Serviced ~~Pari Passu~~ Companion Loan Holder(s)), as a collective ~~whole~~whole (and, in the case of a Subordinate Companion Loan Holder, taking into account the subordinate nature of the related Subordinate Companion Loan), solely for the purpose of its prompt disposition and sale in accordance with Section ~~3.18~~3.18 below, in a manner that does not cause such Administered REO Property to fail to qualify as “foreclosure property” within the meaning of Section 860G(a)(8) of the Code or, except as contemplated by Section 3.17(a)) above, result in the receipt by any REMIC Pool of any “income from non-permitted assets” within the meaning of Section 860F(a)(2)(B) of the Code, in an Adverse REMIC Event with respect to any REMIC Pool or an Adverse Grantor Trust Event with respect to the Grantor Trust Pool. Except as contemplated by Section 3.17(a)) above, the ~~applicable~~ Special Servicer shall not enter into any lease, contract or other agreement with respect to any Administered REO Property that causes the Trust to receive, and (unless required to do so under any lease, contract or agreement to which the ~~applicable~~ Special Servicer or the Trust may become a party or successor to a party due to a foreclosure, ~~deed-in-~~deed in lieu of foreclosure or other similar exercise of a creditor’s rights or remedies with respect to the related Serviced Mortgage Loan) shall not, with respect to any Administered REO Property, cause or allow the Trust to receive, any “net income from foreclosure property” that is subject to taxation under the REMIC Provisions. Subject to the foregoing, however, the ~~applicable~~ Special Servicer shall have full power and authority to do any and all things in connection with the administration of any Administered REO Property, as are consistent with the Servicing Standard and, consistent therewith, shall withdraw from ~~its~~ the REO Account, to the extent of amounts on deposit therein with respect to such Administered REO Property, funds necessary for the proper operation, management, maintenance and disposition of such Administered REO Property, including: (i) all insurance premiums due and payable in respect of such Administered REO Property; (ii) all real estate taxes and assessments in respect of such Administered REO Property that may result in the imposition of a lien thereon; (iii) any ground rents in respect of such Administered REO Property; and (iv) all other costs and expenses necessary to maintain, lease, sell, protect, manage, operate and restore such Administered REO Property. To the extent that amounts on deposit in the ~~applicable Special Servicer’s~~ REO Account with respect to any Administered REO Property are insufficient for the purposes contemplated by the preceding sentence with respect to such REO Property, the ~~applicable~~ Master Servicer shall, at the direction of the ~~applicable~~ Special Servicer, but subject to Section 3.11(h), make a Servicing Advance of such amounts as are necessary for such purposes unless the ~~applicable~~ Master Servicer or the ~~applicable~~ Special Servicer determines, in its reasonable judgment, that such advances would, if made, be Nonrecoverable Servicing Advances; ~~provided,~~ provided that the ~~applicable~~ Master Servicer may in its sole discretion make any such Servicing Advance without regard to recoverability if it is a necessary fee or expense incurred in connection with the defense or prosecution of legal proceedings. (c) The ~~applicable~~ Special Servicer may, and, if required for the Administered REO Property to continue to qualify as “foreclosure property” within the meaning of Section 860G(a)(8) of the Code, shall, contract with any Independent Contractor for the operation and management of any Administered REO Property, provided that: (i) the terms and conditions of any such contract may not be inconsistent herewith and shall reflect an agreement reached at arm’s length; (ii) the fees of such Independent Contractor (which shall be expenses of the Trust) shall be reasonable and customary in consideration of the nature and locality of such Administered REO Property; (iii) any such contract shall be consistent with Treasury Regulations Section 1.856-6(e)(6) and shall require, or shall be administered to require, that the Independent Contractor, in a timely manner, (A) pay all costs and expenses incurred in connection with the operation and management of such Administered REO Property, including those listed in Section 3.17(b) above, and (B) remit all related revenues collected (net of its fees and such costs and expenses) to the ~~applicable~~ Special Servicer upon receipt; (iv) none of the provisions of this Section 3.17(c) relating to any such contract or to actions taken through any such Independent Contractor shall be deemed to relieve the ~~applicable~~ Special Servicer of any of its duties and obligations hereunder with respect to the operation and management of any such Administered REO Property; and (v) the ~~applicable~~ Special Servicer shall be obligated with respect thereto to the same extent as if it alone were performing all duties and obligations in connection with the operation and management of such Administered REO Property, and the ~~applicable~~ Special Servicer shall comply with the Servicing Standard in maintaining such Independent Contractor. The ~~applicable~~ Special Servicer shall be entitled to enter into any agreement with any Independent Contractor performing services for it related to its duties and obligations hereunder for indemnification of the ~~applicable~~ Special Servicer by such Independent Contractor, and nothing in this Agreement shall be deemed to limit or modify such indemnification. To the extent the costs of any contract with any Independent Contractor for the operation and management of any Administered REO Property are greater than the revenues available from such property, such excess costs shall be covered by, and be reimbursable as, a Servicing Advance. (d) Without limiting the generality of the foregoing, the ~~applicable~~ Special Servicer shall not: (i) permit the Trust Fund to enter into, renew or extend any New Lease with respect to any Administered REO Property, if the New Lease by its terms will give rise to any income that does not constitute Rents from Real Property; (ii) permit any amount to be received or accrued under any New Lease other than amounts that will constitute Rents from Real Property; (iii) authorize or permit any construction on any Administered REO Property, other than the repair or maintenance thereof or the completion of a building or other improvement thereon, and then only if more than 10% of the construction of such building or other improvement was completed before default on the related Mortgage Loan become imminent, all within the meaning of Section 856(e)(4)(B) of the Code; or (iv) except as otherwise provided for in Sections 3.17(a)(i), 3.17(a)(ii) and 3.17(a)(iii) ~~and~~ above, Directly Operate, or allow any other Person, other than an Independent Contractor, to Directly Operate, any Administered REO Property on any date more than ninety (90) days after its date of acquisition by or on behalf of the Trust Fund; unless, in any such case, the ~~applicable~~ Special Servicer has obtained an Opinion of Counsel (the cost of which shall be paid by the ~~applicable~~ Master Servicer as a Servicing Advance) to the effect that such action will not cause such Administered REO Property to fail to qualify as “foreclosure property” within the meaning of Section 860G(a)(8) of the Code at any time that it is held for the benefit of the Trust Fund, in which case the ~~applicable~~ Special Servicer may take such actions as are specified in such Opinion of Counsel. (e) Notwithstanding anything to the contrary, this Section 3.17 shall not apply to any REO Property related to a Non-Trust-Serviced Pooled Mortgage Loan.

Appears in 5 contracts

Samples: Pooling and Servicing Agreement (COMM 2015-Lc19 Mortgage Trust), Pooling and Servicing Agreement (Wells Fargo Commercial Mortgage Trust 2015-C29), Pooling and Servicing Agreement (Wells Fargo Commercial Mortgage Trust 2015-Lc20)

Management of Administered REO Property. (a) Prior to the acquisition of title to any Mortgaged Property securing a defaulted Serviced Mortgage Loan, the applicable Special Servicer shall review the operation of such Mortgaged Property and determine the nature of the income that would be derived from such property if it were acquired by the Trust. If the applicable Special Servicer determines from such review that: (i) None of the income from Directly Operating such Mortgaged Property would be subject to tax as “net income from foreclosure property” within the meaning of the REMIC Provisions (such tax referred to herein as an “REO Tax”), then such Mortgaged Property may be Directly Operated by the applicable Special Servicer as Administered REO Property, other than holding such Administered REO Property for sale or lease or performing construction work thereon; (ii) Directly Operating such Mortgaged Property as an Administered REO Property could result in income from such property that would be subject to an REO Tax, but that a lease of such property to another party to operate such property, or the performance of some services by an Independent Contractor with respect to such property, or another method of operating such property would not result in income subject to an REO Tax, then the applicable Special Servicer may (provided that in the judgment of the applicable Special Servicer, exercised in accordance with the Servicing Standard, it is commercially reasonable) so lease or otherwise operate such Administered REO Property; or (iii) It is reasonable to believe that Directly Operating such property as Administered REO Property could result in income subject to an REO Tax and either (i) that the income or earnings with respect to such REO Property will offset any REO Tax relating to such income or earnings and will maximize the net recovery from the applicable Administered REO Property to the Certificateholders (taking into account that any related Serviced Pari Passu Companion Loan Holder(s) do not have any obligation under the related Intercreditor Agreement to bear the effect of any such REO Tax) or (ii) that no commercially reasonable means exists to operate such property as Administered REO Property without the Trust incurring or possibly incurring an REO Tax on income from such property, then the applicable Special Servicer shall deliver to the Tax Administrator and the Subordinate Class Representative, in writing, a proposed plan (the “Proposed Plan”) to manage such property as Administered REO Property. Such plan shall include potential sources of income and good faith estimates of the amount of income from each such source. Within a reasonable period of time after receipt of such plan, the Tax Administrator shall consult with the applicable Special Servicer and shall advise the applicable Special Servicer of the Trust’s federal income tax reporting position with respect to the various sources of income that the Trust would derive under the Proposed Plan. In addition, the Tax Administrator shall (to the maximum extent reasonably possible and at a reasonable fee, which fee shall be an expense of the Trust) advise the applicable Special Servicer of the estimated amount of taxes that the Trust would be required to pay with respect to each such source of income. After receiving the information described in the two preceding sentences from the Tax Administrator, the applicable Special Servicer shall either (A) implement the Proposed Plan (after acquiring the respective Mortgaged Property as Administered REO Property) or (B) manage and operate such property in a manner that would not result in the imposition of an REO Tax on the income derived from such property. Subject to Section 3.17(b), the applicable Special Servicer’s decision as to how each Administered REO Property shall be managed and operated shall be in accordance with the Servicing Standard. Neither the applicable Special Servicer nor the Tax Administrator shall be liable to the Certificateholders, the Trustee, the Trust, the other parties hereto, any beneficiaries hereof or each other for errors in judgment made in good faith in the exercise of their discretion while performing their respective responsibilities under this Section 3.17(a) with respect to any Administered REO Property. Nothing in this Section 3.17(a) is intended to prevent the sale of any Administered REO Property pursuant to the terms and subject to the conditions of Section 3.18. (b) If title to any Administered REO Property is acquired, the applicable Special Servicer shall manage, conserve, protect and operate such Administered REO Property for the benefit of the Certificateholders (or, in the case of any Administered REO Property related to a Serviced Loan Combination, on behalf of both the Certificateholders and the related Serviced Pari Passu Companion Loan Holder(s)), as a collective whole, solely for the purpose of its prompt disposition and sale in accordance with Section ~~3.18~~3.18 below, in a manner that does not cause such Administered REO Property to fail to qualify as “foreclosure property” within the meaning of Section 860G(a)(8) of the Code or, except as contemplated by Section 3.17(a)) above, result in the receipt by any REMIC Pool of any “income from non-permitted assets” within the meaning of Section 860F(a)(2)(B) of the Code, in an Adverse REMIC Event with respect to any REMIC Pool or an Adverse Grantor Trust Event with respect to the Grantor Trust Pool. Except as contemplated by Section 3.17(a)) above, the applicable Special Servicer shall not enter into any lease, contract or other agreement with respect to any Administered REO Property that causes the Trust to receive, and (unless required to do so under any lease, contract or agreement to which the applicable Special Servicer or the Trust may become a party or successor to a party due to a foreclosure, deed-in-lieu of foreclosure or other similar exercise of a creditor’s rights or remedies with respect to the related Serviced Mortgage Loan) shall not, with respect to any Administered REO Property, cause or allow the Trust to receive, any “net income from foreclosure property” that is subject to taxation under the REMIC Provisions. Subject to the foregoing, however, the applicable Special Servicer shall have full power and authority to do any and all things in connection with the administration of any Administered REO Property, as are consistent with the Servicing Standard and, consistent therewith, shall withdraw from its REO Account, to the extent of amounts on deposit therein with respect to such Administered REO Property, funds necessary for the proper operation, management, maintenance and disposition of such Administered REO Property, including: (i) all insurance premiums due and payable in respect of such Administered REO Property; (ii) all real estate taxes and assessments in respect of such Administered REO Property that may result in the imposition of a lien thereon; (iii) any ground rents in respect of such Administered REO Property; and (iv) all other costs and expenses necessary to maintain, lease, sell, protect, manage, operate and restore such Administered REO Property. To the extent that amounts on deposit in the applicable Special Servicer’s REO Account with respect to any Administered REO Property are insufficient for the purposes contemplated by the preceding sentence with respect to such REO Property, the applicable Master Servicer shall, at the direction of the applicable Special Servicer, but subject to Section 3.11(h), make a Servicing Advance of such amounts as are necessary for such purposes unless the applicable Master Servicer or the applicable Special Servicer determines, in its reasonable judgment, that such advances would, if made, be Nonrecoverable Servicing Advances; ~~provided,~~ provided that the applicable Master Servicer may in its sole discretion make any such Servicing Advance without regard to recoverability if it is a necessary fee or expense incurred in connection with the defense or prosecution of legal proceedings. (c) The applicable Special Servicer may, and, if required for the Administered REO Property to continue to qualify as “foreclosure property” within the meaning of Section 860G(a)(8) of the Code, shall, contract with any Independent Contractor for the operation and management of any Administered REO Property, provided that: (i) the terms and conditions of any such contract may not be inconsistent herewith and shall reflect an agreement reached at arm’s length; (ii) the fees of such Independent Contractor (which shall be expenses of the Trust) shall be reasonable and customary in consideration of the nature and locality of such Administered REO Property; (iii) any such contract shall be consistent with Treasury Regulations Section 1.856-6(e)(6) and shall require, or shall be administered to require, that the Independent Contractor, in a timely manner, (A) pay all costs and expenses incurred in connection with the operation and management of such Administered REO Property, including those listed in Section 3.17(b) above, and (B) remit all related revenues collected (net of its fees and such costs and expenses) to the applicable Special Servicer upon receipt; (iv) none of the provisions of this Section 3.17(c) relating to any such contract or to actions taken through any such Independent Contractor shall be deemed to relieve the applicable Special Servicer of any of its duties and obligations hereunder with respect to the operation and management of any such Administered REO Property; and (v) the applicable Special Servicer shall be obligated with respect thereto to the same extent as if it alone were performing all duties and obligations in connection with the operation and management of such Administered REO Property, and the applicable Special Servicer shall comply with the Servicing Standard in maintaining such Independent Contractor. The applicable Special Servicer shall be entitled to enter into any agreement with any Independent Contractor performing services for it related to its duties and obligations hereunder for indemnification of the applicable Special Servicer by such Independent Contractor, and nothing in this Agreement shall be deemed to limit or modify such indemnification. To the extent the costs of any contract with any Independent Contractor for the operation and management of any Administered REO Property are greater than the revenues available from such property, such excess costs shall be covered by, and be reimbursable as, a Servicing Advance. (d) Without limiting the generality of the foregoing, the applicable Special Servicer shall not: (i) permit the Trust Fund to enter into, renew or extend any New Lease with respect to any Administered REO Property, if the New Lease by its terms will give rise to any income that does not constitute Rents from Real Property; (ii) permit any amount to be received or accrued under any New Lease other than amounts that will constitute Rents from Real Property; (iii) authorize or permit any construction on any Administered REO Property, other than the repair or maintenance thereof or the completion of a building or other improvement thereon, and then only if more than 10% of the construction of such building or other improvement was completed before default on the related Mortgage Loan become imminent, all within the meaning of Section 856(e)(4)(B) of the Code; or (iv) except as otherwise provided for in Sections 3.17(a)(i), 3.17(a)(ii) and 3.17(a)(iii) ~~and~~ above, Directly Operate, or allow any other Person, other than an Independent Contractor, to Directly Operate, any Administered REO Property on any date more than ninety (90) days after its date of acquisition by or on behalf of the Trust Fund; unless, in any such case, the applicable Special Servicer has obtained an Opinion of Counsel (the cost of which shall be paid by the applicable Master Servicer as a Servicing Advance) to the effect that such action will not cause such Administered REO Property to fail to qualify as “foreclosure property” within the meaning of Section 860G(a)(8) of the Code at any time that it is held for the benefit of the Trust Fund, in which case the applicable Special Servicer may take such actions as are specified in such Opinion of Counsel. (e) Notwithstanding anything to the contrary, this Section 3.17 shall not apply to any REO Property related to a Non-Trust-Serviced Pooled Mortgage Loan.

Appears in 5 contracts

Samples: Pooling and Servicing Agreement (WFRBS Commercial Mortgage Trust 2014-C23), Pooling and Servicing Agreement (WFRBS Commercial Mortgage Trust 2014-C24), Pooling and Servicing Agreement (WFRBS Commercial Mortgage Trust 2014-C23)

Management of Administered REO Property. (a) Prior to the acquisition of title to any Mortgaged Property securing a defaulted Serviced Mortgage Loan, the ~~applicable~~ Special Servicer shall review the operation of such Mortgaged Property and determine the nature of the income that would be derived from such property if it were acquired by the Trust. If the ~~applicable~~ Special Servicer determines from such review that: (i) None of the income from Directly Operating such Mortgaged Property would be subject to tax as “net income from foreclosure property” within the meaning of the REMIC Provisions (such tax referred to herein as an “REO Tax”), then such Mortgaged Property may be Directly Operated by the ~~applicable~~ Special Servicer as Administered REO Property, other than holding such Administered REO Property for sale or lease or performing construction work thereon; (ii) Directly Operating such Mortgaged Property as an Administered REO Property could result in income from such property that would be subject to an REO Tax, but that a lease of such property to another party to operate such property, or the performance of some services by an Independent Contractor with respect to such property, or another method of operating such property would not result in income subject to an REO Tax, then the ~~applicable~~ Special Servicer may (provided that in the judgment of the ~~applicable~~ Special Servicer, exercised in accordance with the Servicing Standard, it is commercially reasonable) so lease or otherwise operate such Administered REO Property; or (iii) It is reasonable to believe that Directly Operating such property as Administered REO Property could result in income subject to an REO Tax and either (i) that the income or earnings with respect to such REO Property will offset any REO Tax relating to such income or earnings and will maximize the net recovery from the applicable Administered REO Property to the Certificateholders (taking into account that any related Serviced ~~Pari Passu~~ Companion Loan Holder(s) do not have any obligation under the related Intercreditor Agreement to bear the effect of any such REO Tax) or (ii) that no commercially reasonable means exists to operate such property as Administered REO Property without the Trust incurring or possibly incurring an REO Tax on income from such property, then the ~~applicable~~ Special Servicer shall deliver to the Tax Administrator and the Subordinate Class ~~Representative~~Representative (other than with respect to any such property securing an Excluded Loan), in writing, a proposed plan (the “Proposed Plan”) to manage such property as Administered REO Property. Such plan shall include potential sources of income and good faith estimates of the amount of income from each such source. Within a reasonable period of time after receipt of such plan, the Tax Administrator shall consult with the ~~applicable~~ Special Servicer and shall advise the ~~applicable~~ Special Servicer of the Trust’s federal income tax reporting position with respect to the various sources of income that the Trust would derive under the Proposed Plan. In addition, the Tax Administrator shall (to the maximum extent reasonably possible and at a reasonable fee, which fee shall be an expense of the Trust) advise the ~~applicable~~ Special Servicer of the estimated amount of taxes that the Trust would be required to pay with respect to each such source of income. After receiving the information described in the two preceding sentences from the Tax Administrator, the ~~applicable~~ Special Servicer shall either (A) implement the Proposed Plan (after acquiring the respective Mortgaged Property as Administered REO Property) or (B) manage and operate such property in a manner that would not result in the imposition of an REO Tax on the income derived from such property. Subject to Section 3.17(b), the ~~applicable~~ Special Servicer’s decision as to how each Administered REO Property shall be managed and operated shall be in accordance with the Servicing Standard. Neither the ~~applicable~~ Special Servicer nor the Tax Administrator shall be liable to the Certificateholders, the Trustee, the Trust, the other parties hereto, any beneficiaries hereof or each other for errors in judgment made in good faith in the exercise of their discretion while performing their respective responsibilities under this Section 3.17(a) with respect to any Administered REO Property. Nothing in this Section 3.17(a) is intended to prevent the sale of any Administered REO Property pursuant to the terms and subject to the conditions of Section 3.18. (b) If title to any Administered REO Property is acquired, the applicable Special Servicer shall manage, conserve, protect and operate such Administered REO Property for the benefit of the Certificateholders (or, in the case of any Administered REO Property related to a Serviced Loan Combination, on behalf of both the Certificateholders and the related Serviced Pari Passu Companion Loan Holder(s)), as a collective whole, solely for the purpose of its prompt disposition and sale in accordance with Section 3.18, in a manner that does not cause such Administered REO Property to fail to qualify as “foreclosure property” within the meaning of Section 860G(a)(8) of the Code or, except as contemplated by Section 3.17(a), result in the receipt by any REMIC Pool of any “income from non-permitted assets” within the meaning of Section 860F(a)(2)(B) of the Code, in an Adverse REMIC Event with respect to any REMIC Pool or an Adverse Grantor Trust Event with respect to the Grantor Trust Pool. Except as contemplated by Section 3.17(a), the applicable Special Servicer shall not enter into any lease, contract or other agreement with respect to any Administered REO Property that causes the Trust to receive, and (unless required to do so under any lease, contract or agreement to which the applicable Special Servicer or the Trust may become a party or successor to a party due to a foreclosure, deed-in-lieu of foreclosure or other similar exercise of a creditor’s rights or remedies with respect to the related Serviced Mortgage Loan) shall not, with respect to any Administered REO Property, cause or allow the Trust to receive, any “net income from foreclosure property” that is subject to taxation under the REMIC Provisions. Subject to the foregoing, however, the applicable Special Servicer shall have full power and authority to do any and all things in connection with the administration of any Administered REO Property, as are consistent with the Servicing Standard and, consistent therewith, shall withdraw from its REO Account, to the extent of amounts on deposit therein with respect to such Administered REO Property, funds necessary for the proper operation, management, maintenance and disposition of such Administered REO Property, including: (i) all insurance premiums due and payable in respect of such Administered REO Property; (ii) all real estate taxes and assessments in respect of such Administered REO Property that may result in the imposition of a lien thereon; (iii) any ground rents in respect of such Administered REO Property; and (iv) all other costs and expenses necessary to maintain, lease, sell, protect, manage, operate and restore such Administered REO Property. To the extent that amounts on deposit in the applicable Special Servicer’s REO Account with respect to any Administered REO Property are insufficient for the purposes contemplated by the preceding sentence with respect to such REO Property, the applicable Master Servicer shall, at the direction of the applicable Special Servicer, but subject to Section 3.11(h), make a Servicing Advance of such amounts as are necessary for such purposes unless the applicable Master Servicer or the applicable Special Servicer determines, in its reasonable judgment, that such advances would, if made, be Nonrecoverable Servicing Advances; provided, that the applicable Master Servicer may in its sole discretion make any such Servicing Advance without regard to recoverability if it is a necessary fee or expense incurred in connection with the defense or prosecution of legal proceedings. (c) The applicable Special Servicer may, and, if required for the Administered REO Property to continue to qualify as “foreclosure property” within the meaning of Section 860G(a)(8) of the Code, shall, contract with any Independent Contractor for the operation and management of any Administered REO Property, provided that: (i) the terms and conditions of any such contract may not be inconsistent herewith and shall reflect an agreement reached at arm’s length; (ii) the fees of such Independent Contractor (which shall be expenses of the Trust) shall be reasonable and customary in consideration of the nature and locality of such Administered REO Property; (iii) any such contract shall be consistent with Treasury Regulations Section 1.856-6(e)(6) and shall require, or shall be administered to require, that the Independent Contractor, in a timely manner, (A) pay all costs and expenses incurred in connection with the operation and management of such Administered REO Property, including those listed in Section 3.17(b) above, and (B) remit all related revenues collected (net of its fees and such costs and expenses) to the applicable Special Servicer upon receipt; (iv) none of the provisions of this Section 3.17(c) relating to any such contract or to actions taken through any such Independent Contractor shall be deemed to relieve the applicable Special Servicer of any of its duties and obligations hereunder with respect to the operation and management of any such Administered REO Property; and (v) the applicable Special Servicer shall be obligated with respect thereto to the same extent as if it alone were performing all duties and obligations in connection with the operation and management of such Administered REO Property, and the applicable Special Servicer shall comply with the Servicing Standard in maintaining such Independent Contractor. The applicable Special Servicer shall be entitled to enter into any agreement with any Independent Contractor performing services for it related to its duties and obligations hereunder for indemnification of the applicable Special Servicer by such Independent Contractor, and nothing in this Agreement shall be deemed to limit or modify such indemnification. To the extent the costs of any contract with any Independent Contractor for the operation and management of any Administered REO Property are greater than the revenues available from such property, such excess costs shall be covered by, and be reimbursable as, a Servicing Advance. (d) Without limiting the generality of the foregoing, the applicable Special Servicer shall not: (i) permit the Trust Fund to enter into, renew or extend any New Lease with respect to any Administered REO Property, if the New Lease by its terms will give rise to any income that does not constitute Rents from Real Property; (ii) permit any amount to be received or accrued under any New Lease other than amounts that will constitute Rents from Real Property; (iii) authorize or permit any construction on any Administered REO Property, other than the repair or maintenance thereof or the completion of a building or other improvement thereon, and then only if more than 10% of the construction of such building or other improvement was completed before default on the related Mortgage Loan become imminent, all within the meaning of Section 856(e)(4)(B) of the Code; or (iv) except as otherwise provided for in Sections 3.17(a)(i), 3.17(a)(ii) and 3.17(a)(iii) and above, Directly Operate, or allow any other Person, other than an Independent Contractor, to Directly Operate, any Administered REO Property on any date more than ninety (90) days after its date of acquisition by or on behalf of the Trust Fund; unless, in any such case, the applicable Special Servicer has obtained an Opinion of Counsel (the cost of which shall be paid by the applicable Master Servicer as a Servicing Advance) to the effect that such action will not cause such Administered REO Property to fail to qualify as “foreclosure property” within the meaning of Section 860G(a)(8) of the Code at any time that it is held for the benefit of the Trust Fund, in which case the applicable Special Servicer may take such actions as are specified in such Opinion of Counsel. (e) Notwithstanding anything to the contrary, this Section 3.17 shall not apply to any REO Property related to a Non-Trust-Serviced Pooled Mortgage Loan.

Appears in 4 contracts

Samples: Pooling and Servicing Agreement (Wells Fargo Commercial Mortgage Trust 2015-C28), Pooling and Servicing Agreement (Wells Fargo Commercial Mortgage Trust 2015-C29), Pooling and Servicing Agreement (Wells Fargo Commercial Mortgage Trust 2015-Nxs1)

Management of Administered REO Property. (a) Prior to the acquisition of title to any Mortgaged Property securing a defaulted Serviced Mortgage Loan, the ~~applicable~~ Special Servicer shall review the operation of such Mortgaged Property and determine the nature of the income that would be derived from such property if it were acquired by the Trust. If the ~~applicable~~ Special Servicer determines from such review that: (i) None of the income from Directly Operating such Mortgaged Property would be subject to tax as “net income from foreclosure property” within the meaning of the REMIC Provisions (such tax referred to herein as an “REO Tax”), then such Mortgaged Property may be Directly Operated by the ~~applicable~~ Special Servicer as Administered REO Property, other than holding such Administered REO Property for sale or lease or performing construction work thereon; (ii) Directly Operating such Mortgaged Property as an Administered REO Property could result in income from such property that would be subject to an REO Tax, but that a lease of such property to another party to operate such property, or the performance of some services by an Independent Contractor with respect to such property, or another method of operating such property would not result in income subject to an REO Tax, then the ~~applicable~~ Special Servicer may (provided that in the judgment of the ~~applicable~~ Special Servicer, exercised in accordance with the Servicing Standard, it is commercially reasonable) so lease or otherwise operate such Administered REO Property; or (iii) It is reasonable to believe that Directly Operating such property as Administered REO Property could result in income subject to an REO Tax and either (i) that the income or earnings with respect to such REO Property will offset any REO Tax relating to such income or earnings and will maximize the net recovery from the applicable Administered REO Property to the Certificateholders (taking into account that any related Serviced Pari Passu Companion Loan Holder(s) do not have any obligation under the related Intercreditor Agreement to bear the effect of any such REO Tax) or (ii) that no commercially reasonable means exists to operate such property as Administered REO Property without the Trust incurring or possibly incurring an REO Tax on income from such property, then the ~~applicable~~ Special Servicer shall deliver to the Tax Administrator and the Subordinate Class Representative, in writing, a proposed plan (the “Proposed Plan”) to manage such property as Administered REO Property. Such plan shall include potential sources of income and good faith estimates of the amount of income from each such source. Within a reasonable period of time after receipt of such plan, the Tax Administrator shall consult with the ~~applicable~~ Special Servicer and shall advise the ~~applicable~~ Special Servicer of the Trust’s federal income tax reporting position with respect to the various sources of income that the Trust would derive under the Proposed Plan. In addition, the Tax Administrator shall (to the maximum extent reasonably possible and at a reasonable fee, which fee shall be an expense of the Trust) advise the ~~applicable~~ Special Servicer of the estimated amount of taxes that the Trust would be required to pay with respect to each such source of income. After receiving the information described in the two preceding sentences from the Tax Administrator, the ~~applicable~~ Special Servicer shall either (A) implement the Proposed Plan (after acquiring the respective Mortgaged Property as Administered REO Property) or (B) manage and operate such property in a manner that would not result in the imposition of an REO Tax on the income derived from such property. Subject to Section 3.17(b), the ~~applicable~~ Special Servicer’s decision as to how each Administered REO Property shall be managed and operated shall be in accordance with the Servicing Standard. Neither the ~~applicable~~ Special Servicer nor the Tax Administrator shall be liable to the Certificateholders, the Trustee, the Trust, the other parties hereto, any beneficiaries hereof or each other for errors in judgment made in good faith in the exercise of their discretion while performing their respective responsibilities under this Section 3.17(a) with respect to any Administered REO Property. Nothing in this Section 3.17(a) is intended to prevent the sale of any Administered REO Property pursuant to the terms and subject to the conditions of Section 3.18. (b) If title to any Administered REO Property is acquired, the ~~applicable~~ Special Servicer shall manage, conserve, protect and operate such Administered REO Property for the benefit of the Certificateholders (or, in the case of any Administered REO Property related to a Serviced Loan Combination, on behalf of both the Certificateholders and the related Serviced Pari Passu Companion Loan Holder(s)), as a collective whole, solely for the purpose of its prompt disposition and sale in accordance with Section 3.18, in a manner that does not cause such Administered REO Property to fail to qualify as “foreclosure property” within the meaning of Section 860G(a)(8) of the Code or, except as contemplated by Section 3.17(a), result in the receipt by any Trust REMIC ~~Pool~~ of any “income from non-permitted assets” within the meaning of Section 860F(a)(2)(B) of the Code, in an Adverse REMIC Event with respect to any Trust REMIC ~~Pool~~ or an Adverse Grantor Trust Event with respect to the Grantor ~~Trust Pool~~Trust. Except as contemplated by Section 3.17(a), the ~~applicable~~ Special Servicer shall not enter into any lease, contract or other agreement with respect to any Administered REO Property that causes the Trust to receive, and (unless required to do so under any lease, contract or agreement to which the ~~applicable~~ Special Servicer or the Trust may become a party or successor to a party due to a foreclosure, ~~deed-in-~~deed in lieu of foreclosure or other similar exercise of a creditor’s rights or remedies with respect to the related Serviced Mortgage Loan) shall not, with respect to any Administered REO Property, cause or allow the Trust to receive, any “net income from foreclosure property” that is subject to taxation under the REMIC Provisions. Subject to the foregoing, however, the ~~applicable~~ Special Servicer shall have full power and authority to do any and all things in connection with the administration of any Administered REO Property, as are consistent with the Servicing Standard and, consistent therewith, shall withdraw from its REO Account, to the extent of amounts on deposit therein with respect to such Administered REO Property, funds necessary for the proper operation, management, maintenance and disposition of such Administered REO Property, including: (i) all insurance premiums due and payable in respect of such Administered REO Property; (ii) all real estate taxes and assessments in respect of such Administered REO Property that may result in the imposition of a lien thereon; (iii) any ground rents in respect of such Administered REO Property; and (iv) all other costs and expenses necessary to maintain, lease, sell, protect, manage, operate and restore such Administered REO Property. To the extent that amounts on deposit in the ~~applicable~~ Special Servicer’s REO Account with respect to any Administered REO Property are insufficient for the purposes contemplated by the preceding sentence with respect to such REO Property, the ~~applicable~~ Master Servicer shall, at the direction of the ~~applicable~~ Special Servicer, but subject to Section 3.11(h), make a Servicing Advance of such amounts as are necessary for such purposes unless the ~~applicable~~ Master Servicer or the ~~applicable~~ Special Servicer determines, in its reasonable judgment, that such advances would, if made, be Nonrecoverable Servicing Advances; provided, that the ~~applicable~~ Master Servicer may in its sole discretion make any such Servicing Advance without regard to recoverability if it is a necessary fee or expense incurred in connection with the defense or prosecution of legal proceedings. (c) The ~~applicable~~ Special Servicer may, and, if required for the Administered REO Property to continue to qualify as “foreclosure property” within the meaning of Section 860G(a)(8) of the Code, shall, contract with any Independent Contractor for the operation and management of any Administered REO Property, provided that: (i) the terms and conditions of any such contract may not be inconsistent herewith and shall reflect an agreement reached at arm’s length; (ii) the fees of such Independent Contractor (which shall be expenses of the Trust) shall be reasonable and customary in consideration of the nature and locality of such Administered REO Property; (iii) any such contract shall be consistent with Treasury Regulations Section 1.856-6(e)(6) and shall require, or shall be administered to require, that the Independent Contractor, in a timely manner, (A) pay all costs and expenses incurred in connection with the operation and management of such Administered REO Property, including those listed in Section 3.17(b) above, and (B) remit all related revenues collected (net of its fees and such costs and expenses) to the ~~applicable~~ Special Servicer upon receipt; (iv) none of the provisions of this Section 3.17(c) relating to any such contract or to actions taken through any such Independent Contractor shall be deemed to relieve the ~~applicable~~ Special Servicer of any of its duties and obligations hereunder with respect to the operation and management of any such Administered REO Property; and (v) the ~~applicable~~ Special Servicer shall be obligated with respect thereto to the same extent as if it alone were performing all duties and obligations in connection with the operation and management of such Administered REO Property, and the ~~applicable~~ Special Servicer shall comply with the Servicing Standard in maintaining such Independent Contractor. The ~~applicable~~ Special Servicer shall be entitled to enter into any agreement with any Independent Contractor performing services for it related to its duties and obligations hereunder for indemnification of the ~~applicable~~ Special Servicer by such Independent Contractor, and nothing in this Agreement shall be deemed to limit or modify such indemnification. To the extent the costs of any contract with any Independent Contractor for the operation and management of any Administered REO Property are greater than the revenues available from such property, such excess costs shall be covered by, and be reimbursable as, a Servicing Advance. (d) Without limiting the generality of the foregoing, the ~~applicable~~ Special Servicer shall not: (i) permit the Trust Fund to enter into, renew or extend any New Lease with respect to any Administered REO Property, if the New Lease by its terms will give rise to any income that does not constitute Rents from Real Property; (ii) permit any amount to be received or accrued under any New Lease other than amounts that will constitute Rents from Real Property; (iii) authorize or permit any construction on any Administered REO Property, other than the repair or maintenance thereof or the completion of a building or other improvement thereon, and then only if more than 10% of the construction of such building or other improvement was completed before default on the related Mortgage Loan become imminent, all within the meaning of Section 856(e)(4)(B) of the Code; or (iv) except as otherwise provided for in Sections 3.17(a)(i), 3.17(a)(ii) and 3.17(a)(iii) and above, Directly Operate, or allow any other Person, other than an Independent Contractor, to Directly Operate, any Administered REO Property on any date more than ninety (90) days after its date of acquisition by or on behalf of the Trust Fund; unless, in any such case, the ~~applicable~~ Special Servicer has obtained an Opinion of Counsel (the cost of which shall be paid by the ~~applicable~~ Master Servicer as a Servicing Advance) to the effect that such action will not cause such Administered REO Property to fail to qualify as “foreclosure property” within the meaning of Section 860G(a)(8) of the Code at any time that it is held for the benefit of the Trust Fund, in which case the ~~applicable~~ Special Servicer may take such actions as are specified in such Opinion of Counsel. (e) Notwithstanding anything to the contrary, this Section 3.17 shall not apply to any REO Property related to a Non-Trust-Serviced Pooled Mortgage Loan.

Appears in 3 contracts

Samples: Pooling and Servicing Agreement (SG Commercial Mortgage Securities, LLC), Pooling and Servicing Agreement (SG Commercial Mortgage Securities, LLC), Pooling and Servicing Agreement (RBS Commercial Funding Inc.)

Management of Administered REO Property. (a) Prior to the acquisition of title to any Mortgaged Property securing a defaulted Serviced Mortgage Loan, the ~~applicable~~ Special Servicer shall review the operation of such Mortgaged Property and determine the nature of the income that would be derived from such property if it were acquired by the Trust. If the ~~applicable~~ Special Servicer determines from such review that: (i) None of the income from Directly Operating such Mortgaged Property would be subject to tax as “net income from foreclosure property” within the meaning of the REMIC Provisions (such tax referred to herein as an “REO Tax”), then such Mortgaged Property may be Directly Operated by the ~~applicable~~ Special Servicer as Administered REO Property, other than holding such Administered REO Property for sale or lease or performing construction work thereon; (ii) Directly Operating such Mortgaged Property as an Administered REO Property could result in income from such property that would be subject to an REO Tax, but that a lease of such property to another party to operate such property, or the performance of some services by an Independent Contractor with respect to such property, or another method of operating such property would not result in income subject to an REO Tax, then the ~~applicable~~ Special Servicer may (provided that in the judgment of the ~~applicable~~ Special Servicer, exercised in accordance with the Servicing Standard, it is commercially reasonable) so lease or otherwise operate such Administered REO Property; or (iii) It is reasonable to believe that Directly Operating such property as Administered REO Property could result in income subject to an REO Tax and either (i) that the income or earnings with respect to such REO Property will offset any REO Tax relating to such income or earnings and will maximize the net recovery from the applicable Administered REO Property to the Certificateholders (taking into account that any related Serviced Pari Passu Companion Loan Holder(s) do not have any obligation under the related Intercreditor Agreement to bear the effect of any such REO Tax) or (ii) that no commercially reasonable means exists to operate such property as Administered REO Property without the Trust incurring or possibly incurring an REO Tax on income from such property, then the ~~applicable~~ Special Servicer shall deliver to the Tax Administrator and the Subordinate Class Representative, in writing, a proposed plan (the “Proposed Plan”) to manage such property as Administered REO Property. Such plan shall include potential sources of income and good faith estimates of the amount of income from each such source. Within a reasonable period of time after receipt of such plan, the Tax Administrator shall consult with the ~~applicable~~ Special Servicer and shall advise the ~~applicable~~ Special Servicer of the Trust’s federal income tax reporting position with respect to the various sources of income that the Trust would derive under the Proposed Plan. In addition, the Tax Administrator shall (to the maximum extent reasonably possible and at a reasonable fee, which fee shall be an expense of the Trust) advise the ~~applicable~~ Special Servicer of the estimated amount of taxes that the Trust would be required to pay with respect to each such source of income. After receiving the information described in the two preceding sentences from the Tax Administrator, the ~~applicable~~ Special Servicer shall either (A) implement the Proposed Plan (after acquiring the respective Mortgaged Property as Administered REO Property) or (B) manage and operate such property in a manner that would not result in the imposition of an REO Tax on the income derived from such property. Subject to Section 3.17(b), the ~~applicable~~ Special Servicer’s decision as to how each Administered REO Property shall be managed and operated shall be in accordance with the Servicing Standard. Neither the applicable Special Servicer nor the Tax Administrator shall be liable to the Certificateholders, the Trustee, the Trust, the other parties hereto, any beneficiaries hereof or each other for errors in judgment made in good faith in the exercise of their discretion while performing their respective responsibilities under this Section 3.17(a) with respect to any Administered REO Property. Nothing in this Section 3.17(a) is intended to prevent the sale of any Administered REO Property pursuant to the terms and subject to the conditions of Section 3.18. (b) If title to any Administered REO Property is acquired, the ~~applicable~~ Special Servicer shall manage, conserve, protect and operate such Administered REO Property for the benefit of the Certificateholders (or, in the case of any Administered REO Property related to a Serviced Loan Combination, on behalf of both the Certificateholders and the related Serviced Pari Passu Companion Loan Holder(s)), as a collective whole, solely for the purpose of its prompt disposition and sale in accordance with Section 3.18, in a manner that does not cause such Administered REO Property to fail to qualify as “foreclosure property” within the meaning of Section 860G(a)(8) of the Code or, except as contemplated by Section 3.17(a), result in the receipt by any REMIC Pool of any “income from non-permitted assets” within the meaning of Section 860F(a)(2)(B) of the Code, in an Adverse REMIC Event with respect to any REMIC Pool or an Adverse Grantor Trust Event with respect to the Grantor Trust Pool. Except as contemplated by Section 3.17(a), the ~~applicable~~ Special Servicer shall not enter into any lease, contract or other agreement with respect to any Administered REO Property that causes the Trust to receive, and (unless required to do so under any lease, contract or agreement to which the ~~applicable~~ Special Servicer or the Trust may become a party or successor to a party due to a foreclosure, deed-in-lieu of foreclosure or other similar exercise of a creditor’s rights or remedies with respect to the related Serviced Mortgage Loan) shall not, with respect to any Administered REO Property, cause or allow the Trust to receive, any “net income from foreclosure property” that is subject to taxation under the REMIC Provisions. Subject to the foregoing, however, the ~~applicable~~ Special Servicer shall have full power and authority to do any and all things in connection with the administration of any Administered REO Property, as are consistent with the Servicing Standard and, consistent therewith, shall withdraw from its REO Account, to the extent of amounts on deposit therein with respect to such Administered REO Property, funds necessary for the proper operation, management, maintenance and disposition of such Administered REO Property, including: (i) all insurance premiums due and payable in respect of such Administered REO Property; (ii) all real estate taxes and assessments in respect of such Administered REO Property that may result in the imposition of a lien thereon; (iii) any ground rents in respect of such Administered REO Property; and (iv) all other costs and expenses necessary to maintain, lease, sell, protect, manage, operate and restore such Administered REO Property. To the extent that amounts on deposit in the ~~applicable~~ Special Servicer’s REO Account with respect to any Administered REO Property are insufficient for the purposes contemplated by the preceding sentence with respect to such REO Property, the ~~applicable~~ Master Servicer shall, at the direction of the ~~applicable~~ Special Servicer, but subject to Section 3.11(h), make a Servicing Advance of such amounts as are necessary for such purposes unless the ~~applicable~~ Master Servicer or the ~~applicable~~ Special Servicer determines, in its reasonable judgment, that such advances would, if made, be Nonrecoverable Servicing Advances; provided, however, that the ~~applicable~~ Master Servicer may in its sole discretion make any such Servicing Advance without regard to recoverability if it is a necessary fee or expense incurred in connection with the defense or prosecution of legal proceedings. (c) The ~~applicable~~ Special Servicer may, and, if required for the Administered REO Property to continue to qualify as “foreclosure property” within the meaning of Section 860G(a)(8) of the Code, shall, contract with any Independent Contractor for the operation and management of any Administered REO Property, provided that: (i) the terms and conditions of any such contract may not be inconsistent herewith and shall reflect an agreement reached at arm’s length; (ii) the fees of such Independent Contractor (which shall be expenses of the Trust) shall be reasonable and customary in consideration of the nature and locality of such Administered REO Property; (iii) any such contract shall be consistent with Treasury Regulations Section 1.856-6(e)(6) and shall require, or shall be administered to require, that the Independent Contractor, in a timely manner, (A) pay all costs and expenses incurred in connection with the operation and management of such Administered REO Property, including those listed in Section 3.17(b) above, and (B) remit all related revenues collected (net of its fees and such costs and expenses) to the ~~applicable~~ Special Servicer upon receipt; (iv) none of the provisions of this Section 3.17(c) relating to any such contract or to actions taken through any such Independent Contractor shall be deemed to relieve the ~~applicable~~ Special Servicer of any of its duties and obligations hereunder with respect to the operation and management of any such Administered REO Property; and (v) the ~~applicable~~ Special Servicer shall be obligated with respect thereto to the same extent as if it alone were performing all duties and obligations in connection with the operation and management of such Administered REO Property, and the ~~applicable~~ Special Servicer shall comply with the Servicing Standard in maintaining such Independent Contractor. The ~~applicable~~ Special Servicer shall be entitled to enter into any agreement with any Independent Contractor performing services for it related to its duties and obligations hereunder for indemnification of the ~~applicable~~ Special Servicer by such Independent Contractor, and nothing in this Agreement shall be deemed to limit or modify such indemnification. To the extent the costs of any contract with any Independent Contractor for the operation and management of any Administered REO Property are greater than the revenues available from such property, such excess costs shall be covered by, and be reimbursable as, a Servicing Advance. (d) Without limiting the generality of the foregoing, the ~~applicable~~ Special Servicer shall not: (i) permit the Trust Fund to enter into, renew or extend any New Lease with respect to any Administered REO Property, if the New Lease by its terms will give rise to any income that does not constitute Rents from Real Property; (ii) permit any amount to be received or accrued under any New Lease other than amounts that will constitute Rents from Real Property; (iii) authorize or permit any construction on any Administered REO Property, other than the repair or maintenance thereof or the completion of a building or other improvement thereon, and then only if more than 10% of the construction of such building or other improvement was completed before default on the related Mortgage Loan become imminent, all within the meaning of Section 856(e)(4)(B) of the Code; or (iv) except as otherwise provided for in Sections 3.17(a)(i), 3.17(a)(ii) and 3.17(a)(iii) and above, Directly Operate, or allow any other Person, other than an Independent Contractor, to Directly Operate, any Administered REO Property on any date more than ninety (90) days after its date of acquisition by or on behalf of the Trust Fund; unless, in any such case, the ~~applicable~~ Special Servicer has obtained an Opinion of Counsel (the cost of which shall be paid by the ~~applicable~~ Master Servicer as a Servicing Advance) to the effect that such action will not cause such Administered REO Property to fail to qualify as “foreclosure property” within the meaning of Section 860G(a)(8) of the Code at any time that it is held for the benefit of the Trust Fund, in which case the ~~applicable~~ Special Servicer may take such actions as are specified in such Opinion of Counsel. (e) Notwithstanding anything to the contrary, this Section 3.17 shall not apply to any REO Property related to a Non-Trust-Serviced Pooled Mortgage Loan.

Appears in 2 contracts

Samples: Pooling and Servicing Agreement (Wells Fargo Commercial Mortgage Trust 2012-Lc5), Pooling and Servicing Agreement (Wells Fargo Commercial Mortgage Trust 2012-Lc5)

Management of Administered REO Property. (a) Prior to the acquisition of title to any Mortgaged Property securing a defaulted Serviced Mortgage Loan, the ~~applicable~~ Special Servicer shall review the operation of such Mortgaged Property and determine the nature of the income that would be derived from such property if it were acquired by the Trust. If the ~~applicable~~ Special Servicer determines from such review that: (i) None of the income from Directly Operating such Mortgaged Property would be subject to tax as “net income from foreclosure property” within the meaning of the REMIC Provisions (such tax referred to herein as an “REO Tax”), then such Mortgaged Property may be Directly Operated by the ~~applicable~~ Special Servicer as Administered REO Property, other than holding such Administered REO Property for sale or lease or performing construction work thereon; (ii) Directly Operating such Mortgaged Property as an Administered REO Property could result in income from such property that would be subject to an REO Tax, but that a lease of such property to another party to operate such property, or the performance of some services by an Independent Contractor with respect to such property, or another method of operating such property would not result in income subject to an REO Tax, then the ~~applicable~~ Special Servicer may (provided that in the judgment of the ~~applicable~~ Special Servicer, exercised in accordance with the Servicing Standard, it is commercially reasonable) so lease or otherwise operate such Administered REO Property; or (iii) It is reasonable to believe that Directly Operating such property as Administered REO Property could result in income subject to an REO Tax and either (i) that the income or earnings with respect to such REO Property will offset any REO Tax relating to such income or earnings and will maximize the net recovery from the applicable Administered REO Property to the Certificateholders (taking into account that any related Serviced Pari Passu Companion Loan Holder(s) do not have any obligation under the related Intercreditor Agreement to bear the effect of any such REO Tax) or (ii) that no commercially reasonable means exists to operate such property as Administered REO Property without the Trust incurring or possibly incurring an REO Tax on income from such property, then the applicable Special Servicer shall deliver to the Tax Administrator and the Subordinate Class Representative, in writing, a proposed plan (the “Proposed Plan”) to manage such property as Administered REO Property. Such plan shall include potential sources of income and good faith estimates of the amount of income from each such source. Within a reasonable period of time after receipt of such plan, the Tax Administrator shall consult with the applicable Special Servicer and shall advise the applicable Special Servicer of the Trust’s federal income tax reporting position with respect to the various sources of income that the Trust would derive under the Proposed Plan. In addition, the Tax Administrator shall (to the maximum extent reasonably possible and at a reasonable fee, which fee shall be an expense of the Trust) advise the applicable Special Servicer of the estimated amount of taxes that the Trust would be required to pay with respect to each such source of income. After receiving the information described in the two preceding sentences from the Tax Administrator, the applicable Special Servicer shall either (A) implement the Proposed Plan (after acquiring the respective Mortgaged Property as Administered REO Property) or (B) manage and operate such property in a manner that would not result in the imposition of an REO Tax on the income derived from such property. Subject to Section 3.17(b), the applicable Special Servicer’s decision as to how each Administered REO Property shall be managed and operated shall be in accordance with the Servicing Standard. Neither the applicable Special Servicer nor the Tax Administrator shall be liable to the Certificateholders, the Trustee, the Trust, the other parties hereto, any beneficiaries hereof or each other for errors in judgment made in good faith in the exercise of their discretion while performing their respective responsibilities under this Section 3.17(a) with respect to any Administered REO Property. Nothing in this Section 3.17(a) is intended to prevent the sale of any Administered REO Property pursuant to the terms and subject to the conditions of Section 3.18. (b) If title to any Administered REO Property is acquired, the applicable Special Servicer shall manage, conserve, protect and operate such Administered REO Property for the benefit of the Certificateholders (or, in the case of any Administered REO Property related to a Serviced Loan Combination, on behalf of both the Certificateholders and the related Serviced Pari Passu Companion Loan Holder(s)), as a collective whole, solely for the purpose of its prompt disposition and sale in accordance with Section 3.18, in a manner that does not cause such Administered REO Property to fail to qualify as “foreclosure property” within the meaning of Section 860G(a)(8) of the Code or, except as contemplated by Section 3.17(a), result in the receipt by any REMIC Pool of any “income from non-permitted assets” within the meaning of Section 860F(a)(2)(B) of the Code, in an Adverse REMIC Event with respect to any REMIC Pool or an Adverse Grantor Trust Event with respect to the Grantor Trust Pool. Except as contemplated by Section 3.17(a), the applicable Special Servicer shall not enter into any lease, contract or other agreement with respect to any Administered REO Property that causes the Trust to receive, and (unless required to do so under any lease, contract or agreement to which the applicable Special Servicer or the Trust may become a party or successor to a party due to a foreclosure, deed-in-lieu of foreclosure or other similar exercise of a creditor’s rights or remedies with respect to the related Serviced Mortgage Loan) shall not, with respect to any Administered REO Property, cause or allow the Trust to receive, any “net income from foreclosure property” that is subject to taxation under the REMIC Provisions. Subject to the foregoing, however, the applicable Special Servicer shall have full power and authority to do any and all things in connection with the administration of any Administered REO Property, as are consistent with the Servicing Standard and, consistent therewith, shall withdraw from its REO Account, to the extent of amounts on deposit therein with respect to such Administered REO Property, funds necessary for the proper operation, management, maintenance and disposition of such Administered REO Property, including: (i) all insurance premiums due and payable in respect of such Administered REO Property; (ii) all real estate taxes and assessments in respect of such Administered REO Property that may result in the imposition of a lien thereon; (iii) any ground rents in respect of such Administered REO Property; and (iv) all other costs and expenses necessary to maintain, lease, sell, protect, manage, operate and restore such Administered REO Property. To the extent that amounts on deposit in the applicable Special Servicer’s REO Account with respect to any Administered REO Property are insufficient for the purposes contemplated by the preceding sentence with respect to such REO Property, the applicable Master Servicer shall, at the direction of the applicable Special Servicer, but subject to Section 3.11(h), make a Servicing Advance of such amounts as are necessary for such purposes unless the applicable Master Servicer or the applicable Special Servicer determines, in its reasonable judgment, that such advances would, if made, be Nonrecoverable Servicing Advances; provided, that the applicable Master Servicer may in its sole discretion make any such Servicing Advance without regard to recoverability if it is a necessary fee or expense incurred in connection with the defense or prosecution of legal proceedings. (c) The applicable Special Servicer may, and, if required for the Administered REO Property to continue to qualify as “foreclosure property” within the meaning of Section 860G(a)(8) of the Code, shall, contract with any Independent Contractor for the operation and management of any Administered REO Property, provided that: (i) the terms and conditions of any such contract may not be inconsistent herewith and shall reflect an agreement reached at arm’s length; (ii) the fees of such Independent Contractor (which shall be expenses of the Trust) shall be reasonable and customary in consideration of the nature and locality of such Administered REO Property; (iii) any such contract shall be consistent with Treasury Regulations Section 1.856-6(e)(6) and shall require, or shall be administered to require, that the Independent Contractor, in a timely manner, (A) pay all costs and expenses incurred in connection with the operation and management of such Administered REO Property, including those listed in Section 3.17(b) above, and (B) remit all related revenues collected (net of its fees and such costs and expenses) to the applicable Special Servicer upon receipt; (iv) none of the provisions of this Section 3.17(c) relating to any such contract or to actions taken through any such Independent Contractor shall be deemed to relieve the applicable Special Servicer of any of its duties and obligations hereunder with respect to the operation and management of any such Administered REO Property; and (v) the applicable Special Servicer shall be obligated with respect thereto to the same extent as if it alone were performing all duties and obligations in connection with the operation and management of such Administered REO Property, and the applicable Special Servicer shall comply with the Servicing Standard in maintaining such Independent Contractor. The applicable Special Servicer shall be entitled to enter into any agreement with any Independent Contractor performing services for it related to its duties and obligations hereunder for indemnification of the applicable Special Servicer by such Independent Contractor, and nothing in this Agreement shall be deemed to limit or modify such indemnification. To the extent the costs of any contract with any Independent Contractor for the operation and management of any Administered REO Property are greater than the revenues available from such property, such excess costs shall be covered by, and be reimbursable as, a Servicing Advance. (d) Without limiting the generality of the foregoing, the applicable Special Servicer shall not: (i) permit the Trust Fund to enter into, renew or extend any New Lease with respect to any Administered REO Property, if the New Lease by its terms will give rise to any income that does not constitute Rents from Real Property; (ii) permit any amount to be received or accrued under any New Lease other than amounts that will constitute Rents from Real Property; (iii) authorize or permit any construction on any Administered REO Property, other than the repair or maintenance thereof or the completion of a building or other improvement thereon, and then only if more than 10% of the construction of such building or other improvement was completed before default on the related Mortgage Loan become imminent, all within the meaning of Section 856(e)(4)(B) of the Code; or (iv) except as otherwise provided for in Sections 3.17(a)(i), 3.17(a)(ii) and 3.17(a)(iii) and above, Directly Operate, or allow any other Person, other than an Independent Contractor, to Directly Operate, any Administered REO Property on any date more than ninety (90) days after its date of acquisition by or on behalf of the Trust Fund; unless, in any such case, the applicable Special Servicer has obtained an Opinion of Counsel (the cost of which shall be paid by the applicable Master Servicer as a Servicing Advance) to the effect that such action will not cause such Administered REO Property to fail to qualify as “foreclosure property” within the meaning of Section 860G(a)(8) of the Code at any time that it is held for the benefit of the Trust Fund, in which case the applicable Special Servicer may take such actions as are specified in such Opinion of Counsel. (e) Notwithstanding anything to the contrary, this Section 3.17 shall not apply to any REO Property related to a Non-Trust-Serviced Pooled Mortgage Loan.

Appears in 2 contracts

Samples: Pooling and Servicing Agreement (WFRBS Commercial Mortgage Trust 2012-C8), Pooling and Servicing Agreement (WFRBS Commercial Mortgage Trust 2012-C8)

Management of Administered REO Property. (a) Prior to the acquisition of title to any Mortgaged Property securing a defaulted Serviced Mortgage Loan, the ~~applicable~~ Special Servicer shall review the operation of such Mortgaged Property and determine the nature of the income that would be derived from such property if it were acquired by the Trust. If the ~~applicable~~ Special Servicer determines from such review that: (i) None of the income from Directly Operating such Mortgaged Property would be subject to tax as “"net income from foreclosure property” " within the meaning of the REMIC Provisions (such tax referred to herein as an “"REO Tax”"), then such Mortgaged Property may be Directly Operated by the ~~applicable~~ Special Servicer as ~~Administered~~ REO Property, other than holding such ~~Administered~~ REO Property for sale or lease or performing construction work thereon; (ii) Directly Operating such Mortgaged Property as an ~~Administered~~ REO Property could result in income from such property that would be subject to an REO Tax, but that a lease of such property to another party to operate such property, or the performance of some services by an Independent Contractor with respect to such property, or another method of operating such property would not result in income subject to an REO Tax, then the ~~applicable~~ Special Servicer may (provided that in the judgment of the ~~applicable~~ Special Servicer, exercised in accordance with the Servicing Standard, it is commercially reasonable) so lease or otherwise operate such ~~Administered~~ REO Property; or (iii) It is reasonable to believe that Directly Operating such property as ~~Administered~~ REO Property could result in income subject to an REO Tax and either (i) that the income or earnings with respect to such REO Property will offset any REO Tax relating to such income or earnings and will maximize the net recovery from the applicable ~~Administered~~ REO Property to the Certificateholders (taking into account that any related Serviced ~~Pari Passu Companion~~ Non-Pooled Mortgage Loan ~~Holder(s~~Noteholder(s) do not have any obligation under the related Mortgage Loan Group Intercreditor Agreement to bear the effect of any such REO Tax) or (ii) that no commercially reasonable means exists to operate such property as ~~Administered~~ REO Property without the Trust incurring or possibly incurring an REO Tax on income from such property, then the ~~applicable~~ Special Servicer shall deliver to the Tax Administrator and the ~~Subordinate~~ Controlling Class ~~Representative~~Representative (and, if a Serviced Mortgage Loan Group is involved, the related Serviced Mortgage Loan Group Controlling Party to the extent required under the applicable Mortgage Loan Group Intercreditor Agreement), in writing, a proposed plan (the “"Proposed Plan”") to manage such property as ~~Administered~~ REO Property. Such plan shall include potential sources of income and good faith estimates of the amount of income from each such source. Within a reasonable period of time after receipt of such plan, the Tax Administrator shall consult with the ~~applicable~~ Special Servicer and shall advise the ~~applicable~~ Special Servicer of the Trust’s 's federal income tax reporting position with respect to the various sources of income that the Trust would derive under the Proposed Plan. In addition, the Tax Administrator shall (to the maximum extent reasonably possible and at a reasonable fee, which fee shall be an expense of the Trust) advise the ~~applicable~~ Special Servicer of the estimated amount of taxes that the Trust would be required to pay with respect to each such source of income. After receiving the information described in the two preceding sentences from the Tax Administrator, the ~~applicable~~ Special Servicer shall either (A) implement the Proposed Plan (after acquiring the respective Mortgaged Property as ~~Administered~~ REO Property) or (B) manage and operate such property in a manner that would not result in the imposition of an REO Tax on the income derived from such property. Subject to Section 3.17(b), the ~~applicable~~ Special Servicer’s 's decision as to how each Administered REO Property shall be managed and operated shall be in accordance with the Servicing Standard. Neither the applicable Special Servicer nor the Tax Administrator shall be liable to the Certificateholders, the Trustee, the Trust, the other parties hereto, any beneficiaries hereof or each other for errors in judgment made in good faith in the exercise of their discretion while performing their respective responsibilities under this Section 3.17(a) with respect to any Administered REO Property. Nothing in this Section 3.17(a) is intended to prevent the sale of any Administered REO Property pursuant to the terms and subject to the conditions of Section 3.18. (b) If title to any Administered REO Property is acquired, the ~~applicable~~ Special Servicer shall manage, conserve, protect and operate such ~~Administered~~ REO Property for the benefit of the Certificateholders (or, in the case of any ~~Administered~~ REO Property related to a Serviced Mortgage Loan ~~Combination~~Group, on behalf of both the Certificateholders and the related Serviced ~~Pari Passu Companion~~ Non-Pooled Mortgage Loan ~~Holder(s~~Noteholder(s)), as a collective whole, solely for the purpose of its prompt disposition and sale in accordance with Section 3.18, in a manner that does not cause such Administered REO Property to fail to qualify as “"foreclosure property” " within the meaning of Section 860G(a)(8) of the Code or, except as contemplated by Section 3.17(a), result in the receipt by any REMIC Pool of any “"income from non-permitted assets” " within the meaning of Section 860F(a)(2)(B) of the Code, in an Adverse REMIC Event with respect to any REMIC Pool or in an Adverse Grantor Trust Event with respect to ~~the~~ any Grantor Trust Pool. Except as contemplated by Section 3.17(a), the ~~applicable~~ Special Servicer shall not enter into any lease, contract or other agreement with respect to any Administered REO Property that causes the Trust to receive, and (unless required to do so under any lease, contract or agreement to which the ~~applicable~~ Special Servicer or the Trust may become a party or successor to a party due to a foreclosure, deed-in-lieu of foreclosure or other similar exercise of a creditor’s 's rights or remedies with respect to the related Serviced Mortgage Loan) shall not, with respect to any Administered REO Property, cause or allow the Trust to receive, any “"net income from foreclosure property” " that is subject to taxation under the REMIC Provisions. Subject to the foregoing, however, the ~~applicable~~ Special Servicer shall have full power and authority to do any and all things in connection with the administration of any Administered REO Property, as are consistent with the Servicing Standard and, consistent therewith, shall withdraw from its REO ~~Account~~Account , to the extent of amounts on deposit therein with respect to such ~~Administered~~ REO Property, funds necessary for the proper operation, management, maintenance and disposition of such ~~Administered~~ REO Property, including: (i) all insurance premiums due and payable in respect of such ~~Administered~~ REO Property; (ii) all real estate taxes and assessments in respect of such ~~Administered~~ REO Property that may result in the imposition of a lien thereon; (iii) any ground rents in respect of such ~~Administered~~ REO Property; and (iv) all other costs and expenses necessary to maintain, lease, sell, protect, manage, operate and restore such ~~Administered~~ REO Property. To the extent that amounts on deposit in the ~~applicable~~ Special Servicer’s 's REO Account with respect to any Administered REO Property are insufficient for the purposes contemplated by the preceding sentence with respect to such REO Property, the applicable Master Servicer shall, at the direction of the ~~applicable~~ Special Servicer, but subject to Section 3.11(h), make a Servicing Advance of such amounts as are necessary for such purposes unless ~~the applicable~~ such Master Servicer or the ~~applicable~~ Special Servicer determines, in its reasonable judgment, that such advances would, if made, be Nonrecoverable Servicing Advances; provided, however, that ~~the applicable~~ such Master Servicer may in its sole discretion make any such Servicing Advance without regard to recoverability if it is a necessary fee or expense incurred in connection with the defense or prosecution of legal proceedings. (c) The ~~applicable~~ Special Servicer may, and, if required for the Administered REO Property to continue to qualify as “"foreclosure property” " within the meaning of Section 860G(a)(8) of the Code, shall, contract with any Independent Contractor for the operation and management of any Administered REO Property, provided that: (i) the terms and conditions of any such contract may not be inconsistent herewith and shall reflect an agreement reached at arm’s 's length; (ii) the fees of such Independent Contractor (which shall be expenses of the Trust) shall be reasonable and customary in consideration of the nature and locality of such ~~Administered~~ REO Property; (iii) any such contract shall be consistent with Treasury Regulations Section 1.856-6(e)(6) and shall require, or shall be administered to require, that the Independent Contractor, in a timely manner, (A) pay all costs and expenses incurred in connection with the operation and management of such ~~Administered~~ REO Property, including those listed in Section 3.17(b) above, and (B) remit all related revenues collected (net of its fees and such costs and expenses) to the ~~applicable~~ Special Servicer upon receipt; (iv) none of the provisions of this Section 3.17(c) relating to any such contract or to actions taken through any such Independent Contractor shall be deemed to relieve the ~~applicable~~ Special Servicer of any of its duties and obligations hereunder with respect to the operation and management of any such ~~Administered~~ REO Property; and (v) the ~~applicable~~ Special Servicer shall be obligated with respect thereto to the same extent as if it alone were performing all duties and obligations in connection with the operation and management of such ~~Administered~~ REO Property, and the ~~applicable~~ Special Servicer shall comply with the Servicing Standard in maintaining such Independent Contractor. The ~~applicable~~ Special Servicer shall be entitled to enter into any agreement with any Independent Contractor performing services for it related to its duties and obligations hereunder for indemnification of the ~~applicable~~ Special Servicer by such Independent Contractor, and nothing in this Agreement shall be deemed to limit or modify such indemnification. To the extent the costs of any contract with any Independent Contractor for the operation and management of any Administered REO Property are greater than the revenues available from such property, such excess costs shall be covered by, and be reimbursable as, a Servicing Advance. (d) Without limiting the generality of the foregoing, the ~~applicable~~ Special Servicer shall not: (i) permit the Trust Fund to enter into, renew or extend any New Lease with respect to any ~~Administered~~ REO Property, if the New Lease by its terms will give rise to any income that does not constitute Rents from Real Property; (ii) permit any amount to be received or accrued under any New Lease other than amounts that will constitute Rents from Real Property; (iii) authorize or permit any construction on any ~~Administered~~ REO Property, other than the repair or maintenance thereof or the completion of a building or other improvement thereon, and then only if more than 10% of the construction of such building or other improvement was completed before default on the related Mortgage Loan become imminent, all within the meaning of Section 856(e)(4)(B) of the Code; or (iv) except as otherwise provided for in ~~Sections~~ Section 3.17(a)(i), ~~3.17(a)(ii~~(a)(ii) and ~~3.17(a)(iii~~(a)(iii) and above, Directly Operate, or allow any other Person, other than an Independent Contractor, to Directly Operate, any ~~Administered~~ REO Property on any date more than ~~ninety (90)~~ 90 days after its date of acquisition by or on behalf of the Trust Fund; unless, in any such case, the applicable Special Servicer has obtained an Opinion of Counsel (the cost of which shall be paid by the applicable Master Servicer as a Servicing Advance) to the effect that such action will not cause such Administered REO Property to fail to qualify as “foreclosure property” within the meaning of Section 860G(a)(8) of the Code at any time that it is held for the benefit of the Trust Fund, in which case the applicable Special Servicer may take such actions as are specified in such Opinion of CounselAcquisition Date. (e) Notwithstanding anything to the contrary, this Section 3.17 shall not apply to any REO Property related to a Non-Trust-Serviced Pooled Mortgage Loan.

Appears in 2 contracts

Samples: Pooling and Servicing Agreement (Bear Stearns Commercial Mortgage Securities Trust 2005-Pwr9), Pooling and Servicing Agreement (Bear Stearns Commercial Mortgage Securities Trust 2006-Pwr11)

Management of Administered REO Property. (a) Prior to the acquisition of title to any Mortgaged Property securing a defaulted Serviced Mortgage Loan, the applicable Special Servicer shall review the operation of such Mortgaged Property and determine the nature of the income that would be derived from such property if it were acquired by the Trust. If the applicable Special Servicer determines from such review that: (i) None of the income from Directly Operating such Mortgaged Property would be subject to tax as “"net income from foreclosure property” " within the meaning of the REMIC Provisions (such tax referred to herein as an “"REO Tax”"), then such Mortgaged Property may be Directly Operated by ~~the applicable~~ such Special Servicer as ~~Administered~~ REO Property, other than holding such ~~Administered~~ REO Property for sale or lease or performing construction work thereon; (ii) Directly Operating such Mortgaged Property as an ~~Administered~~ REO Property could result in income from such property that would be subject to an REO Tax, but that a lease of such property to another party to operate such property, or the performance of some services by an Independent Contractor with respect to such property, or another method of operating such property would not result in income subject to an REO Tax, then ~~the applicable~~ such Special Servicer may (provided that in the judgment of ~~the applicable~~ such Special Servicer, exercised in accordance with the Servicing Standard, it is commercially reasonable) so lease or otherwise operate such ~~Administered~~ REO Property; or (iii) It is reasonable to believe that Directly Operating such property as ~~Administered~~ REO Property could result in income subject to an REO Tax and either (i) that the income or earnings with respect to such REO Property will offset any REO Tax relating to such income or earnings and will maximize the net recovery from the applicable ~~Administered~~ REO Property to the Certificateholders (taking into account that any related Serviced ~~Pari Passu Companion~~ Non-Pooled Mortgage Loan ~~Holder(s~~Noteholder(s) do not have any obligation under the related Mortgage Loan Group Intercreditor Agreement to bear the effect of any such REO Tax) or (ii) that no commercially reasonable means exists to operate such property as ~~Administered~~ REO Property without the Trust incurring or possibly incurring an REO Tax on income from such property, then ~~the applicable~~ such Special Servicer shall deliver to the Tax Administrator and the ~~Subordinate~~ Controlling Class ~~Representative~~Representative (and, if a Serviced Mortgage Loan Group is involved, the related Serviced Mortgage Loan Group Controlling Party to the extent required under the applicable Mortgage Loan Group Intercreditor Agreement), in writing, a proposed plan (the “"Proposed Plan”") to manage such property as ~~Administered~~ REO Property. Such plan shall include potential sources of income and good faith estimates of the amount of income from each such source. Within a reasonable period of time after receipt of such plan, the Tax Administrator shall consult with the applicable Special Servicer and shall advise ~~the applicable~~ such Special Servicer of the Trust’s 's federal income tax reporting position with respect to the various sources of income that the Trust would derive under the Proposed Plan. In addition, the Tax Administrator shall (to the maximum extent reasonably possible and at a reasonable fee, which fee shall be an expense of the Trust) advise ~~the applicable~~ such Special Servicer of the estimated amount of taxes that the Trust would be required to pay with respect to each such source of income. After receiving the information described in the two preceding sentences from the Tax Administrator, ~~the applicable~~ such Special Servicer shall either (A) implement the Proposed Plan (after acquiring the respective Mortgaged Property as ~~Administered~~ REO Property) or (B) manage and operate such property in a manner that would not result in the imposition of an REO Tax on the income derived from such property. Subject to Section 3.17(b), the applicable Special Servicer’s 's decision as to how each Administered REO Property shall be managed and operated shall be in accordance with the Servicing Standard. Neither the applicable Special Servicer nor the Tax Administrator shall be liable to the Certificateholders, the Trustee, the Trust, the other parties hereto, any beneficiaries hereof or each other for errors in judgment made in good faith in the exercise of their discretion while performing their respective responsibilities under this Section 3.17(a) with respect to any Administered REO Property. Nothing in this Section 3.17(a) is intended to prevent the sale of any Administered REO Property pursuant to the terms and subject to the conditions of Section 3.18. (b) If title to any Administered REO Property is acquired, the applicable Special Servicer shall manage, conserve, protect and operate such Administered REO Property for the benefit of the Certificateholders (or, in the case of any Administered REO Property related to a Serviced Loan Combination, on behalf of both the Certificateholders and the related Serviced Pari Passu Companion Loan Holder(s)), as a collective whole, solely for the purpose of its prompt disposition and sale in accordance with Section 3.18, in a manner that does not cause such Administered REO Property to fail to qualify as “foreclosure property” within the meaning of Section 860G(a)(8) of the Code or, except as contemplated by Section 3.17(a), result in the receipt by any REMIC Pool of any “income from non-permitted assets” within the meaning of Section 860F(a)(2)(B) of the Code, in an Adverse REMIC Event with respect to any REMIC Pool or an Adverse Grantor Trust Event with respect to the Grantor Trust Pool. Except as contemplated by Section 3.17(a), the applicable Special Servicer shall not enter into any lease, contract or other agreement with respect to any Administered REO Property that causes the Trust to receive, and (unless required to do so under any lease, contract or agreement to which the applicable Special Servicer or the Trust may become a party or successor to a party due to a foreclosure, deed-in-lieu of foreclosure or other similar exercise of a creditor’s rights or remedies with respect to the related Serviced Mortgage Loan) shall not, with respect to any Administered REO Property, cause or allow the Trust to receive, any “net income from foreclosure property” that is subject to taxation under the REMIC Provisions. Subject to the foregoing, however, the applicable Special Servicer shall have full power and authority to do any and all things in connection with the administration of any Administered REO Property, as are consistent with the Servicing Standard and, consistent therewith, shall withdraw from its REO Account, to the extent of amounts on deposit therein with respect to such Administered REO Property, funds necessary for the proper operation, management, maintenance and disposition of such Administered REO Property, including: (i) all insurance premiums due and payable in respect of such Administered REO Property; (ii) all real estate taxes and assessments in respect of such Administered REO Property that may result in the imposition of a lien thereon; (iii) any ground rents in respect of such Administered REO Property; and (iv) all other costs and expenses necessary to maintain, lease, sell, protect, manage, operate and restore such Administered REO Property. To the extent that amounts on deposit in the applicable Special Servicer’s REO Account with respect to any Administered REO Property are insufficient for the purposes contemplated by the preceding sentence with respect to such REO Property, the applicable Master Servicer shall, at the direction of the applicable Special Servicer, but subject to Section 3.11(h), make a Servicing Advance of such amounts as are necessary for such purposes unless the applicable Master Servicer or the applicable Special Servicer determines, in its reasonable judgment, that such advances would, if made, be Nonrecoverable Servicing Advances; provided, that the applicable Master Servicer may in its sole discretion make any such Servicing Advance without regard to recoverability if it is a necessary fee or expense incurred in connection with the defense or prosecution of legal proceedings. (c) The applicable Special Servicer may, and, if required for the Administered REO Property to continue to qualify as “foreclosure property” within the meaning of Section 860G(a)(8) of the Code, shall, contract with any Independent Contractor for the operation and management of any Administered REO Property, provided that: (i) the terms and conditions of any such contract may not be inconsistent herewith and shall reflect an agreement reached at arm’s length; (ii) the fees of such Independent Contractor (which shall be expenses of the Trust) shall be reasonable and customary in consideration of the nature and locality of such Administered REO Property; (iii) any such contract shall be consistent with Treasury Regulations Section 1.856-6(e)(6) and shall require, or shall be administered to require, that the Independent Contractor, in a timely manner, (A) pay all costs and expenses incurred in connection with the operation and management of such Administered REO Property, including those listed in Section 3.17(b) above, and (B) remit all related revenues collected (net of its fees and such costs and expenses) to the applicable Special Servicer upon receipt; (iv) none of the provisions of this Section 3.17(c) relating to any such contract or to actions taken through any such Independent Contractor shall be deemed to relieve the applicable Special Servicer of any of its duties and obligations hereunder with respect to the operation and management of any such Administered REO Property; and (v) the applicable Special Servicer shall be obligated with respect thereto to the same extent as if it alone were performing all duties and obligations in connection with the operation and management of such Administered REO Property, and the applicable Special Servicer shall comply with the Servicing Standard in maintaining such Independent Contractor. The applicable Special Servicer shall be entitled to enter into any agreement with any Independent Contractor performing services for it related to its duties and obligations hereunder for indemnification of the applicable Special Servicer by such Independent Contractor, and nothing in this Agreement shall be deemed to limit or modify such indemnification. To the extent the costs of any contract with any Independent Contractor for the operation and management of any Administered REO Property are greater than the revenues available from such property, such excess costs shall be covered by, and be reimbursable as, a Servicing Advance. (d) Without limiting the generality of the foregoing, the applicable Special Servicer shall not: (i) permit the Trust Fund to enter into, renew or extend any New Lease with respect to any Administered REO Property, if the New Lease by its terms will give rise to any income that does not constitute Rents from Real Property; (ii) permit any amount to be received or accrued under any New Lease other than amounts that will constitute Rents from Real Property; (iii) authorize or permit any construction on any Administered REO Property, other than the repair or maintenance thereof or the completion of a building or other improvement thereon, and then only if more than 10% of the construction of such building or other improvement was completed before default on the related Mortgage Loan become imminent, all within the meaning of Section 856(e)(4)(B) of the Code; or (iv) except as otherwise provided for in Sections 3.17(a)(i), 3.17(a)(ii) and 3.17(a)(iii) and above, Directly Operate, or allow any other Person, other than an Independent Contractor, to Directly Operate, any Administered REO Property on any date more than ninety (90) days after its date of acquisition by or on behalf of the Trust Fund; unless, in any such case, the applicable Special Servicer has obtained an Opinion of Counsel (the cost of which shall be paid by the applicable Master Servicer as a Servicing Advance) to the effect that such action will not cause such Administered REO Property to fail to qualify as “foreclosure property” within the meaning of Section 860G(a)(8) of the Code at any time that it is held for the benefit of the Trust Fund, in which case the applicable Special Servicer may take such actions as are specified in such Opinion of Counsel. (e) Notwithstanding anything to the contrary, this Section 3.17 shall not apply to any REO Property related to a Non-Trust-Serviced Pooled Mortgage Loan.

Appears in 2 contracts

Samples: Pooling and Servicing Agreement (Bear Stearns Commercial Mortgage Securities Trust 2005-Pwr8), Pooling and Servicing Agreement (Bear Stearns Commercial Mortgage Securities Inc)

Management of Administered REO Property. (a) Prior to the acquisition of title to any Mortgaged Property securing a defaulted Serviced Mortgage Loan, the ~~applicable~~ Special Servicer shall review the operation of such Mortgaged Property and determine the nature of the income that would be derived from such property if it were acquired by the Trust. If the ~~applicable~~ Special Servicer determines from such review that: (i) None of the income from Directly Operating such Mortgaged Property would be subject to tax as “net income from foreclosure property” within the meaning of the REMIC Provisions (such tax referred to herein as an “REO Tax”), then such Mortgaged Property may be Directly Operated by the ~~applicable~~ Special Servicer as Administered REO Property, other than holding such Administered REO Property for sale or lease or performing construction work thereon; (ii) Directly Operating such Mortgaged Property as an Administered REO Property could result in income from such property that would be subject to an REO Tax, but that a lease of such property to another party to operate such property, or the performance of some services by an Independent Contractor with respect to such property, or another method of operating such property would not result in income subject to an REO Tax, then the ~~applicable~~ Special Servicer may (provided that in the judgment of the ~~applicable~~ Special Servicer, exercised in accordance with the Servicing Standard, it is commercially reasonable) so lease or otherwise operate such Administered REO Property; or (iii) It is reasonable to believe that Directly Operating such property as Administered REO Property could result in income subject to an REO Tax and either (i) that the income or earnings with respect to such REO Property will offset any REO Tax relating to such income or earnings and will maximize the net recovery from the applicable Administered REO Property to the Certificateholders (taking into account that any related Serviced Pari Passu Companion Loan Holder(s) do not have any obligation under the related Intercreditor Agreement to bear the effect of any such REO Tax) or (ii) that no commercially reasonable means exists to operate such property as Administered REO Property without the Trust incurring or possibly incurring an REO Tax on income from such property, then the ~~applicable~~ Special Servicer shall deliver to the Tax Administrator and the Subordinate Class Representative, in writing, a proposed plan (the “Proposed Plan”) to manage such property as Administered REO Property. Such plan shall include potential sources of income and good faith estimates of the amount of income from each such source. Within a reasonable period of time after receipt of such plan, the Tax Administrator shall consult with the ~~applicable~~ Special Servicer and shall advise the ~~applicable~~ Special Servicer of the Trust’s federal income tax reporting position with respect to the various sources of income that the Trust would derive under the Proposed Plan. In addition, the Tax Administrator shall (to the maximum extent reasonably possible and at a reasonable fee, which fee shall be an expense of the Trust) advise the ~~applicable~~ Special Servicer of the estimated amount of taxes that the Trust would be required to pay with respect to each such source of income. After receiving the information described in the two preceding sentences from the Tax Administrator, the ~~applicable~~ Special Servicer shall either (A) implement the Proposed Plan (after acquiring the respective Mortgaged Property as Administered REO Property) or (B) manage and operate such property in a manner that would not result in the imposition of an REO Tax on the income derived from such property. Subject to Section 3.17(b), the ~~applicable~~ Special Servicer’s decision as to how each Administered REO Property shall be managed and operated shall be in accordance with the Servicing Standard. Neither the ~~applicable~~ Special Servicer nor the Tax Administrator shall be liable to the Certificateholders, the Trustee, the Trust, the other parties hereto, any beneficiaries hereof or each other for errors in judgment made in good faith in the exercise of their discretion while performing their respective responsibilities under this Section 3.17(a) with respect to any Administered REO Property. Nothing in this Section 3.17(a) is intended to prevent the sale of any Administered REO Property pursuant to the terms and subject to the conditions of Section 3.18. (b) If title to any Administered REO Property is acquired, the ~~applicable~~ Special Servicer shall manage, conserve, protect and operate such Administered REO Property for the benefit of the Certificateholders (or, in the case of any Administered REO Property related to a Serviced Loan Combination, on behalf of both the Certificateholders and the related Serviced Pari Passu Companion Loan Holder(s)), as a collective whole, solely for the purpose of its prompt disposition and sale in accordance with Section ~~3.18~~3.18 below, in a manner that does not cause such Administered REO Property to fail to qualify as “foreclosure property” within the meaning of Section 860G(a)(8) of the Code or, except as contemplated by Section 3.17(a)) above, result in the receipt by any REMIC Pool of any “income from non-permitted assets” within the meaning of Section 860F(a)(2)(B) of the Code, in an Adverse REMIC Event with respect to any REMIC Pool or an Adverse Grantor Trust Event with respect to the Grantor Trust Pool. Except as contemplated by Section 3.17(a)) above, the ~~applicable~~ Special Servicer shall not enter into any lease, contract or other agreement with respect to any Administered REO Property that causes the Trust to receive, and (unless required to do so under any lease, contract or agreement to which the ~~applicable~~ Special Servicer or the Trust may become a party or successor to a party due to a foreclosure, deed-in-lieu of foreclosure or other similar exercise of a creditor’s rights or remedies with respect to the related Serviced Mortgage Loan) shall not, with respect to any Administered REO Property, cause or allow the Trust to receive, any “net income from foreclosure property” that is subject to taxation under the REMIC Provisions. Subject to the foregoing, however, the ~~applicable~~ Special Servicer shall have full power and authority to do any and all things in connection with the administration of any Administered REO Property, as are consistent with the Servicing Standard and, consistent therewith, shall withdraw from its REO Account, to the extent of amounts on deposit therein with respect to such Administered REO Property, funds necessary for the proper operation, management, maintenance and disposition of such Administered REO Property, including: (i) all insurance premiums due and payable in respect of such Administered REO Property; (ii) all real estate taxes and assessments in respect of such Administered REO Property that may result in the imposition of a lien thereon; (iii) any ground rents in respect of such Administered REO Property; and (iv) all other costs and expenses necessary to maintain, lease, sell, protect, manage, operate and restore such Administered REO Property. To the extent that amounts on deposit in the ~~applicable~~ Special Servicer’s REO Account with respect to any Administered REO Property are insufficient for the purposes contemplated by the preceding sentence with respect to such REO Property, the ~~applicable~~ Master Servicer shall, at the direction of the ~~applicable~~ Special Servicer, but subject to Section 3.11(h), make a Servicing Advance of such amounts as are necessary for such purposes unless the ~~applicable~~ Master Servicer or the ~~applicable~~ Special Servicer determines, in its reasonable judgment, that such advances would, if made, be Nonrecoverable Servicing Advances; ~~provided,~~ provided that the ~~applicable~~ Master Servicer may in its sole discretion make any such Servicing Advance without regard to recoverability if it is a necessary fee or expense incurred in connection with the defense or prosecution of legal proceedings. (c) The ~~applicable~~ Special Servicer may, and, if required for the Administered REO Property to continue to qualify as “foreclosure property” within the meaning of Section 860G(a)(8) of the Code, shall, contract with any Independent Contractor for the operation and management of any Administered REO Property, provided that: (i) the terms and conditions of any such contract may not be inconsistent herewith and shall reflect an agreement reached at arm’s length; (ii) the fees of such Independent Contractor (which shall be expenses of the Trust) shall be reasonable and customary in consideration of the nature and locality of such Administered REO Property; (iii) any such contract shall be consistent with Treasury Regulations Section 1.856-6(e)(6) and shall require, or shall be administered to require, that the Independent Contractor, in a timely manner, (A) pay all costs and expenses incurred in connection with the operation and management of such Administered REO Property, including those listed in Section 3.17(b) above, and (B) remit all related revenues collected (net of its fees and such costs and expenses) to the ~~applicable~~ Special Servicer upon receipt; (iv) none of the provisions of this Section 3.17(c) relating to any such contract or to actions taken through any such Independent Contractor shall be deemed to relieve the ~~applicable~~ Special Servicer of any of its duties and obligations hereunder with respect to the operation and management of any such Administered REO Property; and (v) the ~~applicable~~ Special Servicer shall be obligated with respect thereto to the same extent as if it alone were performing all duties and obligations in connection with the operation and management of such Administered REO Property, and the ~~applicable~~ Special Servicer shall comply with the Servicing Standard in maintaining such Independent Contractor. The ~~applicable~~ Special Servicer shall be entitled to enter into any agreement with any Independent Contractor performing services for it related to its duties and obligations hereunder for indemnification of the ~~applicable~~ Special Servicer by such Independent Contractor, and nothing in this Agreement shall be deemed to limit or modify such indemnification. To the extent the costs of any contract with any Independent Contractor for the operation and management of any Administered REO Property are greater than the revenues available from such property, such excess costs shall be covered by, and be reimbursable as, a Servicing Advance. (d) Without limiting the generality of the foregoing, the ~~applicable~~ Special Servicer shall not: (i) permit the Trust Fund to enter into, renew or extend any New Lease with respect to any Administered REO Property, if the New Lease by its terms will give rise to any income that does not constitute Rents from Real Property; (ii) permit any amount to be received or accrued under any New Lease other than amounts that will constitute Rents from Real Property; (iii) authorize or permit any construction on any Administered REO Property, other than the repair or maintenance thereof or the completion of a building or other improvement thereon, and then only if more than 10% of the construction of such building or other improvement was completed before default on the related Mortgage Loan become imminent, all within the meaning of Section 856(e)(4)(B) of the Code; or (iv) except as otherwise provided for in Sections 3.17(a)(i), 3.17(a)(ii) and 3.17(a)(iii) ~~and~~ above, Directly Operate, or allow any other Person, other than an Independent Contractor, to Directly Operate, any Administered REO Property on any date more than ninety (90) days after its date of acquisition by or on behalf of the Trust Fund; unless, in any such case, the ~~applicable~~ Special Servicer has obtained an Opinion of Counsel (the cost of which shall be paid by the ~~applicable~~ Master Servicer as a Servicing Advance) to the effect that such action will not cause such Administered REO Property to fail to qualify as “foreclosure property” within the meaning of Section 860G(a)(8) of the Code at any time that it is held for the benefit of the Trust Fund, in which case the ~~applicable~~ Special Servicer may take such actions as are specified in such Opinion of Counsel. (e) Notwithstanding anything to the contrary, this Section 3.17 shall not apply to any REO Property related to a Non-Trust-Serviced Pooled Mortgage Loan.

Appears in 2 contracts

Samples: Pooling and Servicing Agreement (Wells Fargo Commercial Mortgage Trust 2014-Lc18), Pooling and Servicing Agreement (WFRBS Commercial Mortgage Trust 2014-C25)

Management of Administered REO Property. (a) Prior to the acquisition of title to any Mortgaged Property securing a defaulted Serviced Mortgage Loan or the Trust Subordinate Companion Loan, the ~~applicable~~ Special Servicer shall review the operation of such Mortgaged Property and determine the nature of the income that would be derived from such property if it were acquired by the Trust. If the ~~applicable~~ Special Servicer determines from such review that: (i) None of the income from Directly Operating such Mortgaged Property would be subject to tax as “net income from foreclosure property” within the meaning of the REMIC Provisions (such tax referred to herein as an “REO Tax”), then such Mortgaged Property may be Directly Operated by the ~~applicable~~ Special Servicer as Administered REO Property, other than holding such Administered REO Property for sale or lease or performing construction work thereon; (ii) Directly Operating such Mortgaged Property as an Administered REO Property could result in income from such property that would be subject to an REO Tax, but that a lease of such property to another party to operate such property, or the performance of some services by an Independent Contractor with respect to such property, or another method of operating such property would not result in income subject to an REO Tax, then the ~~applicable~~ Special Servicer may (provided that in the judgment of the ~~applicable~~ Special Servicer, exercised in accordance with the Servicing Standard, it is commercially reasonable) so lease or otherwise operate such Administered REO Property; or (iii) It is reasonable to believe that Directly Operating such property as Administered REO Property could result in income subject to an REO Tax and either (i) that the income or earnings with respect to such REO Property will offset any REO Tax relating to such income or earnings and will maximize the net recovery from the applicable Administered REO Property to the Certificateholders (including, in the case of the Trust Subordinate Companion Loan, the Holders of the Class SJ Certificates) (taking into account that any related Serviced Pari Passu Companion Loan Holder(s) do not have any obligation under the related Intercreditor Agreement to bear the effect of any such REO Tax) or (ii) that no commercially reasonable means exists to operate such property as Administered REO Property without the Trust incurring or possibly incurring an REO Tax on income from such property, then the ~~applicable~~ Special Servicer shall deliver to the Tax Administrator and the Subordinate Class Representative (or, with respect to the St. Xxxxx Town Center Loan Combination prior to the occurrence and continuance of a Class SJ Control Appraisal Period in respect of the senior-most Class of Control-Eligible Loan-Specific Certificates, the Loan-Specific Subordinate Class Representative), in writing, a proposed plan (the “Proposed Plan”) to manage such property as Administered REO Property. Such plan shall include potential sources of income and good faith estimates of the amount of income from each such source. Within a reasonable period of time after receipt of such plan, the Tax Administrator shall consult with the ~~applicable~~ Special Servicer and shall advise the ~~applicable~~ Special Servicer of the Trust’s federal income tax reporting position with respect to the various sources of income that the Trust would derive under the Proposed Plan. In addition, the Tax Administrator shall (to the maximum extent reasonably possible and at a reasonable fee, which fee shall be an expense of the Trust) advise the ~~applicable~~ Special Servicer of the estimated amount of taxes that the Trust would be required to pay with respect to each such source of income. After receiving the information described in the two preceding sentences from the Tax Administrator, the ~~applicable~~ Special Servicer shall either (A) implement the Proposed Plan (after acquiring the respective Mortgaged Property as Administered REO Property) or (B) manage and operate such property in a manner that would not result in the imposition of an REO Tax on the income derived from such property. Subject to Section 3.17(b), the ~~applicable~~ Special Servicer’s decision as to how each Administered REO Property shall be managed and operated shall be in accordance with the Servicing Standard. Neither the ~~applicable~~ Special Servicer nor the Tax Administrator shall be liable to the ~~Certificateholders~~Certificateholders (including, in the case of the Trust Subordinate Companion Loan, the Holders of the Class SJ Certificates), the Trustee, the Trust, the other parties hereto, any beneficiaries hereof or each other for errors in judgment made in good faith in the exercise of their discretion while performing their respective responsibilities under this Section 3.17(a) with respect to any Administered REO Property. Nothing in this Section 3.17(a) is intended to prevent the sale of any Administered REO Property pursuant to the terms and subject to the conditions of Section 3.18. (b) If title to any Administered REO Property is acquired, the ~~applicable~~ Special Servicer shall manage, conserve, protect and operate such Administered REO Property for the benefit of the Certificateholders (or, in the case of any Administered REO Property related to a Serviced Loan Combination, on behalf of both the Certificateholders (including, in the case of the Trust Subordinate Companion Loan, the Holders of the Class SJ Certificates) and the related Serviced Pari Passu Companion Loan Holder(s)), as a collective whole, solely for the purpose of its prompt disposition and sale in accordance with Section ~~3.18~~3.18 below, in a manner that does not cause such Administered REO Property to fail to qualify as “foreclosure property” within the meaning of Section 860G(a)(8) of the Code or, except as contemplated by Section 3.17(a)) above, result in the receipt by any REMIC Pool of any “income from non-permitted assets” within the meaning of Section 860F(a)(2)(B) of the Code, in an Adverse REMIC Event with respect to any REMIC Pool or an Adverse Grantor Trust Event with respect to the Grantor Trust Pool. Except as contemplated by Section 3.17(a)) above, the ~~applicable~~ Special Servicer shall not enter into any lease, contract or other agreement with respect to any Administered REO Property that causes the Trust to receive, and (unless required to do so under any lease, contract or agreement to which the ~~applicable~~ Special Servicer or the Trust may become a party or successor to a party due to a foreclosure, deed-in-lieu of foreclosure or other similar exercise of a creditor’s rights or remedies with respect to the related Serviced Mortgage Loan or Trust Subordinate Companion Loan) shall not, with respect to any Administered REO Property, cause or allow the Trust to receive, any “net income from foreclosure property” that is subject to taxation under the REMIC Provisions. Subject to the foregoing, however, the ~~applicable~~ Special Servicer shall have full power and authority to do any and all things in connection with the administration of any Administered REO Property, as are consistent with the Servicing Standard and, consistent therewith, shall withdraw from ~~its~~ the REO Account, to the extent of amounts on deposit therein with respect to such Administered REO Property, funds necessary for the proper operation, management, maintenance and disposition of such Administered REO Property, including: (i) all insurance premiums due and payable in respect of such Administered REO Property; (ii) all real estate taxes and assessments in respect of such Administered REO Property that may result in the imposition of a lien thereon; (iii) any ground rents in respect of such Administered REO Property; and (iv) all other costs and expenses necessary to maintain, lease, sell, protect, manage, operate and restore such Administered REO Property. To the extent that amounts on deposit in the ~~applicable~~ Special Servicer’s REO Account with respect to any Administered REO Property are insufficient for the purposes contemplated by the preceding sentence with respect to such REO Property, the ~~applicable~~ Master Servicer shall, at the direction of the ~~applicable~~ Special Servicer, but subject to Section 3.11(h), make a Servicing Advance of such amounts as are necessary for such purposes unless the ~~applicable~~ Master Servicer or the ~~applicable~~ Special Servicer determines, in its reasonable judgment, that such advances would, if made, be Nonrecoverable Servicing Advances; ~~provided,~~ provided that the ~~applicable~~ Master Servicer may in its sole discretion make any such Servicing Advance without regard to recoverability if it is a necessary fee or expense incurred in connection with the defense or prosecution of legal proceedings. (c) The ~~applicable~~ Special Servicer may, and, if required for the Administered REO Property to continue to qualify as “foreclosure property” within the meaning of Section 860G(a)(8) of the Code, shall, contract with any Independent Contractor for the operation and management of any Administered REO Property, provided that: (i) the terms and conditions of any such contract may not be inconsistent herewith and shall reflect an agreement reached at arm’s length; (ii) the fees of such Independent Contractor (which shall be expenses of the Trust) shall be reasonable and customary in consideration of the nature and locality of such Administered REO Property; (iii) any such contract shall be consistent with Treasury Regulations Section 1.856-6(e)(6) and shall require, or shall be administered to require, that the Independent Contractor, in a timely manner, (A) pay all costs and expenses incurred in connection with the operation and management of such Administered REO Property, including those listed in Section 3.17(b) above, and (B) remit all related revenues collected (net of its fees and such costs and expenses) to the ~~applicable~~ Special Servicer upon receipt; (iv) none of the provisions of this Section 3.17(c) relating to any such contract or to actions taken through any such Independent Contractor shall be deemed to relieve the ~~applicable~~ Special Servicer of any of its duties and obligations hereunder with respect to the operation and management of any such Administered REO Property; and (v) the ~~applicable~~ Special Servicer shall be obligated with respect thereto to the same extent as if it alone were performing all duties and obligations in connection with the operation and management of such Administered REO Property, and the ~~applicable~~ Special Servicer shall comply with the Servicing Standard in maintaining such Independent Contractor. The ~~applicable~~ Special Servicer shall be entitled to enter into any agreement with any Independent Contractor performing services for it related to its duties and obligations hereunder for indemnification of the ~~applicable~~ Special Servicer by such Independent Contractor, and nothing in this Agreement shall be deemed to limit or modify such indemnification. To the extent the costs of any contract with any Independent Contractor for the operation and management of any Administered REO Property are greater than the revenues available from such property, such excess costs shall be covered by, and be reimbursable as, a Servicing Advance. (d) Without limiting the generality of the foregoing, the ~~applicable~~ Special Servicer shall not: (i) permit the Trust Fund to enter into, renew or extend any New Lease with respect to any Administered REO Property, if the New Lease by its terms will give rise to any income that does not constitute Rents from Real Property; (ii) permit any amount to be received or accrued under any New Lease other than amounts that will constitute Rents from Real Property; (iii) authorize or permit any construction on any Administered REO Property, other than the repair or maintenance thereof or the completion of a building or other improvement thereon, and then only if more than 10% of the construction of such building or other improvement was completed before default on the related Mortgage Loan become imminent, all within the meaning of Section 856(e)(4)(B) of the Code; or (iv) except as otherwise provided for in Sections 3.17(a)(i), 3.17(a)(ii) and 3.17(a)(iii) ~~and~~ above, Directly Operate, or allow any other Person, other than an Independent Contractor, to Directly Operate, any Administered REO Property on any date more than ninety (90) days after its date of acquisition by or on behalf of the Trust Fund; unless, in any such case, the ~~applicable~~ Special Servicer has obtained an Opinion of Counsel (the cost of which shall be paid by the ~~applicable~~ Master Servicer as a Servicing Advance) to the effect that such action will not cause such Administered REO Property to fail to qualify as “foreclosure property” within the meaning of Section 860G(a)(8) of the Code at any time that it is held for the benefit of the Trust Fund, in which case the ~~applicable~~ Special Servicer may take such actions as are specified in such Opinion of Counsel. (e) Notwithstanding anything to the contrary, this Section 3.17 shall not apply to any REO Property related to a Non-Trust-Serviced Pooled Mortgage Loan.

Appears in 2 contracts

Samples: Pooling and Servicing Agreement (WFRBS Commercial Mortgage Trust 2014-C25), Pooling and Servicing Agreement (WFRBS Commercial Mortgage Trust 2014-C24)

Management of Administered REO Property. (a) Prior to the acquisition of title to any Mortgaged Property securing a defaulted Serviced Mortgage Loan, the ~~applicable~~ Special Servicer shall review the operation of such Mortgaged Property and determine the nature of the income that would be derived from such property if it were acquired by the Trust. If the ~~applicable~~ Special Servicer determines from such review that: (i) None of the income from Directly Operating such Mortgaged Property would be subject to tax as “net income from foreclosure property” within the meaning of the REMIC Provisions (such tax referred to herein as an “REO Tax”), then such Mortgaged Property may be Directly Operated by the ~~applicable~~ Special Servicer as Administered REO Property, other than holding such Administered REO Property for sale or lease or performing construction work thereon; (ii) Directly Operating such Mortgaged Property as an Administered REO Property could result in income from such property that would be subject to an REO Tax, but that a lease of such property to another party to operate such property, or the performance of some services by an Independent Contractor with respect to such property, or another method of operating such property would not result in income subject to an REO Tax, then the ~~applicable~~ Special Servicer may (provided that in the judgment of the ~~applicable~~ Special Servicer, exercised in accordance with the Servicing Standard, it is commercially reasonable) so lease or otherwise operate such Administered REO Property; or (iii) It is reasonable to believe that Directly Operating such property as Administered REO Property could result in income subject to an REO Tax and either (i) that the income or earnings with respect to such REO Property will offset any REO Tax relating to such income or earnings and will maximize the net recovery from the applicable Administered REO Property to the Certificateholders (taking into account that any related Serviced Pari Passu Companion Loan Holder(s) do not have any obligation under the related Intercreditor Agreement to bear the effect of any such REO Tax) or (ii) that no commercially reasonable means exists to operate such property as Administered REO Property without the Trust incurring or possibly incurring an REO Tax on income from such property, then the ~~applicable~~ Special Servicer shall deliver to the Tax Administrator and the Subordinate Class Representative, in writing, a proposed plan (the “Proposed Plan”) to manage such property as Administered REO Property. Such plan shall include potential sources of income and good faith estimates of the amount of income from each such source. Within a reasonable period of time after receipt of such plan, the Tax Administrator shall consult with the ~~applicable~~ Special Servicer and shall advise the ~~applicable~~ Special Servicer of the Trust’s federal income tax reporting position with respect to the various sources of income that the Trust would derive under the Proposed Plan. In addition, the Tax Administrator shall (to the maximum extent reasonably possible and at a reasonable fee, which fee shall be an expense of the Trust) advise the ~~applicable~~ Special Servicer of the estimated amount of taxes that the Trust would be required to pay with respect to each such source of income. After receiving the information described in the two preceding sentences from the Tax Administrator, the ~~applicable~~ Special Servicer shall either (A) implement the Proposed Plan (after acquiring the respective Mortgaged Property as Administered REO Property) or (B) manage and operate such property in a manner that would not result in the imposition of an REO Tax on the income derived from such property. Subject to Section 3.17(b), the ~~applicable~~ Special Servicer’s decision as to how each Administered REO Property shall be managed and operated shall be in accordance with the Servicing Standard. Neither the ~~applicable~~ Special Servicer nor the Tax Administrator shall be liable to the Certificateholders, the Trustee, the Trust, the other parties hereto, any beneficiaries hereof or each other for errors in judgment made in good faith in the exercise of their discretion while performing their respective responsibilities under this Section 3.17(a) with respect to any Administered REO Property. Nothing in this Section 3.17(a) is intended to prevent the sale of any Administered REO Property pursuant to the terms and subject to the conditions of Section 3.18. (b) If title to any Administered REO Property is acquired, the ~~applicable~~ Special Servicer shall manage, conserve, protect and operate such Administered REO Property for the benefit of the Certificateholders (or, in the case of any Administered REO Property related to a Serviced Loan Combination, on behalf of both the Certificateholders and the related Serviced Pari Passu Companion Loan Holder(s)), as a collective whole, solely for the purpose of its prompt disposition and sale in accordance with Section ~~3.18~~3.18 below, in a manner that does not cause such Administered REO Property to fail to qualify as “foreclosure property” within the meaning of Section 860G(a)(8) of the Code or, except as contemplated by Section 3.17(a)) above, result in the receipt by any REMIC Pool of any “income from non-permitted assets” within the meaning of Section 860F(a)(2)(B) of the Code, in an Adverse REMIC Event with respect to any REMIC Pool or an Adverse Grantor Trust Event with respect to the Grantor Trust Pool. Except as contemplated by Section 3.17(a)) above, the ~~applicable~~ Special Servicer shall not enter into any lease, contract or other agreement with respect to any Administered REO Property that causes the Trust to receive, and (unless required to do so under any lease, contract or agreement to which the ~~applicable~~ Special Servicer or the Trust may become a party or successor to a party due to a foreclosure, ~~deed-in-~~deed in lieu of foreclosure or other similar exercise of a creditor’s rights or remedies with respect to the related Serviced Mortgage Loan) shall not, with respect to any Administered REO Property, cause or allow the Trust to receive, any “net income from foreclosure property” that is subject to taxation under the REMIC Provisions. Subject to the foregoing, however, the ~~applicable~~ Special Servicer shall have full power and authority to do any and all things in connection with the administration of any Administered REO Property, as are consistent with the Servicing Standard and, consistent therewith, shall withdraw from ~~its~~ the REO Account, to the extent of amounts on deposit therein with respect to such Administered REO Property, funds necessary for the proper operation, management, maintenance and disposition of such Administered REO Property, including: (i) all insurance premiums due and payable in respect of such Administered REO Property; (ii) all real estate taxes and assessments in respect of such Administered REO Property that may result in the imposition of a lien thereon; (iii) any ground rents in respect of such Administered REO Property; and (iv) all other costs and expenses necessary to maintain, lease, sell, protect, manage, operate and restore such Administered REO Property. To the extent that amounts on deposit in the ~~applicable Special Servicer’s~~ REO Account with respect to any Administered REO Property are insufficient for the purposes contemplated by the preceding sentence with respect to such REO Property, the ~~applicable~~ Master Servicer shall, at the direction of the ~~applicable~~ Special Servicer, but subject to Section 3.11(h), make a Servicing Advance of such amounts as are necessary for such purposes unless the ~~applicable~~ Master Servicer or the ~~applicable~~ Special Servicer determines, in its reasonable judgment, that such advances would, if made, be Nonrecoverable Servicing Advances; ~~provided,~~ provided that the ~~applicable~~ Master Servicer may in its sole discretion make any such Servicing Advance without regard to recoverability if it is a necessary fee or expense incurred in connection with the defense or prosecution of legal proceedings. (c) The ~~applicable~~ Special Servicer may, and, if required for the Administered REO Property to continue to qualify as “foreclosure property” within the meaning of Section 860G(a)(8) of the Code, shall, contract with any Independent Contractor for the operation and management of any Administered REO Property, provided that: (i) the terms and conditions of any such contract may not be inconsistent herewith and shall reflect an agreement reached at arm’s length; (ii) the fees of such Independent Contractor (which shall be expenses of the Trust) shall be reasonable and customary in consideration of the nature and locality of such Administered REO Property; (iii) any such contract shall be consistent with Treasury Regulations Section 1.856-6(e)(6) and shall require, or shall be administered to require, that the Independent Contractor, in a timely manner, (A) pay all costs and expenses incurred in connection with the operation and management of such Administered REO Property, including those listed in Section 3.17(b) above, and (B) remit all related revenues collected (net of its fees and such costs and expenses) to the ~~applicable~~ Special Servicer upon receipt; (iv) none of the provisions of this Section 3.17(c) relating to any such contract or to actions taken through any such Independent Contractor shall be deemed to relieve the ~~applicable~~ Special Servicer of any of its duties and obligations hereunder with respect to the operation and management of any such Administered REO Property; and (v) the ~~applicable~~ Special Servicer shall be obligated with respect thereto to the same extent as if it alone were performing all duties and obligations in connection with the operation and management of such Administered REO Property, and the ~~applicable~~ Special Servicer shall comply with the Servicing Standard in maintaining such Independent Contractor. The ~~applicable~~ Special Servicer shall be entitled to enter into any agreement with any Independent Contractor performing services for it related to its duties and obligations hereunder for indemnification of the ~~applicable~~ Special Servicer by such Independent Contractor, and nothing in this Agreement shall be deemed to limit or modify such indemnification. To the extent the costs of any contract with any Independent Contractor for the operation and management of any Administered REO Property are greater than the revenues available from such property, such excess costs shall be covered by, and be reimbursable as, a Servicing Advance. (d) Without limiting the generality of the foregoing, the ~~applicable~~ Special Servicer shall not: (i) permit the Trust Fund to enter into, renew or extend any New Lease with respect to any Administered REO Property, if the New Lease by its terms will give rise to any income that does not constitute Rents from Real Property; (ii) permit any amount to be received or accrued under any New Lease other than amounts that will constitute Rents from Real Property; (iii) authorize or permit any construction on any Administered REO Property, other than the repair or maintenance thereof or the completion of a building or other improvement thereon, and then only if more than 10% of the construction of such building or other improvement was completed before default on the related Mortgage Loan become imminent, all within the meaning of Section 856(e)(4)(B) of the Code; or (iv) except as otherwise provided for in Sections 3.17(a)(i), 3.17(a)(ii) and 3.17(a)(iii) ~~and~~ above, Directly Operate, or allow any other Person, other than an Independent Contractor, to Directly Operate, any Administered REO Property on any date more than ninety (90) days after its date of acquisition by or on behalf of the Trust Fund; unless, in any such case, the ~~applicable~~ Special Servicer has obtained an Opinion of Counsel (the cost of which shall be paid by the ~~applicable~~ Master Servicer as a Servicing Advance) to the effect that such action will not cause such Administered REO Property to fail to qualify as “foreclosure property” within the meaning of Section 860G(a)(8) of the Code at any time that it is held for the benefit of the Trust Fund, in which case the ~~applicable~~ Special Servicer may take such actions as are specified in such Opinion of Counsel. (e) Notwithstanding anything to the contrary, this Section 3.17 shall not apply to any REO Property related to a Non-Trust-Serviced Pooled Mortgage Loan.

Appears in 2 contracts

Samples: Pooling and Servicing Agreement (Wells Fargo Commercial Mortgage Trust 2015-Nxs1), Pooling and Servicing Agreement (Wells Fargo Commercial Mortgage Trust 2015-C27)

Management of Administered REO Property. (a) Prior to the acquisition of title to any Mortgaged Property securing a defaulted Serviced Mortgage Loan, the ~~applicable~~ Special Servicer shall review the operation of such Mortgaged Property and determine the nature of the income that would be derived from such property if it were acquired by the Trust. If the ~~applicable~~ Special Servicer determines from such review that: (i) None of the income from Directly Operating such Mortgaged Property would be subject to tax as “net income from foreclosure property” within the meaning of the REMIC Provisions (such tax referred to herein as an “REO Tax”), then such Mortgaged Property may be Directly Operated by the ~~applicable~~ Special Servicer as Administered REO Property, other than holding such Administered REO Property for sale or lease or performing construction work thereon; (ii) Directly Operating such Mortgaged Property as an Administered REO Property could result in income from such property that would be subject to an REO Tax, but that a lease of such property to another party to operate such property, or the performance of some services by an Independent Contractor with respect to such property, or another method of operating such property would not result in income subject to an REO Tax, then the ~~applicable~~ Special Servicer may (provided that in the judgment of the ~~applicable~~ Special Servicer, exercised in accordance with the Servicing Standard, it is commercially reasonable) so lease or otherwise operate such Administered REO Property; or (iii) It is reasonable to believe that Directly Operating such property as Administered REO Property could result in income subject to an REO Tax and either (i) that the income or earnings with respect to such REO Property will offset any REO Tax relating to such income or earnings and will maximize the net recovery from the applicable Administered REO Property to the Certificateholders (taking into account that any related Serviced Pari Passu Companion Loan Holder(s) do not have any obligation under the related Intercreditor Agreement to bear the effect of any such REO Tax) or (ii) that no commercially reasonable means exists to operate such property as Administered REO Property without the Trust incurring or possibly incurring an REO Tax on income from such property, then the ~~applicable~~ Special Servicer shall deliver to the Tax Administrator and the Subordinate Class Representative, in writing, a proposed plan (the “Proposed Plan”) to manage such property as Administered REO Property. Such plan shall include potential sources of income and good faith estimates of the amount of income from each such source. Within a reasonable period of time after receipt of such plan, the Tax Administrator shall consult with the ~~applicable~~ Special Servicer and shall advise the ~~applicable~~ Special Servicer of the Trust’s federal income tax reporting position with respect to the various sources of income that the Trust would derive under the Proposed Plan. In addition, the Tax Administrator shall (to the maximum extent reasonably possible and at a reasonable fee, which fee shall be an expense of the Trust) advise the ~~applicable~~ Special Servicer of the estimated amount of taxes that the Trust would be required to pay with respect to each such source of income. After receiving the information described in the two preceding sentences from the Tax Administrator, the ~~applicable~~ Special Servicer shall either (A) implement the Proposed Plan (after acquiring the respective Mortgaged Property as Administered REO Property) or (B) manage and operate such property in a manner that would not result in the imposition of an REO Tax on the income derived from such property. Subject to Section 3.17(b), the ~~applicable~~ Special Servicer’s decision as to how each Administered REO Property shall be managed and operated shall be in accordance with the Servicing Standard. Neither the ~~applicable~~ Special Servicer nor the Tax Administrator shall be liable to the Certificateholders, the Trustee, the Trust, the other parties hereto, any beneficiaries hereof or each other for errors in judgment made in good faith in the exercise of their discretion while performing their respective responsibilities under this Section 3.17(a) with respect to any Administered REO Property. Nothing in this Section 3.17(a) is intended to prevent the sale of any Administered REO Property pursuant to the terms and subject to the conditions of Section 3.18. (b) If title to any Administered REO Property is acquired, the ~~applicable~~ Special Servicer shall manage, conserve, protect and operate such Administered REO Property for the benefit of the Certificateholders (or, in the case of any Administered REO Property related to a Serviced Loan Combination, on behalf of both the Certificateholders and the related Serviced Pari Passu Companion Loan Holder(s)), as a collective whole, solely for the purpose of its prompt disposition and sale in accordance with Section 3.18, in a manner that does not cause such Administered REO Property to fail to qualify as “foreclosure property” within the meaning of Section 860G(a)(8) of the Code or, except as contemplated by Section 3.17(a), result in the receipt by any REMIC Pool of any “income from non-permitted assets” within the meaning of Section 860F(a)(2)(B) of the Code, in an Adverse REMIC Event with respect to any REMIC ~~Pool or an Adverse Grantor Trust Event with respect to the Grantor Trust~~ Pool. Except as contemplated by Section 3.17(a), the ~~applicable~~ Special Servicer shall not enter into any lease, contract or other agreement with respect to any Administered REO Property that causes the Trust to receive, and (unless required to do so under any lease, contract or agreement to which the ~~applicable~~ Special Servicer or the Trust may become a party or successor to a party due to a foreclosure, deed-in-lieu of foreclosure or other similar exercise of a creditor’s rights or remedies with respect to the related Serviced Mortgage Loan) shall not, with respect to any Administered REO Property, cause or allow the Trust to receive, any “net income from foreclosure property” that is subject to taxation under the REMIC Provisions. Subject to the foregoing, however, the ~~applicable~~ Special Servicer shall have full power and authority to do any and all things in connection with the administration of any Administered REO Property, as are consistent with the Servicing Standard and, consistent therewith, shall withdraw from ~~its~~ the REO Account, to the extent of amounts on deposit therein with respect to such Administered REO Property, funds necessary for the proper operation, management, maintenance and disposition of such Administered REO Property, including: (i) all insurance premiums due and payable in respect of such Administered REO Property; (ii) all real estate taxes and assessments in respect of such Administered REO Property that may result in the imposition of a lien thereon; (iii) any ground rents in respect of such Administered REO Property; and (iv) all other costs and expenses necessary to maintain, lease, sell, protect, manage, operate and restore such Administered REO Property. To the extent that amounts on deposit in the ~~applicable~~ Special Servicer’s REO Account with respect to any Administered REO Property are insufficient for the purposes contemplated by the preceding sentence with respect to such REO Property, the ~~applicable~~ Master Servicer shall, at the direction of the ~~applicable~~ Special Servicer, but subject to Section 3.11(h), make a Servicing Advance of such amounts as are necessary for such purposes unless the ~~applicable~~ Master Servicer or the ~~applicable~~ Special Servicer determines, in its reasonable judgment, that such advances would, if made, be Nonrecoverable Servicing Advances; ~~provided,~~ provided that the ~~applicable~~ Master Servicer may in its sole discretion make any such Servicing Advance without regard to recoverability if it is a necessary fee or expense incurred in connection with the defense or prosecution of legal proceedings. (c) The ~~applicable~~ Special Servicer may, and, if required for the Administered REO Property to continue to qualify as “foreclosure property” within the meaning of Section 860G(a)(8) of the Code, shall, contract with any Independent Contractor for the operation and management of any Administered REO Property, provided that: (i) the terms and conditions of any such contract may not be inconsistent herewith and shall reflect an agreement reached at arm’s length; (ii) the fees of such Independent Contractor (which shall be expenses of the Trust) shall be reasonable and customary in consideration of the nature and locality of such Administered REO Property; (iii) any such contract shall be consistent with Treasury Regulations Section 1.856-6(e)(6) and shall require, or shall be administered to require, that the Independent Contractor, in a timely manner, (A) pay all costs and expenses incurred in connection with the operation and management of such Administered REO Property, including those listed in Section 3.17(b) above, and (B) remit all related revenues collected (net of its fees and such costs and expenses) to the ~~applicable~~ Special Servicer upon receipt; (iv) none of the provisions of this Section 3.17(c) relating to any such contract or to actions taken through any such Independent Contractor shall be deemed to relieve the ~~applicable~~ Special Servicer of any of its duties and obligations hereunder with respect to the operation and management of any such Administered REO Property; and (v) the ~~applicable~~ Special Servicer shall be obligated with respect thereto to the same extent as if it alone were performing all duties and obligations in connection with the operation and management of such Administered REO Property, and the ~~applicable~~ Special Servicer shall comply with the Servicing Standard in maintaining such Independent Contractor. The ~~applicable~~ Special Servicer shall be entitled to enter into any agreement with any Independent Contractor performing services for it related to its duties and obligations hereunder for indemnification of the ~~applicable~~ Special Servicer by such Independent Contractor, and nothing in this Agreement shall be deemed to limit or modify such indemnification. To the extent the costs of any contract with any Independent Contractor for the operation and management of any Administered REO Property are greater than the revenues available from such property, such excess costs shall be covered by, and be reimbursable as, a Servicing Advance. (d) Without limiting the generality of the foregoing, the ~~applicable~~ Special Servicer shall not: (i) permit the Trust Fund to enter into, renew or extend any New Lease with respect to any Administered REO Property, if the New Lease by its terms will give rise to any income that does not constitute Rents from Real Property; (ii) permit any amount to be received or accrued under any New Lease other than amounts that will constitute Rents from Real Property; (iii) authorize or permit any construction on any Administered REO Property, other than the repair or maintenance thereof or the completion of a building or other improvement thereon, and then only if more than 10% of the construction of such building or other improvement was completed before default on the related Mortgage Loan become imminent, all within the meaning of Section 856(e)(4)(B) of the Code; or (iv) except as otherwise provided for in ~~Sections~~ Section 3.17(a)(i), 3.17(a)(ii) and 3.17(a)(iii) ~~and~~ above, Directly Operate, or allow any other Person, other than an Independent Contractor, to Directly Operate, any Administered REO Property on any date more than ninety (90) days after its date of acquisition by or on behalf of the Trust Fund; unless, in any such case, the ~~applicable~~ Special Servicer has obtained an Opinion of Counsel (the cost of which shall be paid by the ~~applicable~~ Master Servicer as a Servicing Advance) to the effect that such action will not cause such Administered REO Property to fail to qualify as “foreclosure property” within the meaning of Section 860G(a)(8) of the Code at any time that it is held for the benefit of the Trust Fund, in which case the ~~applicable~~ Special Servicer may take such actions as are specified in such Opinion of Counsel. (e) Notwithstanding anything to the contrary, this Section 3.17 shall not apply to any REO Property related to a Non-Trust-Serviced Pooled Mortgage Loan.

Appears in 2 contracts

Samples: Pooling and Servicing Agreement (Wells Fargo Commercial Mortgage Trust 2014-Lc16), Pooling and Servicing Agreement (Wells Fargo Commercial Mortgage Trust 2014-Lc16)

Management of Administered REO Property. (a) Prior to the acquisition of title to any Mortgaged Property securing a defaulted Serviced Mortgage Loan, the ~~applicable~~ Special Servicer shall review the operation of such Mortgaged Property and determine the nature of the income that would be derived from such property if it were acquired by the Trust. If the ~~applicable~~ Special Servicer determines from such review that: (i) None of the income from Directly Operating such Mortgaged Property would be subject to tax as “"net income from foreclosure property” " within the meaning of the REMIC Provisions (such tax referred to herein as an “"REO Tax”"), then such Mortgaged Property may be Directly Operated by the ~~applicable~~ Special Servicer as ~~Administered~~ REO Property, other than holding such ~~Administered~~ REO Property for sale or lease or performing construction work thereon; (ii) Directly Operating such Mortgaged Property as an ~~Administered~~ REO Property could result in income from such property that would be subject to an REO Tax, but that a lease of such property to another party to operate such property, or the performance of some services by an Independent Contractor with respect to such property, or another method of operating such property would not result in income subject to an REO Tax, then the ~~applicable~~ Special Servicer may (provided that in the judgment of the ~~applicable~~ Special Servicer, exercised in accordance with the Servicing Standard, it is commercially reasonable) so lease or otherwise operate such ~~Administered~~ REO Property; or (iii) It is reasonable to believe that Directly Operating such property as ~~Administered~~ REO Property could result in income subject to an REO Tax and either (i) that the income or earnings with respect to such REO Property will offset any REO Tax relating to such income or earnings and will maximize the net recovery from the applicable ~~Administered~~ REO Property to the Certificateholders ~~(taking into account that any related Serviced Pari Passu Companion Loan Holder(s) do not have any obligation under the related Intercreditor Agreement to bear the effect of any such REO Tax)~~ or (ii) that no commercially reasonable means exists to operate such property as ~~Administered~~ REO Property without the Trust incurring or possibly incurring an REO Tax on income from such property, then the ~~applicable~~ Special Servicer shall deliver to the Tax Administrator and the ~~Subordinate~~ Controlling Class Representative, in writing, a proposed plan (the “"Proposed Plan”") to manage such property as ~~Administered~~ REO Property. Such plan shall include potential sources of income and good faith estimates of the amount of income from each such source. Within a reasonable period of time after receipt of such plan, the Tax Administrator shall consult with the ~~applicable~~ Special Servicer and shall advise the ~~applicable~~ Special Servicer of the Trust’s 's federal income tax reporting position with respect to the various sources of income that the Trust would derive under the Proposed Plan. In addition, the Tax Administrator shall (to the maximum extent reasonably possible and at a reasonable fee, which fee shall be an expense of the Trust) advise the ~~applicable~~ Special Servicer of the estimated amount of taxes that the Trust would be required to pay with respect to each such source of income. After receiving the information described in the two preceding sentences from the Tax Administrator, the ~~applicable~~ Special Servicer shall either (A) implement the Proposed Plan (after acquiring the respective Mortgaged Property as ~~Administered~~ REO Property) or (B) manage and operate such property in a manner that would not result in the imposition of an REO Tax on the income derived from such property. Subject to Section 3.17(b), the ~~applicable~~ Special Servicer’s 's decision as to how each Administered REO Property shall be managed and operated shall be in accordance with the Servicing Standard. Neither the ~~applicable~~ Special Servicer nor the Tax Administrator shall be liable to the Certificateholders, the Trustee, the Trust, the other parties hereto, any beneficiaries hereof or each other for errors in judgment made in good faith in the exercise of their discretion while performing their respective responsibilities under this Section 3.17(a) with respect to any Administered REO Property. Nothing in this Section 3.17(a) is intended to prevent the sale of any Administered REO Property pursuant to the terms and subject to the conditions of Section 3.18. (b) If title to any Administered REO Property is acquired, the ~~applicable~~ Special Servicer shall manage, conserve, protect and operate such ~~Administered~~ REO Property for the benefit of the Certificateholders (or, in the case of any ~~Administered~~ REO Property related to a Serviced Mortgage Loan ~~Combination~~Group, on behalf of both the Certificateholders and the related Serviced ~~Pari Passu Companion~~ Non-Pooled Mortgage Loan ~~Holder(s~~Noteholder(s)), as a collective whole, solely for the purpose of its prompt disposition and sale in accordance with Section 3.18, in a manner that does not cause such Administered REO Property to fail to qualify as “"foreclosure property” " within the meaning of Section 860G(a)(8) of the Code or, except as contemplated by Section 3.17(a), result in the receipt by any REMIC Pool of any “"income from non-permitted assets” " within the meaning of Section 860F(a)(2)(B) of the Code, in an Adverse REMIC Event with respect to any REMIC Pool or in an Adverse Grantor Trust Event with respect to ~~the~~ either Grantor Trust Pool. Except as contemplated by Section 3.17(a), the ~~applicable~~ Special Servicer shall not enter into any lease, contract or other agreement with respect to any Administered REO Property that causes the Trust to receive, and (unless required to do so under any lease, contract or agreement to which the ~~applicable~~ Special Servicer or the Trust may become a party or successor to a party due to a foreclosure, deed-in-lieu of foreclosure or other similar exercise of a creditor’s 's rights or remedies with respect to the related Serviced Mortgage Loan) shall not, with respect to any Administered REO Property, cause or allow the Trust to receive, any “"net income from foreclosure property” " that is subject to taxation under the REMIC Provisions. Subject to the foregoing, however, the ~~applicable~~ Special Servicer shall have full power and authority to do any and all things in connection with the administration of any Administered REO Property, as are consistent with the Servicing Standard and, consistent therewith, shall withdraw from its REO ~~Account~~Account , to the extent of amounts on deposit therein with respect to such ~~Administered~~ REO Property, funds necessary for the proper operation, management, maintenance and disposition of such ~~Administered~~ REO Property, including: (i) all insurance premiums due and payable in respect of such ~~Administered~~ REO Property; (ii) all real estate taxes and assessments in respect of such ~~Administered~~ REO Property that may result in the imposition of a lien thereon; (iii) any ground rents in respect of such ~~Administered~~ REO Property; and (iv) all other costs and expenses necessary to maintain, lease, sell, protect, manage, operate and restore such ~~Administered~~ REO Property. To the extent that amounts on deposit in the ~~applicable~~ Special Servicer’s 's REO Account with respect to any Administered REO Property are insufficient for the purposes contemplated by the preceding sentence with respect to such REO Property, the applicable Master Servicer shall, at the direction of the ~~applicable~~ Special Servicer, but subject to Section 3.11(h), make a Servicing Advance of such amounts as are necessary for such purposes unless ~~the applicable~~ such Master Servicer or the ~~applicable~~ Special Servicer determines, in its reasonable judgment, that such advances would, if made, be Nonrecoverable Servicing Advances; provided, however, that ~~the applicable~~ such Master Servicer may in its sole discretion make any such Servicing Advance without regard to recoverability if it is a necessary fee or expense incurred in connection with the defense or prosecution of legal proceedings. (c) The ~~applicable~~ Special Servicer may, and, if required for the Administered REO Property to continue to qualify as “"foreclosure property” " within the meaning of Section 860G(a)(8) of the Code, shall, contract with any Independent Contractor for the operation and management of any Administered REO Property, provided that: (i) the terms and conditions of any such contract may not be inconsistent herewith and shall reflect an agreement reached at arm’s 's length; (ii) the fees of such Independent Contractor (which shall be expenses of the Trust) shall be reasonable and customary in consideration of the nature and locality of such ~~Administered~~ REO Property; (iii) any such contract shall be consistent with Treasury Regulations Section 1.856-6(e)(6) and shall require, or shall be administered to require, that the Independent Contractor, in a timely manner, (A) pay all costs and expenses incurred in connection with the operation and management of such ~~Administered~~ REO Property, including those listed in Section 3.17(b) above, and (B) remit all related revenues collected (net of its fees and such costs and expenses) to the ~~applicable~~ Special Servicer upon receipt; (iv) none of the provisions of this Section 3.17(c) relating to any such contract or to actions taken through any such Independent Contractor shall be deemed to relieve the ~~applicable~~ Special Servicer of any of its duties and obligations hereunder with respect to the operation and management of any such ~~Administered~~ REO Property; and (v) the ~~applicable~~ Special Servicer shall be obligated with respect thereto to the same extent as if it alone were performing all duties and obligations in connection with the operation and management of such ~~Administered~~ REO Property, and the ~~applicable~~ Special Servicer shall comply with the Servicing Standard in maintaining such Independent Contractor. The ~~applicable~~ Special Servicer shall be entitled to enter into any agreement with any Independent Contractor performing services for it related to its duties and obligations hereunder for indemnification of the ~~applicable~~ Special Servicer by such Independent Contractor, and nothing in this Agreement shall be deemed to limit or modify such indemnification. To the extent the costs of any contract with any Independent Contractor for the operation and management of any Administered REO Property are greater than the revenues available from such property, such excess costs shall be covered by, and be reimbursable as, a Servicing Advance. (d) Without limiting the generality of the foregoing, the applicable Special Servicer shall not: (i) permit the Trust Fund to enter into, renew or extend any New Lease with respect to any Administered REO Property, if the New Lease by its terms will give rise to any income that does not constitute Rents from Real Property; (ii) permit any amount to be received or accrued under any New Lease other than amounts that will constitute Rents from Real Property; (iii) authorize or permit any construction on any Administered REO Property, other than the repair or maintenance thereof or the completion of a building or other improvement thereon, and then only if more than 10% of the construction of such building or other improvement was completed before default on the related Mortgage Loan become imminent, all within the meaning of Section 856(e)(4)(B) of the Code; or (iv) except as otherwise provided for in Sections 3.17(a)(i), 3.17(a)(ii) and 3.17(a)(iii) and above, Directly Operate, or allow any other Person, other than an Independent Contractor, to Directly Operate, any Administered REO Property on any date more than ninety (90) days after its date of acquisition by or on behalf of the Trust Fund; unless, in any such case, the applicable Special Servicer has obtained an Opinion of Counsel (the cost of which shall be paid by the applicable Master Servicer as a Servicing Advance) to the effect that such action will not cause such Administered REO Property to fail to qualify as “foreclosure property” within the meaning of Section 860G(a)(8) of the Code at any time that it is held for the benefit of the Trust Fund, in which case the applicable Special Servicer may take such actions as are specified in such Opinion of Counsel. (e) Notwithstanding anything to the contrary, this Section 3.17 shall not apply to any REO Property related to a either Non-Trust-Serviced Pooled Mortgage Loan.

Appears in 1 contract

Samples: Pooling and Servicing Agreement (Bear Stearns Commercial Mortgage Securities Trust 2004-Pwr5)

Management of Administered REO Property. (a) Prior to the acquisition of title to any Mortgaged Property securing a defaulted Serviced Mortgage Loan, the ~~applicable~~ Special Servicer shall review the operation of such Mortgaged Property and determine the nature of the income that would be derived from such property if it were acquired by the Trust. If the ~~applicable~~ Special Servicer determines from such review that: (i) None of the income from Directly Operating such Mortgaged Property would be subject to tax as “"net income from foreclosure property” " within the meaning of the REMIC Provisions or would be subject to the tax imposed on "prohibited transactions" under Section 860F of the Code (either such tax referred to herein as an “"REO ~~Tax”~~TAX"), then such Mortgaged Property may be Directly Operated by the ~~applicable~~ Special Servicer as ~~Administered~~ REO Property~~, other than holding such Administered REO Property for sale or lease or performing construction work thereon~~; (ii) Directly Operating such Mortgaged Property as an ~~Administered~~ REO Property could result in income from such property that would be subject to an REO Tax, but that a lease of such property to another party to operate such property, or the performance of some services by an Independent Contractor with respect to such property, or another method of operating such property would not result in income subject to an REO Tax, then the ~~applicable~~ Special Servicer may (~~provided~~ PROVIDED that in the reasonable judgment of the ~~applicable~~ Special Servicer~~, exercised in accordance with the Servicing Standard~~, it is commercially reasonable) so lease or ~~otherwise~~ operate such ~~Administered~~ REO Property; or (iii) It is would not be commercially reasonable to ~~believe that Directly Operating~~ operate and manage such property as Administered REO Property could result in income subject to an REO Tax and either (i) that the income or earnings with respect to such REO Property will offset any REO Tax relating to such income or earnings and will maximize the net recovery from the applicable Administered REO Property to the Certificateholders (taking into account that any related Serviced Pari Passu Companion Loan Holder(s) do not have any obligation under the related Intercreditor Agreement to bear the effect of any such REO Tax) or (ii) that no commercially reasonable means exists to operate such property as Administered REO Property without the Trust incurring or possibly incurring an REO Tax on income from such property, then the ~~applicable~~ Special Servicer shall deliver to the ~~Tax Administrator~~ Trustee and the ~~Subordinate~~ Controlling Class Representative, in writing, a proposed plan (the ~~“Proposed Plan”~~"PROPOSED PLAN") to manage such property as ~~Administered~~ REO Property. Such plan shall include potential sources of ~~income~~ income, and ~~good faith~~ to the extent reasonably possible, estimates of the amount of income from each such source. Within a reasonable period of time after receipt of such plan, the ~~Tax Administrator~~ Trustee shall consult with the ~~applicable~~ Special Servicer and shall advise the ~~applicable~~ Special Servicer of the Trust’s 's federal income tax reporting position with respect to the various sources of income that the Trust would derive under the Proposed Plan. In addition, the ~~Tax Administrator~~ Trustee shall (to the maximum extent reasonably possible and at a reasonable fee~~, which fee shall be an expense of the Trust~~) advise the ~~applicable~~ Special Servicer of the estimated amount of taxes that the Trust would be required to pay with respect to each such source of ~~income~~income from such REO Property. After receiving the information described in the two preceding sentences from the ~~Tax Administrator~~Trustee, the ~~applicable~~ Special Servicer shall either (A) implement the Proposed Plan (after acquiring the respective Mortgaged Property as ~~Administered~~ REO Property) or (B) manage and operate such property in a manner that would not result in the imposition of an REO Tax on the income derived from such property. Subject to ~~Section 3.17(b~~SECTIONS 3.16(A) and 3.17(B), the ~~applicable~~ Special Servicer’s 's decision as to how each ~~Administered~~ REO Property shall be managed and operated shall be in accordance with the Servicing Standard. Both the Special Servicer and the Trustee may consult with counsel knowledgeable in such matters at (to the extent reasonable) the expense of the Trust in connection with determinations required under this SECTION 3.17(A) with respect to any Administered REO Property. Neither the ~~applicable~~ Special Servicer nor the ~~Tax Administrator~~ Trustee shall be liable to the Certificateholders, the ~~Trustee, the~~ Trust, the other parties ~~hereto, any beneficiaries hereof~~ hereto or each other for errors in judgment made in good faith in the reasonable exercise of their discretion or in reasonable and good faith reliance on the advice of knowledgeable counsel while performing their respective responsibilities under this ~~Section 3.17(a~~SECTION 3.17(A) ~~with respect~~ or, to ~~any Administered REO Property~~the extent it relates to federal income tax consequences for the Trust, SECTION 3.17(B) below. Nothing in this ~~Section 3.17(a~~SECTION 3.17(A) is intended to prevent the sale of ~~any~~ an Administered REO Property pursuant to the terms and subject to the conditions of ~~Section 3.18~~SECTION 3.18(D). (b) If title to any ~~Administered REO~~ Mortgaged Property (other than the[Separately Serviced Mortgage Loan] Mortgaged Property) is acquired, the ~~applicable~~ Special Servicer shall manage, conserve, protect and operate such ~~Administered REO~~ Mortgaged Property for the benefit of the Certificateholders (or, in the case of any Administered REO Property related to a Serviced Loan Combination, on behalf of both the Certificateholders and the related Serviced Pari Passu Companion Loan Holder(s)), as a collective whole, solely for the purpose of its prompt disposition and sale in ~~accordance with Section 3.18, in~~ a manner that does not cause such ~~Administered REO~~ Mortgaged Property to fail to qualify as “"foreclosure property” " within the meaning of Section 860G(a)(8) of the Code or, except as contemplated by ~~Section 3.17(a~~SECTION 3.17(A), result in the receipt by any REMIC Pool of any “"income from non-permitted assets” " within the meaning of Section 860F(a)(2)(B) of the ~~Code,~~ Code or in an Adverse REMIC Event ~~with~~ in respect to of any REMIC ~~Pool or an Adverse Grantor Trust Event with respect to the Grantor Trust~~ Pool. Except as ~~contemplated by Section 3.17(a~~provided in SECTION 3.17(A), the ~~applicable~~ Special Servicer shall not enter into any lease, contract or other agreement with respect to any Administered REO Property that causes ~~the Trust~~ any REMIC Pool to receive, and (unless required to do so under any lease, contract or agreement to which the ~~applicable~~ Special Servicer or the Trust may become a party or successor to a party due to a foreclosure, deed-in-lieu of foreclosure or other similar exercise of a creditor’s 's rights or remedies with respect to ~~the related~~ a Serviced Mortgage Loan) shall ~~not,~~ not cause or allow any REMIC Pool to receive any "net income from foreclosure property" with respect to any Administered REO ~~Property, cause or allow the Trust to receive, any “net income from foreclosure property”~~ Property that is subject to taxation under the REMIC Provisions. Subject to the foregoing, SECTION 3.16(A) and SECTION 3.17(A), however, the ~~applicable~~ Special Servicer shall have full power and authority to do any and all things in connection with the administration of any Administered REO ~~Property,~~ Property as are consistent with the Servicing Standard and, consistent therewith, shall withdraw from ~~its~~ the REO Account, to the extent of amounts on deposit therein with respect to such ~~Administered~~ REO Property, funds necessary for the proper operation, management, maintenance and disposition of such ~~Administered~~ REO Property, including: (i) all insurance premiums due and payable in respect of such ~~Administered~~ REO Property; (ii) all real estate taxes and assessments in respect of such ~~Administered~~ REO Property that may result in the imposition of a lien thereon; (iii) any ground rents in respect of such ~~Administered~~ REO Property; and (iv) all other costs and expenses necessary to maintain, lease, sell, protect, manage, operate and restore such ~~Administered~~ REO Property. To the extent that amounts on deposit in the ~~applicable Special Servicer’s~~ REO Account ~~with~~ in respect to of any Administered REO Property are insufficient for the purposes ~~contemplated by~~ set forth in the preceding sentence with respect to such REO Property, the ~~applicable~~ Special Servicer shall (in accordance with SECTION 3.19(B)) direct the Master Servicer ~~shall, at~~ to make (and the ~~direction of the applicable Special Servicer, but subject to Section 3.11(h~~Master Servicer shall so make), ~~make a~~ Servicing ~~Advance of~~ Advances in such amounts as are necessary for such purposes unless (as evidenced in the ~~applicable Master~~ manner contemplated by SECTION 3.11(H)) the Special Servicer or the ~~applicable Special~~ Master Servicer determines, in its reasonable judgment, that such ~~advances would, if made,~~ payment would be a Nonrecoverable Servicing Advances; provided, that the applicable Master Servicer may in its sole discretion make any such Servicing Advance without regard to recoverability if it is a necessary fee or expense incurred in connection with the defense or prosecution of legal proceedingsAdvance. (c) The ~~applicable~~ Special Servicer ~~may,~~ may (and, except as otherwise permitted by SECTION 3.17(A), shall if ~~required for the Administered REO Property to continue to qualify as “foreclosure property” within the meaning of Section 860G(a)(8~~it would avoid an Adverse REMIC Event) ~~of the Code, shall,~~ contract with any Independent Contractor for the operation and management of any Administered REO Property, ~~provided~~ PROVIDED that: (i) the terms and conditions of any such contract may not be inconsistent herewith and shall reflect an agreement reached at arm’s 's length; (ii) the fees of such Independent Contractor (which shall be expenses of the Trust) shall be reasonable and customary in consideration of the nature and locality of such ~~Administered~~ REO Property; (iii) any such contract shall be consistent with the provisions of Treasury ~~Regulations Section~~ regulation section 1.856-~~6(e)(6~~4(b)(5) ~~and shall require~~and, or to the extent consistent therewith, shall be administered to ~~require,~~ require that the Independent Contractor, in a timely manner, (A) to the extent of available revenue from such REO Property, pay all costs and expenses incurred in connection with the operation and management of such ~~Administered~~ REO Property, including those listed in ~~Section 3.17(b~~SECTION 3.17(B) above, and (B) remit all related revenues collected (net of its fees and such costs and expenses) to the ~~applicable~~ Special Servicer upon receipt; (iv) none of the provisions of this ~~Section 3.17(c~~SECTION 3.17(C) relating to any such contract or to actions taken through any such Independent Contractor shall be deemed to relieve the ~~applicable~~ Special Servicer of any of its duties and obligations hereunder with respect to the operation and management of any such ~~Administered~~ REO Property; and (v) the ~~applicable~~ Special Servicer shall be obligated with respect thereto to the same extent as if it alone were performing all duties and obligations in connection with the operation and management of such ~~Administered~~ REO Property, and the ~~applicable~~ Special Servicer shall comply with the Servicing Standard in ~~maintaining~~ monitoring such Independent Contractor. The ~~applicable~~ Special Servicer shall be entitled to enter into any agreement with any Independent Contractor performing services for it related to its duties and obligations hereunder for indemnification of the ~~applicable~~ Special Servicer by such Independent Contractor, and nothing in this Agreement shall be deemed to limit or modify such indemnification. To the extent the costs of any contract with any Independent Contractor for the operation and management of any Administered REO Property are greater than the revenues available from such property, such excess costs shall be covered by, and be reimbursable as, a Servicing Advance. (d) Without limiting the generality of the foregoing, the applicable Special Servicer shall not: (i) permit the Trust Fund to enter into, renew or extend any New Lease with respect to any Administered REO Property, if the New Lease by its terms will give rise to any income that does not constitute Rents from Real Property; (ii) permit any amount to be received or accrued under any New Lease other than amounts that will constitute Rents from Real Property; (iii) authorize or permit any construction on any Administered REO Property, other than the repair or maintenance thereof or the completion of a building or other improvement thereon, and then only if more than 10% of the construction of such building or other improvement was completed before default on the related Mortgage Loan become imminent, all within the meaning of Section 856(e)(4)(B) of the Code; or (iv) except as otherwise provided for in Sections 3.17(a)(i), 3.17(a)(ii) and 3.17(a)(iii) and above, Directly Operate, or allow any other Person, other than an Independent Contractor, to Directly Operate, any Administered REO Property on any date more than ninety (90) days after its date of acquisition by or on behalf of the Trust Fund; unless, in any such case, the applicable Special Servicer has obtained an Opinion of Counsel (the cost of which shall be paid by the applicable Master Servicer as a Servicing Advance) to the effect that such action will not cause such Administered REO Property to fail to qualify as “foreclosure property” within the meaning of Section 860G(a)(8) of the Code at any time that it is held for the benefit of the Trust Fund, in which case the applicable Special Servicer may take such actions as are specified in such Opinion of Counsel. (e) Notwithstanding anything to the contrary, this Section 3.17 shall not apply to any REO Property related to a Non-Trust-Serviced Pooled Mortgage Loan.

Appears in 1 contract

Samples: Pooling and Servicing Agreement (Citigroup Mortgage Loan Trust Inc)

Management of Administered REO Property. (a) Prior to the acquisition of title to any Mortgaged Property securing a defaulted Serviced Mortgage Loan, the applicable Special Servicer shall review the operation of such Mortgaged Property and determine the nature of the income that would be derived from such property if it were acquired by the Trust. If the applicable Special Servicer determines from such review that: (i) None of the income from Directly Operating such Mortgaged Property would be subject to tax as “net income from foreclosure property” within the meaning of the REMIC Provisions (such tax referred to herein as an “REO Tax”), then such Mortgaged Property may be Directly Operated by ~~the applicable~~ such Special Servicer as ~~Administered~~ REO Property, other than holding such ~~Administered~~ REO Property for sale or lease or performing construction work thereon; (ii) Directly Operating such Mortgaged Property as an ~~Administered~~ REO Property could result in income from such property that would be subject to an REO Tax, but that a lease of such property to another party to operate such property, or the performance of some services by an Independent Contractor with respect to such property, or another method of operating such property would not result in income subject to an REO Tax, then ~~the applicable~~ such Special Servicer may (provided that in the judgment of ~~the applicable~~ such Special Servicer, exercised in accordance with the Servicing Standard, it is commercially reasonable) so lease or otherwise operate such ~~Administered~~ REO Property; or (iii) It is reasonable to believe that Directly Operating such property as ~~Administered~~ REO Property could result in income subject to an REO Tax and either (i) that the income or earnings with respect to such REO Property will offset any REO Tax relating to such income or earnings and will maximize the net recovery from the applicable ~~Administered~~ REO Property to the Certificateholders (taking into account that any related Serviced ~~Pari Passu Companion~~ Non-Pooled Mortgage Loan ~~Holder(s~~Noteholder(s) do not have any obligation under the related Mortgage Loan Group Intercreditor Agreement to bear the effect of any such REO Tax) or (ii) that no commercially reasonable means exists to operate such property as ~~Administered~~ REO Property without the Trust incurring or possibly incurring an REO Tax on income from such property, then ~~the applicable~~ such Special Servicer shall deliver to the Tax Administrator and the ~~Subordinate~~ Controlling Class ~~Representative~~Representative (and, if a Serviced Mortgage Loan Group is involved, the related Serviced Mortgage Loan Group Controlling Party to the extent required under the applicable Mortgage Loan Group Intercreditor Agreement), in writing, a proposed plan (the “Proposed Plan”) to manage such property as ~~Administered~~ REO Property. Such plan shall include potential sources of income and good faith estimates of the amount of income from each such source. Within a reasonable period of time after receipt of such plan, the Tax Administrator shall consult with the applicable Special Servicer and shall advise ~~the applicable~~ such Special Servicer of the Trust’s federal income tax reporting position with respect to the various sources of income that the Trust would derive under the Proposed Plan. In addition, the Tax Administrator shall (to the maximum extent reasonably possible and at a reasonable fee, which fee shall be an expense of the Trust) advise ~~the applicable~~ such Special Servicer of the estimated amount of taxes that the Trust would be required to pay with respect to each such source of income. After receiving the information described in the two preceding sentences from the Tax Administrator, ~~the applicable~~ such Special Servicer shall either (A) implement the Proposed Plan (after acquiring the respective Mortgaged Property as ~~Administered~~ REO Property) or (B) manage and operate such property in a manner that would not result in the imposition of an REO Tax on the income derived from such property. Subject to Section 3.17(b), the applicable Special Servicer’s decision as to how each Administered REO Property shall be managed and operated shall be in accordance with the Servicing Standard. Neither the applicable Special Servicer nor the Tax Administrator shall be liable to the Certificateholders, the Trustee, the Trust, the other parties hereto, any beneficiaries hereof or each other for errors in judgment made in good faith in the exercise of their discretion while performing their respective responsibilities under this Section 3.17(a) with respect to any Administered REO Property. Nothing in this Section 3.17(a) is intended to prevent the sale of any Administered REO Property pursuant to the terms and subject to the conditions of Section 3.18. (b) If title to any Administered REO Property is acquired, the applicable Special Servicer shall manage, conserve, protect and operate such ~~Administered~~ REO Property for the benefit of the Certificateholders (or, in the case of any ~~Administered~~ REO Property related to a Serviced Mortgage Loan ~~Combination~~Group, on behalf of both the Certificateholders and the related Serviced ~~Pari Passu Companion~~ Non-Pooled Mortgage Loan ~~Holder(s~~Noteholder(s)), as a collective whole, solely for the purpose of its prompt disposition and sale in accordance with Section 3.18, in a manner that does not cause such Administered REO Property to fail to qualify as “foreclosure property” within the meaning of Section 860G(a)(8) of the Code or, except as contemplated by Section 3.17(a), result in the receipt by any REMIC Pool of any “income from non-permitted assets” within the meaning of Section 860F(a)(2)(B) of the Code, in an Adverse REMIC Event with respect to any REMIC Pool or in an Adverse Grantor Trust Event with respect to ~~the~~ any Grantor Trust Pool. Except as contemplated by Section 3.17(a), the applicable Special Servicer shall not enter into any lease, contract or other agreement with respect to any Administered REO Property that causes the Trust to receive, and (unless required to do so under any lease, contract or agreement to which the applicable Special Servicer or the Trust may become a party or successor to a party due to a foreclosure, deed-in-lieu of foreclosure or other similar exercise of a creditor’s rights or remedies with respect to the related Serviced Mortgage Loan) shall not, with respect to any Administered REO Property, cause or allow the Trust to receive, any “net income from foreclosure property” that is subject to taxation under the REMIC Provisions. Subject to the foregoing, however, the applicable Special Servicer shall have full power and authority to do any and all things in connection with the administration of any Administered REO Property, as are consistent with the Servicing Standard and, consistent therewith, shall withdraw from its REO ~~Account~~Account , to the extent of amounts on deposit therein with respect to such ~~Administered~~ REO Property, funds necessary for the proper operation, management, maintenance and disposition of such ~~Administered~~ REO Property, including: (i) all insurance premiums due and payable in respect of such ~~Administered~~ REO Property; (ii) all real estate taxes and assessments in respect of such ~~Administered~~ REO Property that may result in the imposition of a lien thereon; (iii) any ground rents in respect of such ~~Administered~~ REO Property; and (iv) all other costs and expenses necessary to maintain, lease, sell, protect, manage, operate and restore such ~~Administered~~ REO Property. To the extent that amounts on deposit in the applicable Special Servicer’s REO Account with respect to any Administered REO Property are insufficient for the purposes contemplated by the preceding sentence with respect to such REO Property, the applicable Master Servicer shall, at the direction of ~~the applicable~~ such Special Servicer, but subject to Section 3.11(h), make a Servicing Advance of such amounts as are necessary for such purposes unless ~~the applicable~~ such Master Servicer or ~~the applicable~~ such Special Servicer determines, in its reasonable judgment, that such advances would, if made, be Nonrecoverable Servicing Advances; provided, however, that ~~the applicable~~ such Master Servicer may in its sole discretion make any such Servicing Advance without regard to recoverability if it is a necessary fee or expense incurred in connection with the defense or prosecution of legal proceedings. (c) The applicable Special Servicer may, and, if required for the Administered REO Property to continue to qualify as “foreclosure property” within the meaning of Section 860G(a)(8) of the Code, shall, contract with any Independent Contractor for the operation and management of any Administered REO Property, provided that: (i) the terms and conditions of any such contract may not be inconsistent herewith and shall reflect an agreement reached at arm’s length; (ii) the fees of such Independent Contractor (which shall be expenses of the Trust) shall be reasonable and customary in consideration of the nature and locality of such Administered REO Property; (iii) any such contract shall be consistent with Treasury Regulations Section 1.856-6(e)(6) and shall require, or shall be administered to require, that the Independent Contractor, in a timely manner, (A) pay all costs and expenses incurred in connection with the operation and management of such Administered REO Property, including those listed in Section 3.17(b) above, and (B) remit all related revenues collected (net of its fees and such costs and expenses) to the applicable Special Servicer upon receipt; (iv) none of the provisions of this Section 3.17(c) relating to any such contract or to actions taken through any such Independent Contractor shall be deemed to relieve the applicable Special Servicer of any of its duties and obligations hereunder with respect to the operation and management of any such Administered REO Property; and (v) the applicable Special Servicer shall be obligated with respect thereto to the same extent as if it alone were performing all duties and obligations in connection with the operation and management of such Administered REO Property, and the applicable Special Servicer shall comply with the Servicing Standard in maintaining such Independent Contractor. The applicable Special Servicer shall be entitled to enter into any agreement with any Independent Contractor performing services for it related to its duties and obligations hereunder for indemnification of the applicable Special Servicer by such Independent Contractor, and nothing in this Agreement shall be deemed to limit or modify such indemnification. To the extent the costs of any contract with any Independent Contractor for the operation and management of any Administered REO Property are greater than the revenues available from such property, such excess costs shall be covered by, and be reimbursable as, a Servicing Advance. (d) Without limiting the generality of the foregoing, the applicable Special Servicer shall not: (i) permit the Trust Fund to enter into, renew or extend any New Lease with respect to any Administered REO Property, if the New Lease by its terms will give rise to any income that does not constitute Rents from Real Property; (ii) permit any amount to be received or accrued under any New Lease other than amounts that will constitute Rents from Real Property; (iii) authorize or permit any construction on any Administered REO Property, other than the repair or maintenance thereof or the completion of a building or other improvement thereon, and then only if more than 10% of the construction of such building or other improvement was completed before default on the related Mortgage Loan become imminent, all within the meaning of Section 856(e)(4)(B) of the Code; or (iv) except as otherwise provided for in Sections 3.17(a)(i), 3.17(a)(ii) and 3.17(a)(iii) and above, Directly Operate, or allow any other Person, other than an Independent Contractor, to Directly Operate, any Administered REO Property on any date more than ninety (90) days after its date of acquisition by or on behalf of the Trust Fund; unless, in any such case, the applicable Special Servicer has obtained an Opinion of Counsel (the cost of which shall be paid by the applicable Master Servicer as a Servicing Advance) to the effect that such action will not cause such Administered REO Property to fail to qualify as “foreclosure property” within the meaning of Section 860G(a)(8) of the Code at any time that it is held for the benefit of the Trust Fund, in which case the applicable Special Servicer may take such actions as are specified in such Opinion of Counsel. (e) Notwithstanding anything to the contrary, this Section 3.17 shall not apply to any REO Property related to a Non-Trust-Serviced Pooled Mortgage Loan.

Appears in 1 contract

Samples: Pooling and Servicing Agreement (Bear Stearns Commercial Mortgage Securities Trust 2007-Pwr16)

Management of Administered REO Property. (a) Prior to the acquisition of title to any Mortgaged Property securing a defaulted Serviced Mortgage Loan, the applicable Special Servicer shall review the operation of such Mortgaged Property and determine the nature of the income that would be derived from such property if it were acquired by the Trust. If the applicable Special Servicer determines from such review that: (i) None of the income from Directly Operating such Mortgaged Property would be subject to tax as “"net income from foreclosure property” " within the meaning of the REMIC Provisions (such tax referred to herein as an “"REO Tax”"), then such Mortgaged Property may be Directly Operated by ~~the applicable~~ such Special Servicer as ~~Administered~~ REO Property, other than holding such ~~Administered~~ REO Property for sale or lease or performing construction work thereon; (ii) Directly Operating such Mortgaged Property as an ~~Administered~~ REO Property could result in income from such property that would be subject to an REO Tax, but that a lease of such property to another party to operate such property, or the performance of some services by an Independent Contractor with respect to such property, or another method of operating such property would not result in income subject to an REO Tax, then ~~the applicable~~ such Special Servicer may (provided that in the judgment of ~~the applicable~~ such Special Servicer, exercised in accordance with the Servicing Standard, it is commercially reasonable) so lease or otherwise operate such ~~Administered~~ REO Property; or (iii) It is reasonable to believe that Directly Operating such property as ~~Administered~~ REO Property could result in income subject to an REO Tax and either (i) that the income or earnings with respect to such REO Property will offset any REO Tax relating to such income or earnings and will maximize the net recovery from the applicable ~~Administered~~ REO Property to the Certificateholders (taking into account that any related Serviced ~~Pari Passu Companion~~ Non-Pooled Mortgage Loan ~~Holder(s~~Noteholder(s) do not have any obligation under the related Mortgage Loan Group Intercreditor Agreement to bear the effect of any such REO Tax) or (ii) that no commercially reasonable means exists to operate such property as ~~Administered~~ REO Property without the Trust incurring or possibly incurring an REO Tax on income from such property, then ~~the applicable~~ such Special Servicer shall deliver to the Tax Administrator and the ~~Subordinate~~ Controlling Class ~~Representative~~Representative (and, if a Serviced Mortgage Loan Group is involved, the related Serviced Mortgage Loan Group Controlling Party to the extent required under the applicable Mortgage Loan Group Intercreditor Agreement), in writing, a proposed plan (the “"Proposed Plan”") to manage such property as ~~Administered~~ REO Property. Such plan shall include potential sources of income and good faith estimates of the amount of income from each such source. Within a reasonable period of time after receipt of such plan, the Tax Administrator shall consult with the applicable Special Servicer and shall advise ~~the applicable~~ such Special Servicer of the Trust’s 's federal income tax reporting position with respect to the various sources of income that the Trust would derive under the Proposed Plan. In addition, the Tax Administrator shall (to the maximum extent reasonably possible and at a reasonable fee, which fee shall be an expense of the Trust) advise ~~the applicable~~ such Special Servicer of the estimated amount of taxes that the Trust would be required to pay with respect to each such source of income. After receiving the information described in the two preceding sentences from the Tax Administrator, ~~the applicable~~ such Special Servicer shall either (A) implement the Proposed Plan (after acquiring the respective Mortgaged Property as ~~Administered~~ REO Property) or (B) manage and operate such property in a manner that would not result in the imposition of an REO Tax on the income derived from such property. Subject to Section 3.17(b), the applicable Special Servicer’s 's decision as to how each Administered REO Property shall be managed and operated shall be in accordance with the Servicing Standard. Neither the applicable Special Servicer nor the Tax Administrator shall be liable to the Certificateholders, the Trustee, the Trust, the other parties hereto, any beneficiaries hereof or each other for errors in judgment made in good faith in the exercise of their discretion while performing their respective responsibilities under this Section 3.17(a) with respect to any Administered REO Property. Nothing in this Section 3.17(a) is intended to prevent the sale of any Administered REO Property pursuant to the terms and subject to the conditions of Section 3.18. (b) If title to any Administered REO Property is acquired, the applicable Special Servicer shall manage, conserve, protect and operate such ~~Administered~~ REO Property for the benefit of the Certificateholders (or, in the case of any ~~Administered~~ REO Property related to a Serviced Mortgage Loan ~~Combination~~Group, on behalf of both the Certificateholders and the related Serviced ~~Pari Passu Companion~~ Non-Pooled Mortgage Loan ~~Holder(s~~Noteholder(s)), as a collective whole, solely for the purpose of its prompt disposition and sale in accordance with Section 3.18, in a manner that does not cause such Administered REO Property to fail to qualify as “"foreclosure property” " within the meaning of Section 860G(a)(8) of the Code or, except as contemplated by Section 3.17(a), result in the receipt by any REMIC Pool of any “"income from non-permitted assets” " within the meaning of Section 860F(a)(2)(B) of the Code, in an Adverse REMIC Event with respect to any REMIC Pool or in an Adverse Grantor Trust Event with respect to ~~the~~ any Grantor Trust Pool. Except as contemplated by Section 3.17(a), the applicable Special Servicer shall not enter into any lease, contract or other agreement with respect to any Administered REO Property that causes the Trust to receive, and (unless required to do so under any lease, contract or agreement to which the applicable Special Servicer or the Trust may become a party or successor to a party due to a foreclosure, deed-in-lieu of foreclosure or other similar exercise of a creditor’s 's rights or remedies with respect to the related Serviced Mortgage Loan) shall not, with respect to any Administered REO Property, cause or allow the Trust to receive, any “"net income from foreclosure property” " that is subject to taxation under the REMIC Provisions. Subject to the foregoing, however, the applicable Special Servicer shall have full power and authority to do any and all things in connection with the administration of any Administered REO Property, as are consistent with the Servicing Standard and, consistent therewith, shall withdraw from its REO ~~Account~~Account , to the extent of amounts on deposit therein with respect to such ~~Administered~~ REO Property, funds necessary for the proper operation, management, maintenance and disposition of such ~~Administered~~ REO Property, including: (i) all insurance premiums due and payable in respect of such ~~Administered~~ REO Property; (ii) all real estate taxes and assessments in respect of such ~~Administered~~ REO Property that may result in the imposition of a lien thereon; (iii) any ground rents in respect of such ~~Administered~~ REO Property; and (iv) all other costs and expenses necessary to maintain, lease, sell, protect, manage, operate and restore such ~~Administered~~ REO Property. To the extent that amounts on deposit in the applicable Special Servicer’s 's REO Account with respect to any Administered REO Property are insufficient for the purposes contemplated by the preceding sentence with respect to such REO Property, the applicable Master Servicer shall, at the direction of ~~the applicable~~ such Special Servicer, but subject to Section 3.11(h), make a Servicing Advance of such amounts as are necessary for such purposes unless ~~the applicable~~ such Master Servicer or ~~the applicable~~ such Special Servicer determines, in its reasonable judgment, that such advances would, if made, be Nonrecoverable Servicing Advances; provided, however, that ~~the applicable~~ such Master Servicer may in its sole discretion make any such Servicing Advance without regard to recoverability if it is a necessary fee or expense incurred in connection with the defense or prosecution of legal proceedings. (c) The applicable Special Servicer may, and, if required for the Administered REO Property to continue to qualify as “"foreclosure property” " within the meaning of Section 860G(a)(8) of the Code, shall, contract with any Independent Contractor for the operation and management of any Administered REO Property, provided that: (i) the terms and conditions of any such contract may not be inconsistent herewith and shall reflect an agreement reached at arm’s 's length; (ii) the fees of such Independent Contractor (which shall be expenses of the Trust) shall be reasonable and customary in consideration of the nature and locality of such ~~Administered~~ REO Property; (iii) any such contract shall be consistent with Treasury Regulations Section 1.856-6(e)(6) and shall require, or shall be administered to require, that the Independent Contractor, in a timely manner, (A) pay all costs and expenses incurred in connection with the operation and management of such ~~Administered~~ REO Property, including those listed in Section 3.17(b) above, and (B) remit all related revenues collected (net of its fees and such costs and expenses) to ~~the applicable~~ such Special Servicer upon receipt; (iv) none of the provisions of this Section 3.17(c) relating to any such contract or to actions taken through any such Independent Contractor shall be deemed to relieve ~~the applicable~~ such Special Servicer of any of its duties and obligations hereunder with respect to the operation and management of any such ~~Administered~~ REO Property; and (v) ~~the applicable~~ such Special Servicer shall be obligated with respect thereto to the same extent as if it alone were performing all duties and obligations in connection with the operation and management of such ~~Administered~~ REO Property, and ~~the applicable~~ such Special Servicer shall comply with the Servicing Standard in maintaining such Independent Contractor. ~~The applicable~~ Each Special Servicer shall be entitled to enter into any agreement with any Independent Contractor performing services for it related to its duties and obligations hereunder for indemnification of ~~the applicable~~ such Special Servicer by such Independent Contractor, and nothing in this Agreement shall be deemed to limit or modify such indemnification. To the extent the costs of any contract with any Independent Contractor for the operation and management of any Administered REO Property are greater than the revenues available from such property, such excess costs shall be covered by, and be reimbursable as, a Servicing Advance. (d) Without limiting the generality of the foregoing, the applicable Special Servicer shall not: (i) permit the Trust Fund to enter into, renew or extend any New Lease with respect to any ~~Administered~~ REO Property, if the New Lease by its terms will give rise to any income that does not constitute Rents from Real Property; (ii) permit any amount to be received or accrued under any New Lease other than amounts that will constitute Rents from Real Property; (iii) authorize or permit any construction on any ~~Administered~~ REO Property, other than the repair or maintenance thereof or the completion of a building or other improvement thereon, and then only if more than 10% of the construction of such building or other improvement was completed before default on the related Mortgage Loan become imminent, all within the meaning of Section 856(e)(4)(B) of the Code; or (iv) except as otherwise provided for in ~~Sections~~ Section 3.17(a)(i), ~~3.17(a)(ii~~(a)(ii) and ~~3.17(a)(iii~~(a)(iii) and above, Directly Operate, or allow any other Person, other than an Independent Contractor, to Directly Operate, any ~~Administered~~ REO Property on any date more than ~~ninety (90)~~ 90 days after its date of acquisition by or on behalf of the Trust Fund; unless, in any such case, the applicable Special Servicer has obtained an Opinion of Counsel (the cost of which shall be paid by the applicable Master Servicer as a Servicing Advance) to the effect that such action will not cause such Administered REO Property to fail to qualify as “foreclosure property” within the meaning of Section 860G(a)(8) of the Code at any time that it is held for the benefit of the Trust Fund, in which case the applicable Special Servicer may take such actions as are specified in such Opinion of CounselAcquisition Date. (e) Notwithstanding anything to the contrary, this Section 3.17 shall not apply to any REO Property related to a Non-Trust-Serviced Pooled Mortgage Loan.

Appears in 1 contract

Samples: Pooling and Servicing Agreement (Bear Stearns Commercial Mortgage Securities Trust 2007-Pwr18)

Management of Administered REO Property. (a) Prior to the acquisition of title to any Mortgaged Property securing a defaulted Serviced Mortgage Loan, the ~~applicable~~ Special Servicer shall review the operation of such Mortgaged Property and determine the nature of the income that would be derived from such property if it were acquired by the Trust. If the ~~applicable~~ Special Servicer determines from such review that: (i) None of the income from Directly Operating such Mortgaged Property would be subject to tax as “"net income from foreclosure property” " within the meaning of the REMIC Provisions (such tax referred to herein as an “"REO Tax”"), then such Mortgaged Property may be Directly Operated by the ~~applicable~~ Special Servicer as ~~Administered~~ REO Property, other than holding such ~~Administered~~ REO Property for sale or lease or performing construction work thereon; (ii) Directly Operating such Mortgaged Property as an ~~Administered~~ REO Property could result in income from such property that would be subject to an REO Tax, but that a lease of such property to another party to operate such property, or the performance of some services by an Independent Contractor with respect to such property, or another method of operating such property would not result in income subject to an REO Tax, then the ~~applicable~~ Special Servicer may (provided that in the judgment of the ~~applicable~~ Special Servicer, exercised in accordance with the Servicing Standard, it is commercially reasonable) so lease or otherwise operate such ~~Administered~~ REO Property; or (iii) It is reasonable to believe that Directly Operating such property as ~~Administered~~ REO Property could result in income subject to an REO Tax and either (i) that the income or earnings with respect to such REO Property will offset any REO Tax relating to such income or earnings and will maximize the net recovery from the applicable ~~Administered~~ REO Property to the Certificateholders ~~(taking into account that any related Serviced Pari Passu Companion Loan Holder(s) do not have any obligation under the related Intercreditor Agreement to bear the effect of any such REO Tax)~~ or (ii) that no commercially reasonable means exists to operate such property as ~~Administered~~ REO Property without the Trust incurring or possibly incurring an REO Tax on income from such property, then the ~~applicable~~ Special Servicer shall deliver to the Tax Administrator and the ~~Subordinate~~ Controlling Class Representative, in writing, a proposed plan (the “"Proposed Plan”") to manage such property as ~~Administered~~ REO Property. Such plan shall include potential sources of income and good faith estimates of the amount of income from each such source. Within a reasonable period of time after receipt of such plan, the Tax Administrator shall consult with the ~~applicable~~ Special Servicer and shall advise the ~~applicable~~ Special Servicer of the Trust’s 's federal income tax reporting position with respect to the various sources of income that the Trust would derive under the Proposed Plan. In addition, the Tax Administrator shall (to the maximum extent reasonably possible and at a reasonable fee, which fee shall be an expense of the Trust) advise the ~~applicable~~ Special Servicer of the estimated amount of taxes that the Trust would be required to pay with respect to each such source of income. After receiving the information described in the two preceding sentences from the Tax Administrator, the ~~applicable~~ Special Servicer shall either (A) implement the Proposed Plan (after acquiring the respective Mortgaged Property as ~~Administered~~ REO Property) or (B) manage and operate such property in a manner that would not result in the imposition of an REO Tax on the income derived from such property. Subject to Section 3.17(b), the ~~applicable~~ Special Servicer’s 's decision as to how each Administered REO Property shall be managed and operated shall be in accordance with the Servicing Standard. Neither the ~~applicable~~ Special Servicer nor the Tax Administrator shall be liable to the Certificateholders, the Trustee, the Trust, the other parties hereto, any beneficiaries hereof or each other for errors in judgment made in good faith in the exercise of their discretion while performing their respective responsibilities under this Section 3.17(a) with respect to any Administered REO Property. Nothing in this Section 3.17(a) is intended to prevent the sale of any Administered REO Property pursuant to the terms and subject to the conditions of Section 3.18. (b) If title to any Administered REO Property is acquired, the ~~applicable~~ Special Servicer shall manage, conserve, protect and operate such ~~Administered~~ REO Property for the benefit of the Certificateholders (or, in the case of any ~~Administered~~ REO Property related to a the Serviced Mortgage Loan ~~Combination~~Group, on behalf of both the Certificateholders and the related Serviced ~~Pari Passu Companion~~ Non-Pooled Mortgage Loan ~~Holder(s~~Noteholder(s)), as a collective whole, solely for the purpose of its prompt disposition and sale in accordance with Section 3.18, in a manner that does not cause such Administered REO Property to fail to qualify as “"foreclosure property” " within the meaning of Section 860G(a)(8) of the Code or, except as contemplated by ~~Section 3.17(a),~~ Section (a) result in the receipt by any REMIC Pool of any “"income from non-permitted assets” " within the meaning of Section 860F(a)(2)(B) of the Code, in an Adverse REMIC Event with respect to any REMIC Pool or in an Adverse Grantor Trust Event with respect to ~~the~~ either Grantor Trust Pool. Except as contemplated by Section 3.17(a), the ~~applicable~~ Special Servicer shall not enter into any lease, contract or other agreement with respect to any Administered REO Property that causes the Trust to receive, and (unless required to do so under any lease, contract or agreement to which the ~~applicable~~ Special Servicer or the Trust may become a party or successor to a party due to a foreclosure, deed-in-lieu of foreclosure or other similar exercise of a creditor’s 's rights or remedies with respect to the related Serviced Mortgage Loan) shall not, with respect to any Administered REO Property, cause or allow the Trust to receive, any “"net income from foreclosure property” " that is subject to taxation under the REMIC Provisions. Subject to the foregoing, however, the ~~applicable~~ Special Servicer shall have full power and authority to do any and all things in connection with the administration of any Administered REO Property, as are consistent with the Servicing Standard and, consistent therewith, shall withdraw from its REO ~~Account~~Account , to the extent of amounts on deposit therein with respect to such ~~Administered~~ REO Property, funds necessary for the proper operation, management, maintenance and disposition of such ~~Administered~~ REO Property, including: (i) all insurance premiums due and payable in respect of such ~~Administered~~ REO Property; (ii) all real estate taxes and assessments in respect of such ~~Administered~~ REO Property that may result in the imposition of a lien thereon; (iii) any ground rents in respect of such ~~Administered~~ REO Property; and (iv) all other costs and expenses necessary to maintain, lease, sell, protect, manage, operate and restore such ~~Administered~~ REO Property. To the extent that amounts on deposit in the ~~applicable~~ Special Servicer’s 's REO Account with respect to any Administered REO Property are insufficient for the purposes contemplated by the preceding sentence with respect to such REO Property, the applicable Master Servicer shall, at the direction of the ~~applicable~~ Special Servicer, but subject to Section 3.11(h), make a Servicing Advance of such amounts as are necessary for such purposes unless ~~the applicable~~ such Master Servicer or the ~~applicable~~ Special Servicer determines, in its reasonable judgment, that such advances would, if made, be Nonrecoverable Servicing Advances; provided, however, that ~~the applicable~~ such Master Servicer may in its sole discretion make any such Servicing Advance without regard to recoverability if it is a necessary fee or expense incurred in connection with the defense or prosecution of legal proceedings. (c) The ~~applicable~~ Special Servicer may, and, if required for the Administered REO Property to continue to qualify as “"foreclosure property” " within the meaning of Section 860G(a)(8) of the Code, shall, contract with any Independent Contractor for the operation and management of any Administered REO Property, provided that: (i) the terms and conditions of any such contract may not be inconsistent herewith and shall reflect an agreement reached at arm’s 's length; (ii) the fees of such Independent Contractor (which shall be expenses of the Trust) shall be reasonable and customary in consideration of the nature and locality of such ~~Administered~~ REO Property; (iii) any such contract shall be consistent with Treasury Regulations Section 1.856-6(e)(6) and shall require, or shall be administered to require, that the Independent Contractor, in a timely manner, (A) pay all costs and expenses incurred in connection with the operation and management of such ~~Administered~~ REO Property, including those listed in Section 3.17(b) above, and (B) remit all related revenues collected (net of its fees and such costs and expenses) to the ~~applicable~~ Special Servicer upon receipt; (iv) none of the provisions of this Section 3.17(c) relating to any such contract or to actions taken through any such Independent Contractor shall be deemed to relieve the ~~applicable~~ Special Servicer of any of its duties and obligations hereunder with respect to the operation and management of any such ~~Administered~~ REO Property; and (v) the ~~applicable~~ Special Servicer shall be obligated with respect thereto to the same extent as if it alone were performing all duties and obligations in connection with the operation and management of such ~~Administered~~ REO Property, and the ~~applicable~~ Special Servicer shall comply with the Servicing Standard in maintaining such Independent Contractor. The ~~applicable~~ Special Servicer shall be entitled to enter into any agreement with any Independent Contractor performing services for it related to its duties and obligations hereunder for indemnification of the ~~applicable~~ Special Servicer by such Independent Contractor, and nothing in this Agreement shall be deemed to limit or modify such indemnification. To the extent the costs of any contract with any Independent Contractor for the operation and management of any Administered REO Property are greater than the revenues available from such property, such excess costs shall be covered by, and be reimbursable as, a Servicing Advance. (d) Without limiting the generality of the foregoing, the applicable Special Servicer shall not: (i) permit the Trust Fund to enter into, renew or extend any New Lease with respect to any Administered REO Property, if the New Lease by its terms will give rise to any income that does not constitute Rents from Real Property; (ii) permit any amount to be received or accrued under any New Lease other than amounts that will constitute Rents from Real Property; (iii) authorize or permit any construction on any Administered REO Property, other than the repair or maintenance thereof or the completion of a building or other improvement thereon, and then only if more than 10% of the construction of such building or other improvement was completed before default on the related Mortgage Loan become imminent, all within the meaning of Section 856(e)(4)(B) of the Code; or (iv) except as otherwise provided for in Sections 3.17(a)(i), 3.17(a)(ii) and 3.17(a)(iii) and above, Directly Operate, or allow any other Person, other than an Independent Contractor, to Directly Operate, any Administered REO Property on any date more than ninety (90) days after its date of acquisition by or on behalf of the Trust Fund; unless, in any such case, the applicable Special Servicer has obtained an Opinion of Counsel (the cost of which shall be paid by the applicable Master Servicer as a Servicing Advance) to the effect that such action will not cause such Administered REO Property to fail to qualify as “foreclosure property” within the meaning of Section 860G(a)(8) of the Code at any time that it is held for the benefit of the Trust Fund, in which case the applicable Special Servicer may take such actions as are specified in such Opinion of Counsel. (e) Notwithstanding anything to the contrary, this Section 3.17 shall not apply to any REO Property related to a the Non-Trust-Serviced Pooled Mortgage Loan.

Appears in 1 contract

Samples: Pooling and Servicing Agreement (Bear Stearns Commercial Mortgage Securities Trust 2004-Pwr6)

Management of Administered REO Property. (a) Prior to the acquisition of title to any Mortgaged Property securing a defaulted Serviced Mortgage Loan, the ~~applicable~~ Special Servicer shall review the operation of such Mortgaged Property and determine the nature of the income that would be derived from such property if it were acquired by the Trust. If the ~~applicable~~ Special Servicer determines from such review that: (i) None of the income from Directly Operating such Mortgaged Property would be subject to tax as “"net income from foreclosure property” " within the meaning of the REMIC Provisions (such tax referred to herein as an “"REO Tax”"), then such Mortgaged Property may be Directly Operated by the ~~applicable~~ Special Servicer as ~~Administered~~ REO Property, other than holding such ~~Administered~~ REO Property for sale or lease or performing construction work thereon; (ii) Directly Operating such Mortgaged Property as an ~~Administered~~ REO Property could result in income from such property that would be subject to an REO Tax, but that a lease of such property to another party to operate such property, or the performance of some services by an Independent Contractor with respect to such property, or another method of operating such property would not result in income subject to an REO Tax, then the ~~applicable~~ Special Servicer may (provided that in the judgment of the ~~applicable~~ Special Servicer, exercised in accordance with the Servicing Standard, it is commercially reasonable) so lease or otherwise operate such ~~Administered~~ REO Property; or (iii) It is reasonable to believe that Directly Operating such property as ~~Administered~~ REO Property could result in income subject to an REO Tax and either (i) that the income or earnings with respect to such REO Property will offset any REO Tax relating to such income or earnings and will maximize the net recovery from the applicable ~~Administered~~ REO Property to the Certificateholders ~~(taking into account that any related Serviced Pari Passu Companion Loan Holder(s) do not have any obligation under the related Intercreditor Agreement to bear the effect of any such REO Tax)~~ or (ii) that no commercially reasonable means exists to operate such property as ~~Administered~~ REO Property without the Trust incurring or possibly incurring an REO Tax on income from such property, then the ~~applicable~~ Special Servicer shall deliver to the Tax Administrator and the ~~Subordinate~~ Controlling Class Representative, in writing, a proposed plan (the “"Proposed Plan”") to manage such property as ~~Administered~~ REO Property. Such plan shall include potential sources of income and good faith estimates of the amount of income from each such source. Within a reasonable period of time after receipt of such plan, the Tax Administrator shall consult with the ~~applicable~~ Special Servicer and shall advise the ~~applicable~~ Special Servicer of the Trust’s 's federal income tax reporting position with respect to the various sources of income that the Trust would derive under the Proposed Plan. In addition, the Tax Administrator shall (to the maximum extent reasonably possible and at a reasonable fee, which fee shall be an expense of the Trust) advise the ~~applicable~~ Special Servicer of the estimated amount of taxes that the Trust would be required to pay with respect to each such source of income. After receiving the information described in the two preceding sentences from the Tax Administrator, the ~~applicable~~ Special Servicer shall either (A) implement the Proposed Plan (after acquiring the respective Mortgaged Property as ~~Administered~~ REO Property) or (B) manage and operate such property in a manner that would not result in the imposition of an REO Tax on the income derived from such property. Subject to Section 3.17(b), the ~~applicable~~ Special Servicer’s 's decision as to how each Administered REO Property shall be managed and operated shall be in accordance with the Servicing Standard. Neither the ~~applicable~~ Special Servicer nor the Tax Administrator shall be liable to the Certificateholders, the Trustee, the Trust, the other parties hereto, any beneficiaries hereof or each other for errors in judgment made in good faith in the exercise of their discretion while performing their respective responsibilities under this Section 3.17(a) with respect to any Administered REO Property. Nothing in this Section 3.17(a) is intended to prevent the sale of any Administered REO Property pursuant to the terms and subject to the conditions of Section 3.18. (b) If title to any Administered REO Property is acquired, the ~~applicable~~ Special Servicer shall manage, conserve, protect and operate such ~~Administered~~ REO Property for the benefit of the Certificateholders (or, in the case of any ~~Administered~~ REO Property related to a Serviced Mortgage Loan ~~Combination~~Group, on behalf of both the Certificateholders and the related Serviced ~~Pari Passu Companion~~ Non-Pooled Mortgage Loan ~~Holder(s~~Noteholder(s)), as a collective whole, solely for the purpose of its prompt disposition and sale in accordance with Section 3.18, in a manner that does not cause such Administered REO Property to fail to qualify as “"foreclosure property” " within the meaning of Section 860G(a)(8) of the Code or, except as contemplated by Section 3.17(a), result in the receipt by any REMIC Pool of any “"income from non-permitted assets” " within the meaning of Section 860F(a)(2)(B) of the Code, in an Adverse REMIC Event with respect to any REMIC Pool or in an Adverse Grantor Trust Event with respect to ~~the~~ either Grantor Trust Pool. Except as contemplated by Section 3.17(a), the ~~applicable~~ Special Servicer shall not enter into any lease, contract or other agreement with respect to any Administered REO Property that causes the Trust to receive, and (unless required to do so under any lease, contract or agreement to which the ~~applicable~~ Special Servicer or the Trust may become a party or successor to a party due to a foreclosure, deed-in-lieu of foreclosure or other similar exercise of a creditor’s 's rights or remedies with respect to the related Serviced Mortgage Loan) shall not, with respect to any Administered REO Property, cause or allow the Trust to receive, any “"net income from foreclosure property” " that is subject to taxation under the REMIC Provisions. Subject to the foregoing, however, the ~~applicable~~ Special Servicer shall have full power and authority to do any and all things in connection with the administration of any Administered REO Property, as are consistent with the Servicing Standard and, consistent therewith, shall withdraw from its REO ~~Account~~Account , to the extent of amounts on deposit therein with respect to such ~~Administered~~ REO Property, funds necessary for the proper operation, management, maintenance and disposition of such ~~Administered~~ REO Property, including: (i) all insurance premiums due and payable in respect of such ~~Administered~~ REO Property; (ii) all real estate taxes and assessments in respect of such ~~Administered~~ REO Property that may result in the imposition of a lien thereon; (iii) any ground rents in respect of such ~~Administered~~ REO Property; and (iv) all other costs and expenses necessary to maintain, lease, sell, protect, manage, operate and restore such ~~Administered~~ REO Property. To the extent that amounts on deposit in the ~~applicable~~ Special Servicer’s 's REO Account with respect to any Administered REO Property are insufficient for the purposes contemplated by the preceding sentence with respect to such REO Property, the applicable Master Servicer shall, at the direction of the ~~applicable~~ Special Servicer, but subject to Section 3.11(h), make a Servicing Advance of such amounts as are necessary for such purposes unless ~~the applicable~~ such Master Servicer or the ~~applicable~~ Special Servicer determines, in its reasonable judgment, that such advances would, if made, be Nonrecoverable Servicing Advances; provided, however, that ~~the applicable~~ such Master Servicer may in its sole discretion make any such Servicing Advance without regard to recoverability if it is a necessary fee or expense incurred in connection with the defense or prosecution of legal proceedings. (c) The ~~applicable~~ Special Servicer may, and, if required for the Administered REO Property to continue to qualify as “"foreclosure property” " within the meaning of Section 860G(a)(8) of the Code, shall, contract with any Independent Contractor for the operation and management of any Administered REO Property, provided that: (i) the terms and conditions of any such contract may not be inconsistent herewith and shall reflect an agreement reached at arm’s 's length; (ii) the fees of such Independent Contractor (which shall be expenses of the Trust) shall be reasonable and customary in consideration of the nature and locality of such ~~Administered~~ REO Property; (iii) any such contract shall be consistent with Treasury Regulations Section 1.856-6(e)(6) and shall require, or shall be administered to require, that the Independent Contractor, in a timely manner, (A) pay all costs and expenses incurred in connection with the operation and management of such ~~Administered~~ REO Property, including those listed in Section 3.17(b) above, and (B) remit all related revenues collected (net of its fees and such costs and expenses) to the ~~applicable~~ Special Servicer upon receipt; (iv) none of the provisions of this Section 3.17(c) relating to any such contract or to actions taken through any such Independent Contractor shall be deemed to relieve the ~~applicable~~ Special Servicer of any of its duties and obligations hereunder with respect to the operation and management of any such ~~Administered~~ REO Property; and (v) the ~~applicable~~ Special Servicer shall be obligated with respect thereto to the same extent as if it alone were performing all duties and obligations in connection with the operation and management of such ~~Administered~~ REO Property, and the ~~applicable~~ Special Servicer shall comply with the Servicing Standard in maintaining such Independent Contractor. The ~~applicable~~ Special Servicer shall be entitled to enter into any agreement with any Independent Contractor performing services for it related to its duties and obligations hereunder for indemnification of the ~~applicable~~ Special Servicer by such Independent Contractor, and nothing in this Agreement shall be deemed to limit or modify such indemnification. To the extent the costs of any contract with any Independent Contractor for the operation and management of any Administered REO Property are greater than the revenues available from such property, such excess costs shall be covered by, and be reimbursable as, a Servicing Advance. (d) Without limiting the generality of the foregoing, the ~~applicable~~ Special Servicer shall not: (i) permit the Trust Fund to enter into, renew or extend any New Lease with respect to any ~~Administered~~ REO Property, if the New Lease by its terms will give rise to any income that does not constitute Rents from Real Property; (ii) permit any amount to be received or accrued under any New Lease other than amounts that will constitute Rents from Real Property; (iii) authorize or permit any construction on any ~~Administered~~ REO Property, other than the repair or maintenance thereof or the completion of a building or other improvement thereon, and then only if more than 10% of the construction of such building or other improvement was completed before default on the related Mortgage Loan become imminent, all within the meaning of Section 856(e)(4)(B) of the Code; or (iv) except as otherwise provided for in ~~Sections~~ Section 3.17(a)(i), ~~3.17(a)(ii~~(a)(ii) and ~~3.17(a)(iii~~(a)(iii) and above, Directly Operate, or allow any other Person, other than an Independent Contractor, to Directly Operate, any ~~Administered~~ REO Property on any date more than ~~ninety (90)~~ 90 days after its date of acquisition by or on behalf of the Trust Fund; unless, in any such case, the applicable Special Servicer has obtained an Opinion of Counsel (the cost of which shall be paid by the applicable Master Servicer as a Servicing Advance) to the effect that such action will not cause such Administered REO Property to fail to qualify as “foreclosure property” within the meaning of Section 860G(a)(8) of the Code at any time that it is held for the benefit of the Trust Fund, in which case the applicable Special Servicer may take such actions as are specified in such Opinion of CounselAcquisition Date. (e) Notwithstanding anything to the contrary, this Section 3.17 shall not apply to any REO Property related to a Non-Trust-Serviced Pooled Mortgage Loan.

Appears in 1 contract

Samples: Pooling and Servicing Agreement (Bear Stearns Commercial Mortgage Securities Inc)

Management of Administered REO Property. (a) Prior to the acquisition of title to any Mortgaged Property securing a defaulted Serviced Mortgage Loan, the applicable Special Servicer shall review the operation of such Mortgaged Property and determine the nature of the income that would be derived from such property if it were acquired by the Trust. If the applicable Special Servicer determines from such review that: (i) None of the income from Directly Operating such Mortgaged Property would be subject to tax as “"net income from foreclosure property” " within the meaning of the REMIC Provisions (such tax referred to herein as an “"REO Tax”"), then such Mortgaged Property may be Directly Operated by the ~~applicable~~ such Special Servicer as ~~Administered~~ REO Property, other than holding such ~~Administered~~ REO Property for sale or lease or performing construction work thereon; (ii) Directly Operating such Mortgaged Property as an ~~Administered~~ REO Property could result in income from such property that would be subject to an REO Tax, but that a lease of such property to another party to operate such property, or the performance of some services by an Independent Contractor with respect to such property, or another method of operating such property would not result in income subject to an REO Tax, then ~~the applicable~~ such Special Servicer may (provided that in the judgment of ~~the applicable~~ such Special Servicer, exercised in accordance with the Servicing Standard, it is commercially reasonable) so lease or otherwise operate such ~~Administered~~ REO Property; or (iii) It is reasonable to believe that Directly Operating such property as ~~Administered~~ REO Property could result in income subject to an REO Tax and either (i) that the income or earnings with respect to such REO Property will offset any REO Tax relating to such income or earnings and will maximize the net recovery from the applicable ~~Administered~~ REO Property to the Certificateholders (taking into account ~~that any related Serviced Pari Passu Companion Loan Holder(s) do not have~~ any obligation or lack thereof on the part of the Shell Plaza Non-Pooled Subordinate Noteholder under the ~~related~~ Shell Plaza Intercreditor Agreement to bear the effect of any such REO Tax) or (ii) that no commercially reasonable means exists to operate such property as ~~Administered~~ REO Property without the Trust incurring or possibly incurring an REO Tax on income from such property, then ~~the applicable~~ such Special Servicer shall deliver to the Tax Administrator and the ~~Subordinate~~ Controlling Class ~~Representative~~Representative (and the Shell Plaza Controlling Party, if affected), in writing, a proposed plan (the “"Proposed Plan”") to manage such property as ~~Administered~~ REO Property. Such plan shall include potential sources of income and good faith estimates of the amount of income from each such source. Within a reasonable period of time after receipt of such plan, the Tax Administrator shall consult with the applicable Special Servicer and shall advise ~~the applicable~~ such Special Servicer of the Trust’s 's federal income tax reporting position with respect to the various sources of income that the Trust would derive under the Proposed Plan. In addition, the Tax Administrator shall (to the maximum extent reasonably possible and at a reasonable fee, which fee shall be an expense of the Trust) advise ~~the applicable~~ such Special Servicer of the estimated amount of taxes that the Trust would be required to pay with respect to each such source of income. After receiving the information described in the two preceding sentences from the Tax Administrator, ~~the applicable~~ such Special Servicer shall either (A) implement the Proposed Plan (after acquiring the respective Mortgaged Property as ~~Administered~~ REO Property) or (B) manage and operate such property in a manner that would not result in the imposition of an REO Tax on the income derived from such property. Subject to Section 3.17(b), the applicable Special Servicer’s 's decision as to how each Administered REO Property shall be managed and operated shall be in accordance with the Servicing Standard. Neither the applicable Special Servicer nor the Tax Administrator shall be liable to the Certificateholders, the Trustee, the Trust, the other parties hereto, any beneficiaries hereof or each other for errors in judgment made in good faith in the exercise of their discretion while performing their respective responsibilities under this Section 3.17(a) with respect to any Administered REO Property. Nothing in this Section 3.17(a) is intended to prevent the sale of any Administered REO Property pursuant to the terms and subject to the conditions of Section 3.18. (b) If title to any Administered REO Property is acquired, the applicable Special Servicer shall manage, conserve, protect and operate such ~~Administered~~ REO Property for the benefit of the Certificateholders (or, in the case of any ~~Administered~~ REO Property related to a Serviced Mortgage Loan ~~Combination~~Group, on behalf of both the Certificateholders and the related Serviced ~~Pari Passu Companion~~ Non-Pooled Mortgage Loan ~~Holder(s~~Noteholder(s)), as a collective whole, solely for the purpose of its prompt disposition and sale in accordance with Section 3.18, in a manner that does not cause such Administered REO Property to fail to qualify as “"foreclosure property” " within the meaning of Section 860G(a)(8) of the Code or, except as contemplated by Section 3.17(a), result in the receipt by any REMIC Pool of any “"income from non-permitted assets” " within the meaning of Section 860F(a)(2)(B) of the Code, in an Adverse REMIC Event with respect to any REMIC Pool or in an Adverse Grantor Trust Event with respect to ~~the~~ either Grantor Trust Pool. Except as contemplated by Section 3.17(a), the applicable Special Servicer shall not enter into any lease, contract or other agreement with respect to any Administered REO Property that causes the Trust to receive, and (unless required to do so under any lease, contract or agreement to which the applicable Special Servicer or the Trust may become a party or successor to a party due to a foreclosure, deed-in-lieu of foreclosure or other similar exercise of a creditor’s 's rights or remedies with respect to the related Serviced Mortgage Loan) shall not, with respect to any Administered REO Property, cause or allow the Trust to receive, any “"net income from foreclosure property” " that is subject to taxation under the REMIC Provisions. Subject to the foregoing, however, the applicable Special Servicer shall have full power and authority to do any and all things in connection with the administration of any Administered REO Property, as are consistent with the Servicing Standard and, consistent therewith, shall withdraw from its REO ~~Account~~Account , to the extent of amounts on deposit therein with respect to such ~~Administered~~ REO Property, funds necessary for the proper operation, management, maintenance and disposition of such ~~Administered~~ REO Property, including: (i) all insurance premiums due and payable in respect of such ~~Administered~~ REO Property; (ii) all real estate taxes and assessments in respect of such ~~Administered~~ REO Property that may result in the imposition of a lien thereon; (iii) any ground rents in respect of such ~~Administered~~ REO Property; and (iv) all other costs and expenses necessary to maintain, lease, sell, protect, manage, operate and restore such ~~Administered~~ REO Property. To the extent that amounts on deposit in the applicable Special Servicer’s 's REO Account with respect to any Administered REO Property are insufficient for the purposes contemplated by the preceding sentence with respect to such REO Property, the applicable Master Servicer shall, at the direction of ~~the applicable~~ such Special Servicer, but subject to Section 3.11(h), make a Servicing Advance of such amounts as are necessary for such purposes unless ~~the applicable~~ such Master Servicer or ~~the applicable~~ such Special Servicer determines, in its reasonable judgment, that such advances would, if made, be Nonrecoverable Servicing Advances; provided, however, that ~~the applicable~~ such Master Servicer may in its sole discretion make any such Servicing Advance without regard to recoverability if it is a necessary fee or expense incurred in connection with the defense or prosecution of legal proceedings. (c) The applicable Special Servicer may, and, if required for the Administered REO Property to continue to qualify as “"foreclosure property” " within the meaning of Section 860G(a)(8) of the Code, shall, contract with any Independent Contractor for the operation and management of any Administered REO Property, provided that: (i) the terms and conditions of any such contract may not be inconsistent herewith and shall reflect an agreement reached at arm’s 's length; (ii) the fees of such Independent Contractor (which shall be expenses of the Trust) shall be reasonable and customary in consideration of the nature and locality of such ~~Administered~~ REO Property; (iii) any such contract shall be consistent with Treasury Regulations Section 1.856-6(e)(6) and shall require, or shall be administered to require, that the Independent Contractor, in a timely manner, (A) pay all costs and expenses incurred in connection with the operation and management of such ~~Administered~~ REO Property, including those listed in Section 3.17(b) above, and (B) remit all related revenues collected (net of its fees and such costs and expenses) to ~~the applicable~~ such Special Servicer upon receipt; (iv) none of the provisions of this Section 3.17(c) relating to any such contract or to actions taken through any such Independent Contractor shall be deemed to relieve ~~the applicable~~ such Special Servicer of any of its duties and obligations hereunder with respect to the operation and management of any such ~~Administered~~ REO Property; and (v) ~~the applicable~~ such Special Servicer shall be obligated with respect thereto to the same extent as if it alone were performing all duties and obligations in connection with the operation and management of such ~~Administered~~ REO Property, and ~~the applicable~~ such Special Servicer shall comply with the Servicing Standard in maintaining such Independent Contractor. ~~The applicable~~ Each Special Servicer shall be entitled to enter into any agreement with any Independent Contractor performing services for it related to its duties and obligations hereunder for indemnification of ~~the applicable~~ such Special Servicer by such Independent Contractor, and nothing in this Agreement shall be deemed to limit or modify such indemnification. To the extent the costs of any contract with any Independent Contractor for the operation and management of any Administered REO Property are greater ~~than~~ that the revenues available from such property, such excess costs shall be covered by, and be reimbursable as, a Servicing Advance. (d) Without limiting the generality of the foregoing, the applicable Special Servicer shall not: (i) permit the Trust Fund to enter into, renew or extend any New Lease with respect to any Administered REO Property, if the New Lease by its terms will give rise to any income that does not constitute Rents from Real Property; (ii) permit any amount to be received or accrued under any New Lease other than amounts that will constitute Rents from Real Property; (iii) authorize or permit any construction on any Administered REO Property, other than the repair or maintenance thereof or the completion of a building or other improvement thereon, and then only if more than 10% of the construction of such building or other improvement was completed before default on the related Mortgage Loan become imminent, all within the meaning of Section 856(e)(4)(B) of the Code; or (iv) except as otherwise provided for in Sections 3.17(a)(i), 3.17(a)(ii) and 3.17(a)(iii) and above, Directly Operate, or allow any other Person, other than an Independent Contractor, to Directly Operate, any Administered REO Property on any date more than ninety (90) days after its date of acquisition by or on behalf of the Trust Fund; unless, in any such case, the applicable Special Servicer has obtained an Opinion of Counsel (the cost of which shall be paid by the applicable Master Servicer as a Servicing Advance) to the effect that such action will not cause such Administered REO Property to fail to qualify as “foreclosure property” within the meaning of Section 860G(a)(8) of the Code at any time that it is held for the benefit of the Trust Fund, in which case the applicable Special Servicer may take such actions as are specified in such Opinion of Counsel. (e) Notwithstanding anything to the contrary, this Section 3.17 shall not apply to any REO Property related to ~~a Non-Trust-Serviced~~ the GIC Office Portfolio Pooled Mortgage Loan.

Appears in 1 contract

Samples: Pooling and Servicing Agreement (Bear Stearns Commercial Mortgage Securities Trust 2004-Pwr4)

Management of Administered REO Property. (a) Prior to the acquisition of title to any Mortgaged Property securing a defaulted Serviced Mortgage Loan, the applicable Special Servicer shall review the operation of such Mortgaged Property and determine the nature of the income that would be derived from such property if it were acquired by the Trust. If the applicable Special Servicer determines from such review that: (i) None of the income from Directly Operating such Mortgaged Property would be subject to tax as “"net income from foreclosure property” " within the meaning of the REMIC Provisions (such tax referred to herein as an “"REO Tax”"), then such Mortgaged Property may be Directly Operated by the ~~applicable~~ such Special Servicer as ~~Administered~~ REO Property, other than holding such ~~Administered~~ REO Property for sale or lease or performing construction work thereon; (ii) Directly Operating such Mortgaged Property as an ~~Administered~~ REO Property could result in income from such property that would be subject to an REO Tax, but that a lease of such property to another party to operate such property, or the performance of some services by an Independent Contractor with respect to such property, or another method of operating such property would not result in income subject to an REO Tax, then ~~the applicable~~ such Special Servicer may (provided that in the judgment of ~~the applicable~~ such Special Servicer, exercised in accordance with the Servicing Standard, it is commercially reasonable) so lease or otherwise operate such ~~Administered~~ REO Property; or (iii) It is reasonable to believe that Directly Operating such property as ~~Administered~~ REO Property could result in income subject to an REO Tax and either (i) that the income or earnings with respect to such REO Property will offset any REO Tax relating to such income or earnings and will maximize the net recovery from the applicable ~~Administered~~ REO Property to the Certificateholders (taking into account ~~that any related Serviced Pari Passu Companion Loan Holder(s) do not have~~ any obligation or lack thereof on the part of the Lion Industrial Portfolio Non-Pooled Subordinate Noteholder under the ~~related~~ Lion Industrial Portfolio Intercreditor Agreement to bear the effect of any such REO Tax) or (ii) that no commercially reasonable means exists to operate such property as ~~Administered~~ REO Property without the Trust incurring or possibly incurring an REO Tax on income from such property, then ~~the applicable~~ such Special Servicer shall deliver to the Tax Administrator and the ~~Subordinate~~ Controlling Class ~~Representative~~Representative (and the Lion Industrial Portfolio Controlling Party, if affected), in writing, a proposed plan (the “"Proposed Plan”") to manage such property as ~~Administered~~ REO Property. Such plan shall include potential sources of income and good faith estimates of the amount of income from each such source. Within a reasonable period of time after receipt of such plan, the Tax Administrator shall consult with the applicable Special Servicer and shall advise ~~the applicable~~ such Special Servicer of the Trust’s 's federal income tax reporting position with respect to the various sources of income that the Trust would derive under the Proposed Plan. In addition, the Tax Administrator shall (to the maximum extent reasonably possible and at a reasonable fee, which fee shall be an expense of the Trust) advise ~~the applicable~~ such Special Servicer of the estimated amount of taxes that the Trust would be required to pay with respect to each such source of income. After receiving the information described in the two preceding sentences from the Tax Administrator, ~~the applicable~~ such Special Servicer shall either (A) implement the Proposed Plan (after acquiring the respective Mortgaged Property as ~~Administered~~ REO Property) or (B) manage and operate such property in a manner that would not result in the imposition of an REO Tax on the income derived from such property. Subject to Section 3.17(b), the applicable Special Servicer’s 's decision as to how each Administered REO Property shall be managed and operated shall be in accordance with the Servicing Standard. Neither the applicable Special Servicer nor the Tax Administrator shall be liable to the Certificateholders, the Trustee, the Trust, the other parties ~~hereto, any beneficiaries hereof~~ hereto or each other for errors in judgment made in good faith in the exercise of their discretion while performing their respective responsibilities under this Section 3.17(a) with respect to any Administered REO Property. Nothing in this Section 3.17(a) is intended to prevent the sale of any Administered REO Property pursuant to the terms and subject to the conditions of Section 3.18. (b) If title to any Administered REO Property is acquired, the applicable Special Servicer shall manage, conserve, protect and operate such ~~Administered~~ REO Property for the benefit of the Certificateholders (or, in the case of any ~~Administered~~ REO Property related to ~~a Serviced~~ the Lion Industrial Portfolio Loan ~~Combination~~Group, on behalf of both the Certificateholders and the ~~related Serviced Pari Passu Companion Loan Holder(s)~~Lion Industrial Portfolio Non-Pooled Subordinate Noteholder), as a collective whole, solely for the purpose of its prompt disposition and sale in accordance with Section 3.18, in a manner that does not cause such Administered REO Property to fail to qualify as “"foreclosure property” " within the meaning of Section 860G(a)(8) of the Code or, except as contemplated by Section 3.17(a), result in the receipt by any REMIC Pool of any “"income from non-permitted assets” " within the meaning of Section 860F(a)(2)(B) of the Code, in an Adverse REMIC Event with respect to any REMIC Pool or in an Adverse Grantor Trust Event with respect to ~~the~~ either Grantor Trust Pool. Except as contemplated by Section 3.17(a), the applicable Special Servicer shall not enter into any lease, contract or other agreement with respect to any Administered REO Property that causes the Trust to receive, and (unless required to do so under any lease, contract or agreement to which the applicable Special Servicer or the Trust may become a party or successor to a party due to a foreclosure, deed-in-lieu of foreclosure or other similar exercise of a creditor’s 's rights or remedies with respect to the related Serviced Mortgage Loan) shall not, with respect to any Administered REO Property, cause or allow the Trust to receive, any “"net income from foreclosure property” " that is subject to taxation under the REMIC Provisions. Subject to the foregoing, however, the applicable Special Servicer shall have full power and authority to do any and all things in connection with the administration of any Administered REO Property, as are consistent with the Servicing Standard and, consistent therewith, shall withdraw from its REO ~~Account~~Account , to the extent of amounts on deposit therein with respect to such ~~Administered~~ REO Property, funds necessary for the proper operation, management, maintenance and disposition of such ~~Administered~~ REO Property, including: (i) all insurance premiums due and payable in respect of such ~~Administered~~ REO Property; (ii) all real estate taxes and assessments in respect of such ~~Administered~~ REO Property that may result in the imposition of a lien thereon; (iii) any ground rents in respect of such ~~Administered~~ REO Property; and (iv) all other costs and expenses necessary to maintain, lease, sell, protect, manage, operate and restore such ~~Administered~~ REO Property. To the extent that amounts on deposit in the applicable Special Servicer’s 's REO Account with respect to any Administered REO Property are insufficient for the purposes contemplated by the preceding sentence with respect to such REO Property, the applicable Master Servicer shall, at the direction of ~~the applicable~~ such Special Servicer, but subject to Section 3.11(h), make a Servicing Advance of such amounts as are necessary for such purposes unless ~~the applicable~~ such Master Servicer or ~~the applicable~~ such Special Servicer determines, in its reasonable judgment, that such advances would, if made, be Nonrecoverable Servicing Advances; provided, however, that ~~the applicable~~ such Master Servicer may in its sole discretion make any such Servicing Advance without regard to recoverability if it is a necessary fee or expense incurred in connection with the defense or prosecution of legal proceedings. (c) The applicable Special Servicer may, and, if required for the Administered REO Property to continue to qualify as “"foreclosure property” " within the meaning of Section 860G(a)(8) of the Code, shall, contract with any Independent Contractor for the operation and management of any Administered REO Property, provided that: (i) the terms and conditions of any such contract may not be inconsistent herewith and shall reflect an agreement reached at arm’s 's length; (ii) the fees of such Independent Contractor (which shall be expenses of the Trust) shall be reasonable and customary in consideration of the nature and locality of such ~~Administered~~ REO Property; (iii) any such contract shall be consistent with Treasury Regulations Section 1.856-6(e)(6) and shall require, or shall be administered to require, that the Independent Contractor, in a timely manner, (A) pay all costs and expenses incurred in connection with the operation and management of such ~~Administered~~ REO Property, including those listed in Section 3.17(b) above, and (B) remit all related revenues collected (net of its fees and such costs and expenses) to ~~the applicable~~ such Special Servicer upon receipt; (iv) none of the provisions of this Section 3.17(c) relating to any such contract or to actions taken through any such Independent Contractor shall be deemed to relieve ~~the applicable~~ such Special Servicer of any of its duties and obligations hereunder with respect to the operation and management of any such ~~Administered~~ REO Property; and (v) ~~the applicable~~ such Special Servicer shall be obligated with respect thereto to the same extent as if it alone were performing all duties and obligations in connection with the operation and management of such ~~Administered~~ REO Property, and ~~the applicable~~ such Special Servicer shall comply with the Servicing Standard in maintaining such Independent Contractor. ~~The applicable~~ Each Special Servicer shall be entitled to enter into any agreement with any Independent Contractor performing services for it related to its duties and obligations hereunder for indemnification of ~~the applicable~~ such Special Servicer by such Independent Contractor, and nothing in this Agreement shall be deemed to limit or modify such indemnification. To the extent the costs of any contract with any Independent Contractor for the operation and management of any Administered REO Property are greater ~~than~~ that the revenues available from such property, such excess costs shall be covered by, and be reimbursable as, a Servicing Advance. (d) Without limiting the generality of the foregoing, the applicable Special Servicer shall not: (i) permit the Trust Fund to enter into, renew or extend any New Lease with respect to any Administered REO Property, if the New Lease by its terms will give rise to any income that does not constitute Rents from Real Property; (ii) permit any amount to be received or accrued under any New Lease other than amounts that will constitute Rents from Real Property; (iii) authorize or permit any construction on any Administered REO Property, other than the repair or maintenance thereof or the completion of a building or other improvement thereon, and then only if more than 10% of the construction of such building or other improvement was completed before default on the related Mortgage Loan become imminent, all within the meaning of Section 856(e)(4)(B) of the Code; or (iv) except as otherwise provided for in Sections 3.17(a)(i), 3.17(a)(ii) and 3.17(a)(iii) and above, Directly Operate, or allow any other Person, other than an Independent Contractor, to Directly Operate, any Administered REO Property on any date more than ninety (90) days after its date of acquisition by or on behalf of the Trust Fund; unless, in any such case, the applicable Special Servicer has obtained an Opinion of Counsel (the cost of which shall be paid by the applicable Master Servicer as a Servicing Advance) to the effect that such action will not cause such Administered REO Property to fail to qualify as “foreclosure property” within the meaning of Section 860G(a)(8) of the Code at any time that it is held for the benefit of the Trust Fund, in which case the applicable Special Servicer may take such actions as are specified in such Opinion of Counsel. (e) Notwithstanding anything to the contrary, this Section 3.17 shall not apply to any REO Property related to a any Non-Trust-Serviced Pooled Mortgage Loan.

Appears in 1 contract

Samples: Pooling and Servicing Agreement (Bear Stearns Commercial Mortgage Securities Trust 2004-Pwr3)

Management of Administered REO Property. (a) Prior to the acquisition of title to any Mortgaged Property securing a defaulted Serviced Mortgage Loan, the applicable Special Servicer shall review the operation of such Mortgaged Property and determine the nature of the income that would be derived from such property if it were acquired by the Trust. If the applicable Special Servicer determines from such review that: (i) None of the income from Directly Operating such Mortgaged Property would be subject to tax as “"net income from foreclosure property” " within the meaning of the REMIC Provisions (such tax referred to herein as an “"REO Tax”"), then such Mortgaged Property may be Directly Operated by ~~the applicable~~ such Special Servicer as ~~Administered~~ REO Property, other than holding such ~~Administered~~ REO Property for sale or lease or performing construction work thereon; (ii) Directly Operating such Mortgaged Property as an ~~Administered~~ REO Property could result in income from such property that would be subject to an REO Tax, but that a lease of such property to another party to operate such property, or the performance of some services by an Independent Contractor with respect to such property, or another method of operating such property would not result in income subject to an REO Tax, then ~~the applicable~~ such Special Servicer may (provided that in the judgment of ~~the applicable~~ such Special Servicer, exercised in accordance with the Servicing Standard, it is commercially reasonable) so lease or otherwise operate such ~~Administered~~ REO Property; or (iii) It is reasonable to believe that Directly Operating such property as ~~Administered~~ REO Property could result in income subject to an REO Tax and either (i) that the income or earnings with respect to such REO Property will offset any REO Tax relating to such income or earnings and will maximize the net recovery from the applicable ~~Administered~~ REO Property to the Certificateholders (taking into account that any related Serviced ~~Pari Passu Companion~~ Non-Pooled Mortgage Loan ~~Holder(s~~Noteholder(s) do not have any obligation under the related Mortgage Loan Group Intercreditor Agreement to bear the effect of any such REO Tax) or (ii) that no commercially reasonable means exists to operate such property as ~~Administered~~ REO Property without the Trust incurring or possibly incurring an REO Tax on income from such property, then ~~the applicable~~ such Special Servicer shall deliver to the Tax Administrator and the ~~Subordinate~~ Controlling Class ~~Representative~~Representative (and, if a Serviced Mortgage Loan Group is involved, the related Serviced Mortgage Loan Group Controlling Party to the extent required under the applicable Mortgage Loan Group Intercreditor Agreement), in writing, a proposed plan (the “"Proposed Plan”") to manage such property as ~~Administered~~ REO Property. Such plan shall include potential sources of income and good faith estimates of the amount of income from each such source. Within a reasonable period of time after receipt of such plan, the Tax Administrator shall consult with the applicable Special Servicer and shall advise ~~the applicable~~ such Special Servicer of the Trust’s 's federal income tax reporting position with respect to the various sources of income that the Trust would derive under the Proposed Plan. In addition, the Tax Administrator shall (to the maximum extent reasonably possible and at a reasonable fee, which fee shall be an expense of the Trust) advise ~~the applicable~~ such Special Servicer of the estimated amount of taxes that the Trust would be required to pay with respect to each such source of income. After receiving the information described in the two preceding sentences from the Tax Administrator, ~~the applicable~~ such Special Servicer shall either (A) implement the Proposed Plan (after acquiring the respective Mortgaged Property as ~~Administered~~ REO Property) or (B) manage and operate such property in a manner that would not result in the imposition of an REO Tax on the income derived from such property. Subject to Section 3.17(b), the applicable Special Servicer’s 's decision as to how each Administered REO Property shall be managed and operated shall be in accordance with the Servicing Standard. Neither the applicable Special Servicer nor the Tax Administrator shall be liable to the Certificateholders, the Trustee, the Trust, the other parties hereto, any beneficiaries hereof or each other for errors in judgment made in good faith in the exercise of their discretion while performing their respective responsibilities under this Section 3.17(a) with respect to any Administered REO Property. Nothing in this Section 3.17(a) is intended to prevent the sale of any Administered REO Property pursuant to the terms and subject to the conditions of Section 3.18. (b) If title to any Administered REO Property is acquired, the applicable Special Servicer shall manage, conserve, protect and operate such ~~Administered~~ REO Property for the benefit of the Certificateholders (or, in the case of any ~~Administered~~ REO Property related to a Serviced Mortgage Loan ~~Combination~~Group, on behalf of both the Certificateholders and the related Serviced ~~Pari Passu Companion~~ Non-Pooled Mortgage Loan ~~Holder(s~~Noteholder(s)), as a collective whole, solely for the purpose of its prompt disposition and sale in accordance with Section 3.18, in a manner that does not cause such Administered REO Property to fail to qualify as “"foreclosure property” " within the meaning of Section 860G(a)(8) of the Code or, except as contemplated by Section 3.17(a), result in the receipt by any REMIC Pool of any “"income from non-permitted assets” " within the meaning of Section 860F(a)(2)(B) of the Code, in an Adverse REMIC Event with respect to any REMIC Pool or in an Adverse Grantor Trust Event with respect to ~~the~~ any Grantor Trust Pool. Except as contemplated by Section 3.17(a), the applicable Special Servicer shall not enter into any lease, contract or other agreement with respect to any Administered REO Property that causes the Trust to receive, and (unless required to do so under any lease, contract or agreement to which the applicable Special Servicer or the Trust may become a party or successor to a party due to a foreclosure, deed-in-lieu of foreclosure or other similar exercise of a creditor’s 's rights or remedies with respect to the related Serviced Mortgage Loan) shall not, with respect to any Administered REO Property, cause or allow the Trust to receive, any “"net income from foreclosure property” " that is subject to taxation under the REMIC Provisions. Subject to the foregoing, however, the applicable Special Servicer shall have full power and authority to do any and all things in connection with the administration of any Administered REO Property, as are consistent with the Servicing Standard and, consistent therewith, shall withdraw from its REO Account, to the extent of amounts on deposit therein with respect to such ~~Administered~~ REO Property, funds necessary for the proper operation, management, maintenance and disposition of such ~~Administered~~ REO Property, including: (i) all insurance premiums due and payable in respect of such ~~Administered~~ REO Property; (ii) all real estate taxes and assessments in respect of such ~~Administered~~ REO Property that may result in the imposition of a lien thereon; (iii) any ground rents in respect of such ~~Administered~~ REO Property; and (iv) all other costs and expenses necessary to maintain, lease, sell, protect, manage, operate and restore such ~~Administered~~ REO Property. To the extent that amounts on deposit in the applicable Special Servicer’s 's REO Account with respect to any Administered REO Property are insufficient for the purposes contemplated by the preceding sentence with respect to such REO Property, the applicable Master Servicer shall, at the direction of ~~the applicable~~ such Special Servicer, but subject to Section 3.11(h), make a Servicing Advance of such amounts as are necessary for such purposes unless ~~the applicable~~ such Master Servicer or ~~the applicable~~ such Special Servicer determines, in its reasonable judgment, that such advances would, if made, be Nonrecoverable Servicing Advances; provided, however, that ~~the applicable~~ such Master Servicer may in its sole discretion make any such Servicing Advance without regard to recoverability if it is a necessary fee or expense incurred in connection with the defense or prosecution of legal proceedings. (c) The applicable Special Servicer may, and, if required for the Administered REO Property to continue to qualify as “"foreclosure property” " within the meaning of Section 860G(a)(8) of the Code, shall, contract with any Independent Contractor for the operation and management of any Administered REO Property, provided that: (i) the terms and conditions of any such contract may not be inconsistent herewith and shall reflect an agreement reached at arm’s 's length; (ii) the fees of such Independent Contractor (which shall be expenses of the Trust) shall be reasonable and customary in consideration of the nature and locality of such ~~Administered~~ REO Property; (iii) any such contract shall be consistent with Treasury Regulations Section 1.856-6(e)(6) and shall require, or shall be administered to require, that the Independent Contractor, in a timely manner, (A) pay all costs and expenses incurred in connection with the operation and management of such ~~Administered~~ REO Property, including those listed in Section 3.17(b) above, and (B) remit all related revenues collected (net of its fees and such costs and expenses) to ~~the applicable~~ such Special Servicer upon receipt; (iv) none of the provisions of this Section 3.17(c) relating to any such contract or to actions taken through any such Independent Contractor shall be deemed to relieve ~~the applicable~~ such Special Servicer of any of its duties and obligations hereunder with respect to the operation and management of any such ~~Administered~~ REO Property; and (v) ~~the applicable~~ such Special Servicer shall be obligated with respect thereto to the same extent as if it alone were performing all duties and obligations in connection with the operation and management of such ~~Administered~~ REO Property, and ~~the applicable~~ such Special Servicer shall comply with the Servicing Standard in maintaining such Independent Contractor. ~~The applicable~~ Each Special Servicer shall be entitled to enter into any agreement with any Independent Contractor performing services for it related to its duties and obligations hereunder for indemnification of ~~the applicable~~ such Special Servicer by such Independent Contractor, and nothing in this Agreement shall be deemed to limit or modify such indemnification. To the extent the costs of any contract with any Independent Contractor for the operation and management of any Administered REO Property are greater than the revenues available from such property, such excess costs shall be covered by, and be reimbursable as, a Servicing Advance. (d) Without limiting the generality of the foregoing, the applicable Special Servicer shall not: (i) permit the Trust Fund to enter into, renew or extend any New Lease with respect to any ~~Administered~~ REO Property, if the New Lease by its terms will give rise to any income that does not constitute Rents from Real Property; (ii) permit any amount to be received or accrued under any New Lease other than amounts that will constitute Rents from Real Property; (iii) authorize or permit any construction on any ~~Administered~~ REO Property, other than the repair or maintenance thereof or the completion of a building or other improvement thereon, and then only if more than 10% of the construction of such building or other improvement was completed before default on the related Mortgage Loan become imminent, all within the meaning of Section 856(e)(4)(B) of the Code; or (iv) except as otherwise provided for in ~~Sections~~ Section 3.17(a)(i), ~~3.17(a)(ii~~(a)(ii) and ~~3.17(a)(iii~~(a)(iii) and above, Directly Operate, or allow any other Person, other than an Independent Contractor, to Directly Operate, any ~~Administered~~ REO Property on any date more than ~~ninety (90)~~ 90 days after its date of acquisition by or on behalf of the Trust Fund; unless, in any such case, the applicable Special Servicer has obtained an Opinion of Counsel (the cost of which shall be paid by the applicable Master Servicer as a Servicing Advance) to the effect that such action will not cause such Administered REO Property to fail to qualify as “foreclosure property” within the meaning of Section 860G(a)(8) of the Code at any time that it is held for the benefit of the Trust Fund, in which case the applicable Special Servicer may take such actions as are specified in such Opinion of CounselAcquisition Date. (e) Notwithstanding anything to the contrary, this Section 3.17 shall not apply to any REO Property related to a Non-Trust-Serviced Pooled Mortgage Loan.

Appears in 1 contract

Samples: Pooling and Servicing Agreement (Bear Stearns Commercial Mortgage Securities Trust 2006-Pwr14)

Management of Administered REO Property. (a) Prior to the acquisition of title to any Mortgaged Property securing a defaulted Serviced Mortgage Loan, the ~~applicable~~ Special Servicer shall review the operation of such Mortgaged Property and determine the nature of the income that would be derived from such property if it were acquired by the Trust. If the ~~applicable~~ Special Servicer determines from such review that: (i) None of the income from Directly Operating such Mortgaged Property would be subject to tax as “net income from foreclosure property” within the meaning of the REMIC Provisions (such tax referred to herein as an “REO Tax”), then such Mortgaged Property may be Directly Operated by the ~~applicable~~ Special Servicer as Administered REO Property, other than holding such Administered REO Property for sale or lease or performing construction work thereon; (ii) Directly Operating such Mortgaged Property as an Administered REO Property could result in income from such property that would be subject to an REO Tax, but that a lease of such property to another party to operate such property, or the performance of some services by an Independent Contractor with respect to such property, or another method of operating such property would not result in income subject to an REO Tax, then the ~~applicable~~ Special Servicer may (provided that in the judgment of the ~~applicable~~ Special Servicer, exercised in accordance with the Servicing Standard, it is commercially reasonable) so lease or otherwise operate such Administered REO Property; or (iii) It is reasonable to believe that Directly Operating such property as Administered REO Property could result in income subject to an REO Tax and either (i) that the income or earnings with respect to such REO Property will offset any REO Tax relating to such income or earnings and will maximize the net recovery from the applicable Administered REO Property to the Certificateholders (taking into account that any related Serviced Pari Passu Companion Loan Holder(s) do not have any obligation under the related Intercreditor Agreement to bear the effect of any such REO Tax) or (ii) that no commercially reasonable means exists to operate such property as Administered REO Property without the Trust incurring or possibly incurring an REO Tax on income from such property, then the ~~applicable~~ Special Servicer shall deliver to the Tax Administrator and the Subordinate Class Representative, in writing, a proposed plan (the “Proposed Plan”) to manage such property as Administered REO Property. Such plan shall include potential sources of income and good faith estimates of the amount of income from each such source. Within a reasonable period of time after receipt of such plan, the Tax Administrator shall consult with the ~~applicable~~ Special Servicer and shall advise the ~~applicable~~ Special Servicer of the Trust’s federal income tax reporting position with respect to the various sources of income that the Trust would derive under the Proposed Plan. In addition, the Tax Administrator shall (to the maximum extent reasonably possible and at a reasonable fee, which fee shall be an expense of the Trust) advise the ~~applicable~~ Special Servicer of the estimated amount of taxes that the Trust would be required to pay with respect to each such source of income. After receiving the information described in the two preceding sentences from the Tax Administrator, the ~~applicable~~ Special Servicer shall either (A) implement the Proposed Plan (after acquiring the respective Mortgaged Property as Administered REO Property) or (B) manage and operate such property in a manner that would not result in the imposition of an REO Tax on the income derived from such property. Subject to Section 3.17(b), the ~~applicable~~ Special Servicer’s decision as to how each Administered REO Property shall be managed and operated shall be in accordance with the Servicing Standard. Neither the ~~applicable~~ Special Servicer nor the Tax Administrator shall be liable to the Certificateholders, the Trustee, the Trust, the other parties hereto, any beneficiaries hereof or each other for errors in judgment made in good faith in the exercise of their discretion while performing their respective responsibilities under this Section 3.17(a) with respect to any Administered REO Property. Nothing in this Section 3.17(a) is intended to prevent the sale of any Administered REO Property pursuant to the terms and subject to the conditions of Section 3.18. (b) If title to any Administered REO Property is acquired, the ~~applicable~~ Special Servicer shall manage, conserve, protect and operate such Administered REO Property for the benefit of the Certificateholders (or, in the case of any Administered REO Property related to a Serviced Loan Combination, on behalf of both the Certificateholders and the related Serviced Pari Passu Companion Loan Holder(s)), as a collective whole, solely for the purpose of its prompt disposition and sale in accordance with Section 3.18, in a manner that does not cause such Administered REO Property to fail to qualify as “foreclosure property” within the meaning of Section 860G(a)(8) of the Code or, except as contemplated by Section 3.17(a), result in the receipt by any REMIC Pool of any “income from non-permitted assets” within the meaning of Section 860F(a)(2)(B) of the Code, in an Adverse REMIC Event with respect to any REMIC Pool or an Adverse Grantor Trust Event with respect to the Grantor Trust Pool. Except as contemplated by Section 3.17(a), the ~~applicable~~ Special Servicer shall not enter into any lease, contract or other agreement with respect to any Administered REO Property that causes the Trust to receive, and (unless required to do so under any lease, contract or agreement to which the ~~applicable~~ Special Servicer or the Trust may become a party or successor to a party due to a foreclosure, deed-in-lieu of foreclosure or other similar exercise of a creditor’s rights or remedies with respect to the related Serviced Mortgage Loan) shall not, with respect to any Administered REO Property, cause or allow the Trust to receive, any “net income from foreclosure property” that is subject to taxation under the REMIC Provisions. Subject to the foregoing, however, the ~~applicable~~ Special Servicer shall have full power and authority to do any and all things in connection with the administration of any Administered REO Property, as are consistent with the Servicing Standard and, consistent therewith, shall withdraw from its REO Account, to the extent of amounts on deposit therein with respect to such Administered REO Property, funds necessary for the proper operation, management, maintenance and disposition of such Administered REO Property, including: (i) all insurance premiums due and payable in respect of such Administered REO Property; (ii) all real estate taxes and assessments in respect of such Administered REO Property that may result in the imposition of a lien thereon; (iii) any ground rents in respect of such Administered REO Property; and (iv) all other costs and expenses necessary to maintain, lease, sell, protect, manage, operate and restore such Administered REO Property. To the extent that amounts on deposit in the ~~applicable~~ Special Servicer’s REO Account with respect to any Administered REO Property are insufficient for the purposes contemplated by the preceding sentence with respect to such REO Property, the ~~applicable~~ Master Servicer shall, at the direction of the ~~applicable~~ Special Servicer, but subject to Section 3.11(h), make a Servicing Advance of such amounts as are necessary for such purposes unless the ~~applicable~~ Master Servicer or the ~~applicable~~ Special Servicer determines, in its reasonable judgment, that such advances would, if made, be Nonrecoverable Servicing Advances; provided, that the ~~applicable~~ Master Servicer may in its sole discretion make any such Servicing Advance without regard to recoverability if it is a necessary fee or expense incurred in connection with the defense or prosecution of legal proceedings. (c) The ~~applicable~~ Special Servicer may, and, if required for the Administered REO Property to continue to qualify as “foreclosure property” within the meaning of Section 860G(a)(8) of the Code, shall, contract with any Independent Contractor for the operation and management of any Administered REO Property, provided that: (i) the terms and conditions of any such contract may not be inconsistent herewith and shall reflect an agreement reached at arm’s length; (ii) the fees of such Independent Contractor (which shall be expenses of the Trust) shall be reasonable and customary in consideration of the nature and locality of such Administered REO Property; (iii) any such contract shall be consistent with Treasury Regulations Section 1.856-6(e)(6) and shall require, or shall be administered to require, that the Independent Contractor, in a timely manner, (A) pay all costs and expenses incurred in connection with the operation and management of such Administered REO Property, including those listed in Section 3.17(b) above, and (B) remit all related revenues collected (net of its fees and such costs and expenses) to the ~~applicable~~ Special Servicer upon receipt; (iv) none of the provisions of this Section 3.17(c) relating to any such contract or to actions taken through any such Independent Contractor shall be deemed to relieve the ~~applicable~~ Special Servicer of any of its duties and obligations hereunder with respect to the operation and management of any such Administered REO Property; and (v) the ~~applicable~~ Special Servicer shall be obligated with respect thereto to the same extent as if it alone were performing all duties and obligations in connection with the operation and management of such Administered REO Property, and the ~~applicable~~ Special Servicer shall comply with the Servicing Standard in maintaining such Independent Contractor. The ~~applicable~~ Special Servicer shall be entitled to enter into any agreement with any Independent Contractor performing services for it related to its duties and obligations hereunder for indemnification of the ~~applicable~~ Special Servicer by such Independent Contractor, and nothing in this Agreement shall be deemed to limit or modify such indemnification. To the extent the costs of any contract with any Independent Contractor for the operation and management of any Administered REO Property are greater than the revenues available from such property, such excess costs shall be covered by, and be reimbursable as, a Servicing Advance. (d) Without limiting the generality of the foregoing, the ~~applicable~~ Special Servicer shall not: (i) permit the Trust Fund to enter into, renew or extend any New Lease with respect to any Administered REO Property, if the New Lease by its terms will give rise to any income that does not constitute Rents from Real Property; (ii) permit any amount to be received or accrued under any New Lease other than amounts that will constitute Rents from Real Property; (iii) authorize or permit any construction on any Administered REO Property, other than the repair or maintenance thereof or the completion of a building or other improvement thereon, and then only if more than 10% of the construction of such building or other improvement was completed before default on the related Mortgage Loan become imminent, all within the meaning of Section 856(e)(4)(B) of the Code; or (iv) except as otherwise provided for in Sections 3.17(a)(i), 3.17(a)(ii) and 3.17(a)(iii) and above, Directly Operate, or allow any other Person, other than an Independent Contractor, to Directly Operate, any Administered REO Property on any date more than ninety (90) days after its date of acquisition by or on behalf of the Trust Fund; unless, in any such case, the ~~applicable~~ Special Servicer has obtained an Opinion of Counsel (the cost of which shall be paid by the ~~applicable~~ Master Servicer as a Servicing Advance) to the effect that such action will not cause such Administered REO Property to fail to qualify as “foreclosure property” within the meaning of Section 860G(a)(8) of the Code at any time that it is held for the benefit of the Trust Fund, in which case the ~~applicable~~ Special Servicer may take such actions as are specified in such Opinion of Counsel. (e) Notwithstanding anything to the contrary, this Section 3.17 shall not apply to any REO Property related to a Non-Trust-Serviced Pooled Mortgage Loan.

Appears in 1 contract

Samples: Pooling and Servicing Agreement (WFRBS Commercial Mortgage Trust 2013-C17)

Management of Administered REO Property. (a) Prior to the acquisition of title to any Mortgaged Property securing a defaulted Serviced Mortgage Loan, the applicable Special Servicer shall review the operation of such Mortgaged Property and determine the nature of the income that would be derived from such property if it were acquired by the Trust. If the applicable Special Servicer determines from such review that: (i) None of the income from Directly Operating such Mortgaged Property would be subject to tax as “net income from foreclosure property” within the meaning of the REMIC Provisions (such tax referred to herein as an “REO Tax”), then such Mortgaged Property may be Directly Operated by the applicable Special Servicer as Administered REO Property, other than holding such Administered REO Property for sale or lease or performing construction work thereon; (ii) Directly Operating such Mortgaged Property as an Administered REO Property could result in income from such property that would be subject to an REO Tax, but that a lease of such property to another party to operate such property, or the performance of some services by an Independent Contractor with respect to such property, or another method of operating such property would not result in income subject to an REO Tax, then the applicable Special Servicer may (provided that in the judgment of the applicable Special Servicer, exercised in accordance with the Servicing Standard, it is commercially reasonable) so lease or otherwise operate such Administered REO Property; or (iii) It is reasonable to believe that Directly Operating such property as Administered REO Property could result in income subject to an REO Tax and either (i) that the income or earnings with respect to such REO Property will offset any REO Tax relating to such income or earnings and will maximize the net recovery from the applicable Administered REO Property to the Certificateholders (taking into account that any related Serviced Pari Passu Companion Loan Holder(s) do not have any obligation under the related Intercreditor Agreement to bear the effect of any such REO Tax) or (ii) that no commercially reasonable means exists to operate such property as Administered REO Property without the Trust incurring or possibly incurring an REO Tax on income from such property, then the applicable Special Servicer shall deliver to the Tax Administrator and the Subordinate Class Representative, in writing, a proposed plan (the “Proposed Plan”) to manage such property as Administered REO Property. Such plan shall include potential sources of income and good faith estimates of the amount of income from each such source. Within a reasonable period of time after receipt of such plan, the Tax Administrator shall consult with the applicable Special Servicer and shall advise the applicable Special Servicer of the Trust’s federal income tax reporting position with respect to the various sources of income that the Trust would derive under the Proposed Plan. In addition, the Tax Administrator shall (to the maximum extent reasonably possible and at a reasonable fee, which fee shall be an expense of the Trust) advise the applicable Special Servicer of the estimated amount of taxes that the Trust would be required to pay with respect to each such source of income. After receiving the information described in the two preceding sentences from the Tax Administrator, the applicable Special Servicer shall either (A) implement the Proposed Plan (after acquiring the respective Mortgaged Property as Administered REO Property) or (B) manage and operate such property in a manner that would not result in the imposition of an REO Tax on the income derived from such property. Subject to Section 3.17(b), the applicable Special Servicer’s decision as to how each Administered REO Property shall be managed and operated shall be in accordance with the Servicing Standard. Neither the applicable Special Servicer nor the Tax Administrator shall be liable to the Certificateholders, the Trustee, the Trust, the other parties hereto, any beneficiaries hereof or each other for errors in judgment made in good faith in the exercise of their discretion while performing their respective responsibilities under this Section 3.17(a) with respect to any Administered REO Property. Nothing in this Section 3.17(a) is intended to prevent the sale of any Administered REO Property pursuant to the terms and subject to the conditions of Section 3.18. (b) If title to any Administered REO Property is acquired, the applicable Special Servicer shall manage, conserve, protect and operate such Administered REO Property for the benefit of the Certificateholders (or, in the case of any Administered REO Property related to a Serviced Loan Combination, on behalf of both the Certificateholders and the related Serviced Pari Passu Companion Loan Holder(s)), as a collective whole, solely for the purpose of its prompt disposition and sale in accordance with Section 3.18, in a manner that does not cause such Administered REO Property to fail to qualify as “foreclosure property” within the meaning of Section 860G(a)(8) of the Code or, except as contemplated by Section 3.17(a), result in the receipt by any REMIC Pool of any “income from non-permitted assets” within the meaning of Section 860F(a)(2)(B) of the Code, in an Adverse REMIC Event with respect to any REMIC Pool or an Adverse Grantor Trust Event with respect to the Grantor Trust Pool. Except as contemplated by Section 3.17(a), the applicable Special Servicer shall not enter into any lease, contract or other agreement with respect to any Administered REO Property that causes the Trust to receive, and (unless required to do so under any lease, contract or agreement to which the applicable Special Servicer or the Trust may become a party or successor to a party due to a foreclosure, ~~deed-in-~~deed in lieu of foreclosure or other similar exercise of a creditor’s rights or remedies with respect to the related Serviced Mortgage Loan) shall not, with respect to any Administered REO Property, cause or allow the Trust to receive, any “net income from foreclosure property” that is subject to taxation under the REMIC Provisions. Subject to the foregoing, however, the applicable Special Servicer shall have full power and authority to do any and all things in connection with the administration of any Administered REO Property, as are consistent with the Servicing Standard and, consistent therewith, shall withdraw from its REO Account, to the extent of amounts on deposit therein with respect to such Administered REO Property, funds necessary for the proper operation, management, maintenance and disposition of such Administered REO Property, including: (i) all insurance premiums due and payable in respect of such Administered REO Property; (ii) all real estate taxes and assessments in respect of such Administered REO Property that may result in the imposition of a lien thereon; (iii) any ground rents in respect of such Administered REO Property; and (iv) all other costs and expenses necessary to maintain, lease, sell, protect, manage, operate and restore such Administered REO Property. To the extent that amounts on deposit in the applicable Special Servicer’s REO Account with respect to any Administered REO Property are insufficient for the purposes contemplated by the preceding sentence with respect to such REO Property, the applicable Master Servicer shall, at the direction of the applicable Special Servicer, but subject to Section 3.11(h), make a Servicing Advance of such amounts as are necessary for such purposes unless the applicable Master Servicer or the applicable Special Servicer determines, in its reasonable judgment, that such advances would, if made, be Nonrecoverable Servicing Advances; provided, that the applicable Master Servicer may in its sole discretion make any such Servicing Advance without regard to recoverability if it is a necessary fee or expense incurred in connection with the defense or prosecution of legal proceedings. (c) The applicable Special Servicer may, and, if required for the Administered REO Property to continue to qualify as “foreclosure property” within the meaning of Section 860G(a)(8) of the Code, shall, contract with any Independent Contractor for the operation and management of any Administered REO Property, provided that: (i) the terms and conditions of any such contract may not be inconsistent herewith and shall reflect an agreement reached at arm’s length; (ii) the fees of such Independent Contractor (which shall be expenses of the Trust) shall be reasonable and customary in consideration of the nature and locality of such Administered REO Property; (iii) any such contract shall be consistent with Treasury Regulations Section 1.856-6(e)(6) and shall require, or shall be administered to require, that the Independent Contractor, in a timely manner, (A) pay all costs and expenses incurred in connection with the operation and management of such Administered REO Property, including those listed in Section 3.17(b) above, and (B) remit all related revenues collected (net of its fees and such costs and expenses) to the applicable Special Servicer upon receipt; (iv) none of the provisions of this Section 3.17(c) relating to any such contract or to actions taken through any such Independent Contractor shall be deemed to relieve the applicable Special Servicer of any of its duties and obligations hereunder with respect to the operation and management of any such Administered REO Property; and (v) the applicable Special Servicer shall be obligated with respect thereto to the same extent as if it alone were performing all duties and obligations in connection with the operation and management of such Administered REO Property, and the applicable Special Servicer shall comply with the Servicing Standard in maintaining such Independent Contractor. The applicable Special Servicer shall be entitled to enter into any agreement with any Independent Contractor performing services for it related to its duties and obligations hereunder for indemnification of the applicable Special Servicer by such Independent Contractor, and nothing in this Agreement shall be deemed to limit or modify such indemnification. To the extent the costs of any contract with any Independent Contractor for the operation and management of any Administered REO Property are greater than the revenues available from such property, such excess costs shall be covered by, and be reimbursable as, a Servicing Advance. (d) Without limiting the generality of the foregoing, the applicable Special Servicer shall not: (i) permit the Trust Fund to enter into, renew or extend any New Lease with respect to any Administered REO Property, if the New Lease by its terms will give rise to any income that does not constitute Rents from Real Property; (ii) permit any amount to be received or accrued under any New Lease other than amounts that will constitute Rents from Real Property; (iii) authorize or permit any construction on any Administered REO Property, other than the repair or maintenance thereof or the completion of a building or other improvement thereon, and then only if more than 10% of the construction of such building or other improvement was completed before default on the related Mortgage Loan become imminent, all within the meaning of Section 856(e)(4)(B) of the Code; or (iv) except as otherwise provided for in Sections 3.17(a)(i), 3.17(a)(ii) and 3.17(a)(iii) and above, Directly Operate, or allow any other Person, other than an Independent Contractor, to Directly Operate, any Administered REO Property on any date more than ninety (90) days after its date of acquisition by or on behalf of the Trust Fund; unless, in any such case, the applicable Special Servicer has obtained an Opinion of Counsel (the cost of which shall be paid by the applicable Master Servicer as a Servicing Advance) to the effect that such action will not cause such Administered REO Property to fail to qualify as “foreclosure property” within the meaning of Section 860G(a)(8) of the Code at any time that it is held for the benefit of the Trust Fund, in which case the applicable Special Servicer may take such actions as are specified in such Opinion of Counsel. (e) Notwithstanding anything to the contrary, this Section 3.17 shall not apply to any REO Property related to a Non-Trust-Serviced Pooled Mortgage Loan.

Appears in 1 contract

Samples: Pooling and Servicing Agreement (WFRBS Commercial Mortgage Trust 2014-C19)

Management of Administered REO Property. (a) Prior to the acquisition of title to any Mortgaged Property securing a defaulted Serviced Mortgage Loan, the ~~applicable~~ Special Servicer shall review the operation of such Mortgaged Property and determine the nature of the income that would be derived from such property if it were acquired by the Trust. If the ~~applicable~~ Special Servicer determines from such review that: (i) None of the income from Directly Operating such Mortgaged Property would be subject to tax as “"net income from foreclosure property” " within the meaning of the REMIC Provisions or would be subject to the tax imposed on "prohibited transactions" under Section 860F of the Code (either such tax referred to herein as an “"REO Tax”"), then such Mortgaged Property may be Directly Operated by the ~~applicable~~ Special Servicer as ~~Administered~~ REO Property~~, other than holding such Administered REO Property for sale or lease or performing construction work thereon~~; (ii) Directly Operating such Mortgaged Property as an ~~Administered~~ REO Property could result in income from such property that would be subject to an REO Tax, but that a lease of such property to another party to operate such property, or the performance of some services by an Independent Contractor with respect to such property, or another method of operating such property would not result in income subject to an REO Tax, then the ~~applicable~~ Special Servicer may (provided that in the reasonable judgment of the ~~applicable~~ Special Servicer~~, exercised in accordance with the Servicing Standard~~, it is commercially reasonable) so lease or ~~otherwise~~ operate such ~~Administered~~ REO Property; or (iii) It is would not be commercially reasonable to ~~believe that Directly Operating~~ operate and manage such property as Administered REO Property could result in income subject to an REO Tax and either (i) that the income or earnings with respect to such REO Property will offset any REO Tax relating to such income or earnings and will maximize the net recovery from the applicable Administered REO Property to the Certificateholders (taking into account that any related Serviced Pari Passu Companion Loan Holder(s) do not have any obligation under the related Intercreditor Agreement to bear the effect of any such REO Tax) or (ii) that no commercially reasonable means exists to operate such property as Administered REO Property without the Trust incurring or possibly incurring an REO Tax on income from such property, then the ~~applicable~~ Special Servicer shall deliver to the ~~Tax Administrator~~ Trustee and the ~~Subordinate~~ Controlling Class Representative, in writing, a proposed plan (the “"Proposed Plan”") to manage such property as ~~Administered~~ REO Property. Such plan shall include potential sources of ~~income~~ income, and ~~good faith~~ to the extent reasonably possible, estimates of the amount of income from each such source. Within a reasonable period of time after receipt of such plan, the ~~Tax Administrator~~ Trustee shall consult with the ~~applicable~~ Special Servicer and shall advise the ~~applicable~~ Special Servicer of the Trust’s 's federal income tax reporting position with respect to the various sources of income that the Trust would derive under the Proposed Plan. In addition, the ~~Tax Administrator~~ Trustee shall (to the maximum extent reasonably possible and at a reasonable fee~~, which fee shall be an expense of the Trust~~) advise the ~~applicable~~ Special Servicer of the estimated amount of taxes that the Trust would be required to pay with respect to each such source of ~~income~~income from such REO Property. After receiving the information described in the two preceding sentences from the ~~Tax Administrator~~Trustee, the ~~applicable~~ Special Servicer shall either (A) implement the Proposed Plan (after acquiring the respective Mortgaged Property as ~~Administered~~ REO Property) or (B) manage and operate such property in a manner that would not result in the imposition of an REO Tax on the income derived from such property. Subject to ~~Section~~ Sections 3.16(a) and 3.17(b), the ~~applicable~~ Special Servicer’s 's decision as to how each ~~Administered~~ REO Property shall be managed and operated shall be in accordance with the Servicing Standard. Both the Special Servicer and the Trustee may consult with counsel knowledgeable in such matters at (to the extent reasonable) the expense of the Trust in connection with determinations required under this Section 3.17(a) with respect to any Administered REO Property. Neither the ~~applicable~~ Special Servicer nor the ~~Tax Administrator~~ Trustee shall be liable to the Certificateholders, the ~~Trustee, the~~ Trust, the other parties ~~hereto, any beneficiaries hereof~~ hereto or each other for errors in judgment made in good faith in the reasonable exercise of their discretion or in reasonable and good faith reliance on the advice of knowledgeable counsel while performing their respective responsibilities under this Section 3.17(a) ~~with respect~~ or, to ~~any Administered REO Property~~the extent it relates to federal income tax consequences for the Trust, Section 3.17(b) below. Nothing in this Section 3.17(a) is intended to prevent the sale of ~~any~~ an Administered REO Property pursuant to the terms and subject to the conditions of Section ~~3.18~~3.18(d). (b) If title to any ~~Administered REO~~ Mortgaged Property (other than the[Separately Serviced Mortgage Loan] Mortgaged Property) is acquired, the ~~applicable~~ Special Servicer shall manage, conserve, protect and operate such ~~Administered REO~~ Mortgaged Property for the benefit of the Certificateholders (or, in the case of any Administered REO Property related to a Serviced Loan Combination, on behalf of both the Certificateholders and the related Serviced Pari Passu Companion Loan Holder(s)), as a collective whole, solely for the purpose of its prompt disposition and sale in ~~accordance with Section 3.18, in~~ a manner that does not cause such ~~Administered REO~~ Mortgaged Property to fail to qualify as “"foreclosure property” " within the meaning of Section 860G(a)(8) of the Code or, except as contemplated by Section 3.17(a), result in the receipt by any REMIC Pool of any “"income from non-permitted assets” " within the meaning of Section 860F(a)(2)(B) of the ~~Code,~~ Code or in an Adverse REMIC Event ~~with~~ in respect to of any REMIC ~~Pool or an Adverse Grantor Trust Event with respect to the Grantor Trust~~ Pool. Except as ~~contemplated by~~ provided in Section 3.17(a), the ~~applicable~~ Special Servicer shall not enter into any lease, contract or other agreement with respect to any Administered REO Property that causes ~~the Trust~~ any REMIC Pool to receive, and (unless required to do so under any lease, contract or agreement to which the ~~applicable~~ Special Servicer or the Trust may become a party or successor to a party due to a foreclosure, deed-in-lieu of foreclosure or other similar exercise of a creditor’s 's rights or remedies with respect to ~~the related~~ a Serviced Mortgage Loan) shall ~~not,~~ not cause or allow any REMIC Pool to receive any "net income from foreclosure property" with respect to any Administered REO ~~Property, cause or allow the Trust to receive, any “net income from foreclosure property”~~ Property that is subject to taxation under the REMIC Provisions. Subject to the foregoing, Section 3.16(a) and Section 3.17(a), however, the ~~applicable~~ Special Servicer shall have full power and authority to do any and all things in connection with the administration of any Administered REO ~~Property,~~ Property as are consistent with the Servicing Standard and, consistent therewith, shall withdraw from ~~its~~ the REO Account, to the extent of amounts on deposit therein with respect to such ~~Administered~~ REO Property, funds necessary for the proper operation, management, maintenance and disposition of such ~~Administered~~ REO Property, including: (i) all insurance premiums due and payable in respect of such ~~Administered~~ REO Property; (ii) all real estate taxes and assessments in respect of such ~~Administered~~ REO Property that may result in the imposition of a lien thereon; (iii) any ground rents in respect of such ~~Administered~~ REO Property; and (iv) all other costs and expenses necessary to maintain, lease, sell, protect, manage, operate and restore such ~~Administered~~ REO Property. To the extent that amounts on deposit in the ~~applicable Special Servicer’s~~ REO Account ~~with~~ in respect to of any Administered REO Property are insufficient for the purposes ~~contemplated by~~ set forth in the preceding sentence with respect to such REO Property, the ~~applicable~~ Special Servicer shall (in accordance with Section 3.19(b)) direct the Master Servicer ~~shall, at~~ to make (and the ~~direction of the applicable Special Servicer, but subject to Section 3.11(h~~Master Servicer shall so make), ~~make a~~ Servicing ~~Advance of~~ Advances in such amounts as are necessary for such purposes unless (as evidenced in the ~~applicable Master~~ manner contemplated by Section 3.11(h)) the Special Servicer or the ~~applicable Special~~ Master Servicer determines, in its reasonable judgment, that such ~~advances would, if made,~~ payment would be a Nonrecoverable Servicing Advances; provided, that the applicable Master Servicer may in its sole discretion make any such Servicing Advance without regard to recoverability if it is a necessary fee or expense incurred in connection with the defense or prosecution of legal proceedingsAdvance. (c) The ~~applicable~~ Special Servicer ~~may,~~ may (and, except as otherwise permitted by Section 3.17(a), shall if ~~required for the Administered REO Property to continue to qualify as “foreclosure property” within the meaning of Section 860G(a)(8~~it would avoid an Adverse REMIC Event) ~~of the Code, shall,~~ contract with any Independent Contractor for the operation and management of any Administered REO Property, provided that: (i) the terms and conditions of any such contract may not be inconsistent herewith and shall reflect an agreement reached at arm’s 's length; (ii) the fees of such Independent Contractor (which shall be expenses of the Trust) shall be reasonable and customary in consideration of the nature and locality of such ~~Administered~~ REO Property; (iii) any such contract shall be consistent with the provisions of Treasury ~~Regulations Section~~ regulation section 1.856-~~6(e)(6~~4(b)(5) ~~and shall require~~and, or to the extent consistent therewith, shall be administered to ~~require,~~ require that the Independent Contractor, in a timely manner, (A) to the extent of available revenue from such REO Property, pay all costs and expenses incurred in connection with the operation and management of such ~~Administered~~ REO Property, including those listed in Section 3.17(b) -148- above, and (B) remit all related revenues collected (net of its fees and such costs and expenses) to the ~~applicable~~ Special Servicer upon receipt; (iv) none of the provisions of this Section 3.17(c) relating to any such contract or to actions taken through any such Independent Contractor shall be deemed to relieve the ~~applicable~~ Special Servicer of any of its duties and obligations hereunder with respect to the operation and management of any such ~~Administered~~ REO Property; and (v) the ~~applicable~~ Special Servicer shall be obligated with respect thereto to the same extent as if it alone were performing all duties and obligations in connection with the operation and management of such ~~Administered~~ REO Property, and the ~~applicable~~ Special Servicer shall comply with the Servicing Standard in ~~maintaining~~ monitoring such Independent Contractor. The ~~applicable~~ Special Servicer shall be entitled to enter into any agreement with any Independent Contractor performing services for it related to its duties and obligations hereunder for indemnification of the ~~applicable~~ Special Servicer by such Independent Contractor, and nothing in this Agreement shall be deemed to limit or modify such indemnification. To the extent the costs of any contract with any Independent Contractor for the operation and management of any Administered REO Property are greater than the revenues available from such property, such excess costs shall be covered by, and be reimbursable as, a Servicing Advance. (d) Without limiting the generality of the foregoing, the applicable Special Servicer shall not: (i) permit the Trust Fund to enter into, renew or extend any New Lease with respect to any Administered REO Property, if the New Lease by its terms will give rise to any income that does not constitute Rents from Real Property; (ii) permit any amount to be received or accrued under any New Lease other than amounts that will constitute Rents from Real Property; (iii) authorize or permit any construction on any Administered REO Property, other than the repair or maintenance thereof or the completion of a building or other improvement thereon, and then only if more than 10% of the construction of such building or other improvement was completed before default on the related Mortgage Loan become imminent, all within the meaning of Section 856(e)(4)(B) of the Code; or (iv) except as otherwise provided for in Sections 3.17(a)(i), 3.17(a)(ii) and 3.17(a)(iii) and above, Directly Operate, or allow any other Person, other than an Independent Contractor, to Directly Operate, any Administered REO Property on any date more than ninety (90) days after its date of acquisition by or on behalf of the Trust Fund; unless, in any such case, the applicable Special Servicer has obtained an Opinion of Counsel (the cost of which shall be paid by the applicable Master Servicer as a Servicing Advance) to the effect that such action will not cause such Administered REO Property to fail to qualify as “foreclosure property” within the meaning of Section 860G(a)(8) of the Code at any time that it is held for the benefit of the Trust Fund, in which case the applicable Special Servicer may take such actions as are specified in such Opinion of Counsel. (e) Notwithstanding anything to the contrary, this Section 3.17 shall not apply to any REO Property related to a Non-Trust-Serviced Pooled Mortgage Loan.

Appears in 1 contract

Samples: Pooling and Servicing Agreement (Citigroup Commercial Mortgage Securities Inc)

Management of Administered REO Property. (a) Prior to the acquisition of title to any Mortgaged Property securing a defaulted Serviced Mortgage Loan, the ~~applicable~~ Special Servicer shall review the operation of such Mortgaged Property and determine the nature of the income that would be derived from such property if it were acquired by the Trust. If the ~~applicable~~ Special Servicer determines from such review that: (i) None of the income from Directly Operating such Mortgaged Property would be subject to tax as “"net income from foreclosure property” " within the meaning of the REMIC Provisions (such tax referred to herein as an “"REO Tax”"), then such Mortgaged Property may be Directly Operated by the ~~applicable~~ Special Servicer as ~~Administered~~ REO Property, other than holding such ~~Administered~~ REO Property for sale or lease or performing construction work thereon; (ii) Directly Operating such Mortgaged Property as an ~~Administered~~ REO Property could result in income from such property that would be subject to an REO Tax, but that a lease of such property to another party to operate such property, or the performance of some services by an Independent Contractor with respect to such property, or another method of operating such property would not result in income subject to an REO Tax, then the ~~applicable~~ Special Servicer may (provided that in the judgment of the ~~applicable~~ Special Servicer, exercised in accordance with the Servicing Standard, it is commercially reasonable) so lease or otherwise operate such ~~Administered~~ REO Property; or (iii) It is reasonable to believe that Directly Operating such property as ~~Administered~~ REO Property could result in income subject to an REO Tax and either (i) that the income or earnings with respect to such REO Property will offset any REO Tax relating to such income or earnings and will maximize the net recovery from the applicable ~~Administered~~ REO Property to the Certificateholders (taking into account that any related Serviced ~~Pari Passu Companion~~ Non-Pooled Mortgage Loan ~~Holder(s~~Noteholder(s) do not have any obligation under the related Mortgage Loan Group Intercreditor Agreement to bear the effect of any such REO Tax) or (ii) that no commercially reasonable means exists to operate such property as ~~Administered~~ REO Property without the Trust incurring or possibly incurring an REO Tax on income from such property, then the ~~applicable~~ Special Servicer shall deliver to the Tax Administrator and the ~~Subordinate~~ Controlling Class ~~Representative~~Representative (and, if a Serviced Mortgage Loan Group is involved, the related Serviced Mortgage Loan Group Controlling Party to the extent required under the applicable Mortgage Loan Group Intercreditor Agreement), in writing, a proposed plan (the “"Proposed Plan”") to manage such property as ~~Administered~~ REO Property. Such plan shall include potential sources of income and good faith estimates of the amount of income from each such source. Within a reasonable period of time after receipt of such plan, the Tax Administrator shall consult with the ~~applicable~~ Special Servicer and shall advise the ~~applicable~~ Special Servicer of the Trust’s 's federal income tax reporting position with respect to the various sources of income that the Trust would derive under the Proposed Plan. In addition, the Tax Administrator shall (to the maximum extent reasonably possible and at a reasonable fee, which fee shall be an expense of the Trust) advise the ~~applicable~~ Special Servicer of the estimated amount of taxes that the Trust would be required to pay with respect to each such source of income. After receiving the information described in the two preceding sentences from the Tax Administrator, the ~~applicable~~ Special Servicer shall either (A) implement the Proposed Plan (after acquiring the respective Mortgaged Property as ~~Administered~~ REO Property) or (B) manage and operate such property in a manner that would not result in the imposition of an REO Tax on the income derived from such property. Subject to Section 3.17(b), the ~~applicable~~ Special Servicer’s 's decision as to how each Administered REO Property shall be managed and operated shall be in accordance with the Servicing Standard. Neither the applicable Special Servicer nor the Tax Administrator shall be liable to the Certificateholders, the Trustee, the Trust, the other parties hereto, any beneficiaries hereof or each other for errors in judgment made in good faith in the exercise of their discretion while performing their respective responsibilities under this Section 3.17(a) with respect to any Administered REO Property. Nothing in this Section 3.17(a) is intended to prevent the sale of any Administered REO Property pursuant to the terms and subject to the conditions of Section 3.18. (b) If title to any Administered REO Property is acquired, the ~~applicable~~ Special Servicer shall manage, conserve, protect and operate such ~~Administered~~ REO Property for the benefit of the Certificateholders (or, in the case of any ~~Administered~~ REO Property related to a Serviced Mortgage Loan ~~Combination~~Group, on behalf of both the Certificateholders and the related Serviced ~~Pari Passu Companion~~ Non-Pooled Mortgage Loan ~~Holder(s~~Noteholder(s)), as a collective whole, solely for the purpose of its prompt disposition and sale in accordance with Section 3.18, in a manner that does not cause such Administered REO Property to fail to qualify as “"foreclosure property” " within the meaning of Section 860G(a)(8) of the Code or, except as contemplated by Section 3.17(a), result in the receipt by any REMIC Pool of any “"income from non-permitted assets” " within the meaning of Section 860F(a)(2)(B) of the Code, in an Adverse REMIC Event with respect to any REMIC Pool or in an Adverse Grantor Trust Event with respect to ~~the~~ any Grantor Trust Pool. Except as contemplated by Section 3.17(a), the ~~applicable~~ Special Servicer shall not enter into any lease, contract or other agreement with respect to any Administered REO Property that causes the Trust to receive, and (unless required to do so under any lease, contract or agreement to which the ~~applicable~~ Special Servicer or the Trust may become a party or successor to a party due to a foreclosure, deed-in-lieu of foreclosure or other similar exercise of a creditor’s 's rights or remedies with respect to the related Serviced Mortgage Loan) shall not, with respect to any Administered REO Property, cause or allow the Trust to receive, any “"net income from foreclosure property” " that is subject to taxation under the REMIC Provisions. Subject to the foregoing, however, the ~~applicable~~ Special Servicer shall have full power and authority to do any and all things in connection with the administration of any Administered REO Property, as are consistent with the Servicing Standard and, consistent therewith, shall withdraw from its REO Account, to the extent of amounts on deposit therein with respect to such ~~Administered~~ REO Property, funds necessary for the proper operation, management, maintenance and disposition of such ~~Administered~~ REO Property, including: (i) all insurance premiums due and payable in respect of such ~~Administered~~ REO Property; (ii) all real estate taxes and assessments in respect of such ~~Administered~~ REO Property that may result in the imposition of a lien thereon; (iii) any ground rents in respect of such ~~Administered~~ REO Property; and (iv) all other costs and expenses necessary to maintain, lease, sell, protect, manage, operate and restore such ~~Administered~~ REO Property. To the extent that amounts on deposit in the ~~applicable~~ Special Servicer’s 's REO Account with respect to any Administered REO Property are insufficient for the purposes contemplated by the preceding sentence with respect to such REO Property, the applicable Master Servicer shall, at the direction of the ~~applicable~~ Special Servicer, but subject to Section 3.11(h), make a Servicing Advance of such amounts as are necessary for such purposes unless ~~the applicable~~ such Master Servicer or the ~~applicable~~ Special Servicer determines, in its reasonable judgment, that such advances would, if made, be Nonrecoverable Servicing Advances; provided, however, that ~~the applicable~~ such Master Servicer may in its sole discretion make any such Servicing Advance without regard to recoverability if it is a necessary fee or expense incurred in connection with the defense or prosecution of legal proceedings. (c) The ~~applicable~~ Special Servicer may, and, if required for the Administered REO Property to continue to qualify as “"foreclosure property” " within the meaning of Section 860G(a)(8) of the Code, shall, contract with any Independent Contractor for the operation and management of any Administered REO Property, provided that: (i) the terms and conditions of any such contract may not be inconsistent herewith and shall reflect an agreement reached at arm’s 's length; (ii) the fees of such Independent Contractor (which shall be expenses of the Trust) shall be reasonable and customary in consideration of the nature and locality of such ~~Administered~~ REO Property; (iii) any such contract shall be consistent with Treasury Regulations Section 1.856-6(e)(6) and shall require, or shall be administered to require, that the Independent Contractor, in a timely manner, (A) pay all costs and expenses incurred in connection with the operation and management of such ~~Administered~~ REO Property, including those listed in Section 3.17(b) above, and (B) remit all related revenues collected (net of its fees and such costs and expenses) to the ~~applicable~~ Special Servicer upon receipt; (iv) none of the provisions of this Section 3.17(c) relating to any such contract or to actions taken through any such Independent Contractor shall be deemed to relieve the ~~applicable~~ Special Servicer of any of its duties and obligations hereunder with respect to the operation and management of any such ~~Administered~~ REO Property; and (v) the ~~applicable~~ Special Servicer shall be obligated with respect thereto to the same extent as if it alone were performing all duties and obligations in connection with the operation and management of such ~~Administered~~ REO Property, and the ~~applicable~~ Special Servicer shall comply with the Servicing Standard in maintaining such Independent Contractor. The ~~applicable~~ Special Servicer shall be entitled to enter into any agreement with any Independent Contractor performing services for it related to its duties and obligations hereunder for indemnification of the ~~applicable~~ Special Servicer by such Independent Contractor, and nothing in this Agreement shall be deemed to limit or modify such indemnification. To the extent the costs of any contract with any Independent Contractor for the operation and management of any Administered REO Property are greater than the revenues available from such property, such excess costs shall be covered by, and be reimbursable as, a Servicing Advance. (d) Without limiting the generality of the foregoing, the ~~applicable~~ Special Servicer shall not: (i) permit the Trust Fund to enter into, renew or extend any New Lease with respect to any ~~Administered~~ REO Property, if the New Lease by its terms will give rise to any income that does not constitute Rents from Real Property; (ii) permit any amount to be received or accrued under any New Lease other than amounts that will constitute Rents from Real Property; (iii) authorize or permit any construction on any ~~Administered~~ REO Property, other than the repair or maintenance thereof or the completion of a building or other improvement thereon, and then only if more than 10% of the construction of such building or other improvement was completed before default on the related Mortgage Loan become imminent, all within the meaning of Section 856(e)(4)(B) of the Code; or (iv) except as otherwise provided for in ~~Sections~~ Section 3.17(a)(i), ~~3.17(a)(ii~~(a)(ii) and ~~3.17(a)(iii~~(a)(iii) and above, Directly Operate, or allow any other Person, other than an Independent Contractor, to Directly Operate, any ~~Administered~~ REO Property on any date more than ~~ninety (90)~~ 90 days after its date of acquisition by or on behalf of the Trust Fund; unless, in any such case, the applicable Special Servicer has obtained an Opinion of Counsel (the cost of which shall be paid by the applicable Master Servicer as a Servicing Advance) to the effect that such action will not cause such Administered REO Property to fail to qualify as “foreclosure property” within the meaning of Section 860G(a)(8) of the Code at any time that it is held for the benefit of the Trust Fund, in which case the applicable Special Servicer may take such actions as are specified in such Opinion of CounselAcquisition Date. (e) Notwithstanding anything to the contrary, this Section 3.17 shall not apply to any REO Property related to a Non-Trust-Serviced Pooled Mortgage Loan.

Appears in 1 contract

Samples: Pooling and Servicing Agreement (Bear Stearns Commercial Mortgage Securities Trust 2005-Pwr10)

Common use of Management of Administered REO Property Clause in Contracts