Realization Upon Defaulted Serviced Mortgage Loans. (a) The applicable Special Servicer shall, subject to Sections 3.09(b), 3.09(c), 3.09(d), Section 3.24, Section 3.26 and/or Section 3.28, as applicable, exercise reasonable efforts, consistent with the Servicing Standard, to foreclose upon or otherwise comparably convert the ownership of the real property and other collateral securing any Serviced Mortgage Loan or Serviced Loan Combination that comes into and continues in default and as to which no satisfactory arrangements can be made for collection of delinquent payments, including pursuant to Section 3.20. In connection with the foregoing, in the event of a default under any Serviced Mortgage Loan, Serviced Loan Combination or Cross-Collateralized Group that is secured by real properties located in multiple states, and such states include California or another state with a statute, rule or regulation comparable to California’s “one action rule”, then the applicable Special Servicer shall consult Independent counsel regarding the order and manner in which the applicable Special Servicer should foreclose upon or comparably proceed against such properties. The applicable Special Servicer may direct the applicable Master Servicer to advance, as contemplated by Section 3.19(b), all costs and expenses (including attorneys’ fees and litigation costs and expenses) to be incurred on behalf of the Trust in any such proceedings or such consultation, subject to the applicable Master Servicer being entitled to reimbursement for any such advance as a Servicing Advance as provided in Section 3.05(a), and further subject to the applicable Special Servicer’s being entitled to pay out of the related Liquidation Proceeds, Insurance Proceeds and/or Condemnation Proceeds any Liquidation Expenses incurred in respect of any Serviced Mortgage Loan or Serviced Loan Combination, which Liquidation Expenses were outstanding at the time such proceeds are received. Nothing contained in this Section 3.09 shall be construed so as to require the applicable Special Servicer, on behalf of the Trust, to make a bid on any Mortgaged Property at a foreclosure sale or similar proceeding that is in excess of the fair market value of such property, as determined by the applicable Special Servicer taking into account the factors described in Section 3.18 and the results of any appraisal obtained pursuant to the following sentence or otherwise, all such cash bids to be made in a manner consistent with the Servicing Standard. If and when the applicable Master Servicer or the applicable Special Servicer deems it necessary in accordance with the Servicing Standard for purposes of establishing the fair market value of any Mortgaged Property securing a defaulted Serviced Mortgage Loan or Serviced Loan Combination, whether for purposes of bidding at foreclosure or otherwise, the applicable Master Servicer or the applicable Special Servicer (as the case may be) is authorized to have an Appraisal completed with respect to such property (the cost of which appraisal shall be covered by, and be reimbursable as, a Servicing Advance). The applicable Master Servicer shall not foreclose upon or otherwise comparably convert, including by taking title thereto, any real property or other collateral securing a Defaulted Mortgage Loan or Serviced Loan Combination. (b) Notwithstanding the foregoing provisions of this Section 3.09, no Mortgaged Property shall be acquired by the applicable Special Servicer on behalf of the Trust (and, in the case of a Serviced Loan Combination, the related Serviced Pari Passu Companion Loan Holder(s)) under such circumstances, in such manner or pursuant to such terms as would (i) cause such Mortgaged Property to fail to qualify as “foreclosure property” within the meaning of Section 860G(a)(8) of the Code (unless the portion of such REO Property that is not treated as “foreclosure property” and that is held by any REMIC Pool at any given time constitutes not more than a de minimis amount of the assets of such REMIC Pool within the meaning of Treasury Regulations Section 1.860D-1(b)(3)(i) and (ii)), or (ii) except as permitted by Section 3.17(a), subject the Trust to the imposition of any federal income or prohibited transaction taxes under the Code. Subject to the foregoing, however, a Mortgaged Property may be acquired through a single-member limited liability company. In addition, except as permitted under Section 3.17(a), the applicable Special Servicer shall not acquire any personal property on behalf of the Trust (and, in the case of a Serviced Loan Combination, the related Serviced Pari Passu Companion Loan Holder(s) pursuant to this Section 3.09 unless either: (i) such personal property is incident to real property (within the meaning of Section 856(e)(1) of the Code) so acquired by the applicable Special Servicer; or (ii) the applicable Special Servicer shall have obtained an Opinion of Counsel (the cost of which shall be covered by, and reimbursable as, a Servicing Advance) to the effect that the holding of such personal property as part of the Trust Fund will not result in an Adverse REMIC Event with respect to any REMIC Pool or an Adverse Grantor Trust Event with respect to the Grantor Trust Pool. (c) Notwithstanding the foregoing provisions of this Section 3.09, the applicable Special Servicer shall not, on behalf of the Trust (and, in the case of a Serviced Loan Combination, the related Serviced Pari Passu Companion Loan Holder(s)), have a receiver of rents appointed with respect to a Mortgaged Property, or obtain title to a Mortgaged Property by foreclosure, deed in lieu of foreclosure or otherwise, or take any other action with respect to any Mortgaged Property, if, as a result of any such action, the Trustee, on behalf of the Certificateholders, could, in the reasonable judgment of the applicable Special Servicer, exercised in accordance with the Servicing Standard, be considered to hold title to, to be a “mortgagee-in-possession” of, or to be an “owner” or “operator” of such Mortgaged Property within the meaning of CERCLA or any comparable law, unless: (i) the applicable Special Servicer has previously determined in accordance with the Servicing Standard, based on a Phase I Environmental Assessment (and any additional environmental testing that the applicable Special Servicer deems necessary and prudent) of such Mortgaged Property conducted by an Independent Person who regularly conducts Phase I Environmental Assessments and performed during the nine-month period preceding any such acquisition of title or other action, that such Mortgaged Property is in compliance with applicable environmental laws and regulations and there are no circumstances or conditions present at the Mortgaged Property relating to the use, management or disposal of Hazardous Materials for which investigation, testing, monitoring, containment, clean-up or remediation could be required under any applicable environmental laws and regulations; or (ii) if the determination described in clause (c)(i) above cannot be made, the applicable Special Servicer has previously determined in accordance with the Servicing Standard, on the same basis as described in clause (c)(i) above, and taking into account the coverage provided under the related Environmental Insurance Policy, that it would maximize the recovery to the Certificateholders and, in the case of a Mortgaged Property securing a Serviced Loan Combination, to the related Serviced Pari Passu Companion Loan Holder(s) (as a collective whole) on a present value basis (the relevant discounting of anticipated collections that will be distributable to Certificateholders and, in the case of a Mortgaged Property securing a Serviced Loan Combination, to the related Serviced Pari Passu Companion Loan Holder(s), to be performed at the related Net Mortgage Rate (or (x) in the case of an ARD Mortgage Loan after its Anticipated Repayment Date, at the related Net Mortgage Rate immediately prior to the Anticipated Repayment Date, or (y) in the case of a Serviced Loan Combination, at the weighted average of the Net Mortgage Rates for the related notes)) to acquire title to or possession of the Mortgaged Property and to take such remedial, corrective and/or other further actions as are necessary to bring the Mortgaged Property into compliance with applicable environmental laws and regulations and to appropriately address any of the circumstances and conditions referred to in clause (c)(i) above. Any such determination by the applicable Special Servicer contemplated by clause (i) or clause (ii) of the preceding paragraph shall be evidenced by an Officer’s Certificate to such effect delivered to the Trustee, the applicable Master Servicer, the Subordinate Class Representative and the Majority Subordinate Certificateholder (and, in the case of a Mortgaged Property securing a Serviced Loan Combination, to the related Serviced Pari Passu Companion Loan Holder(s)), specifying all of the bases for such determination, such Officer’s Certificate to be accompanied by all related environmental reports. The cost of such Phase I Environmental Assessment and any such additional environmental testing, as well as the cost of any remedial, corrective or other further action contemplated by clause (i) and/or clause (ii) above of the first paragraph of Section 3.09(c), shall be paid out of the Collection Account (subject to, if it relates to one or more Mortgage Loans in a Serviced Loan Combination, the proviso at the end of the first paragraph (that is, the initial paragraph that includes the enumerated clauses (i) through (xxiii) of Section 3.05(a)(I)). (d) If neither of the conditions set forth in clauses (i) and (ii) of the first paragraph of Section 3.09(c) has been satisfied with respect to any Mortgaged Property securing a defaulted Serviced Mortgage Loan (or, if applicable, a Serviced Loan Combination), the applicable Special Servicer shall take such action as is in accordance with the Servicing Standard (other than proceeding against the Mortgaged Property) and, at such time as it deems appropriate, may, on behalf of the Trust and, if applicable, any related Serviced Pari Passu Companion Loan Holder(s), release all or a portion of such Mortgaged Property from the lien of the related Mortgage; provided that both (i) if such Serviced Mortgage Loan has a then-outstanding principal balance greater than $1,000,000, then prior to the release of all or a portion of the related Mortgaged Property from the lien of the related Mortgage, the applicable Special Servicer shall have notified the Rating Agencies (subject to Section 3.27), the Subordinate Class Representative, the Majority Subordinate Certificateholder, the Trustee, the Certificate Administrator and the applicable Master Servicer, in writing of its intention to so release all or a portion of such Mortgaged Property and the basis for the determination that such intention, in the applicable Special Servicer’s good faith judgment, was consistent with the Servicing Standard and (ii) if any Serviced Loan Combination is involved, the holders of the related Serviced Pari Passu Companion Loan or their representatives shall have the rights, if any, in respect thereof that are enumerated in the related Intercreditor Agreement. (e) The applicable Special Servicer shall report to the Trustee, the applicable Master Servicer, the Majority Subordinate Certificateholder, the Trust Advisor (during any Collective Consultation Period and any Senior Consultation Period), the Subordinate Class Representative (during any Subordinate Control Period and any Collective Consultation Period), and, in case of a Mortgaged Property securing a Serviced Loan Combination, the related Serviced Pari Passu Companion Loan Holder(s), monthly in writing as to any actions taken by the applicable Special Servicer with respect to any Mortgaged Property as to which neither of the conditions set forth in clauses (i) and (ii) of the first paragraph of Section 3.09(c) has been satisfied, in each case until the earliest to occur of satisfaction of either of such conditions, release of the lien of the related Mortgage on such Mortgaged Property and the related Mortgage Loan’s (or in the case of a Serviced Loan Combination, each of the related Mortgage Loan and any related Serviced Pari Passu Companion Loan) becoming a Corrected Mortgage Loan. (f) The applicable Special Servicer shall have the right to determine, in accordance with the Servicing Standard, with respect to any Specially Serviced Mortgage Loan, the advisability of seeking to obtain a deficiency judgment if the state in which the related Mortgaged Property is located and the terms of the subject Mortgage Loan permit such an action and shall, in accordance with the Servicing Standard, seek such deficiency judgment if it deems advisable. The applicable Master Servicer, at the direction of the applicable Special Servicer, shall make a Servicing Advance for the costs incurred in pursuing any such deficiency action, provided that the applicable Master Servicer shall not be obligated in connection therewith to advance any funds, which if so advanced would constitute a Nonrecoverable Advance. (g) Annually in each January, each Master Servicer shall, with the reasonable cooperation of the applicable Special Servicer, prepare and file with the IRS on a timely basis the information returns with respect to the reports of foreclosures and abandonments and reports relating to any cancellation of indebtedness income with respect to any Serviced Mortgage Loan, or Mortgaged Property securing a Serviced Mortgage Loan and any Serviced Loan Combination, required by Sections 6050H (as applicable), 6050J and 6050P of the Code. Contemporaneously therewith, the applicable Master Servicer shall deliver a copy of such information returns to the applicable Special Servicer and the Trustee. (h) As soon as the applicable Special Servicer makes a Final Recovery Determination (during any Subordinate Control Period and any Collective Consultation Period, such determination to be made in consultation with the Subordinate Class Representative and the related calculations to be subject to the approval of such Subordinate Class Representative) with respect to any Mortgage Loan, Serviced Loan Combination or REO Property, it shall promptly notify the Certificate Administrator, the Trustee, the Rating Agencies (subject to Section 3.27), the applicable Master Servicer (unless it is the one making the determination), the Trust Advisor (during any Collective Consultation Period and any Senior Consultation Period) and the Subordinate Class Representative (during any Subordinate Control Period and any Collective Consultation Period). The applicable Special Servicer shall maintain accurate records, prepared by a Servicing Officer, of each such Final Recovery Determination (if any) made by it and the basis thereof. Each such Final Recovery Determination (if any) shall be evidenced by an Officer’s Certificate delivered to the Certificate Administrator, the Trustee, the applicable Master Servicer (unless it is the one making the determination), the Trust Advisor (during any Collective Consultation Period and any Senior Consultation Period) and the Subordinate Class Representative (during any Subordinate Control Period and any Collective Consultation Period) no later than ten (10) Business Days following such Final Recovery Determination. (i) Notwithstanding anything the contrary, to the extent that the applicable Special Servicer acquires a Mortgaged Property that is a hospitality property on behalf of the Trust and such hospitality property has a franchise or licensing agreement that requires a successor or replacement franchisee or licensee to have a specified net worth, the applicable Special Servicer shall, to the extent consistent with the Servicing Standard, take all actions reasonably necessary to permit the Mortgaged Property to maintain its franchise or license with the same franchisor or licensor in place prior to such foreclosure.

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)

Realization Upon Defaulted Serviced Mortgage Loans. (a) The applicable Special Servicer shall, subject to Sections 3.09(b), 3.09(c), 3.09(d), Section 3.24, Section 3.26 and/or Section 3.28, as applicable, exercise reasonable efforts, consistent with the Servicing Standard, to foreclose upon or otherwise comparably convert the ownership of the real property and other collateral securing any Serviced Mortgage Loan or Serviced Loan Combination that comes into and continues in default and as to which no satisfactory arrangements can be made for collection of delinquent payments, including pursuant to Section 3.20. In connection with the foregoing, in the event of a default under any Serviced Mortgage Loan, Serviced Loan Combination or Cross-Collateralized Group that is secured by real properties located in multiple states, and such states include California or another state with a statute, rule or regulation comparable to California’s “one action rule”, then the applicable Special Servicer shall consult Independent counsel regarding the order and manner in which the applicable Special Servicer should foreclose upon or comparably proceed against such properties. The applicable Special Servicer may direct the applicable Master Servicer to advance, as contemplated by Section 3.19(b), all costs and expenses (including attorneys’ fees and litigation costs and expenses) to be incurred on behalf of the Trust in any such proceedings or such consultation, subject to the applicable Master Servicer being entitled to reimbursement for any such advance as a Servicing Advance as provided in Section 3.05(a), and further subject to the applicable Special Servicer’s being entitled to pay out of the related Liquidation Proceeds, Insurance Proceeds and/or Condemnation Proceeds any Liquidation Expenses incurred in respect of any Serviced Mortgage Loan or Serviced Loan Combination, which Liquidation Expenses were outstanding at the time such proceeds are received. Nothing contained in this Section 3.09 shall be construed so as to require the applicable Special Servicer, on behalf of the Trust, to make a bid on any Mortgaged Property at a foreclosure sale or similar proceeding that is in excess of the fair market value of such property, as determined by the applicable Special Servicer taking into account the factors described in Section 3.18 and the results of any appraisal obtained pursuant to the following sentence or otherwise, all such cash bids to be made in a manner consistent with the Servicing Standard. If and when the applicable Master Servicer or the applicable Special Servicer deems it necessary in accordance with the Servicing Standard for purposes of establishing the fair market value of any Mortgaged Property securing a defaulted Serviced Mortgage Loan or Serviced Loan Combination, whether for purposes of bidding at foreclosure or otherwise, the applicable Master Servicer or the applicable Special Servicer (as the case may be) is authorized to have an Appraisal completed with respect to such property (the cost of which appraisal shall be covered by, and be reimbursable as, a Servicing Advance). The applicable Master Servicer shall not foreclose upon or otherwise comparably convert, including by taking title thereto, any real property or other collateral securing a Defaulted Mortgage Loan or Serviced Loan Combination. (b) Notwithstanding the foregoing provisions of this Section 3.09, no Mortgaged Property shall be acquired by the applicable Special Servicer on behalf of the Trust (and, in the case of a Serviced Loan Combination, the related Serviced Pari Passu Companion Loan Holder(s)) under such circumstances, in such manner or pursuant to such terms as would (i) cause such Mortgaged Property to fail to qualify as “foreclosure property” within the meaning of Section 860G(a)(8) of the Code (unless the portion of such REO Property that is not treated as “foreclosure property” and that is held by any REMIC Pool at any given time constitutes not more than a de minimis amount of the assets of such REMIC Pool within the meaning of Treasury Regulations Section 1.860D-1(b)(3)(i) and (ii)), or (ii) except as permitted by Section 3.17(a), subject the Trust to the imposition of any federal income or prohibited transaction taxes under the Code. Subject to the foregoing, however, a Mortgaged Property may be acquired through a single-member limited liability company. In addition, except as permitted under Section 3.17(a), the applicable Special Servicer shall not acquire any personal property on behalf of the Trust (and, in the case of a Serviced Loan Combination, the related Serviced Pari Passu Companion Loan Holder(s) pursuant to this Section 3.09 unless either: (i) such personal property is incident to real property (within the meaning of Section 856(e)(1) of the Code) so acquired by the applicable Special Servicer; or (ii) the applicable Special Servicer shall have obtained an Opinion of Counsel (the cost of which shall be covered by, and reimbursable as, a Servicing Advance) to the effect that the holding of such personal property as part of the Trust Fund will not result in an Adverse REMIC Event with respect to any REMIC Pool or an Adverse Grantor Trust Event with respect to the Grantor Trust Pool. (c) Notwithstanding the foregoing provisions of this Section 3.09, the applicable Special Servicer shall not, on behalf of the Trust (and, in the case of a Serviced Loan Combination, the related Serviced Pari Passu Companion Loan Holder(s)), have a receiver of rents appointed with respect to a Mortgaged Property, or obtain title to a Mortgaged Property by foreclosure, deed in lieu of foreclosure or otherwise, or take any other action with respect to any Mortgaged Property, if, as a result of any such action, the Trustee, on behalf of the Certificateholders, could, in the reasonable judgment of the applicable Special Servicer, exercised in accordance with the Servicing Standard, be considered to hold title to, to be a “mortgagee-in-possession” of, or to be an “owner” or “operator” of such Mortgaged Property within the meaning of CERCLA or any comparable law, unless: (i) the applicable Special Servicer has previously determined in accordance with the Servicing Standard, based on a Phase I Environmental Assessment (and any additional environmental testing that the applicable Special Servicer deems necessary and prudent) of such Mortgaged Property conducted by an Independent Person who regularly conducts Phase I Environmental Assessments and performed during the nine-month period preceding any such acquisition of title or other action, that such Mortgaged Property is in compliance with applicable environmental laws and regulations and there are no circumstances or conditions present at the Mortgaged Property relating to the use, management or disposal of Hazardous Materials for which investigation, testing, monitoring, containment, clean-up or remediation could be required under any applicable environmental laws and regulations; or (ii) if the determination described in clause (c)(i) above cannot be made, the applicable Special Servicer has previously determined in accordance with the Servicing Standard, on the same basis as described in clause (c)(i) above, and taking into account the coverage provided under the related Environmental Insurance Policy, that it would maximize the recovery to the Certificateholders and, in the case of a Mortgaged Property securing a Serviced Loan Combination, to the related Serviced Pari Passu Companion Loan Holder(s) (as a collective whole) on a present value basis (the relevant discounting of anticipated collections that will be distributable to Certificateholders and, in the case of a Mortgaged Property securing a Serviced Loan Combination, to the related Serviced Pari Passu Companion Loan Holder(s), to be performed at the related Net Mortgage Rate (or (x) in the case of an ARD Mortgage Loan after its Anticipated Repayment Date, at the related Net Mortgage Rate immediately prior to the Anticipated Repayment Date, or (y) in the case of a Serviced Loan Combination, at the weighted average of the Net Mortgage Rates for the related notes)), to be performed at the related Net Mortgage Rate) to acquire title to or possession of the Mortgaged Property and to take such remedial, corrective and/or other further actions as are necessary to bring the Mortgaged Property into compliance with applicable environmental laws and regulations and to appropriately address any of the circumstances and conditions referred to in clause (c)(i) above. Any such determination by the applicable Special Servicer contemplated by clause (i) or clause (ii) of the preceding paragraph shall be evidenced by an Officer’s Certificate to such effect delivered to the Trustee, the applicable Master Servicer, the Subordinate Class Representative and the Majority Subordinate Certificateholder (and, in the case of a Mortgaged Property securing a Serviced Loan Combination, to the related Serviced Pari Passu Companion Loan Holder(s)), specifying all of the bases for such determination, such Officer’s Certificate to be accompanied by all related environmental reports. The cost of such Phase I Environmental Assessment and any such additional environmental testing, as well as the cost of any remedial, corrective or other further action contemplated by clause (i) and/or clause (ii) ~~above~~ of the ~~first paragraph of Section 3.09(c)~~preceding paragraph, shall be paid out of the Collection Account (subject to, if it relates to one or more Mortgage Loans in a Serviced Loan Combination, the proviso at the end of the first paragraph (that is, the initial paragraph that includes the enumerated clauses (i) through (xxiii) of subsection (I) of Section ~~3.05(a)(I~~3.05(a)). (d) If neither of the conditions set forth in clauses (i) and (ii) of the first paragraph of Section 3.09(c) has been satisfied with respect to any Mortgaged Property securing a defaulted Serviced Mortgage Loan (or, if applicable, a Serviced Loan Combination), the applicable Special Servicer shall take such action as is in accordance with the Servicing Standard (other than proceeding against the Mortgaged Property) and, at such time as it deems appropriate, may, on behalf of the Trust and, if applicable, any related Serviced Pari Passu Companion Loan Holder(s), release all or a portion of such Mortgaged Property from the lien of the related Mortgage; provided that both (i) if such Serviced Mortgage Loan has a then-outstanding principal balance greater than $~~1,000,000~~1 million, then prior to the release of all or a portion of the related Mortgaged Property from the lien of the related Mortgage, the applicable Special Servicer shall have notified the Rating Agencies (subject to Section 3.27), the Subordinate Class Representative, the Majority Subordinate Certificateholder, the Trustee, the Certificate Administrator and the applicable Master Servicer, in writing of its intention to so release all or a portion of such Mortgaged Property and the basis for the determination that such intention, in the applicable Special Servicer’s good faith judgment, was consistent with the Servicing Standard and (ii) if any Serviced Loan Combination is involved, the holders of the related Serviced Pari Passu Companion Loan or their representatives shall have the rights, if any, in respect thereof that are enumerated in the related Intercreditor Agreement. (e) The applicable Special Servicer shall report to the Trustee, the applicable Master Servicer, the Majority Subordinate Certificateholder, the Trust Advisor (during any Collective Consultation Period and any Senior Consultation Period), the Subordinate Class Representative (during any Subordinate Control Period and any Collective Consultation Period), and, in case of a Mortgaged Property securing a Serviced Loan Combination, the related Serviced Pari Passu Companion Loan Holder(s), monthly in writing as to any actions taken by the applicable Special Servicer with respect to any Mortgaged Property as to which neither of the conditions set forth in clauses (i) and (ii) of the first paragraph of Section 3.09(c) has been satisfied, in each case until the earliest to occur of satisfaction of either of such conditions, release of the lien of the related Mortgage on such Mortgaged Property and the related Mortgage Loan’s (or in the case of a Serviced Loan Combination, each of the related Mortgage Loan and any related Serviced Pari Passu Companion Loan) becoming a Corrected Mortgage Loan. (f) The applicable Special Servicer shall have the right to determine, in accordance with the Servicing Standard, with respect to any Specially Serviced Mortgage Loan, the advisability of seeking to obtain a deficiency judgment if the state in which the related Mortgaged Property is located and the terms of the subject Mortgage Loan permit such an action and shall, in accordance with the Servicing Standard, seek such deficiency judgment if it deems advisable. The applicable Master Servicer, at the direction of the applicable Special Servicer, shall make a Servicing Advance for the costs incurred in pursuing any such deficiency action, provided that the applicable Master Servicer shall not be obligated in connection therewith to advance any funds, which if so advanced would constitute a Nonrecoverable Advance. (g) Annually in each January, each Master Servicer shall, with the reasonable cooperation of the applicable Special Servicer, prepare and file with the IRS on a timely basis the information returns with respect to the reports of foreclosures and abandonments and reports relating to any cancellation of indebtedness income with respect to any Serviced Mortgage Loan, or Mortgaged Property securing a Serviced Mortgage Loan and any Serviced Loan Combination, required by Sections 6050H (as applicable), 6050J and 6050P of the Code. Contemporaneously therewith, the applicable Master Servicer shall deliver a copy of such information returns to the applicable Special Servicer and the Trustee. (h) As soon as the applicable Special Servicer makes a Final Recovery Determination (during any Subordinate Control Period and any Collective Consultation Period, such determination to be made in consultation with the Subordinate Class Representative and the related calculations to be subject to the approval of such Subordinate Class Representative) with respect to any Mortgage Loan, Serviced Loan Combination or REO Property, it shall promptly notify the Certificate Administrator, the Trustee, the Rating Agencies (subject to Section 3.27), the applicable Master Servicer (unless it is the one making the determination), the Trust Advisor (during any Collective Consultation Period and any Senior Consultation Period) and the Subordinate Class Representative (during any Subordinate Control Period and any Collective Consultation Period). The applicable Special Servicer shall maintain accurate records, prepared by a Servicing Officer, of each such Final Recovery Determination (if any) made by it and the basis thereof. Each such Final Recovery Determination (if any) shall be evidenced by an Officer’s Certificate delivered to the Certificate Administrator, the Trustee, the applicable Master Servicer (unless it is the one making the determination), the Trust Advisor (during any Collective Consultation Period and any Senior Consultation Period) and the Subordinate Class Representative (during any Subordinate Control Period and any Collective Consultation Period) no later than ten (10) Business Days following such Final Recovery Determination. (i) Notwithstanding anything the contrary, to the extent that the applicable Special Servicer acquires a Mortgaged Property that is a hospitality property on behalf of the Trust and such hospitality property has a franchise or licensing agreement that requires a successor or replacement franchisee or licensee to have a specified net worth, the applicable Special Servicer shall, to the extent consistent with the Servicing Standard, take all actions reasonably necessary to permit the Mortgaged Property to maintain its franchise or license with the same franchisor or licensor in place prior to such foreclosure.

Appears in 8 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)

Realization Upon Defaulted Serviced Mortgage Loans. (a) The ~~applicable~~ Special Servicer shall, subject to Sections 3.09(b), 3.09(c), 3.09(d), Section 3.24, Section 3.26 and/or Section 3.28, as applicable, exercise reasonable efforts, consistent with the Servicing Standard, to foreclose upon or otherwise comparably convert the ownership of the real property and other collateral securing any Serviced Mortgage Loan or Serviced Loan Combination that comes into and continues in default and as to which no satisfactory arrangements can be made for collection of delinquent payments, including pursuant to Section 3.20. In connection with the foregoing, in the event of a default under any Serviced Mortgage Loan, Serviced Loan Combination or Cross-Collateralized Group that is secured by real properties located in multiple states, and such states include California or another state with a statute, rule or regulation comparable to California’s “one action rule”, then the ~~applicable~~ Special Servicer shall consult Independent counsel regarding the order and manner in which the ~~applicable~~ Special Servicer should foreclose upon or comparably proceed against such properties. The ~~applicable~~ Special Servicer may direct the ~~applicable~~ Master Servicer to advance, as contemplated by Section 3.19(b), all costs and expenses (including attorneys’ fees and litigation costs and expenses) to be incurred on behalf of the Trust in any such proceedings or such consultation, subject to the ~~applicable~~ Master Servicer being entitled to reimbursement for any such advance as a Servicing Advance as provided in Section 3.05(a), and further subject to the ~~applicable~~ Special Servicer’s being entitled to pay out of the related Liquidation Proceeds, Insurance Proceeds and/or Condemnation Proceeds any Liquidation Expenses incurred in respect of any Serviced Mortgage Loan or Serviced Loan Combination, which Liquidation Expenses were outstanding at the time such proceeds are received. Nothing contained in this Section 3.09 shall be construed so as to require the ~~applicable~~ Special Servicer, on behalf of the Trust, to make a bid on any Mortgaged Property at a foreclosure sale or similar proceeding that is in excess of the fair market value of such property, as determined by the ~~applicable~~ Special Servicer taking into account the factors described in Section 3.18 and the results of any appraisal obtained pursuant to the following sentence or otherwise, all such cash bids to be made in a manner consistent with the Servicing Standard. If and when the ~~applicable~~ Master Servicer or the ~~applicable~~ Special Servicer deems it necessary in accordance with the Servicing Standard for purposes of establishing the fair market value of any Mortgaged Property securing a defaulted Serviced Mortgage Loan or Serviced Loan Combination, whether for purposes of bidding at foreclosure or otherwise, the ~~applicable~~ Master Servicer or the ~~applicable~~ Special Servicer (as the case may be) is authorized to have an Appraisal completed with respect to such property (the cost of which appraisal shall be covered by, and be reimbursable as, a Servicing Advance). The ~~applicable~~ Master Servicer shall not foreclose upon or otherwise comparably convert, including by taking title thereto, any real property or other collateral securing a Defaulted Mortgage Loan or Serviced Loan Combination. (b) Notwithstanding the foregoing provisions of this Section 3.09, no Mortgaged Property shall be acquired by the ~~applicable~~ Special Servicer on behalf of the Trust (and, in the case of a Serviced Loan Combination, the related Serviced ~~Pari Passu~~ Companion Loan Holder(s)) under such circumstances, in such manner or pursuant to such terms as would (i) cause such Mortgaged Property to fail to qualify as “foreclosure property” within the meaning of Section 860G(a)(8) of the Code (unless the portion of such REO Property that is not treated as “foreclosure property” and that is held by any REMIC Pool at any given time constitutes not more than a de minimis amount of the assets of such REMIC Pool within the meaning of Treasury Regulations Section 1.860D-1(b)(3)(i) and (ii)), or (ii) except as permitted by Section 3.17(a), subject the Trust to the imposition of any federal income or prohibited transaction taxes under the Code. Subject to the foregoing, however, a Mortgaged Property may be acquired through a single-member limited liability company. In addition, except as permitted under Section 3.17(a), the ~~applicable~~ Special Servicer shall not acquire any personal property on behalf of the Trust (and, in the case of a Serviced Loan Combination, the related Serviced ~~Pari Passu~~ Companion Loan Holder(s) pursuant to this Section 3.09 unless either: (i) such personal property is incident to real property (within the meaning of Section 856(e)(1) of the Code) so acquired by the ~~applicable~~ Special Servicer; or (ii) the ~~applicable~~ Special Servicer shall have obtained an Opinion of Counsel (the cost of which shall be covered by, and reimbursable as, a Servicing Advance) to the effect that the holding of such personal property as part of the Trust Fund will not result in an Adverse REMIC Event with respect to any REMIC Pool or an Adverse Grantor Trust Event with respect to the Grantor Trust Pool. (c) Notwithstanding the foregoing provisions of this Section 3.09, the ~~applicable~~ Special Servicer shall not, on behalf of the Trust (and, in the case of a Serviced Loan Combination, the related Serviced ~~Pari Passu~~ Companion Loan Holder(s)), have a receiver of rents appointed with respect to a Mortgaged Property, or obtain title to a Mortgaged Property by foreclosure, deed in lieu of foreclosure or otherwise, or take any other action with respect to any Mortgaged Property, if, as a result of any such action, the Trustee, on behalf of the Certificateholders, could, in the reasonable judgment of the ~~applicable~~ Special Servicer, exercised in accordance with the Servicing Standard, be considered to hold title to, to be a “mortgagee-in-possession” of, or to be an “owner” or “operator” of such Mortgaged Property within the meaning of CERCLA or any comparable law, unless: (i) the ~~applicable~~ Special Servicer has previously determined in accordance with the Servicing Standard, based on a Phase I Environmental Assessment (and any additional environmental testing that the ~~applicable~~ Special Servicer deems necessary and prudent) of such Mortgaged Property conducted by an Independent Person who regularly conducts Phase I Environmental Assessments and performed during the nine-month period preceding any such acquisition of title or other action, that such Mortgaged Property is in compliance with applicable environmental laws and regulations and there are no circumstances or conditions present at the Mortgaged Property relating to the use, management or disposal of Hazardous Materials for which investigation, testing, monitoring, containment, clean-up or remediation could be required under any applicable environmental laws and regulations; or (ii) if the determination described in clause (c)(i) above cannot be made, the ~~applicable~~ Special Servicer has previously determined in accordance with the Servicing Standard, on the same basis as described in clause (c)(i) above, and taking into account the coverage provided under the related Environmental Insurance Policy, that it would maximize the recovery to the Certificateholders and, in the case of a Mortgaged Property securing a Serviced Loan Combination, to 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)) on a present value basis (the relevant discounting of anticipated collections that will be distributable to Certificateholders and, in the case of a Mortgaged Property securing a Serviced Loan Combination, to the related Serviced ~~Pari Passu~~ Companion Loan Holder(s), to be performed at the related Net Mortgage Rate (or (x) in the case of an ARD Mortgage Loan after its Anticipated Repayment Date, at the related Net Mortgage Rate immediately prior to the Anticipated Repayment Date, or (y) in the case of a Serviced Loan Combination, at the weighted average of the Net Mortgage Rates for the related notes)) to acquire title to or possession of the Mortgaged Property and to take such remedial, corrective and/or other further actions as are necessary to bring the Mortgaged Property into compliance with applicable environmental laws and regulations and to appropriately address any of the circumstances and conditions referred to in clause (c)(i) above. Any such determination by the ~~applicable~~ Special Servicer contemplated by clause (i) or clause (ii) of the preceding paragraph shall be evidenced by an Officer’s Certificate to such effect delivered to the Trustee, the ~~applicable~~ Master Servicer, the Subordinate Class Representative and the Majority Subordinate Certificateholder (and, in the case of a Mortgaged Property securing a Serviced Loan Combination, to the related Serviced ~~Pari Passu~~ Companion Loan Holder(s)), specifying all of the bases for such determination, such Officer’s Certificate to be accompanied by all related environmental reports. The cost of such Phase I Environmental Assessment and any such additional environmental testing, as well as the cost of any remedial, corrective or other further action contemplated by clause (i) and/or clause (ii) above of the first paragraph of Section 3.09(c), shall be paid out of the Collection Account (subject to, if it relates to one or more Mortgage Loans in a Serviced Loan Combination, the proviso at the end of the first paragraph (that is, the initial paragraph that includes the enumerated clauses (i) through (xxiii) of Section 3.05(a)(I)). (d) If neither of the conditions set forth in clauses (i) and (ii) of the first paragraph of Section 3.09(c) has been satisfied with respect to any Mortgaged Property securing a defaulted Serviced Mortgage Loan (or, if applicable, a Serviced Loan Combination), the ~~applicable~~ Special Servicer shall take such action as is in accordance with the Servicing Standard (other than proceeding against the Mortgaged Property) and, at such time as it deems appropriate, may, on behalf of the Trust and, if applicable, any related Serviced ~~Pari Passu~~ Companion Loan Holder(s), release all or a portion of such Mortgaged Property from the lien of the related Mortgage; provided that both (i) if such Serviced Mortgage Loan has a then-outstanding principal balance greater than $1,000,000, then prior to the release of all or a portion of the related Mortgaged Property from the lien of the related Mortgage, the ~~applicable~~ Special Servicer shall have notified the Rating Agencies (subject to Section 3.27), the Subordinate Class Representative, the Majority Subordinate Certificateholder, the Trustee, the Certificate Administrator and the ~~applicable~~ Master Servicer, in writing of its intention to so release all or a portion of such Mortgaged Property and the basis for the determination that such intention, in the ~~applicable~~ Special Servicer’s good faith judgment, was consistent with the Servicing Standard and (ii) if any Serviced Loan Combination is involved, the holders of the related Serviced ~~Pari Passu~~ Companion Loan or their representatives shall have the rights, if any, in respect thereof that are enumerated in the related Intercreditor Agreement. (e) The ~~applicable~~ Special Servicer shall report to the Trustee, the ~~applicable~~ Master Servicer, the Majority Subordinate Certificateholder, the Trust Advisor (during any Collective Consultation Period and any Senior Consultation Period), the Subordinate Class Representative (during any Subordinate Control Period and any Collective Consultation Period), and, in case of a Mortgaged Property securing a Serviced Loan Combination, the related Serviced ~~Pari Passu~~ Companion Loan Holder(s), monthly in writing as to any actions taken by the ~~applicable~~ Special Servicer with respect to any Mortgaged Property as to which neither of the conditions set forth in clauses (i) and (ii) of the first paragraph of Section 3.09(c) has been satisfied, in each case until the earliest to occur of satisfaction of either of such conditions, release of the lien of the related Mortgage on such Mortgaged Property and the related Mortgage Loan’s (or in the case of a Serviced Loan Combination, each of the related Mortgage Loan and any related Serviced ~~Pari Passu~~ Companion ~~Loan~~Loan(s)) becoming a Corrected Mortgage Loan. (f) The ~~applicable~~ Special Servicer shall have the right to determine, in accordance with the Servicing Standard, with respect to any Specially Serviced Mortgage Loan, the advisability of seeking to obtain a deficiency judgment if the state in which the related Mortgaged Property is located and the terms of the subject Mortgage Loan permit such an action and shall, in accordance with the Servicing Standard, seek such deficiency judgment if it deems advisable. The ~~applicable~~ Master Servicer, at the direction of the ~~applicable~~ Special Servicer, shall make a Servicing Advance for the costs incurred in pursuing any such deficiency action, provided that the ~~applicable~~ Master Servicer shall not be obligated in connection therewith to advance any funds, which if so advanced would constitute a Nonrecoverable Advance. (g) Annually in each January, ~~each~~ the Master Servicer shall, with the reasonable cooperation of the ~~applicable~~ Special Servicer, prepare and file with the IRS on a timely basis the information returns with respect to the reports of foreclosures and abandonments and reports relating to any cancellation of indebtedness income with respect to any Serviced Mortgage Loan, or Mortgaged Property securing a Serviced Mortgage Loan and any Serviced Loan Combination, required by Sections 6050H (as applicable), 6050J and 6050P of the Code. Contemporaneously therewith, the ~~applicable~~ Master Servicer shall deliver a copy of such information returns to the ~~applicable~~ Special Servicer and the Trustee. (h) As soon as the ~~applicable~~ Special Servicer makes a Final Recovery Determination (during any Subordinate Control Period and any Collective Consultation Period, such determination to be made in consultation with the Subordinate Class Representative and the related calculations to be subject to the approval of such Subordinate Class Representative) with respect to any Mortgage Loan, Serviced Loan Combination or REO Property, it shall promptly notify the Certificate Administrator, the Trustee, the Rating Agencies (subject to Section 3.27), the ~~applicable~~ Master Servicer (unless it is the one making the determination), the Trust Advisor (during any Collective Consultation Period and any Senior Consultation Period) and the Subordinate Class Representative (during any Subordinate Control Period and any Collective Consultation Period). The ~~applicable~~ Special Servicer shall maintain accurate records, prepared by a Servicing Officer, of each such Final Recovery Determination (if any) made by it and the basis thereof. Each such Final Recovery Determination (if any) shall be evidenced by an Officer’s Certificate delivered to the Certificate Administrator, the Trustee, the ~~applicable~~ Master Servicer (unless it is the one making the determination), the Trust Advisor (during any Collective Consultation Period and any Senior Consultation Period) and the Subordinate Class Representative (during any Subordinate Control Period and any Collective Consultation Period) no later than ten (10) Business Days following such Final Recovery Determination. (i) Notwithstanding anything the contrary, to the extent that the ~~applicable~~ Special Servicer acquires a Mortgaged Property that is a hospitality property on behalf of the Trust and such hospitality property has a franchise or licensing agreement that requires a successor or replacement franchisee or licensee to have a specified net worth, the ~~applicable~~ Special Servicer shall, to the extent consistent with the Servicing Standard, take all actions reasonably necessary to permit the Mortgaged Property to maintain its franchise or license with the same franchisor or licensor in place prior to such foreclosure.

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)

Realization Upon Defaulted Serviced Mortgage Loans. (a) The ~~applicable~~ Special Servicer shall, subject to Sections 3.09(b), 3.09(c), 3.09(d), Section 3.24, Section 3.26 and/or Section 3.28, as applicable, exercise reasonable efforts, consistent with the Servicing Standard, to foreclose upon or otherwise comparably convert the ownership of the real property and other collateral securing any Serviced Mortgage Loan or Serviced Loan Combination that comes into and continues in default and as to which no satisfactory arrangements can be made for collection of delinquent payments, including pursuant to Section 3.20. In connection with the foregoing, in the event of a default under any Serviced Mortgage Loan, Serviced Loan Combination or Cross-Collateralized Group that is secured by real properties located in multiple states, and such states include California or another state with a statute, rule or regulation comparable to California’s “one action rule”, then the ~~applicable~~ Special Servicer shall consult Independent counsel regarding the order and manner in which the ~~applicable~~ Special Servicer should foreclose upon or comparably proceed against such properties. The ~~applicable~~ Special Servicer may direct the ~~applicable~~ Master Servicer to advance, as contemplated by Section 3.19(b), all costs and expenses (including attorneys’ fees and litigation costs and expenses) to be incurred on behalf of the Trust in any such proceedings or such consultation, subject to the ~~applicable~~ Master Servicer being entitled to reimbursement for any such advance as a Servicing Advance as provided in Section 3.05(a), and further subject to the ~~applicable~~ Special Servicer’s being entitled to pay out of the related Liquidation Proceeds, Insurance Proceeds and/or Condemnation Proceeds any Liquidation Expenses incurred in respect of any Serviced Mortgage Loan or Serviced Loan Combination, which Liquidation Expenses were outstanding at the time such proceeds are received. Nothing contained in this Section 3.09 shall be construed so as to require the ~~applicable~~ Special Servicer, on behalf of the Trust, to make a bid on any Mortgaged Property at a foreclosure sale or similar proceeding that is in excess of the fair market value of such property, as determined by the ~~applicable~~ Special Servicer taking into account the factors described in Section 3.18 and the results of any appraisal obtained pursuant to the following sentence or otherwise, all such cash bids to be made in a manner consistent with the Servicing Standard. If and when the ~~applicable~~ Master Servicer or the ~~applicable~~ Special Servicer deems it necessary in accordance with the Servicing Standard for purposes of establishing the fair market value of any Mortgaged Property securing a defaulted Serviced Mortgage Loan or Serviced Loan Combination, whether for purposes of bidding at foreclosure or otherwise, the ~~applicable~~ Master Servicer or the ~~applicable~~ Special Servicer (as the case may be) is authorized to have an Appraisal completed with respect to such property (the cost of which appraisal shall be covered by, and be reimbursable as, a Servicing Advance). The ~~applicable~~ Master Servicer shall not foreclose upon or otherwise comparably convert, including by taking title thereto, any real property or other collateral securing a Defaulted Mortgage Loan or Serviced Loan Combination. (b) Notwithstanding the foregoing provisions of this Section 3.09, no Mortgaged Property shall be acquired by the ~~applicable~~ Special Servicer on behalf of the Trust (and, in the case of a Serviced Loan Combination, the related Serviced ~~Pari Passu~~ Companion Loan Holder(s)) under such circumstances, in such manner or pursuant to such terms as would (i) cause such Mortgaged Property to fail to qualify as “foreclosure property” within the meaning of Section 860G(a)(8) of the Code (unless the portion of such REO Property that is not treated as “foreclosure property” and that is held by any REMIC Pool at any given time constitutes not more than a de minimis amount of the assets of such REMIC Pool within the meaning of Treasury Regulations Section 1.860D-1(b)(3)(i) and (ii)), or (ii) except as permitted by Section 3.17(a), subject the Trust to the imposition of any federal income or prohibited transaction taxes under the Code. Subject to the foregoing, however, a Mortgaged Property may be acquired through a single-member limited liability company. In addition, except as permitted under Section 3.17(a), the ~~applicable~~ Special Servicer shall not acquire any personal property on behalf of the Trust (and, in the case of a Serviced Loan Combination, the related Serviced ~~Pari Passu~~ Companion Loan Holder(s) pursuant to this Section 3.09 unless either: (i) such personal property is incident to real property (within the meaning of Section 856(e)(1) of the Code) so acquired by the ~~applicable~~ Special Servicer; or (ii) the ~~applicable~~ Special Servicer shall have obtained an Opinion of Counsel (the cost of which shall be covered by, and reimbursable as, a Servicing Advance) to the effect that the holding of such personal property as part of the Trust Fund will not result in an Adverse REMIC Event with respect to any REMIC Pool or an Adverse Grantor Trust Event with respect to the Grantor Trust Pool. (c) Notwithstanding the foregoing provisions of this Section 3.09, the ~~applicable~~ Special Servicer shall not, on behalf of the Trust (and, in the case of a Serviced Loan Combination, the related Serviced ~~Pari Passu~~ Companion Loan Holder(s)), have a receiver of rents appointed with respect to a Mortgaged Property, or obtain title to a Mortgaged Property by foreclosure, deed in lieu of foreclosure or otherwise, or take any other action with respect to any Mortgaged Property, if, as a result of any such action, the Trustee, on behalf of the Certificateholders, could, in the reasonable judgment of the ~~applicable~~ Special Servicer, exercised in accordance with the Servicing Standard, be considered to hold title to, to be a “mortgagee-in-possession” of, or to be an “owner” or “operator” of such Mortgaged Property within the meaning of CERCLA or any comparable law, unless: (i) the ~~applicable~~ Special Servicer has previously determined in accordance with the Servicing Standard, based on a Phase I Environmental Assessment (and any additional environmental testing that the ~~applicable~~ Special Servicer deems necessary and prudent) of such Mortgaged Property conducted by an Independent Person who regularly conducts Phase I Environmental Assessments and performed during the nine-month period preceding any such acquisition of title or other action, that such Mortgaged Property is in compliance with applicable environmental laws and regulations and there are no circumstances or conditions present at the Mortgaged Property relating to the use, management or disposal of Hazardous Materials for which investigation, testing, monitoring, containment, clean-up or remediation could be required under any applicable environmental laws and regulations; or (ii) if the determination described in clause (c)(i) above cannot be made, the ~~applicable~~ Special Servicer has previously determined in accordance with the Servicing Standard, on the same basis as described in clause (c)(i) above, and taking into account the coverage provided under the related Environmental Insurance Policy, that it would maximize the recovery to the Certificateholders and, in the case of a Mortgaged Property securing a Serviced Loan Combination, to 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)) on a present value basis (the relevant discounting of anticipated collections that will be distributable to Certificateholders and, in the case of a Mortgaged Property securing a Serviced Loan Combination, to the related Serviced ~~Pari Passu~~ Companion Loan Holder(s), to be performed at the related Net Mortgage Rate (or (x) in the case of an ARD Mortgage Loan after its Anticipated Repayment Date, at the related Net Mortgage Rate immediately prior to the Anticipated Repayment Date, or (y) in the case of a Serviced Loan Combination, at the weighted average of the Net Mortgage Rates for the related notes)) to acquire title to or possession of the Mortgaged Property and to take such remedial, corrective and/or other further actions as are necessary to bring the Mortgaged Property into compliance with applicable environmental laws and regulations and to appropriately address any of the circumstances and conditions referred to in clause (c)(i) above. Any such determination by the ~~applicable~~ Special Servicer contemplated by clause (i) or clause (ii) of the preceding paragraph shall be evidenced by an Officer’s Certificate to such effect delivered to the Trustee, the ~~applicable~~ Master Servicer, the Subordinate Class Representative (other than with respect to any Mortgaged Property securing an Excluded Loan) and the Majority Subordinate Certificateholder (other than with respect to any Mortgaged Property securing an Excluded Loan) (and, in the case of a Mortgaged Property securing a Serviced Loan Combination, to the related Serviced ~~Pari Passu~~ Companion Loan Holder(s)), specifying all of the bases for such determination, such Officer’s Certificate to be accompanied by all related environmental reports. The cost of such Phase I Environmental Assessment and any such additional environmental testing, as well as the cost of any remedial, corrective or other further action contemplated by clause (i) and/or clause (ii) above of the first paragraph of Section 3.09(c), shall be paid out of the Collection Account (subject to, if it relates to one or more Mortgage Loans in a Serviced Loan Combination, the proviso at the end of the first paragraph (that is, the initial paragraph that includes the enumerated clauses (i) through (xxiii) of Section 3.05(a)(I)). (d) If neither of the conditions set forth in clauses (i) and (ii) of the first paragraph of Section 3.09(c) has been satisfied with respect to any Mortgaged Property securing a defaulted Serviced Mortgage Loan (or, if applicable, a Serviced Loan Combination), the ~~applicable~~ Special Servicer shall take such action as is in accordance with the Servicing Standard (other than proceeding against the Mortgaged Property) and, at such time as it deems appropriate, may, on behalf of the Trust and, if applicable, any related Serviced ~~Pari Passu~~ Companion Loan Holder(s), release all or a portion of such Mortgaged Property from the lien of the related Mortgage; provided that both (i) if such Serviced Mortgage Loan has a then-outstanding principal balance greater than $1,000,000, then prior to the release of all or a portion of the related Mortgaged Property from the lien of the related Mortgage, the ~~applicable~~ Special Servicer shall have notified the Rating Agencies (subject to Section 3.27), the Subordinate Class Representative, the Majority Subordinate Certificateholder, the Trustee, the Certificate Administrator and the ~~applicable~~ Master Servicer, in writing of its intention to so release all or a portion of such Mortgaged Property and the basis for the determination that such intention, in the ~~applicable~~ Special Servicer’s good faith judgment, was consistent with the Servicing Standard and (ii) if any Serviced Loan Combination is involved, the holders of the related Serviced ~~Pari Passu~~ Companion Loan or their representatives shall have the rights, if any, in respect thereof that are enumerated in the related Intercreditor Agreement. (e) The ~~applicable~~ Special Servicer shall report to the Trustee, the ~~applicable~~ Master Servicer, the Majority Subordinate Certificateholder, the Trust Advisor (during any Collective Consultation Period and any Senior Consultation Period), the Subordinate Class Representative (during any Subordinate Control Period and any Collective Consultation ~~Period~~Period and other than with respect to any Mortgaged Property securing an Excluded Loan), and, in case of a Mortgaged Property securing a Serviced Loan Combination, the related Serviced ~~Pari Passu~~ Companion Loan Holder(s), monthly in writing as to any actions taken by the ~~applicable~~ Special Servicer with respect to any Mortgaged Property as to which neither of the conditions set forth in clauses (i) and (ii) of the first paragraph of Section 3.09(c) has been satisfied, in each case until the earliest to occur of satisfaction of either of such conditions, release of the lien of the related Mortgage on such Mortgaged Property and the related Mortgage Loan’s (or in the case of a Serviced Loan Combination, each of the related Mortgage Loan and any related Serviced ~~Pari Passu~~ Companion ~~Loan~~Loan(s)) becoming a Corrected Mortgage Loan. (f) The ~~applicable~~ Special Servicer shall have the right to determine, in accordance with the Servicing Standard, with respect to any Specially Serviced Mortgage Loan, the advisability of seeking to obtain a deficiency judgment if the state in which the related Mortgaged Property is located and the terms of the subject Mortgage Loan permit such an action and shall, in accordance with the Servicing Standard, seek such deficiency judgment if it deems advisable. The ~~applicable~~ Master Servicer, at the direction of the ~~applicable~~ Special Servicer, shall make a Servicing Advance for the costs incurred in pursuing any such deficiency action, provided that the ~~applicable~~ Master Servicer shall not be obligated in connection therewith to advance any funds, which if so advanced would constitute a Nonrecoverable Advance. (g) Annually in each January, ~~each~~ the Master Servicer shall, with the reasonable cooperation of the ~~applicable~~ Special Servicer, prepare and file with the IRS on a timely basis the information returns with respect to the reports of foreclosures and abandonments and reports relating to any cancellation of indebtedness income with respect to any Serviced Mortgage Loan, or Mortgaged Property securing a Serviced Mortgage Loan and any Serviced Loan Combination, required by Sections 6050H (as applicable), 6050J and 6050P of the Code. Contemporaneously therewith, the ~~applicable~~ Master Servicer shall deliver a copy of such information returns to the ~~applicable~~ Special Servicer and the Trustee. (h) As soon as the ~~applicable~~ Special Servicer makes a Final Recovery Determination (during any Subordinate Control Period and any Collective Consultation Period, such determination to be made in consultation with the Subordinate Class Representative and the related calculations to be subject to the approval of such Subordinate Class Representative, in each case, other than with respect to any Mortgaged Property securing an Excluded Loan) with respect to any Mortgage Loan, Serviced Loan Combination or REO Property, it shall promptly notify the Certificate Administrator, the Trustee, the Rating Agencies (subject to Section 3.27), the ~~applicable~~ Master Servicer (unless it is the one making the determination), the Trust Advisor (during any Collective Consultation Period and any Senior Consultation Period) and the Subordinate Class Representative (during any Subordinate Control Period and any Collective Consultation Period). The ~~applicable~~ Special Servicer shall maintain accurate records, prepared by a Servicing Officer, of each such Final Recovery Determination (if any) made by it and the basis thereof. Each such Final Recovery Determination (if any) shall be evidenced by an Officer’s Certificate delivered to the Certificate Administrator, the Trustee, the ~~applicable~~ Master Servicer (unless it is the one making the determination), the Trust Advisor (during any Collective Consultation Period and any Senior Consultation Period) and the Subordinate Class Representative (during any Subordinate Control Period and any Collective Consultation Period) no later than ten (10) Business Days following such Final Recovery Determination. (i) Notwithstanding anything the contrary, to the extent that the ~~applicable~~ Special Servicer acquires a Mortgaged Property that is a hospitality property on behalf of the Trust and such hospitality property has a franchise or licensing agreement that requires a successor or replacement franchisee or licensee to have a specified net worth, the ~~applicable~~ Special Servicer shall, to the extent consistent with the Servicing Standard, take all actions reasonably necessary to permit the Mortgaged Property to maintain its franchise or license with the same franchisor or licensor in place prior to such foreclosure.

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)

Realization Upon Defaulted Serviced Mortgage Loans. (a) The ~~applicable~~ Special Servicer shall, subject to Sections 3.09(b), 3.09(c), 3.09(d), Section ~~3.24, Section 3.26~~ 3.24 and/or Section ~~3.28~~3.26, as applicable, exercise reasonable efforts, consistent with the Servicing Standard, to foreclose upon or otherwise comparably convert the ownership of the real property and other collateral securing any Serviced Mortgage Loan or Serviced Loan Combination that comes into and continues in default and as to which no satisfactory arrangements can be made for collection of delinquent payments, including pursuant to Section 3.20. In connection with the foregoing, in the event of a default under any Serviced Mortgage Loan, Serviced Loan Combination or Cross-Collateralized Group that is secured by real properties located in multiple states, and such states include California or another state with a statute, rule or regulation comparable to California’s “one action rule”, then the ~~applicable~~ Special Servicer shall consult Independent counsel regarding the order and manner in which the ~~applicable~~ Special Servicer should foreclose upon or comparably proceed against such properties. The ~~applicable~~ Special Servicer may direct the ~~applicable~~ Master Servicer to advance, as contemplated by Section 3.19(b), all costs and expenses (including attorneys’ fees and litigation costs and expenses) to be incurred on behalf of the Trust in any such proceedings or such consultation, subject to the ~~applicable~~ Master Servicer being entitled to reimbursement for any such advance as a Servicing Advance as provided in Section 3.05(a), and further subject to the ~~applicable~~ Special Servicer’s being entitled to pay out of the related Liquidation Proceeds, Insurance Proceeds and/or Condemnation Proceeds any Liquidation Expenses incurred in respect of any Serviced Mortgage Loan or Serviced Loan Combination, which Liquidation Expenses were outstanding at the time such proceeds are received. Nothing contained in this Section 3.09 shall be construed so as to require the ~~applicable~~ Special Servicer, on behalf of the Trust, to make a bid on any Mortgaged Property at a foreclosure sale or similar proceeding that is in excess of the fair market value of such property, as determined by the ~~applicable~~ Special Servicer taking into account the factors described in Section 3.18 and the results of any appraisal obtained pursuant to the following sentence or otherwise, all such cash bids to be made in a manner consistent with the Servicing Standard. If and when the ~~applicable~~ Master Servicer or the ~~applicable~~ Special Servicer deems it necessary in accordance with the Servicing Standard for purposes of establishing the fair market value of any Mortgaged Property securing a defaulted Serviced Mortgage Loan or Serviced Loan Combination, whether for purposes of bidding at foreclosure or otherwise, the ~~applicable~~ Master Servicer or the ~~applicable~~ Special Servicer (as the case may be) is authorized to have an Appraisal completed with respect to such property (the cost of which appraisal shall be covered by, and be reimbursable as, a Servicing Advance). The ~~applicable~~ Master Servicer shall not foreclose upon or otherwise comparably convert, including by taking title thereto, any real property or other collateral securing a Defaulted Mortgage Loan or Serviced Loan Combination. (b) Notwithstanding the foregoing provisions of this Section 3.09, no Mortgaged Property shall be acquired by the ~~applicable~~ Special Servicer on behalf of the Trust (and, in the case of a Serviced Loan Combination, the related Serviced Pari Passu Companion Loan Holder(s)) under such circumstances, in such manner or pursuant to such terms as would (i) cause such Mortgaged Property to fail to qualify as “foreclosure property” within the meaning of Section 860G(a)(8) of the Code (unless the portion of such REO Property that is not treated as “foreclosure property” and that is held by any REMIC Pool at any given time constitutes not more than a de minimis amount of the assets of such REMIC Pool within the meaning of Treasury Regulations Section 1.860D-1(b)(3)(i) and (ii)), or (ii) except as permitted by Section 3.17(a), subject the Trust to the imposition of any federal income or prohibited transaction taxes under the Code. Subject to the foregoing, however, a Mortgaged Property may be acquired through a ~~single-~~single member limited liability company. In addition, except as permitted under Section 3.17(a), the ~~applicable~~ Special Servicer shall not acquire any personal property on behalf of the Trust (and, in the case of a Serviced Loan Combination, the related Serviced Pari Passu Companion Loan Holder(s) pursuant to this Section 3.09 unless either: (i) such personal property is incident to real property (within the meaning of Section 856(e)(1) of the Code) so acquired by the ~~applicable~~ Special Servicer; or (ii) the ~~applicable~~ Special Servicer shall have obtained an Opinion of Counsel (the cost of which shall be covered by, and reimbursable as, a Servicing Advance) to the effect that the holding of such personal property as part of the Trust Fund will not result in an Adverse REMIC Event with respect to any REMIC Pool or an Adverse Grantor Trust Event with respect to the Grantor Trust Pool. (c) Notwithstanding the foregoing provisions of this Section 3.09, the ~~applicable~~ Special Servicer shall not, on behalf of the Trust (and, in the case of a Serviced Loan Combination, the related Serviced Pari Passu Companion Loan Holder(s)), have a receiver of rents appointed with respect to a Mortgaged Property, or obtain title to a Mortgaged Property by foreclosure, deed in lieu of foreclosure or otherwise, or take any other action with respect to any Mortgaged Property, if, as a result of any such action, the Trustee, on behalf of the Certificateholders, could, in the reasonable judgment of the ~~applicable~~ Special Servicer, exercised in accordance with the Servicing Standard, be considered to hold title to, to be a “mortgagee-in-possession” of, or to be an “owner” or “operator” of such Mortgaged Property within the meaning of CERCLA or any comparable law, unless: (i) the ~~applicable~~ Special Servicer has previously determined in accordance with the Servicing Standard, based on a Phase I Environmental Assessment (and any additional environmental testing that the ~~applicable~~ Special Servicer deems necessary and prudent) of such Mortgaged Property conducted by an Independent Person who regularly conducts Phase I Environmental Assessments and performed during the nine-month period preceding any such acquisition of title or other action, that such Mortgaged Property is in compliance with applicable environmental laws and regulations and there are no circumstances or conditions present at the Mortgaged Property relating to the use, management or disposal of Hazardous Materials for which investigation, testing, monitoring, containment, clean-up or remediation could be required under any applicable environmental laws and regulations; or (ii) if in the event that the determination described in clause (c)(i) above cannot be made, the ~~applicable~~ Special Servicer has previously determined in accordance with the Servicing Standard, on the same basis as described in clause (c)(i) above, and taking into account the coverage provided under the related Environmental Insurance Policy, that it would maximize the recovery to the Certificateholders and, in the case of a Mortgaged Property securing a Serviced Loan Combination, to the related Serviced Pari Passu Companion Loan Holder(s) (as a collective whole) on a present value basis (the relevant discounting of anticipated collections that will be distributable to Certificateholders and, in the case of a Mortgaged Property securing a Serviced Loan Combination, to the related Serviced Pari Passu Companion Loan Holder(s), to be performed at the related Net Mortgage Rate (or (x) in the case of an ARD Mortgage Loan after its Anticipated Repayment Date, at the related Net Mortgage Rate immediately prior to the Anticipated Repayment Date, or (y) in the case of a Serviced Loan Combination, at the weighted average of the Net Mortgage Rates for the related notes)), to be performed at the related Net Mortgage Rate) to acquire title to or possession of the Mortgaged Property and to take such remedial, corrective and/or other further actions as are necessary to bring the Mortgaged Property into compliance with applicable environmental laws and regulations and to appropriately address any of the circumstances and conditions referred to in clause (c)(i) above. Any such determination by the ~~applicable~~ Special Servicer contemplated by clause (i) or clause (ii) of the preceding paragraph shall be evidenced by an Officer’s Certificate to such effect delivered to the Trustee, the ~~applicable~~ Master Servicer, the Subordinate Class Representative and the Majority Subordinate Certificateholder (and, in the case of a Mortgaged Property securing a Serviced Loan Combination, to the related Serviced Pari Passu Companion Loan Holder(s)), specifying all of the bases for such determination, such Officer’s Certificate to be accompanied by all related environmental reports. The cost of such Phase I Environmental Assessment and any such additional environmental testing, as well as the cost of any remedial, corrective or other further action contemplated by clause (i) and/or clause (ii) ~~above~~ of the ~~first paragraph of Section 3.09(c)~~preceding paragraph, shall be paid out of the Collection Account (subject to, if it relates to one or more Mortgage Loans in a Serviced Loan Combination, the proviso at the end of the first paragraph (that is, the initial paragraph that includes the enumerated clauses (i) through (~~xxiii~~xxii) of subsection (I) of Section ~~3.05(a)(I~~3.05(a)). (d) If neither of the conditions set forth in clauses (i) and (ii) of the first paragraph of Section 3.09(c) has been satisfied with respect to any Mortgaged Property securing a defaulted Serviced Mortgage Loan (or, if applicable, a Serviced Loan Combination), the ~~applicable~~ Special Servicer shall take such action as is in accordance with the Servicing Standard (other than proceeding against the Mortgaged Property) and, at such time as it deems appropriate, may, on behalf of the Trust and, if applicable, ~~any~~ the related Serviced Pari Passu Companion Loan Holder(s), release all or a portion of such Mortgaged Property from the lien of the related Mortgage; provided that both (i) if such Serviced Mortgage Loan has a ~~then-~~then outstanding principal balance greater than $~~1,000,000~~1 million, then prior to the release of all or a portion of the related Mortgaged Property from the lien of the related Mortgage, the ~~applicable~~ Special Servicer shall have notified the Rating Agencies (subject to Section 3.27), the Subordinate Class Representative, the Majority Subordinate Certificateholder, the Trustee, the Certificate Administrator and the ~~applicable~~ Master Servicer, in writing of its intention to so release all or a portion of such Mortgaged Property and the basis for the determination that such intention, in the ~~applicable~~ Special Servicer’s good faith judgment, was consistent with the Servicing Standard and (ii) if ~~any~~ the Serviced Loan Combination is involved, the holders of the related Serviced Pari Passu Companion Loan or their representatives shall have the rights, if any, in respect thereof that are enumerated in the related Intercreditor Agreement. (e) The ~~applicable~~ Special Servicer shall report to the Trustee, the ~~applicable~~ Master Servicer, the Majority Subordinate ~~Certificateholder, the Trust Advisor (during any Collective Consultation Period~~ Certificateholder and ~~any Senior Consultation Period),~~ the Subordinate Class Representative (~~during any Subordinate Control Period and any Collective Consultation Period),~~ and, in case of a Mortgaged Property securing a Serviced Loan Combination, the related Serviced Pari Passu Companion Loan Holder(s), ) monthly in writing as to any actions taken by the ~~applicable~~ Special Servicer with respect to any Mortgaged Property as to which neither of the conditions set forth in clauses (i) and (ii) of the first paragraph of Section 3.09(c) has been satisfied, in each case until the earliest to occur of satisfaction of either of such conditions, release of the lien of the related Mortgage on such Mortgaged Property and the related Mortgage Loan’s (or in the case of a Serviced Loan Combination, each of the related Mortgage ~~Loan and any related Serviced Pari Passu Companion~~ Loan’s) becoming a Corrected Mortgage Loan. (f) The ~~applicable~~ Special Servicer shall have the right to determine, in accordance with the Servicing Standard, with respect to any Specially Serviced Mortgage Loan, the advisability of seeking to obtain a deficiency judgment if the state in which the related Mortgaged Property is located and the terms of the subject Mortgage Loan permit such an action and shall, in accordance with the Servicing Standard, seek such deficiency judgment if it deems advisable. The ~~applicable~~ Master Servicer, at the direction of the ~~applicable~~ Special Servicer, shall make a Servicing Advance for the costs incurred in pursuing any such deficiency action, provided that the ~~applicable~~ Master Servicer shall not be obligated in connection therewith to advance any funds, which if so advanced would constitute a Nonrecoverable Advance. (g) Annually in each January, ~~each~~ the Master Servicer shall, with the reasonable cooperation of the ~~applicable~~ Special Servicer, prepare and file with the IRS on a timely basis the information returns with respect to the reports of foreclosures and abandonments and reports relating to any cancellation of indebtedness income with respect to any Serviced Mortgage Loan, or Mortgaged Property securing a Serviced Mortgage ~~Loan and any Serviced Loan Combination~~Loan, required by Sections 6050H (as applicable), 6050J and 6050P of the Code. Contemporaneously therewith, the ~~applicable~~ Master Servicer shall deliver a copy of such information returns to the ~~applicable~~ Special Servicer and the Trustee. (h) As soon as the ~~applicable~~ Special Servicer makes a Final Recovery Determination (~~during any Subordinate Control Period and any Collective Consultation Period,~~ such determination to be made in consultation with the Subordinate Class Representative and the related calculations to be subject to the approval of such Subordinate Class Representative) with respect to any Mortgage Loan, Serviced Loan Combination or REO Property, it shall promptly notify the Certificate Administrator, the Trustee, the Rating Agencies (subject to Section 3.27), the ~~applicable~~ Master Servicer (unless it is the one making the determination~~), the Trust Advisor (during any Collective Consultation Period and any Senior Consultation Period~~) and the Subordinate Class ~~Representative (during any Subordinate Control Period and any Collective Consultation Period)~~Representative. The ~~applicable~~ Special Servicer shall maintain accurate records, prepared by a Servicing Officer, of each such Final Recovery Determination (if any) made by it and the basis thereof. Each such Final Recovery Determination (if any) shall be evidenced by an Officer’s Certificate delivered to the Certificate Administrator, the Trustee, the ~~applicable~~ Master Servicer (unless it is the one making the determination~~), the Trust Advisor (during any Collective Consultation Period and any Senior Consultation Period~~) and the Subordinate Class Representative ~~(during any Subordinate Control Period and any Collective Consultation Period)~~ no later than ten (10) Business Days following such Final Recovery Determination. (i) Notwithstanding anything the contrary, to the extent that the ~~applicable~~ Special Servicer acquires a Mortgaged Property that is a hospitality property on behalf of the Trust and such hospitality property has a franchise or licensing agreement that requires a successor or replacement franchisee or licensee to have a specified net worth, the ~~applicable~~ Special Servicer shall, to the extent consistent with the Servicing Standard, take all actions reasonably necessary to permit the Mortgaged Property to maintain its franchise or license with the same franchisor or licensor in place prior to such foreclosure.

Appears in 4 contracts

Samples: Pooling and Servicing Agreement (Wells Fargo Commercial Mortgage Trust 2012-Lc5), Pooling and Servicing Agreement (Wells Fargo Commercial Mortgage Trust 2012-Lc5), Pooling and Servicing Agreement (WFRBS Commercial Mortgage Trust 2012-C8)

Realization Upon Defaulted Serviced Mortgage Loans. (a) The applicable Special Servicer shall, subject to Sections 3.09(b), 3.09(c), 3.09(d), Section 3.24, Section 3.26 and/or Section 3.28, as applicable, exercise reasonable efforts, consistent with the Servicing Standard, to foreclose upon or otherwise comparably convert the ownership of the real property and other collateral securing any Serviced Mortgage Loan or Serviced Loan Combination that comes into and continues in default and as to which no satisfactory arrangements can be made for collection of delinquent payments, including pursuant to Section 3.20. In connection with the foregoing, in the event of a default under any Serviced Mortgage Loan, Serviced Loan Combination or Cross-Collateralized Group that is secured by real properties located in multiple states, and such states include California or another state with a statute, rule or regulation comparable to California’s “one action rule”, then the applicable Special Servicer shall consult Independent counsel regarding the order and manner in which the applicable Special Servicer should foreclose upon or comparably proceed against such properties. The applicable Special Servicer may direct the applicable Master Servicer to advance, as contemplated by Section 3.19(b), all costs and expenses (including attorneys’ fees and litigation costs and expenses) to be incurred on behalf of the Trust in any such proceedings or such consultation, subject to the applicable Master Servicer being entitled to reimbursement for any such advance as a Servicing Advance as provided in Section 3.05(a), and further subject to the applicable Special Servicer’s being entitled to pay out of the related Liquidation Proceeds, Insurance Proceeds and/or Condemnation Proceeds any Liquidation Expenses incurred in respect of any Serviced Mortgage Loan or Serviced Loan Combination, which Liquidation Expenses were outstanding at the time such proceeds are received. Nothing contained in this Section 3.09 shall be construed so as to require the applicable Special Servicer, on behalf of the Trust, to make a bid on any Mortgaged Property at a foreclosure sale or similar proceeding that is in excess of the fair market value of such property, as determined by the applicable Special Servicer taking into account the factors described in Section 3.18 and the results of any appraisal obtained pursuant to the following sentence or otherwise, all such cash bids to be made in a manner consistent with the Servicing Standard. If and when the applicable Master Servicer or the applicable Special Servicer deems it necessary in accordance with the Servicing Standard for purposes of establishing the fair market value of any Mortgaged Property securing a defaulted Serviced Mortgage Loan or Serviced Loan Combination, whether for purposes of bidding at foreclosure or otherwise, the applicable Master Servicer or the applicable Special Servicer (as the case may be) is authorized to have an Appraisal completed with respect to such property (the cost of which appraisal shall be covered by, and be reimbursable as, a Servicing Advance). The applicable Master Servicer shall not foreclose upon or otherwise comparably convert, including by taking title thereto, any real property or other collateral securing a Defaulted Mortgage Loan or Serviced Loan Combination. (b) Notwithstanding the foregoing provisions of this Section 3.09, no Mortgaged Property shall be acquired by the applicable Special Servicer on behalf of the Trust (and, in the case of a Serviced Loan Combination, the related Serviced Pari Passu Companion Loan Holder(s)) under such circumstances, in such manner or pursuant to such terms as would (i) cause such Mortgaged Property to fail to qualify as “foreclosure property” within the meaning of Section 860G(a)(8) of the Code (unless the portion of such REO Property that is not treated as “foreclosure property” and that is held by any REMIC Pool at any given time constitutes not more than a de minimis amount of the assets of such REMIC Pool within the meaning of Treasury Regulations Section 1.860D-1(b)(3)(i) and (ii)), or (ii) except as permitted by Section 3.17(a), subject the Trust to the imposition of any federal income or prohibited transaction taxes under the Code. Subject to the foregoing, however, a Mortgaged Property may be acquired through a single-member limited liability company. In addition, except as permitted under Section 3.17(a), the applicable Special Servicer shall not acquire any personal property on behalf of the Trust (and, in the case of a Serviced Loan Combination, the related Serviced Pari Passu Companion Loan Holder(s) pursuant to this Section 3.09 unless either: (i) such personal property is incident to real property (within the meaning of Section 856(e)(1) of the Code) so acquired by the applicable Special Servicer; or (ii) the applicable Special Servicer shall have obtained an Opinion of Counsel (the cost of which shall be covered by, and reimbursable as, a Servicing Advance) to the effect that the holding of such personal property as part of the Trust Fund will not result in an Adverse REMIC Event with respect to any REMIC Pool or an Adverse Grantor Trust Event with respect to the Grantor Trust Pool. (c) Notwithstanding the foregoing provisions of this Section 3.09, the applicable Special Servicer shall not, on behalf of the Trust (and, in the case of a Serviced Loan Combination, the related Serviced Pari Passu Companion Loan Holder(s)), have a receiver of rents appointed with respect to a Mortgaged Property, or obtain title to a Mortgaged Property by foreclosure, deed in lieu of foreclosure or otherwise, or take any other action with respect to any Mortgaged Property, if, as a result of any such action, the Trustee, on behalf of the Certificateholders, could, in the reasonable judgment of the applicable Special Servicer, exercised in accordance with the Servicing Standard, be considered to hold title to, to be a “mortgagee-in-possession” of, or to be an “owner” or “operator” of such Mortgaged Property within the meaning of CERCLA or any comparable law, unless: (i) the applicable Special Servicer has previously determined in accordance with the Servicing Standard, based on a Phase I Environmental Assessment (and any additional environmental testing that the applicable Special Servicer deems necessary and prudent) of such Mortgaged Property conducted by an Independent Person who regularly conducts Phase I Environmental Assessments and performed during the nine-month period preceding any such acquisition of title or other action, that such Mortgaged Property is in compliance with applicable environmental laws and regulations and there are no circumstances or conditions present at the Mortgaged Property relating to the use, management or disposal of Hazardous Materials for which investigation, testing, monitoring, containment, clean-up or remediation could be required under any applicable environmental laws and regulations; or (ii) if the determination described in clause (c)(i) above cannot be made, the applicable Special Servicer has previously determined in accordance with the Servicing Standard, on the same basis as described in clause (c)(i) above, and taking into account the coverage provided under the related Environmental Insurance Policy, that it would maximize the recovery to the Certificateholders and, in the case of a Mortgaged Property securing a Serviced Loan Combination, to the related Serviced Pari Passu Companion Loan Holder(s) (as a collective whole) on a present value basis (the relevant discounting of anticipated collections that will be distributable to Certificateholders and, in the case of a Mortgaged Property securing a Serviced Loan Combination, to the related Serviced Pari Passu Companion Loan Holder(s), to be performed at the related Net Mortgage Rate (~~or (x) in the case of an ARD Mortgage Loan after its Anticipated Repayment Date~~or, ~~at the related Net Mortgage Rate immediately prior to the Anticipated Repayment Date, or (y)~~ in the case of a Serviced Loan Combination, at the weighted average of the Net Mortgage Rates for the related notes)) to acquire title to or possession of the Mortgaged Property and to take such remedial, corrective and/or other further actions as are necessary to bring the Mortgaged Property into compliance with applicable environmental laws and regulations and to appropriately address any of the circumstances and conditions referred to in clause (c)(i) above. Any such determination by the applicable Special Servicer contemplated by clause (i) or clause (ii) of the preceding paragraph shall be evidenced by an Officer’s Certificate to such effect delivered to the Trustee, the applicable Master Servicer, the Subordinate Class Representative and the Majority Subordinate Certificateholder (and, in the case of a Mortgaged Property securing a Serviced Loan Combination, to the related Serviced Pari Passu Companion Loan Holder(s)), specifying all of the bases for such determination, such Officer’s Certificate to be accompanied by all related environmental reports. The cost of such Phase I Environmental Assessment and any such additional environmental testing, as well as the cost of any remedial, corrective or other further action contemplated by clause (i) and/or clause (ii) above of the first paragraph of Section 3.09(c), shall be paid out of the Collection Account (subject to, if it relates to one or more Mortgage Loans in a Serviced Loan Combination, the proviso at the end of the first paragraph (that is, the initial paragraph that includes the enumerated clauses (i) through (xxiii) of Section 3.05(a)(I)). (d) If neither of the conditions set forth in clauses (i) and (ii) of the first paragraph of Section 3.09(c) has been satisfied with respect to any Mortgaged Property securing a defaulted Serviced Mortgage Loan (or, if applicable, a Serviced Loan Combination), the applicable Special Servicer shall take such action as is in accordance with the Servicing Standard (other than proceeding against the Mortgaged Property) and, at such time as it deems appropriate, may, on behalf of the Trust and, if applicable, any related Serviced Pari Passu Companion Loan Holder(s), release all or a portion of such Mortgaged Property from the lien of the related Mortgage; provided that both (i) if such Serviced Mortgage Loan has a then-outstanding principal balance greater than $~~1,000,000~~1 million, then prior to the release of all or a portion of the related Mortgaged Property from the lien of the related Mortgage, the applicable Special Servicer shall have notified the Rating Agencies (subject to Section 3.27), the Subordinate Class Representative, the Majority Subordinate Certificateholder, the Trustee, the Certificate Administrator and the applicable Master Servicer, in writing of its intention to so release all or a portion of such Mortgaged Property and the basis for the determination that such intention, in the applicable Special Servicer’s good faith judgment, was consistent with the Servicing Standard and (ii) if any Serviced Loan Combination is involved, the holders of the related Serviced Pari Passu Companion Loan or their representatives shall have the rights, if any, in respect thereof that are enumerated in the related Intercreditor Agreement. (e) The applicable Special Servicer shall report to the Trustee, the applicable Master Servicer, the Majority Subordinate Certificateholder, the Trust Advisor (during any Collective Consultation Period and any Senior Consultation Period), the Subordinate Class Representative (during any Subordinate Control Period and any Collective Consultation Period), and, in case of a Mortgaged Property securing a Serviced Loan Combination, the related Serviced Pari Passu Companion Loan Holder(s), monthly in writing as to any actions taken by the applicable Special Servicer with respect to any Mortgaged Property as to which neither of the conditions set forth in clauses (i) and (ii) of the first paragraph of Section 3.09(c) has been satisfied, in each case until the earliest to occur of satisfaction of either of such conditions, release of the lien of the related Mortgage on such Mortgaged Property and the related Mortgage Loan’s (or in the case of a Serviced Loan Combination, each of the related Mortgage Loan and any related Serviced Pari Passu Companion Loan) becoming a Corrected Mortgage Loan. (f) The applicable Special Servicer shall have the right to determine, in accordance with the Servicing Standard, with respect to any Specially Serviced Mortgage Loan, the advisability of seeking to obtain a deficiency judgment if the state in which the related Mortgaged Property is located and the terms of the subject Mortgage Loan permit such an action and shall, in accordance with the Servicing Standard, seek such deficiency judgment if it deems advisable. The applicable Master Servicer, at the direction of the applicable Special Servicer, shall make a Servicing Advance for the costs incurred in pursuing any such deficiency action, provided that the applicable Master Servicer shall not be obligated in connection therewith to advance any funds, which if so advanced would constitute a Nonrecoverable Advance. (g) Annually in each January, each Master Servicer shall, with the reasonable cooperation of the applicable Special Servicer, prepare and file with the IRS on a timely basis the information returns with respect to the reports of foreclosures and abandonments and reports relating to any cancellation of indebtedness income with respect to any Serviced Mortgage Loan, or Mortgaged Property securing a Serviced Mortgage Loan and any Serviced Loan Combination, required by Sections 6050H (as applicable), 6050J and 6050P of the Code. Contemporaneously therewith, the applicable Master Servicer shall deliver a copy of such information returns to the applicable Special Servicer and the Trustee. (h) As soon as the applicable Special Servicer makes a Final Recovery Determination (during any Subordinate Control Period and any Collective Consultation Period, such determination to be made in consultation with the Subordinate Class Representative and the related calculations to be subject to the approval of such Subordinate Class Representative) with respect to any Mortgage Loan, Serviced Loan Combination or REO Property, it shall promptly notify the Certificate Administrator, the Trustee, the Rating Agencies (subject to Section 3.27), the applicable Master Servicer (unless it is the one making the determination), the Trust Advisor (during any Collective Consultation Period and any Senior Consultation Period) and the Subordinate Class Representative (during any Subordinate Control Period and any Collective Consultation Period). The applicable Special Servicer shall maintain accurate records, prepared by a Servicing Officer, of each such Final Recovery Determination (if any) made by it and the basis thereof. Each such Final Recovery Determination (if any) shall be evidenced by an Officer’s Certificate delivered to the Certificate Administrator, the Trustee, the applicable Master Servicer (unless it is the one making the determination), the Trust Advisor (during any Collective Consultation Period and any Senior Consultation Period) and the Subordinate Class Representative (during any Subordinate Control Period and any Collective Consultation Period) no later than ten (10) Business Days following such Final Recovery Determination. (i) Notwithstanding anything the contrary, to the extent that the applicable Special Servicer acquires a Mortgaged Property that is a hospitality property on behalf of the Trust and such hospitality property has a franchise or licensing agreement that requires a successor or replacement franchisee or licensee to have a specified net worth, the applicable Special Servicer shall, to the extent consistent with the Servicing Standard, take all actions reasonably necessary to permit the Mortgaged Property to maintain its franchise or license with the same franchisor or licensor in place prior to such foreclosure.

Appears in 3 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)

Realization Upon Defaulted Serviced Mortgage Loans. (a) The ~~applicable~~ Special Servicer shall, subject to Sections 3.09(b), 3.09(c), 3.09(d), Section 3.24, Section 3.26 and/or Section 3.28, as applicable, exercise reasonable efforts, consistent with the Servicing Standard, to foreclose upon or otherwise comparably convert the ownership of the real property and other collateral securing any Serviced Mortgage Loan or Serviced Loan Combination that comes into and continues in default and as to which no satisfactory arrangements can be made for collection of delinquent payments, including pursuant to Section 3.20. In connection with the foregoing, in the event of a default under any Serviced Mortgage Loan, Serviced Loan Combination or Cross-Collateralized Group that is secured by real properties located in multiple states, and such states include California or another state with a statute, rule or regulation comparable to California’s “one action rule”, ,” then the ~~applicable~~ Special Servicer shall consult Independent counsel regarding the order and manner in which the ~~applicable~~ Special Servicer should foreclose upon or comparably proceed against such properties. The ~~applicable~~ Special Servicer may direct the ~~applicable~~ Master Servicer to advance, as contemplated by Section 3.19(b), all costs and expenses (including attorneys’ fees and litigation costs and expenses) to be incurred on behalf of the Trust in any such proceedings or such consultation, subject to the ~~applicable~~ Master Servicer being entitled to reimbursement for any such advance as a Servicing Advance as provided in Section 3.05(a), and further subject to the ~~applicable~~ Special Servicer’s being entitled to pay out of the related Liquidation Proceeds, Insurance Proceeds and/or Condemnation Proceeds any Liquidation Expenses incurred in respect of any Serviced Mortgage Loan or Serviced Loan Combination, which Liquidation Expenses were outstanding at the time such proceeds are received. Nothing contained in this Section 3.09 shall be construed so as to require the ~~applicable~~ Special Servicer, on behalf of the Trust, to make a bid on any Mortgaged Property at a foreclosure sale or similar proceeding that is in excess of the fair market value of such property, as determined by the ~~applicable~~ Special Servicer taking into account the factors described in Section 3.18 and the results of any appraisal obtained pursuant to the following sentence or otherwise, all such cash bids to be made in a manner consistent with the Servicing Standard. If and when the ~~applicable~~ Master Servicer or the ~~applicable~~ Special Servicer deems it necessary in accordance with the Servicing Standard for purposes of establishing the fair market value of any Mortgaged Property securing a defaulted Serviced Mortgage Loan or Serviced Loan Combination, whether for purposes of bidding at foreclosure or otherwise, the ~~applicable~~ Master Servicer or the ~~applicable~~ Special Servicer (as the case may be) is authorized to have an Appraisal completed with respect to such property (the cost of which appraisal shall be covered by, and be reimbursable as, a Servicing Advance). The ~~applicable~~ Master Servicer shall not foreclose upon or otherwise comparably convert, including by taking title thereto, any real property or other collateral securing a Defaulted Mortgage Loan or Serviced Loan Combination. (b) Notwithstanding the foregoing provisions of this Section 3.09, no Mortgaged Property shall be acquired by the ~~applicable~~ Special Servicer on behalf of the Trust (and, in the case of a Serviced Loan Combination, the related Serviced Pari Passu Companion Loan Holder(s)) under such circumstances, in such manner or pursuant to such terms as would (i) cause such Mortgaged Property to fail to qualify as “foreclosure property” within the meaning of Section 860G(a)(8) of the Code (unless the portion of such REO Property that is not treated as “foreclosure property” and that is held by any Trust REMIC ~~Pool~~ at any given time constitutes not more than a de minimis amount of the assets of such Trust REMIC ~~Pool~~ within the meaning of Treasury Regulations Section 1.860D-1(b)(3)(i) and (ii)), or (ii) except as permitted by Section 3.17(a), subject the Trust to the imposition of any federal income or prohibited transaction taxes under the Code. Subject to the foregoing, however, a Mortgaged Property may be acquired through a single-member limited liability company. In addition, except as permitted under Section 3.17(a), the ~~applicable~~ Special Servicer shall not acquire any personal property on behalf of the Trust (and, in the case of a Serviced Loan Combination, the related Serviced Pari Passu Companion Loan Holder(s) pursuant to this Section 3.09 unless either: (i) such personal property is incident to real property (within the meaning of Section 856(e)(1) of the Code) so acquired by the ~~applicable~~ Special Servicer; or (ii) the ~~applicable~~ Special Servicer shall have obtained an Opinion of Counsel (the cost of which shall be covered by, and reimbursable as, a Servicing Advance) to the effect that the holding of such personal property as part of the Trust Fund will not result 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. (c) Notwithstanding the foregoing provisions of this Section 3.09, the ~~applicable~~ Special Servicer shall not, on behalf of the Trust (and, in the case of a Serviced Loan Combination, the related Serviced Pari Passu Companion Loan Holder(s)), have a receiver of rents appointed with respect to a Mortgaged Property, or obtain title to a Mortgaged Property by foreclosure, deed in lieu of foreclosure or otherwise, or take any other action with respect to any Mortgaged Property, if, as a result of any such action, the Trustee, on behalf of the Certificateholders, could, in the reasonable judgment of the ~~applicable~~ Special Servicer, exercised in accordance with the Servicing Standard, be considered to hold title to, to be a “mortgagee-in-possession” of, or to be an “owner” or “operator” of such Mortgaged Property within the meaning of CERCLA or any comparable law, unless: (i) the ~~applicable~~ Special Servicer has previously determined in accordance with the Servicing Standard, based on a Phase I Environmental Assessment (and any additional environmental testing that the ~~applicable~~ Special Servicer deems necessary and prudent) of such Mortgaged Property conducted by an Independent Person who regularly conducts Phase I Environmental Assessments and performed during the nine-month period preceding any such acquisition of title or other action, that such Mortgaged Property is in compliance with applicable environmental laws and regulations and there are no circumstances or conditions present at the Mortgaged Property relating to the use, management or disposal of Hazardous Materials for which investigation, testing, monitoring, containment, clean-up or remediation could be required under any applicable environmental laws and regulations; or (ii) if the determination described in clause (c)(i) above cannot be made, the ~~applicable~~ Special Servicer has previously determined in accordance with the Servicing Standard, on the same basis as described in clause (c)(i) above, and taking into account the coverage provided under the related Environmental Insurance Policy, that it would maximize the recovery to the Certificateholders and, in the case of a Mortgaged Property securing a Serviced Loan Combination, to the related Serviced Pari Passu Companion Loan Holder(s) (as a collective whole) on a present value basis (the relevant discounting of anticipated collections that will be distributable to Certificateholders and, in the case of a Mortgaged Property securing a Serviced Loan Combination, to the related Serviced Pari Passu Companion Loan Holder(s), to be performed at the related Net Mortgage Rate (or (x) in the case of an ARD Mortgage Loan after its Anticipated Repayment Date, at the related Net Mortgage Rate immediately prior to the Anticipated Repayment Date, or (y) in the case of a Serviced Loan Combination, at the weighted average of the Net Mortgage Rates for the related notes)), to be performed at the related Net Mortgage Rate) to acquire title to or possession of the Mortgaged Property and to take such remedial, corrective and/or other further actions as are necessary to bring the Mortgaged Property into compliance with applicable environmental laws and regulations and to appropriately address any of the circumstances and conditions referred to in clause (c)(i) above. Any such determination by the ~~applicable~~ Special Servicer contemplated by clause (i) or clause (ii) of the preceding paragraph shall be evidenced by an Officer’s Certificate to such effect delivered to the Trustee, the ~~applicable~~ Master Servicer, the Subordinate Class Representative and the Majority Subordinate Certificateholder (and, in the case of a Mortgaged Property securing a Serviced Loan Combination, to the related Serviced Pari Passu Companion Loan Holder(s)), specifying all of the bases for such determination, such Officer’s Certificate to be accompanied by all related environmental reports. The cost of such Phase I Environmental Assessment and any such additional environmental testing, as well as the cost of any remedial, corrective or other further action contemplated by clause (i) and/or clause (ii) ~~above~~ of the ~~first paragraph of Section 3.09(c)~~preceding paragraph, shall be paid out of the Collection Account (subject to, if it relates to one or more Mortgage Loans in a Serviced Loan Combination, the proviso at the end of the first paragraph (that is, the initial paragraph that includes the enumerated clauses (i) through (xxiii) of subsection (I) of Section ~~3.05(a)(I~~3.05(a)). (d) If neither of the conditions set forth in clauses (i) and (ii) of the first paragraph of Section 3.09(c) has been satisfied with respect to any Mortgaged Property securing a defaulted Serviced Mortgage Loan (or, if applicable, a Serviced Loan Combination), the ~~applicable~~ Special Servicer shall take such action as is in accordance with the Servicing Standard (other than proceeding against the Mortgaged Property) and, at such time as it deems appropriate, may, on behalf of the Trust and, if applicable, ~~any~~ the related Serviced Pari Passu Companion Loan Holder(s), release all or a portion of such Mortgaged Property from the lien of the related Mortgage; provided that both (i) if such Serviced Mortgage Loan has a ~~then-~~then outstanding principal balance greater than $1,000,000, then prior to the release of all or a portion of the related Mortgaged Property from the lien of the related Mortgage, the ~~applicable~~ Special Servicer shall have notified the Rating Agencies (subject to Section 3.27), the Subordinate Class Representative, the Majority Subordinate Certificateholder, the Trustee, the Certificate Administrator and the ~~applicable~~ Master ~~Servicer,~~ Servicer in writing of its intention to so release all or a portion of such Mortgaged Property and the basis for the determination that such intention, in the ~~applicable~~ Special Servicer’s good faith judgment, was consistent with the Servicing Standard and (ii) if ~~any~~ a Serviced Loan Combination is involved, the holders of the related Serviced Pari Passu Companion Loan or their representatives shall have the rights, if any, in respect thereof that are enumerated in the related Intercreditor Agreement. (e) The ~~applicable~~ Special Servicer shall report to the Trustee, the ~~applicable~~ Master Servicer, the Majority Subordinate Certificateholder, the Trust Advisor (during any Collective Consultation Period and any Senior Consultation Period), the Subordinate Class Representative (during any Subordinate Control Period and any Collective Consultation Period), and, in case of a Mortgaged Property securing a Serviced Loan Combination, the related Serviced Pari Passu Companion Loan Holder(s), monthly in writing as to any actions taken by the ~~applicable~~ Special Servicer with respect to any Mortgaged Property as to which neither of the conditions set forth in clauses (i) and (ii) of the first paragraph of Section 3.09(c) has been satisfied, in each case until the earliest to occur of satisfaction of either of such conditions, release of the lien of the related Mortgage on such Mortgaged Property and the related Mortgage Loan’s (or in the case of a Serviced Loan Combination, each of the related Mortgage Loan and ~~any~~ the related Serviced Pari Passu Companion Loan) becoming a Corrected Mortgage Loan. (f) The ~~applicable~~ Special Servicer shall have the right to determine, in accordance with the Servicing Standard, with respect to any Specially Serviced Mortgage Loan, the advisability of seeking to obtain a deficiency judgment if the state in which the related Mortgaged Property is located and the terms of the subject Mortgage Loan permit such an action and shall, in accordance with the Servicing Standard, seek such deficiency judgment if it deems advisable. The ~~applicable~~ Master Servicer, at the direction of the ~~applicable~~ Special Servicer, shall make a Servicing Advance for the costs incurred in pursuing any such deficiency action, provided that the ~~applicable~~ Master Servicer shall not be obligated in connection therewith to advance any funds, which if so advanced would constitute a Nonrecoverable Advance. (g) Annually in each January, each Master Servicer shall, with the reasonable cooperation of the ~~applicable~~ Special Servicer, prepare and file with the IRS on a timely basis the information returns with respect to the reports of foreclosures and abandonments and reports relating to any cancellation of indebtedness income with respect to any Serviced Mortgage Loan, or Mortgaged Property securing a Serviced Mortgage Loan and any Serviced Loan Combination, required by Sections 6050H (as applicable), 6050J and 6050P of the Code. Contemporaneously therewith, the ~~applicable~~ Master Servicer shall deliver a copy of such information returns to the ~~applicable~~ Special Servicer and the Trustee. (h) As soon as the ~~applicable~~ Special Servicer makes a Final Recovery Determination (during any Subordinate Control Period and any Collective Consultation Period, such determination to be made in consultation with the Subordinate Class Representative and the related calculations to be subject to the approval of such Subordinate Class Representative) with respect to any Mortgage Loan, Serviced Loan Combination or REO Property, it shall promptly notify the Certificate Administrator, the Trustee, the Rating Agencies (subject to Section 3.27), the ~~applicable~~ Master Servicer (unless it is the one making the determination), the Trust Advisor (during any Collective Consultation Period and any Senior Consultation Period) and the Subordinate Class Representative (during any Subordinate Control Period and any Collective Consultation Period). The ~~applicable~~ Special Servicer shall maintain accurate records, prepared by a Servicing Officer, of each such Final Recovery Determination (if any) made by it and the basis thereof. Each such Final Recovery Determination (if any) shall be evidenced by an Officer’s Certificate delivered to the Certificate Administrator, the Trustee, the ~~applicable~~ Master Servicer (unless it is the one making the determination), the Trust Advisor (during any Collective Consultation Period and any Senior Consultation Period) and the Subordinate Class Representative (during any Subordinate Control Period and any Collective Consultation Period) no later than ten (10) Business Days following such Final Recovery Determination. (i) Notwithstanding anything the contrary, to the extent that the ~~applicable~~ Special Servicer acquires a Mortgaged Property that is a hospitality property on behalf of the Trust and such hospitality property has a franchise or licensing agreement that requires a successor or replacement franchisee or licensee to have a specified net worth, the ~~applicable~~ Special Servicer shall, to the extent consistent with the Servicing Standard, take all actions reasonably necessary to permit the Mortgaged Property to maintain its franchise or license with the same franchisor or licensor in place prior to such foreclosure.

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.)

Realization Upon Defaulted Serviced Mortgage Loans. (a) The ~~applicable~~ Special Servicer shall, subject to Sections 3.09(b), 3.09(c), 3.09(d), Section 3.24, Section 3.26 and/or Section 3.28, as applicable, exercise reasonable efforts, consistent with the Servicing Standard, to foreclose upon or otherwise comparably convert the ownership of the real property and other collateral securing any Serviced Mortgage Loan or Serviced Loan Combination that comes into and continues in default and as to which no satisfactory arrangements can be made for collection of delinquent payments, including pursuant to Section 3.20. In connection with the foregoing, in the event of a default under any Serviced Mortgage Loan, Serviced Loan Combination or Cross-Collateralized Group that is secured by real properties located in multiple states, and such states include California or another state with a statute, rule or regulation comparable to California’s “one action rule”, then the ~~applicable~~ Special Servicer shall consult Independent counsel regarding the order and manner in which the ~~applicable~~ Special Servicer should foreclose upon or comparably proceed against such properties. The ~~applicable~~ Special Servicer may direct the ~~applicable~~ Master Servicer to advance, as contemplated by Section 3.19(b), all costs and expenses (including attorneys’ fees and litigation costs and expenses) to be incurred on behalf of the Trust in any such proceedings or such consultation, subject to the ~~applicable~~ Master Servicer being entitled to reimbursement for any such advance as a Servicing Advance as provided in Section 3.05(a), and further subject to the ~~applicable~~ Special Servicer’s being entitled to pay out of the related Liquidation Proceeds, Insurance Proceeds and/or Condemnation Proceeds any Liquidation Expenses incurred in respect of any Serviced Mortgage Loan or Serviced Loan Combination, which Liquidation Expenses were outstanding at the time such proceeds are received. Nothing contained in this Section 3.09 shall be construed so as to require the ~~applicable~~ Special Servicer, on behalf of the Trust, to make a bid on any Mortgaged Property at a foreclosure sale or similar proceeding that is in excess of the fair market value of such property, as determined by the ~~applicable~~ Special Servicer taking into account the factors described in Section 3.18 and the results of any appraisal obtained pursuant to the following sentence or otherwise, all such cash bids to be made in a manner consistent with the Servicing Standard. If and when the ~~applicable~~ Master Servicer or the ~~applicable~~ Special Servicer deems it necessary in accordance with the Servicing Standard for purposes of establishing the fair market value of any Mortgaged Property securing a defaulted Serviced Mortgage Loan or Serviced Loan Combination, whether for purposes of bidding at foreclosure or otherwise, the ~~applicable~~ Master Servicer or the ~~applicable~~ Special Servicer (as the case may be) is authorized to have an Appraisal completed with respect to such property (the cost of which appraisal shall be covered by, and be reimbursable as, a Servicing Advance). The ~~applicable~~ Master Servicer shall not foreclose upon or otherwise comparably convert, including by taking title thereto, any real property or other collateral securing a Defaulted Mortgage Loan or Serviced Loan Combination. (b) Notwithstanding the foregoing provisions of this Section 3.09, no Mortgaged Property shall be acquired by the ~~applicable~~ Special Servicer on behalf of the Trust (and, in the case of a Serviced Loan Combination, the related Serviced Pari Passu Companion Loan Holder(s)) under such circumstances, in such manner or pursuant to such terms as would (i) cause such Mortgaged Property to fail to qualify as “foreclosure property” within the meaning of Section 860G(a)(8) of the Code (unless the portion of such REO Property that is not treated as “foreclosure property” and that is held by any REMIC Pool at any given time constitutes not more than a de minimis amount of the assets of such REMIC Pool within the meaning of Treasury Regulations Section 1.860D-1(b)(3)(i) and (ii)), or (ii) except as permitted by Section 3.17(a), subject the Trust to the imposition of any federal income or prohibited transaction taxes under the Code. Subject to the foregoing, however, a Mortgaged Property may be acquired through a single-member limited liability company. In addition, except as permitted under Section 3.17(a), the ~~applicable~~ Special Servicer shall not acquire any personal property on behalf of the Trust (and, in the case of a Serviced Loan Combination, the related Serviced Pari Passu Companion Loan Holder(s) pursuant to this Section 3.09 unless either: (i) such personal property is incident to real property (within the meaning of Section 856(e)(1) of the Code) so acquired by the ~~applicable~~ Special Servicer; or (ii) the ~~applicable~~ Special Servicer shall have obtained an Opinion of Counsel (the cost of which shall be covered by, and reimbursable as, a Servicing Advance) to the effect that the holding of such personal property as part of the Trust Fund will not result in an Adverse REMIC Event with respect to any REMIC ~~Pool or an Adverse Grantor Trust Event with respect to the Grantor Trust~~ Pool. (c) Notwithstanding the foregoing provisions of this Section 3.09, the ~~applicable~~ Special Servicer shall not, on behalf of the Trust (and, in the case of a Serviced Loan Combination, the related Serviced Pari Passu Companion Loan Holder(s)), have a receiver of rents appointed with respect to a Mortgaged Property, or obtain title to a Mortgaged Property by foreclosure, deed in lieu of foreclosure or otherwise, or take any other action with respect to any Mortgaged Property, if, as a result of any such action, the Trustee, on behalf of the Certificateholders, could, in the reasonable judgment of the ~~applicable~~ Special Servicer, exercised in accordance with the Servicing Standard, be considered to hold title to, to be a “mortgagee-in-possession” of, or to be an “owner” or “operator” of such Mortgaged Property within the meaning of CERCLA or any comparable law, unless: (i) the ~~applicable~~ Special Servicer has previously determined in accordance with the Servicing Standard, based on a Phase I Environmental Assessment (and any additional environmental testing that the ~~applicable~~ Special Servicer deems necessary and prudent) of such Mortgaged Property conducted by an Independent Person who regularly conducts Phase I Environmental Assessments and performed during the nine-month period preceding any such acquisition of title or other action, that such Mortgaged Property is in compliance with applicable environmental laws and regulations and there are no circumstances or conditions present at the Mortgaged Property relating to the use, management or disposal of Hazardous Materials for which investigation, testing, monitoring, containment, clean-up or remediation could be required under any applicable environmental laws and regulations; or (ii) if the determination described in clause (c)(i) above cannot be made, the ~~applicable~~ Special Servicer has previously determined in accordance with the Servicing Standard, on the same basis as described in clause (c)(i) above, and taking into account the coverage provided under the related Environmental Insurance Policy, that it would maximize the recovery to the Certificateholders and, in the case of a Mortgaged Property securing a Serviced Loan Combination, to the related Serviced Pari Passu Companion Loan Holder(s) (as a collective whole) on a present value basis (the relevant discounting of anticipated collections that will be distributable to Certificateholders and, in the case of a Mortgaged Property securing a Serviced Loan Combination, to the related Serviced Pari Passu Companion Loan Holder(s), to be performed at the related Net Mortgage Rate (or (x) in the case of an ARD Mortgage Loan after its Anticipated Repayment Date, at the related Net Mortgage Rate immediately prior to the Anticipated Repayment Date, or (y) in the case of a Serviced Loan Combination, at the weighted average of the Net Mortgage Rates for the related notes)), to be performed at the related Net Mortgage Rate) to acquire title to or possession of the Mortgaged Property and to take such remedial, corrective and/or other further actions as are necessary to bring the Mortgaged Property into compliance with applicable environmental laws and regulations and to appropriately address any of the circumstances and conditions referred to in clause (c)(i) above. Any such determination by the ~~applicable~~ Special Servicer contemplated by clause (i) or clause (ii) of the preceding paragraph shall be evidenced by an Officer’s Certificate to such effect delivered to the Trustee, the ~~applicable~~ Master Servicer, the Subordinate Class Representative and the Majority Subordinate Certificateholder (and, in the case of a Mortgaged Property securing a Serviced Loan Combination, to the related Serviced Pari Passu Companion Loan Holder(s)), specifying all of the bases for such determination, such Officer’s Certificate to be accompanied by all related environmental reports. The cost of such Phase I Environmental Assessment and any such additional environmental testing, as well as the cost of any remedial, corrective or other further action contemplated by clause (i) and/or clause (ii) above of the first paragraph of Section 3.09(c), shall be paid out of the Collection Account (subject to, if it relates to one or more Mortgage Loans in a Serviced Loan Combination, the proviso at the end of the first paragraph (that is, the initial paragraph that includes the enumerated clauses (i) through (xxiii) of Section 3.05(a)(I)). (d) If neither of the conditions set forth in clauses (i) and (ii) of the first paragraph of Section 3.09(c) has been satisfied with respect to any Mortgaged Property securing a defaulted Serviced Mortgage Loan (or, if applicable, a Serviced Loan Combination), the ~~applicable~~ Special Servicer shall take such action as is in accordance with the Servicing Standard (other than proceeding against the Mortgaged Property) and, at such time as it deems appropriate, may, on behalf of the Trust and, if applicable, any related Serviced Pari Passu Companion Loan Holder(s), release all or a portion of such Mortgaged Property from the lien of the related Mortgage; provided that both (i) if such Serviced Mortgage Loan has a then-outstanding principal balance greater than $1,000,000, then prior to the release of all or a portion of the related Mortgaged Property from the lien of the related Mortgage, the ~~applicable~~ Special Servicer shall have notified the Rating Agencies (subject to Section 3.27), the Subordinate Class Representative, the Majority Subordinate Certificateholder, the Trustee, the Certificate Administrator and the ~~applicable~~ Master ~~Servicer,~~ Servicer in writing of its intention to so release all or a portion of such Mortgaged Property and the basis for the determination that such intention, in the ~~applicable~~ Special Servicer’s good faith judgment, was consistent with the Servicing Standard and (ii) if any Serviced Loan Combination is involved, the holders of the related Serviced Pari Passu Companion Loan or their representatives shall have the rights, if any, in respect thereof that are enumerated in the related Intercreditor Agreement. (e) The ~~applicable~~ Special Servicer shall report to the Trustee, the ~~applicable~~ Master Servicer, the Majority Subordinate Certificateholder, the Trust Advisor (during any Collective Consultation Period and any Senior Consultation Period), the Subordinate Class Representative (during any Subordinate Control Period and any Collective Consultation Period), and, in case of a Mortgaged Property securing a Serviced Loan Combination, the related Serviced Pari Passu Companion Loan Holder(s), monthly in writing as to any actions taken by the ~~applicable~~ Special Servicer with respect to any Mortgaged Property as to which neither of the conditions set forth in clauses (i) and (ii) of the first paragraph of Section 3.09(c) has been satisfied, in each case until the earliest to occur of satisfaction of either of such conditions, release of the lien of the related Mortgage on such Mortgaged Property and the related Mortgage Loan’s (or in the case of a Serviced Loan Combination, each of the related Mortgage Loan and any related Serviced Pari Passu Companion Loan) becoming a Corrected Mortgage Loan. (f) The ~~applicable~~ Special Servicer shall have the right to determine, in accordance with the Servicing Standard, with respect to any Specially Serviced Mortgage Loan, the advisability of seeking to obtain a deficiency judgment if the state in which the related Mortgaged Property is located and the terms of the subject Mortgage Loan permit such an action and shall, in accordance with the Servicing Standard, seek such deficiency judgment if it deems advisable. The ~~applicable~~ Master Servicer, at the direction of the ~~applicable~~ Special Servicer, shall make a Servicing Advance for the costs incurred in pursuing any such deficiency action, provided that the ~~applicable~~ Master Servicer shall not be obligated in connection therewith to advance any funds, which if so advanced would constitute a Nonrecoverable Advance. (g) Annually in each January, ~~each~~ the Master Servicer shall, with the reasonable cooperation of the ~~applicable~~ Special Servicer, prepare and file with the IRS on a timely basis the information returns with respect to the reports of foreclosures and abandonments and reports relating to any cancellation of indebtedness income with respect to any Serviced Mortgage Loan, or Mortgaged Property securing a Serviced Mortgage Loan and any Serviced Loan Combination, required by Sections 6050H (as applicable), 6050J and 6050P of the Code. Contemporaneously therewith, the ~~applicable~~ Master Servicer shall deliver a copy of such information returns to the ~~applicable~~ Special Servicer and the Trustee. (h) As soon as the ~~applicable~~ Special Servicer makes a Final Recovery Determination (during any Subordinate Control Period and any Collective Consultation Period, such determination to be made in consultation with the Subordinate Class Representative and the related calculations to be subject to the approval of such Subordinate Class Representative) with respect to any Mortgage Loan, Serviced Loan Combination or REO Property, it shall promptly notify the Certificate Administrator, the Trustee, the Rating Agencies (subject to Section 3.27), the ~~applicable~~ Master Servicer (unless it is the one making the determination), the Trust Advisor (during any Collective Consultation Period and any Senior Consultation Period) and the Subordinate Class Representative (during any Subordinate Control Period and any Collective Consultation Period). The ~~applicable~~ Special Servicer shall maintain accurate records, prepared by a Servicing Officer, of each such Final Recovery Determination (if any) made by it and the basis thereof. Each such Final Recovery Determination (if any) shall be evidenced by an Officer’s Certificate delivered to the Certificate Administrator, the Trustee, the ~~applicable~~ Master Servicer (unless it is the one making the determination), the Trust Advisor (during any Collective Consultation Period and any Senior Consultation Period) and the Subordinate Class Representative (during any Subordinate Control Period and any Collective Consultation Period) no later than ten (10) Business Days following such Final Recovery Determination. (i) Notwithstanding anything the contrary, to the extent that the ~~applicable~~ Special Servicer acquires a Mortgaged Property that is a hospitality property on behalf of the Trust and such hospitality property has a franchise or licensing agreement that requires a successor or replacement franchisee or licensee to have a specified net worth, the ~~applicable~~ Special Servicer shall, to the extent consistent with the Servicing Standard, take all actions reasonably necessary to permit the Mortgaged Property to maintain its franchise or license with the same franchisor or licensor in place prior to such foreclosure.

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)

Realization Upon Defaulted Serviced Mortgage Loans. (a) The ~~applicable Special~~ Servicer shall, ~~subject to Sections 3.09(b), 3.09(c), 3.09(d), Section 3.24, Section 3.26 and/or Section 3.28, as applicable, exercise reasonable efforts,~~ consistent with ~~the~~ Accepted Servicing ~~Standard~~Practices, to foreclose upon or otherwise comparably convert the ownership of properties securing such of the ~~real property and other collateral securing any~~ Serviced Mortgage ~~Loan or~~ Loans (including selling any such Serviced ~~Loan Combination that comes~~ Mortgage Loans other than converting the ownership of the related properties) as come into and ~~continues~~ continue in default and as to which no satisfactory arrangements can be made for collection of delinquent payments~~, including pursuant to Section 3.20~~. In connection with the foregoing, in the event of a default under any Serviced Mortgage Loan, Serviced Loan Combination or Cross-Collateralized Group that is secured by real properties located in multiple states, and such states include California or another state with a statute, rule or regulation comparable to California’s “one action rule”, then the applicable Special The Servicer shall consult Independent counsel regarding the order and manner in which the applicable Special Servicer should foreclose upon or comparably proceed against such properties. The applicable Special Servicer may direct the applicable Master Servicer to advance, as contemplated by Section 3.19(b), be responsible for all costs and expenses ~~(including attorneys’ fees and litigation~~ incurred by it in any such proceedings; provided, however, that such costs and expenses will be recoverable as Servicing Advances by the Servicer as contemplated in Section 3.04. The foregoing is subject to the provision that, in any case in which Mortgaged Property shall have suffered damage from an uninsured cause, the Servicer shall not be required to expend its own funds toward the restoration of such Mortgaged Property unless in its determination such restoration will increase the proceeds of liquidation of the related Serviced Mortgage Loan after reimbursement to itself for such expenses. (b) ~~to be incurred on behalf~~ If the Servicer determines that it is in the best economic interest of the Trust ~~in any~~ and the Certificateholders to sell a Distressed Mortgage Loan rather than foreclosing, the Servicer may effect such ~~proceedings or~~ a sale. The net proceeds of such consultation, subject to the applicable Master Servicer being entitled to reimbursement for any such advance as a Servicing Advance as provided in Section 3.05(a), and further subject to the applicable Special Servicer’s being entitled to pay out of the related sale shall be Liquidation Proceeds. (c) Proceeds received in connection with any Final Recovery Determination, as well as any recovery resulting from a partial collection of Insurance Proceeds, Liquidation Proceeds ~~and/or~~ or Condemnation ~~Proceeds any Liquidation Expenses incurred~~ Proceeds, in respect of any Serviced Mortgage ~~Loan or Serviced Loan Combination~~Loan, ~~which Liquidation Expenses were outstanding at~~ will be applied in the ~~time such proceeds are received. Nothing contained in this Section 3.09 shall be construed so as to require the applicable Special Servicer, on behalf~~ following order of ~~the Trust~~priority: first, to ~~make a bid on~~ unpaid General Servicing Fees; second, to reimburse the Servicer or any Mortgaged Property at a foreclosure sale or similar proceeding that is in excess of the fair market value of such property, as determined by the applicable Special Servicer taking into account the factors described in Section 3.18 sub-servicer for any related unreimbursed Servicing Advances and ~~the results of any appraisal obtained~~ Monthly Advances pursuant to the following sentence or otherwise, all such cash bids to be made in a manner consistent with the Servicing Standard. If and when the applicable Master Servicer or the applicable Special Servicer deems it necessary in accordance with the Servicing Standard for purposes of establishing the fair market value of any Mortgaged Property securing a defaulted Serviced Mortgage Loan or Serviced Loan Combination, whether for purposes of bidding at foreclosure or otherwise, the applicable Master Servicer or the applicable Special Servicer (as the case may be) is authorized to have an Appraisal completed with respect to such property (the cost of which appraisal shall be covered by, and be reimbursable as, a Servicing Advance). The applicable Master Servicer shall not foreclose upon or otherwise comparably convert, including by taking title thereto, any real property or other collateral securing a Defaulted Mortgage Loan or Serviced Loan Combination. (b) Notwithstanding the foregoing provisions of this Section 3.09, no Mortgaged Property shall be acquired by the applicable Special Servicer on behalf of the Trust (and, in the case of a Serviced Loan Combination, the related Serviced Pari Passu Companion Loan Holder(s)) under such circumstances, in such manner or pursuant to such terms as would (i) cause such Mortgaged Property to fail to qualify as “foreclosure property” within the meaning of Section 860G(a)(8) of the Code (unless the portion of such REO Property that is not treated as “foreclosure property” and that is held by any REMIC Pool at any given time constitutes not more than a de minimis amount of the assets of such REMIC Pool within the meaning of Treasury Regulations Section 1.860D-1(b)(3)(i) and (ii)), or (ii) except as permitted by Section 3.17(a), subject the Trust to the imposition of any federal income or prohibited transaction taxes under the Code. Subject to the foregoing, however, a Mortgaged Property may be acquired through a single-member limited liability company. In addition, except as permitted under Section 3.17(a), the applicable Special Servicer shall not acquire any personal property on behalf of the Trust (and, in the case of a Serviced Loan Combination, the related Serviced Pari Passu Companion Loan Holder(s) pursuant to this Section 3.09 unless either: (i) such personal property is incident to real property (within the meaning of Section 856(e)(1) of the Code) so acquired by the applicable Special Servicer3.04; or (ii) the applicable Special Servicer shall have obtained an Opinion of Counsel (the cost of which shall be covered by, and reimbursable as, a Servicing Advance) to the effect that the holding of such personal property as part of the Trust Fund will not result in an Adverse REMIC Event with respect to any REMIC Pool or an Adverse Grantor Trust Event with respect to the Grantor Trust Pool. (c) Notwithstanding the foregoing provisions of this Section 3.09, the applicable Special Servicer shall not, on behalf of the Trust (and, in the case of a Serviced Loan Combination, the related Serviced Pari Passu Companion Loan Holder(s)), have a receiver of rents appointed with respect to a Mortgaged Property, or obtain title to a Mortgaged Property by foreclosure, deed in lieu of foreclosure or otherwise, or take any other action with respect to any Mortgaged Property, if, as a result of any such action, the Trustee, on behalf of the Certificateholders, could, in the reasonable judgment of the applicable Special Servicer, exercised in accordance with the Servicing Standard, be considered to hold title tothird, to be a “mortgagee-in-possession” of, or to be an “owner” or “operator” of such Mortgaged Property within the meaning of CERCLA or any comparable law, unless: (i) the applicable Special Servicer has previously determined in accordance with the Servicing Standard, based on a Phase I Environmental Assessment (accrued and any additional environmental testing that the applicable Special Servicer deems necessary and prudent) of such Mortgaged Property conducted by an Independent Person who regularly conducts Phase I Environmental Assessments and performed during the nine-month period preceding any such acquisition of title or other action, that such Mortgaged Property is in compliance with applicable environmental laws and regulations and there are no circumstances or conditions present at the Mortgaged Property relating to the use, management or disposal of Hazardous Materials for which investigation, testing, monitoring, containment, clean-up or remediation could be required under any applicable environmental laws and regulations; or (ii) if the determination described in clause (c)(i) above cannot be made, the applicable Special Servicer has previously determined in accordance with the Servicing Standard, unpaid interest on the same basis as described in clause (c)(i) above, and taking into account the coverage provided under the related Environmental Insurance Policy, that it would maximize the recovery to the Certificateholders and, in the case of a Mortgaged Property securing a Serviced Loan Combination, to the related Serviced Pari Passu Companion Loan Holder(s) (as a collective whole) on a present value basis (the relevant discounting of anticipated collections that will be distributable to Certificateholders and, in the case of a Mortgaged Property securing a Serviced Loan Combination, to the related Serviced Pari Passu Companion Loan Holder(s), to be performed at the related Net Mortgage Rate (or (x) in the case of an ARD Mortgage Loan after its Anticipated Repayment Date, at the related Net Mortgage Rate immediately prior to the Anticipated Repayment Date, or (y) in the case of a Serviced Loan Combination, at the weighted average of the Net Mortgage Rates for the related notes)) to acquire title to or possession of the Mortgaged Property and to take such remedial, corrective and/or other further actions as are necessary to bring the Mortgaged Property into compliance with applicable environmental laws and regulations and to appropriately address any of the circumstances and conditions referred to in clause (c)(i) above. Any such determination by the applicable Special Servicer contemplated by clause (i) or clause (ii) of the preceding paragraph shall be evidenced by an Officer’s Certificate to such effect delivered to the Trustee, the applicable Master Servicer, the Subordinate Class Representative and the Majority Subordinate Certificateholder (and, in the case of a Mortgaged Property securing a Serviced Loan Combination, to the related Serviced Pari Passu Companion Loan Holder(s)), specifying all of the bases for such determination, such Officer’s Certificate to be accompanied by all related environmental reports. The cost of such Phase I Environmental Assessment and any such additional environmental testing, as well as the cost of any remedial, corrective or other further action contemplated by clause (i) and/or clause (ii) above of the first paragraph of Section 3.09(c), shall be paid out of the Collection Account (subject to, if it relates to one or more Mortgage Loans in a Serviced Loan Combination, the proviso at the end of the first paragraph (that is, the initial paragraph that includes the enumerated clauses (i) through (xxiii) of Section 3.05(a)(I)). (d) If neither of the conditions set forth in clauses (i) and (ii) of the first paragraph of Section 3.09(c) has been satisfied with respect to any Mortgaged Property securing a defaulted Serviced Mortgage Loan (or, if applicable, a Serviced Loan Combination), the applicable Special Servicer shall take such action as is in accordance with the Servicing Standard (other than proceeding against the Mortgaged Property) and, at such time as it deems appropriate, may, on behalf of the Trust and, if applicable, any related Serviced Pari Passu Companion Loan Holder(s), release all or a portion of such Mortgaged Property from the lien of the related Mortgage; provided that both (i) if such Serviced Mortgage Loan has a then-outstanding principal balance greater than $1,000,000, then prior to the release of all or a portion of the related Mortgaged Property from the lien of the related Mortgage, the applicable Special Servicer shall have notified the Rating Agencies (subject to Section 3.27), the Subordinate Class Representative, the Majority Subordinate Certificateholder, the Trustee, the Certificate Administrator and the applicable Master Servicer, in writing of its intention to so release all or a portion of such Mortgaged Property and the basis for the determination that such intention, in the applicable Special Servicer’s good faith judgment, was consistent with the Servicing Standard and (ii) if any Serviced Loan Combination is involved, the holders of the related Serviced Pari Passu Companion Loan or their representatives shall have the rights, if any, in respect thereof that are enumerated in the related Intercreditor Agreement. (e) The applicable Special Servicer shall report to the Trustee, the applicable Master Servicer, the Majority Subordinate Certificateholder, the Trust Advisor (during any Collective Consultation Period and any Senior Consultation Period), the Subordinate Class Representative (during any Subordinate Control Period and any Collective Consultation Period), and, in case of a Mortgaged Property securing a Serviced Loan Combination, the related Serviced Pari Passu Companion Loan Holder(s), monthly in writing as to any actions taken by the applicable Special Servicer with respect to any Mortgaged Property as to which neither of the conditions set forth in clauses (i) and (ii) of the first paragraph of Section 3.09(c) has been satisfied, in each case until the earliest to occur of satisfaction of either of such conditions, release of the lien of the related Mortgage on such Mortgaged Property and the related Mortgage Loan’s (or in the case of a Serviced Loan Combination, each of the related Mortgage Loan and any related Serviced Pari Passu Companion Loan) becoming a Corrected Mortgage Loan. (f) The applicable Special Servicer shall have the right to determine, in accordance with the Servicing Standard, with respect to any Specially Serviced Mortgage Loan, to the ~~advisability of seeking to obtain a deficiency judgment if the state in which the related Mortgaged Property is located and the terms~~ date of the ~~subject Mortgage Loan permit~~ Final Recovery Determination, or to the Due Date prior to the Distribution Date on which such ~~an action~~ amounts are to be distributed if not in connection with a Final Recovery Determination; and ~~shall~~fourth, ~~in accordance with the Servicing Standard, seek such deficiency judgment if it deems advisable. The applicable Master Servicer, at the direction~~ as a recovery of principal of the applicable Special Servicer, shall make a Servicing Advance for the costs incurred in pursuing any such deficiency action, provided that the applicable Master Servicer shall not be obligated in connection therewith to advance any funds, which if so advanced would constitute a Nonrecoverable Advance. (g) Annually in each January, each Master Servicer shall, with the reasonable cooperation of the applicable Special Servicer, prepare and file with the IRS on a timely basis the information returns with respect to the reports of foreclosures and abandonments and reports relating to any cancellation of indebtedness income with respect to any Serviced Mortgage Loan~~, or Mortgaged Property securing a Serviced Mortgage Loan and any Serviced Loan Combination, required by Sections 6050H (as applicable), 6050J and 6050P~~ . The portion of the ~~Code. Contemporaneously therewith, the applicable Master Servicer~~ recovery so allocated to any unpaid Option One Servicing Fee shall ~~deliver a copy of such information returns~~ be reimbursed to the ~~applicable Special~~ Servicer ~~and the Trustee. (h) As soon as the applicable Special~~ or any Sub-Servicer makes a Final Recovery Determination (during any Subordinate Control Period and any Collective Consultation Period, such determination to be made in consultation with the Subordinate Class Representative and the related calculations to be subject to the approval of such Subordinate Class Representative) with respect to any Mortgage Loan, Serviced Loan Combination or REO Property, it shall promptly notify the Certificate Administrator, the Trustee, the Rating Agencies (subject pursuant to Section 3.27), the applicable Master Servicer (unless it is the one making the determination), the Trust Advisor (during any Collective Consultation Period and any Senior Consultation Period) and the Subordinate Class Representative (during any Subordinate Control Period and any Collective Consultation Period). The applicable Special Servicer shall maintain accurate records, prepared by a Servicing Officer, of each such Final Recovery Determination (if any) made by it and the basis thereof. Each such Final Recovery Determination (if any) shall be evidenced by an Officer’s Certificate delivered to the Certificate Administrator, the Trustee, the applicable Master Servicer (unless it is the one making the determination), the Trust Advisor (during any Collective Consultation Period and any Senior Consultation Period) and the Subordinate Class Representative (during any Subordinate Control Period and any Collective Consultation Period) no later than ten (10) Business Days following such Final Recovery Determination3.04. (i) Notwithstanding anything the contrary, to the extent that the applicable Special Servicer acquires a Mortgaged Property that is a hospitality property on behalf of the Trust and such hospitality property has a franchise or licensing agreement that requires a successor or replacement franchisee or licensee to have a specified net worth, the applicable Special Servicer shall, to the extent consistent with the Servicing Standard, take all actions reasonably necessary to permit the Mortgaged Property to maintain its franchise or license with the same franchisor or licensor in place prior to such foreclosure.

Appears in 2 contracts

Samples: Servicing Agreement (Structured Asset Securities Corp Mor Pas THR Cer Sr 2001-Bc4), Servicing Agreement (Structured Asset Securities Corp Mor Pas THR Cer Se 2001-Bc5)

Realization Upon Defaulted Serviced Mortgage Loans. (a) The applicable Special Servicer shall, subject to Sections 3.09(b), 3.09(c), 3.09(d), Section 3.24, Section 3.26 and/or Section 3.28, as applicable, exercise reasonable efforts, consistent with the Servicing Standard, to foreclose upon or otherwise comparably convert the ownership of the real property and other collateral securing any Serviced Mortgage Loan or Serviced Loan Combination that comes into and continues in default and as to which no satisfactory arrangements can be made for collection of delinquent payments, including pursuant to Section 3.20. In connection with the foregoing, in the event of a default under any Serviced Mortgage Loan, Serviced Loan Combination or Cross-Collateralized Group that is secured by real properties located in multiple states, and such states include California or another state with a statute, rule or regulation comparable to California’s “one action rule”, then the applicable Special Servicer shall consult Independent counsel regarding the order and manner in which the applicable Special Servicer should foreclose upon or comparably proceed against such properties. The applicable Special Servicer may direct the applicable Master Servicer to advance, as contemplated by Section 3.19(b), all costs and expenses (including attorneys’ fees and litigation costs and expenses) to be incurred on behalf of the Trust in any such proceedings or such consultation, subject to the applicable Master Servicer being entitled to reimbursement for any such advance as a Servicing Advance as provided in Section 3.05(a), and further subject to the applicable Special Servicer’s being entitled to pay out of the related Liquidation Proceeds, Insurance Proceeds and/or Condemnation Proceeds any Liquidation Expenses incurred in respect of any Serviced Mortgage Loan or Serviced Loan Combination, which Liquidation Expenses were outstanding at the time such proceeds are received. Nothing contained in this Section 3.09 shall be construed so as to require the applicable Special Servicer, on behalf of the Trust, to make a bid on any Mortgaged Property at a foreclosure sale or similar proceeding that is in excess of the fair market value of such property, as determined by the applicable Special Servicer taking into account the factors described in Section 3.18 and the results of any appraisal obtained pursuant to the following sentence or otherwise, all such cash bids to be made in a manner consistent with the Servicing Standard. If and when the applicable Master Servicer or the applicable Special Servicer deems it necessary in accordance with the Servicing Standard for purposes of establishing the fair market value of any Mortgaged Property securing a defaulted Serviced Mortgage Loan or Serviced Loan Combination, whether for purposes of bidding at foreclosure or otherwise, the applicable Master Servicer or the applicable Special Servicer (as the case may be) is authorized to have an Appraisal completed with respect to such property (the cost of which appraisal shall be covered by, and be reimbursable as, a Servicing Advance). The applicable Master Servicer shall not foreclose upon or otherwise comparably convert, including by taking title thereto, any real property or other collateral securing a Defaulted Mortgage Loan or Serviced Loan Combination. (b) Notwithstanding the foregoing provisions of this Section 3.09, no Mortgaged Property shall be acquired by the applicable Special Servicer on behalf of the Trust (and, in the case of a Serviced Loan Combination, the related Serviced Pari Passu Companion Loan Holder(s)) under such circumstances, in such manner or pursuant to such terms as would (i) cause such Mortgaged Property to fail to qualify as “foreclosure property” within the meaning of Section 860G(a)(8) of the Code (unless the portion of such REO Property that is not treated as “foreclosure property” and that is held by any REMIC Pool at any given time constitutes not more than a de minimis amount of the assets of such REMIC Pool within the meaning of Treasury Regulations Section 1.860D-1(b)(3)(i) and (ii)), or (ii) except as permitted by Section 3.17(a), subject the Trust to the imposition of any federal income or prohibited transaction taxes under the Code. Subject to the foregoing, however, a Mortgaged Property may be acquired through a single-member limited liability company. In addition, except as permitted under Section 3.17(a), the applicable Special Servicer shall not acquire any personal property on behalf of the Trust (and, in the case of a Serviced Loan Combination, the related Serviced Pari Passu Companion Loan Holder(s) pursuant to this Section 3.09 unless either: (i) such personal property is incident to real property (within the meaning of Section 856(e)(1) of the Code) so acquired by the applicable Special Servicer; or (ii) the applicable Special Servicer shall have obtained an Opinion of Counsel (the cost of which shall be covered by, and reimbursable as, a Servicing Advance) to the effect that the holding of such personal property as part of the Trust Fund will not result in an Adverse REMIC Event with respect to any REMIC Pool or an Adverse Grantor Trust Event with respect to the Grantor Trust Pool. (c) Notwithstanding the foregoing provisions of this Section 3.09, the applicable Special Servicer shall not, on behalf of the Trust (and, in the case of a Serviced Loan Combination, the related Serviced Pari Passu Companion Loan Holder(s)), have a receiver of rents appointed with respect to a Mortgaged Property, or obtain title to a Mortgaged Property by foreclosure, deed in lieu of foreclosure or otherwise, or take any other action with respect to any Mortgaged Property, if, as a result of any such action, the Trustee, on behalf of the Certificateholders, could, in the reasonable judgment of the applicable Special Servicer, exercised in accordance with the Servicing Standard, be considered to hold title to, to be a “mortgagee-in-possession” of, or to be an “owner” or “operator” of such Mortgaged Property within the meaning of CERCLA or any comparable law, unless: (i) the applicable Special Servicer has previously determined in accordance with the Servicing Standard, based on a Phase I Environmental Assessment (and any additional environmental testing that the applicable Special Servicer deems necessary and prudent) of such Mortgaged Property conducted by an Independent Person who regularly conducts Phase I Environmental Assessments and performed during the nine-month period preceding any such acquisition of title or other action, that such Mortgaged Property is in compliance with applicable environmental laws and regulations and there are no circumstances or conditions present at the Mortgaged Property relating to the use, management or disposal of Hazardous Materials for which investigation, testing, monitoring, containment, clean-up or remediation could be required under any applicable environmental laws and regulations; or (ii) if the determination described in clause (c)(i) above cannot be made, the applicable Special Servicer has previously determined in accordance with the Servicing Standard, on the same basis as described in clause (c)(i) above, and taking into account the coverage provided under the related Environmental Insurance Policy, that it would maximize the recovery to the Certificateholders and, in the case of a Mortgaged Property securing a Serviced Loan Combination, to the related Serviced Pari Passu Companion Loan Holder(s) (as a collective whole) on a present value basis (the relevant discounting of anticipated collections that will be distributable to Certificateholders and, in the case of a Mortgaged Property securing a Serviced Loan Combination, to the related Serviced Pari Passu Companion Loan Holder(s), to be performed at the related Net Mortgage Rate (or (x) in the case of an ARD Mortgage Loan after its Anticipated Repayment Date, at the related Net Mortgage Rate immediately prior to the Anticipated Repayment Date, or (y) in the case of a Serviced Loan Combination, at the weighted average of the Net Mortgage Rates for the related notes)), to be performed at the related Net Mortgage Rate) to acquire title to or possession of the Mortgaged Property and to take such remedial, corrective and/or other further actions as are necessary to bring the Mortgaged Property into compliance with applicable environmental laws and regulations and to appropriately address any of the circumstances and conditions referred to in clause (c)(i) above. Any such determination by the applicable Special Servicer contemplated by clause (i) or clause (ii) of the preceding paragraph shall be evidenced by an Officer’s Certificate to such effect delivered to the Trustee, the applicable Master Servicer, the Subordinate Class Representative and the Majority Subordinate Certificateholder (and, in the case of a Mortgaged Property securing a Serviced Loan Combination, to the related Serviced Pari Passu Companion Loan Holder(s)), specifying all of the bases for such determination, such Officer’s Certificate to be accompanied by all related environmental reports. The cost of such Phase I Environmental Assessment and any such additional environmental testing, as well as the cost of any remedial, corrective or other further action contemplated by clause (i) and/or clause (ii) above of the first paragraph of Section 3.09(c), shall be paid out of the Collection Account (subject to, if it relates to one or more Mortgage Loans in a Serviced Loan Combination, the proviso at the end of the first paragraph (that is, the initial paragraph that includes the enumerated clauses (i) through (xxiii) of Section 3.05(a)(I)). (d) If neither of the conditions set forth in clauses (i) and (ii) of the first paragraph of Section 3.09(c) has been satisfied with respect to any Mortgaged Property securing a defaulted Serviced Mortgage Loan (or, if applicable, a Serviced Loan Combination), the applicable Special Servicer shall take such action as is in accordance with the Servicing Standard (other than proceeding against the Mortgaged Property) and, at such time as it deems appropriate, may, on behalf of the Trust and, if applicable, any related Serviced Pari Passu Companion Loan Holder(s), release all or a portion of such Mortgaged Property from the lien of the related Mortgage; provided that both (i) if such Serviced Mortgage Loan has a then-outstanding principal balance greater than $~~1,000,000~~1 million, then prior to the release of all or a portion of the related Mortgaged Property from the lien of the related Mortgage, the applicable Special Servicer shall have notified the Rating Agencies (subject to Section 3.27), the Subordinate Class Representative, the Majority Subordinate Certificateholder, the Trustee, the Certificate Administrator and the applicable Master Servicer, in writing of its intention to so release all or a portion of such Mortgaged Property and the basis for the determination that such intention, in the applicable Special Servicer’s good faith judgment, was consistent with the Servicing Standard and (ii) if any Serviced Loan Combination is involved, the holders of the related Serviced Pari Passu Companion Loan or their representatives shall have the rights, if any, in respect thereof that are enumerated in the related Intercreditor Agreement. (e) The applicable Special Servicer shall report to the Trustee, the applicable Master Servicer, the Majority Subordinate Certificateholder, the Trust Advisor (during any Collective Consultation Period and any Senior Consultation Period), the Subordinate Class Representative (during any Subordinate Control Period and any Collective Consultation Period), and, in case of a Mortgaged Property securing a Serviced Loan Combination, the related Serviced Pari Passu Companion Loan Holder(s), monthly in writing as to any actions taken by the applicable Special Servicer with respect to any Mortgaged Property as to which neither of the conditions set forth in clauses (i) and (ii) of the first paragraph of Section 3.09(c) has been satisfied, in each case until the earliest to occur of satisfaction of either of such conditions, release of the lien of the related Mortgage on such Mortgaged Property and the related Mortgage Loan’s (or in the case of a Serviced Loan Combination, each of the related Mortgage Loan and any related Serviced Pari Passu Companion Loan) becoming a Corrected Mortgage Loan. (f) The applicable Special Servicer shall have the right to determine, in accordance with the Servicing Standard, with respect to any Specially Serviced Mortgage Loan, the advisability of seeking to obtain a deficiency judgment if the state in which the related Mortgaged Property is located and the terms of the subject Mortgage Loan permit such an action and shall, in accordance with the Servicing Standard, seek such deficiency judgment if it deems advisable. The applicable Master Servicer, at the direction of the applicable Special Servicer, shall make a Servicing Advance for the costs incurred in pursuing any such deficiency action, provided that the applicable Master Servicer shall not be obligated in connection therewith to advance any funds, which if so advanced would constitute a Nonrecoverable Advance. (g) Annually in each January, each Master Servicer shall, with the reasonable cooperation of the applicable Special Servicer, prepare and file with the IRS on a timely basis the information returns with respect to the reports of foreclosures and abandonments and reports relating to any cancellation of indebtedness income with respect to any Serviced Mortgage Loan, or Mortgaged Property securing a Serviced Mortgage Loan and any Serviced Loan Combination, required by Sections 6050H (as applicable), 6050J and 6050P of the Code. Contemporaneously therewith, the applicable Master Servicer shall deliver a copy of such information returns to the applicable Special Servicer and the Trustee. (h) As soon as the applicable Special Servicer makes a Final Recovery Determination (during any Subordinate Control Period and any Collective Consultation Period, such determination to be made in consultation with the Subordinate Class Representative and the related calculations to be subject to the approval of such Subordinate Class Representative) with respect to any Mortgage Loan, Serviced Loan Combination or REO Property, it shall promptly notify the Certificate Administrator, the Trustee, the Rating Agencies (subject to Section 3.27), the applicable Master Servicer (unless it is the one making the determination), the Trust Advisor (during any Collective Consultation Period and any Senior Consultation Period) and the Subordinate Class Representative (during any Subordinate Control Period and any Collective Consultation Period). The applicable Special Servicer shall maintain accurate records, prepared by a Servicing Officer, of each such Final Recovery Determination (if any) made by it and the basis thereof. Each such Final Recovery Determination (if any) shall be evidenced by an Officer’s Certificate delivered to the Certificate Administrator, the Trustee, the applicable Master Servicer (unless it is the one making the determination), the Trust Advisor (during any Collective Consultation Period and any Senior Consultation Period) and the Subordinate Class Representative (during any Subordinate Control Period and any Collective Consultation Period) no later than ten (10) Business Days following such Final Recovery Determination. (i) Notwithstanding anything the contrary, to the extent that the applicable Special Servicer acquires a Mortgaged Property that is a hospitality property on behalf of the Trust and such hospitality property has a franchise or licensing agreement that requires a successor or replacement franchisee or licensee to have a specified net worth, the applicable Special Servicer shall, to the extent consistent with the Servicing Standard, take all actions reasonably necessary to permit the Mortgaged Property to maintain its franchise or license with the same franchisor or licensor in place prior to such foreclosure.

Appears in 2 contracts

Samples: Pooling and Servicing Agreement (Wells Fargo Commercial Mortgage Trust 2014-Lc16), Pooling and Servicing Agreement (WFRBS Commercial Mortgage Trust 2014-C20)

Realization Upon Defaulted Serviced Mortgage Loans. (a) The ~~applicable~~ Special Servicer shall, subject to Sections 3.09(b), 3.09(c), 3.09(d), Section 3.24, Section 3.26 and/or Section 3.28, as applicable, exercise reasonable efforts, consistent with the Servicing Standard, to foreclose upon or otherwise comparably convert the ownership of the real property and other collateral securing any Serviced Mortgage Loan or Serviced Loan Combination that comes into and continues in default and as to which no satisfactory arrangements can be made for collection of delinquent payments, including pursuant to Section 3.20. In connection with the foregoing, in the event of a default under any Serviced Mortgage Loan, Serviced Loan Combination or Cross-Collateralized Group that is secured by real properties located in multiple states, and such states include California or another state with a statute, rule or regulation comparable to California’s “one action rule”, then the ~~applicable~~ Special Servicer shall consult Independent counsel regarding the order and manner in which the ~~applicable~~ Special Servicer should foreclose upon or comparably proceed against such properties. The ~~applicable~~ Special Servicer may direct the ~~applicable~~ Master Servicer to advance, as contemplated by Section 3.19(b), all costs and expenses (including attorneys’ fees and litigation costs and expenses) to be incurred on behalf of the Trust in any such proceedings or such consultation, subject to the ~~applicable~~ Master Servicer being entitled to reimbursement for any such advance as a Servicing Advance as provided in Section 3.05(a), and further subject to the ~~applicable~~ Special Servicer’s being entitled to pay out of the related Liquidation Proceeds, Insurance Proceeds and/or Condemnation Proceeds any Liquidation Expenses incurred in respect of any Serviced Mortgage Loan or Serviced Loan Combination, which Liquidation Expenses were outstanding at the time such proceeds are received. Nothing contained in this Section 3.09 shall be construed so as to require the ~~applicable~~ Special Servicer, on behalf of the Trust, to make a bid on any Mortgaged Property at a foreclosure sale or similar proceeding that is in excess of the fair market value of such property, as determined by the ~~applicable~~ Special Servicer taking into account the factors described in Section 3.18 and the results of any appraisal obtained pursuant to the following sentence or otherwise, all such cash bids to be made in a manner consistent with the Servicing Standard. If and when the ~~applicable~~ Master Servicer or the ~~applicable~~ Special Servicer deems it necessary in accordance with the Servicing Standard for purposes of establishing the fair market value of any Mortgaged Property securing a defaulted Serviced Mortgage Loan or Serviced Loan Combination, whether for purposes of bidding at foreclosure or otherwise, the ~~applicable~~ Master Servicer or the ~~applicable~~ Special Servicer (as the case may be) is authorized to have an Appraisal completed with respect to such property (the cost of which appraisal shall be covered by, and be reimbursable as, a Servicing Advance). The ~~applicable~~ Master Servicer shall not foreclose upon or otherwise comparably convert, including by taking title thereto, any real property or other collateral securing a Defaulted Mortgage Loan or Serviced Loan Combination. (b) Notwithstanding the foregoing provisions of this Section 3.09, no Mortgaged Property shall be acquired by the ~~applicable~~ Special Servicer on behalf of the Trust (and, in the case of a Serviced Loan Combination, the related Serviced Pari Passu Companion Loan Holder(s)) under such circumstances, in such manner or pursuant to such terms as would (i) cause such Mortgaged Property to fail to qualify as “foreclosure property” within the meaning of Section 860G(a)(8) of the Code (unless the portion of such REO Property that is not treated as “foreclosure property” and that is held by any REMIC Pool at any given time constitutes not more than a de minimis amount of the assets of such REMIC Pool within the meaning of Treasury Regulations Section 1.860D-1(b)(3)(i) and (ii)), or (ii) except as permitted by Section 3.17(a), subject the Trust to the imposition of any federal income or prohibited transaction taxes under the Code. Subject to the foregoing, however, a Mortgaged Property may be acquired through a single-member limited liability company. In addition, except as permitted under Section 3.17(a), the ~~applicable~~ Special Servicer shall not acquire any personal property on behalf of the Trust (and, in the case of a Serviced Loan Combination, the related Serviced Pari Passu Companion Loan Holder(s) pursuant to this Section 3.09 unless either: (i) such personal property is incident to real property (within the meaning of Section 856(e)(1) of the Code) so acquired by the ~~applicable~~ Special Servicer; or (ii) the ~~applicable~~ Special Servicer shall have obtained an Opinion of Counsel (the cost of which shall be covered by, and reimbursable as, a Servicing Advance) to the effect that the holding of such personal property as part of the Trust Fund will not result in an Adverse REMIC Event with respect to any REMIC Pool or an Adverse Grantor Trust Event with respect to the Grantor Trust Pool. (c) Notwithstanding the foregoing provisions of this Section 3.09, the ~~applicable~~ Special Servicer shall not, on behalf of the Trust (and, in the case of a Serviced Loan Combination, the related Serviced Pari Passu Companion Loan Holder(s)), have a receiver of rents appointed with respect to a Mortgaged Property, or obtain title to a Mortgaged Property by foreclosure, deed in lieu of foreclosure or otherwise, or take any other action with respect to any Mortgaged Property, if, as a result of any such action, the Trustee, on behalf of the Certificateholders, could, in the reasonable judgment of the ~~applicable~~ Special Servicer, exercised in accordance with the Servicing Standard, be considered to hold title to, to be a “mortgagee-in-possession” of, or to be an “owner” or “operator” of such Mortgaged Property within the meaning of CERCLA or any comparable law, unless: (i) the ~~applicable~~ Special Servicer has previously determined in accordance with the Servicing Standard, based on a Phase I Environmental Assessment (and any additional environmental testing that the ~~applicable~~ Special Servicer deems necessary and prudent) of such Mortgaged Property conducted by an Independent Person who regularly conducts Phase I Environmental Assessments and performed during the nine-month period preceding any such acquisition of title or other action, that such Mortgaged Property is in compliance with applicable environmental laws and regulations and there are no circumstances or conditions present at the Mortgaged Property relating to the use, management or disposal of Hazardous Materials for which investigation, testing, monitoring, containment, clean-up or remediation could be required under any applicable environmental laws and regulations; or (ii) if the determination described in clause (c)(i) above cannot be made, the ~~applicable~~ Special Servicer has previously determined in accordance with the Servicing Standard, on the same basis as described in clause (c)(i) above, and taking into account the coverage provided under the related Environmental Insurance Policy, that it would maximize the recovery to the Certificateholders and, in the case of a Mortgaged Property securing a Serviced Loan Combination, to the related Serviced Pari Passu Companion Loan Holder(s) (as a collective whole) on a present value basis (the relevant discounting of anticipated collections that will be distributable to Certificateholders and, in the case of a Mortgaged Property securing a Serviced Loan Combination, to the related Serviced Pari Passu Companion Loan Holder(s), to be performed at the related Net Mortgage Rate (or (x) in the case of an ARD Mortgage Loan after its Anticipated Repayment Date, at the related Net Mortgage Rate immediately prior to the Anticipated Repayment Date, or (y) in the case of a Serviced Loan Combination, at the weighted average of the Net Mortgage Rates for the related notes)), to be performed at the related Net Mortgage Rate) to acquire title to or possession of the Mortgaged Property and to take such remedial, corrective and/or other further actions as are necessary to bring the Mortgaged Property into compliance with applicable environmental laws and regulations and to appropriately address any of the circumstances and conditions referred to in clause (c)(i) above. Any such determination by the ~~applicable~~ Special Servicer contemplated by clause (i) or clause (ii) of the preceding paragraph shall be evidenced by an Officer’s Certificate to such effect delivered to the Trustee, the ~~applicable~~ Master Servicer, the Subordinate Class Representative and the Majority Subordinate Certificateholder (and, in the case of a Mortgaged Property securing a Serviced Loan Combination, to the related Serviced Pari Passu Companion Loan Holder(s)), specifying all of the bases for such determination, such Officer’s Certificate to be accompanied by all related environmental reports. The cost of such Phase I Environmental Assessment and any such additional environmental testing, as well as the cost of any remedial, corrective or other further action contemplated by clause (i) and/or clause (ii) above of the first paragraph of Section 3.09(c), shall be paid out of the Collection Account (subject to, if it relates to one or more Mortgage Loans in a Serviced Loan Combination, the proviso at the end of the first paragraph (that is, the initial paragraph that includes the enumerated clauses (i) through (xxiii) of Section 3.05(a)(I)). (d) If neither of the conditions set forth in clauses (i) and (ii) of the first paragraph of Section 3.09(c) has been satisfied with respect to any Mortgaged Property securing a defaulted Serviced Mortgage Loan (or, if applicable, a Serviced Loan Combination), the ~~applicable~~ Special Servicer shall take such action as is in accordance with the Servicing Standard (other than proceeding against the Mortgaged Property) and, at such time as it deems appropriate, may, on behalf of the Trust and, if applicable, any related Serviced Pari Passu Companion Loan Holder(s), release all or a portion of such Mortgaged Property from the lien of the related Mortgage; provided that both (i) if such Serviced Mortgage Loan has a then-outstanding principal balance greater than $~~1,000,000~~1 million, then prior to the release of all or a portion of the related Mortgaged Property from the lien of the related Mortgage, the ~~applicable~~ Special Servicer shall have notified the Rating Agencies (subject to Section 3.27), the Subordinate Class Representative, the Majority Subordinate Certificateholder, the Trustee, the Certificate Administrator and the ~~applicable~~ Master Servicer, in writing of its intention to so release all or a portion of such Mortgaged Property and the basis for the determination that such intention, in the ~~applicable~~ Special Servicer’s good faith judgment, was consistent with the Servicing Standard and (ii) if any Serviced Loan Combination is involved, the holders of the related Serviced Pari Passu Companion Loan or their representatives shall have the rights, if any, in respect thereof that are enumerated in the related Intercreditor Agreement. (e) The ~~applicable~~ Special Servicer shall report to the Trustee, the ~~applicable~~ Master Servicer, the Majority Subordinate Certificateholder, the Trust Advisor (during any Collective Consultation Period and any Senior Consultation Period), the Subordinate Class Representative (during any Subordinate Control Period and any Collective Consultation Period), and, in case of a Mortgaged Property securing a Serviced Loan Combination, the related Serviced Pari Passu Companion Loan Holder(s), monthly in writing as to any actions taken by the ~~applicable~~ Special Servicer with respect to any Mortgaged Property as to which neither of the conditions set forth in clauses (i) and (ii) of the first paragraph of Section 3.09(c) has been satisfied, in each case until the earliest to occur of satisfaction of either of such conditions, release of the lien of the related Mortgage on such Mortgaged Property and the related Mortgage Loan’s (or in the case of a Serviced Loan Combination, each of the related Mortgage Loan and any related Serviced Pari Passu Companion Loan) becoming a Corrected Mortgage Loan. (f) The ~~applicable~~ Special Servicer shall have the right to determine, in accordance with the Servicing Standard, with respect to any Specially Serviced Mortgage Loan, the advisability of seeking to obtain a deficiency judgment if the state in which the related Mortgaged Property is located and the terms of the subject Mortgage Loan permit such an action and shall, in accordance with the Servicing Standard, seek such deficiency judgment if it deems advisable. The ~~applicable~~ Master Servicer, at the direction of the ~~applicable~~ Special Servicer, shall make a Servicing Advance for the costs incurred in pursuing any such deficiency action, provided that the ~~applicable~~ Master Servicer shall not be obligated in connection therewith to advance any funds, which if so advanced would constitute a Nonrecoverable Advance. (g) Annually in each January, ~~each~~ the Master Servicer shall, with the reasonable cooperation of the ~~applicable~~ Special Servicer, prepare and file with the IRS on a timely basis the information returns with respect to the reports of foreclosures and abandonments and reports relating to any cancellation of indebtedness income with respect to any Serviced Mortgage Loan, or Mortgaged Property securing a Serviced Mortgage Loan and any Serviced Loan Combination, required by Sections 6050H (as applicable), 6050J and 6050P of the Code. Contemporaneously therewith, the ~~applicable~~ Master Servicer shall deliver a copy of such information returns to the ~~applicable~~ Special Servicer and the Trustee. (h) As soon as the ~~applicable~~ Special Servicer makes a Final Recovery Determination (during any Subordinate Control Period and any Collective Consultation Period, such determination to be made in consultation with the Subordinate Class Representative and the related calculations to be subject to the approval of such Subordinate Class Representative) with respect to any Mortgage Loan, Serviced Loan Combination or REO Property, it shall promptly notify the Certificate Administrator, the Trustee, the Rating Agencies (subject to Section 3.27), the ~~applicable~~ Master Servicer (unless it is the one making the determination), the Trust Advisor (during any Collective Consultation Period and any Senior Consultation Period) and the Subordinate Class Representative (during any Subordinate Control Period and any Collective Consultation Period). The ~~applicable~~ Special Servicer shall maintain accurate records, prepared by a Servicing Officer, of each such Final Recovery Determination (if any) made by it and the basis thereof. Each such Final Recovery Determination (if any) shall be evidenced by an Officer’s Certificate delivered to the Certificate Administrator, the Trustee, the ~~applicable~~ Master Servicer (unless it is the one making the determination), the Trust Advisor (during any Collective Consultation Period and any Senior Consultation Period) and the Subordinate Class Representative (during any Subordinate Control Period and any Collective Consultation Period) no later than ten (10) Business Days following such Final Recovery Determination. (i) Notwithstanding anything the contrary, to the extent that the ~~applicable~~ Special Servicer acquires a Mortgaged Property that is a hospitality property on behalf of the Trust and such hospitality property has a franchise or licensing agreement that requires a successor or replacement franchisee or licensee to have a specified net worth, the ~~applicable~~ Special Servicer shall, to the extent consistent with the Servicing Standard, take all actions reasonably necessary to permit the Mortgaged Property to maintain its franchise or license with the same franchisor or licensor in place prior to such foreclosure.

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)

Realization Upon Defaulted Serviced Mortgage Loans. (a) The applicable Special Servicer shall, subject to Sections 3.09(b), 3.09(c), 3.09(d), Section 3.24, Section 3.26 and/or Section 3.28, as applicable, exercise reasonable efforts, consistent with the Servicing Standard, to foreclose upon or otherwise comparably convert the ownership of the real property and other collateral securing any Serviced Mortgage Loan or Serviced Loan Combination that comes into and continues in default and as to which no satisfactory arrangements can be made for collection of delinquent payments, including pursuant to Section 3.20. In connection with the foregoing, in the event of a default under any Serviced Mortgage Loan, Serviced Loan Combination or Cross-Collateralized Group that is secured by real properties located in multiple states, and such states include California or another state with a statute, rule or regulation comparable to California’s “one action rule”, then the applicable Special Servicer shall consult Independent counsel regarding the order and manner in which the applicable Special Servicer should foreclose upon or comparably proceed against such properties. The applicable Special Servicer may direct the applicable Master Servicer to advance, as contemplated by Section 3.19(b), all costs and expenses (including attorneys’ fees and litigation costs and expenses) to be incurred on behalf of the Trust in any such proceedings or such consultation, subject to the applicable Master Servicer being entitled to reimbursement for any such advance as a Servicing Advance as provided in Section 3.05(a), and further subject to the applicable Special Servicer’s being entitled to pay out of the related Liquidation Proceeds, Insurance Proceeds and/or Condemnation Proceeds any Liquidation Expenses incurred in respect of any Serviced Mortgage Loan or Serviced Loan Combination, which Liquidation Expenses were outstanding at the time such proceeds are received. Nothing contained in this Section 3.09 shall be construed so as to require the applicable Special Servicer, on behalf of the Trust, to make a bid on any Mortgaged Property at a foreclosure sale or similar proceeding that is in excess of the fair market value of such property, as determined by the applicable Special Servicer taking into account the factors described in Section 3.18 and the results of any appraisal obtained pursuant to the following sentence or otherwise, all such cash bids to be made in a manner consistent with the Servicing Standard. If and when the applicable Master Servicer or the applicable Special Servicer deems it necessary in accordance with the Servicing Standard for purposes of establishing the fair market value of any Mortgaged Property securing a defaulted Serviced Mortgage Loan or Serviced Loan Combination, whether for purposes of bidding at foreclosure or otherwise, the applicable Master Servicer or the applicable Special Servicer (as the case may be) is authorized to have an Appraisal completed with respect to such property (the cost of which appraisal shall be covered by, and be reimbursable as, a Servicing Advance). The applicable Master Servicer shall not foreclose upon or otherwise comparably convert, including by taking title thereto, any real property or other collateral securing a Defaulted Mortgage Loan or Serviced Loan Combination. (b) Notwithstanding the foregoing provisions of this Section 3.09, no Mortgaged Property shall be acquired by the applicable Special Servicer on behalf of the Trust (and, in the case of a Serviced Loan Combination, the related Serviced Pari Passu Companion Loan Holder(s)) under such circumstances, in such manner or pursuant to such terms as ~~would~~ would (i) cause such Mortgaged Property to fail to qualify as “foreclosure property” within the meaning of Section 860G(a)(8) of the Code (unless the portion of such REO Property that is not treated as “foreclosure property” and that is held by any REMIC Pool at any given time constitutes not more than a de minimis amount of the assets of such REMIC Pool within the meaning of Treasury Regulations Section 1.860D-1(b)(3)(i) and (ii)), or (ii) except as permitted by Section 3.17(a), subject the Trust to the imposition of any federal income or prohibited transaction taxes under the Code. Subject to the foregoing, however, a Mortgaged Property may be acquired through a ~~single-~~single member limited liability company. In addition, except as permitted under Section 3.17(a), the applicable Special Servicer shall not acquire any personal property on behalf of the Trust (and, in the case of a Serviced Loan Combination, the related Serviced Pari Passu Companion Loan Holder(s) pursuant to this Section 3.09 unless either: (i) such personal property is incident to real property (within the meaning of Section 856(e)(1) of the Code) so acquired by the applicable Special Servicer; or (ii) the applicable Special Servicer shall have obtained an Opinion of Counsel (the cost of which shall be covered by, and reimbursable as, a Servicing Advance) to the effect that the holding of such personal property as part of the Trust Fund will not result in an Adverse REMIC Event with respect to any REMIC Pool or an Adverse Grantor Trust Event with respect to the Grantor Trust Pool. (c) Notwithstanding the foregoing provisions of this Section 3.09, the applicable Special Servicer shall not, on behalf of the Trust (and, in the case of a Serviced Loan Combination, the related Serviced Pari Passu Companion Loan Holder(s)), have a receiver of rents appointed with respect to a Mortgaged Property, or obtain title to a Mortgaged Property by foreclosure, deed in lieu of foreclosure or otherwise, or take any other action with respect to any Mortgaged Property, if, as a result of any such action, the Trustee, on behalf of the Certificateholders, could, in the reasonable judgment of the applicable Special Servicer, exercised in accordance with the Servicing Standard, be considered to hold title to, to be a “mortgagee-in-possession” of, or to be an “owner” or “operator” of such Mortgaged Property within the meaning of CERCLA or any comparable law, unless: (i) the applicable Special Servicer has previously determined in accordance with the Servicing Standard, based on a Phase I Environmental Assessment (and any additional environmental testing that the applicable Special Servicer deems necessary and prudent) of such Mortgaged Property conducted by an Independent Person who regularly conducts Phase I Environmental Assessments and performed during the nine-month period preceding any such acquisition of title or other action, that such Mortgaged Property is in compliance with applicable environmental laws and regulations and there are no circumstances or conditions present at the Mortgaged Property relating to the use, management or disposal of Hazardous Materials for which investigation, testing, monitoring, containment, clean-up or remediation could be required under any applicable environmental laws and regulations; or (ii) if the determination described in clause (c)(i) above cannot be made, the applicable Special Servicer has previously determined in accordance with the Servicing Standard, on the same basis as described in clause (c)(i) above, and taking into account the coverage provided under the related Environmental Insurance Policy, that it would maximize the recovery to the Certificateholders and, in the case of a Mortgaged Property securing a Serviced Loan Combination, to the related Serviced Pari Passu Companion Loan Holder(s) (as a collective whole) on a present value basis (the relevant discounting of anticipated collections that will be distributable to Certificateholders and, in the case of a Mortgaged Property securing a Serviced Loan Combination, to the related Serviced Pari Passu Companion Loan Holder(s), to be performed at the related Net Mortgage Rate (or (x) in the case of an ARD Mortgage Loan after its Anticipated Repayment Date, at the related Net Mortgage Rate immediately prior to the Anticipated Repayment Date, or (y) in the case of a Serviced Loan Combination, at the weighted average of the Net Mortgage Rates for the related notes)), to be performed at the related Net Mortgage Rate) to acquire title to or possession of the Mortgaged Property and to take such remedial, corrective and/or other further actions as are necessary to bring the Mortgaged Property into compliance with applicable environmental laws and regulations and to appropriately address any of the circumstances and conditions referred to in clause (c)(i) above. Any such determination by the applicable Special Servicer contemplated by clause (i) or clause (ii) of the preceding paragraph shall be evidenced by an Officer’s Certificate to such effect delivered to the Trustee, the applicable Master Servicer, the Subordinate Class Representative and the Majority Subordinate Certificateholder (and, in the case of a Mortgaged Property securing a Serviced Loan Combination, to the related Serviced Pari Passu Companion Loan Holder(s)), specifying all of the bases for such determination, such Officer’s Certificate to be accompanied by all related environmental reports. The cost of such Phase I Environmental Assessment and any such additional environmental testing, as well as the cost of any remedial, corrective or other further action contemplated by clause (i) and/or clause (ii) ~~above~~ of the ~~first paragraph of Section 3.09(c)~~preceding paragraph, shall be paid out of the Collection Account (subject to, if it relates to one or more Mortgage Loans in a Serviced Loan Combination, the proviso at the end of the first paragraph (that is, the initial paragraph that includes the enumerated clauses (i) through (~~xxiii~~xxii) of subsection (I) of Section ~~3.05(a)(I~~3.05(a)). (d) If neither of the conditions set forth in clauses (i) and (ii) of the first paragraph of Section 3.09(c) has been satisfied with respect to any Mortgaged Property securing a defaulted Serviced Mortgage Loan (or, if applicable, a Serviced Loan Combination), the applicable Special Servicer shall take such action as is in accordance with the Servicing Standard (other than proceeding against the Mortgaged Property) and, at such time as it deems appropriate, may, on behalf of the Trust and, if applicable, ~~any~~ the related Serviced Pari Passu Companion Loan Holder(s), release all or a portion of such Mortgaged Property from the lien of the related Mortgage; provided that both (i) if such Serviced Mortgage Loan has a ~~then-~~then outstanding principal balance greater than $~~1,000,000~~1 million, then prior to the release of all or a portion of the related Mortgaged Property from the lien of the related Mortgage, the applicable Special Servicer shall have notified the Rating Agencies (subject to Section 3.27), the Subordinate Class Representative, the Majority Subordinate Certificateholder, the Trustee, the Certificate Administrator and the applicable Master Servicer, in writing of its intention to so release all or a portion of such Mortgaged Property and the basis for the determination that such intention, in the applicable Special Servicer’s good faith judgment, was consistent with the Servicing Standard and (ii) if ~~any~~ the Serviced Loan Combination is involved, the holders of the related Serviced Pari Passu Companion Loan or their representatives shall have the rights, if any, in respect thereof that are enumerated in the related Intercreditor Agreement. (e) The applicable Special Servicer shall report to the Trustee, the applicable Master Servicer, the Majority Subordinate Certificateholder, the Trust Advisor (during any Collective Consultation Period and any Senior Consultation Period), the Subordinate Class Representative (during any Subordinate Control Period and any Collective Consultation Period), and, in case of a Mortgaged Property securing a Serviced Loan Combination, the related Serviced Pari Passu Companion Loan Holder(s), monthly in writing as to any actions taken by the applicable Special Servicer with respect to any Mortgaged Property as to which neither of the conditions set forth in clauses (i) and (ii) of the first paragraph of Section 3.09(c) has been satisfied, in each case until the earliest to occur of satisfaction of either of such conditions, release of the lien of the related Mortgage on such Mortgaged Property and the related Mortgage Loan’s (or in the case of a Serviced Loan Combination, each of the related Mortgage Loan and ~~any related~~ Serviced Pari Passu Companion Loan) becoming a Corrected Mortgage Loan. (f) The applicable Special Servicer shall have the right to determine, in accordance with the Servicing Standard, with respect to any Specially Serviced Mortgage Loan, the advisability of seeking to obtain a deficiency judgment if the state in which the related Mortgaged Property is located and the terms of the subject Mortgage Loan permit such an action and shall, in accordance with the Servicing Standard, seek such deficiency judgment if it deems advisable. The applicable Master Servicer, at the direction of the applicable Special Servicer, shall make a Servicing Advance for the costs incurred in pursuing any such deficiency action, provided that the applicable Master Servicer shall not be obligated in connection therewith to advance any funds, which if so advanced would constitute a Nonrecoverable Advance. (g) Annually in each January, each Master Servicer shall, with the reasonable cooperation of the applicable Special Servicer, prepare and file with the IRS on a timely basis the information returns with respect to the reports of foreclosures and abandonments and reports relating to any cancellation of indebtedness income with respect to any Serviced Mortgage Loan, or Mortgaged Property securing a Serviced Mortgage Loan and any Serviced Loan Combination, required by Sections 6050H (as applicable), 6050J and 6050P of the Code. Contemporaneously therewith, the applicable Master Servicer shall deliver a copy of such information returns to the applicable Special Servicer and the Trustee. (h) As soon as the applicable Special Servicer makes a Final Recovery Determination (during any Subordinate Control Period and any Collective Consultation Period, such determination to be made in consultation with the Subordinate Class Representative and the related calculations to be subject to the approval of such Subordinate Class Representative) with respect to any Mortgage Loan, Serviced Loan Combination or REO Property, it shall promptly notify the Certificate Administrator, the Trustee, the Rating Agencies (subject to Section 3.27), the applicable Master Servicer (unless it is the one making the determination), the Trust Advisor (during any Collective Consultation Period and any Senior Consultation Period) and the Subordinate Class Representative (during any Subordinate Control Period and any Collective Consultation Period). The applicable Special Servicer shall maintain accurate records, prepared by a Servicing Officer, of each such Final Recovery Determination (if any) made by it and the basis thereof. Each such Final Recovery Determination (if any) shall be evidenced by an Officer’s Certificate delivered to the Certificate Administrator, the Trustee, the applicable Master Servicer (unless it is the one making the determination), the Trust Advisor (during any Collective Consultation Period and any Senior Consultation Period) and the Subordinate Class Representative (during any Subordinate Control Period and any Collective Consultation Period) no later than ten (10) Business Days following such Final Recovery Determination. (i) Notwithstanding anything the contrary, to the extent that the applicable Special Servicer acquires a Mortgaged Property that is a hospitality property on behalf of the Trust and such hospitality property has a franchise or licensing agreement that requires a successor or replacement franchisee or licensee to have a specified net worth, the applicable Special Servicer shall, to the extent consistent with the Servicing Standard, take all actions reasonably necessary to permit the Mortgaged Property to maintain its franchise or license with the same franchisor or licensor in place prior to such foreclosure.

Appears in 2 contracts

Samples: Pooling and Servicing Agreement (WFRBS Commercial Mortgage Trust 2013-C13), Pooling and Servicing Agreement (WFRBS Commercial Mortgage Trust 2013-C13)

Realization Upon Defaulted Serviced Mortgage Loans. (a) The ~~applicable~~ Special Servicer shall, subject to Sections 3.09(b), 3.09(c), 3.09(d), ~~Section 3.24, Section 3.26 and/or Section 3.28, as applicable~~3.24 and 3.27, exercise reasonable efforts, consistent with the Servicing Standard, to foreclose upon or otherwise comparably convert the ownership of the real property and other collateral securing any Serviced Mortgage Loan ~~or Serviced Loan Combination~~ that comes into and continues in default and as to which no satisfactory arrangements can be made for collection of delinquent payments, including pursuant to Section 3.20; provided that neither Master Servicer shall, with respect to any Serviced Mortgage Loan that is an ARD Mortgage Loan after its Anticipated Repayment Date, take any enforcement action with respect to the payment of Post-ARD Additional Interest (other than the making of requests for its collection), and the Special Servicer may take such enforcement action only if (i) the taking of an enforcement action with respect to the payment of other amounts due under such Mortgage Loan is, in the reasonable judgment of the Special Servicer, and without regard to such Post-ARD Additional Interest, also necessary, appropriate and consistent with the Servicing Standard or (ii) all other amounts due under such Mortgage Loan have been paid, the payment of such Post-ARD Additional Interest has not been forgiven in accordance with Section 3.20 and, in the reasonable judgment of the Special Servicer, the Liquidation Proceeds expected to be recovered in connection with such enforcement action will cover the anticipated costs of such enforcement action and, if applicable, any associated Advance Interest. In connection with the foregoing, in the event of a default under any Serviced Mortgage ~~Loan, Serviced~~ Loan ~~Combination~~ or Cross-Collateralized Group that is secured by real properties located in multiple states, and such states include California or another state with a statute, rule or regulation comparable to California~~’s “~~'s "one action rule”", then the ~~applicable~~ Special Servicer shall consult Independent counsel regarding the order and manner in which the ~~applicable~~ Special Servicer should foreclose upon or comparably proceed against such properties. The ~~applicable~~ Special Servicer may direct the applicable Master Servicer to advance, as contemplated by Section 3.19(b), all costs and expenses (including ~~attorneys’~~ attorneys fees and litigation costs and expenses) to be incurred on behalf of the Trust in any such proceedings or such consultation, subject to the applicable Master Servicer being entitled to reimbursement for any such advance as a Servicing Advance as provided in Section 3.05(a), and further subject to the ~~applicable~~ Special Servicer’s 's being entitled to pay out of the related Liquidation Proceeds, Insurance Proceeds and/or Condemnation Proceeds any Liquidation Expenses incurred in respect of any Serviced Mortgage ~~Loan or Serviced Loan Combination~~Loan, which Liquidation Expenses were outstanding at the time such proceeds are received. Nothing contained in this Section 3.09 shall be construed so as to require the ~~applicable~~ Special Servicer, on behalf of the Trust, to make a bid on any Mortgaged Property at a foreclosure sale or similar proceeding that is in excess of the fair market value of such property, as determined by the ~~applicable~~ Special Servicer taking into account the factors described in Section 3.18 and the results of any appraisal obtained pursuant to the following sentence or otherwise, all such cash bids to be made in a manner consistent with the Servicing Standard. If and when the applicable Master Servicer or the ~~applicable~~ Special Servicer deems it necessary in accordance with the Servicing Standard for purposes of establishing the fair market value of any Mortgaged Property securing a defaulted Serviced Mortgage ~~Loan or Serviced Loan Combination~~Loan, whether for purposes of bidding at foreclosure or otherwise, ~~the applicable~~ such Master Servicer or the ~~applicable~~ Special Servicer (as the case may be) is authorized to have an Appraisal completed with respect to such property (the cost of which appraisal shall be covered by, and be reimbursable as, a Servicing Advance). The applicable Master Servicer shall not foreclose upon or otherwise comparably convert, including by taking title thereto, any real property or other collateral securing a Defaulted Mortgage Loan or Serviced Loan Combination. (b) Notwithstanding the foregoing provisions of this Section 3.09, no Mortgaged Property shall be acquired by the applicable Special Servicer on behalf of the Trust (and, in the case of a Serviced Loan Combination, the related Serviced Pari Passu Companion Loan Holder(s)) under such circumstances, in such manner or pursuant to such terms as would (i) cause such Mortgaged Property to fail to qualify as “foreclosure property” within the meaning of Section 860G(a)(8) of the Code (unless the portion of such REO Property that is not treated as “foreclosure property” and that is held by any REMIC Pool at any given time constitutes not more than a de minimis amount of the assets of such REMIC Pool within the meaning of Treasury Regulations Section 1.860D-1(b)(3)(i) and (ii)), or (ii) except as permitted by Section 3.17(a), subject the Trust to the imposition of any federal income or prohibited transaction taxes under the Code. Subject to the foregoing, however, a Mortgaged Property may be acquired through a single-member limited liability company. In addition, except as permitted under Section 3.17(a), the applicable Special Servicer shall not acquire any personal property on behalf of the Trust (and, in the case of a Serviced Loan Combination, the related Serviced Pari Passu Companion Loan Holder(s) pursuant to this Section 3.09 unless either: (i) such personal property is incident to real property (within the meaning of Section 856(e)(1) of the Code) so acquired by the applicable Special Servicer; or (ii) the applicable Special Servicer shall have obtained an Opinion of Counsel (the cost of which shall be covered by, and reimbursable as, a Servicing Advance) to the effect that the holding of such personal property as part of the Trust Fund will not result in an Adverse REMIC Event with respect to any REMIC Pool or an Adverse Grantor Trust Event with respect to the Grantor Trust Pool. (c) Notwithstanding the foregoing provisions of this Section 3.09, the applicable Special Servicer shall not, on behalf of the Trust (and, in the case of a Serviced Loan Combination, the related Serviced Pari Passu Companion Loan Holder(s)), have a receiver of rents appointed with respect to a Mortgaged Property, or obtain title to a Mortgaged Property by foreclosure, deed in lieu of foreclosure or otherwise, or take any other action with respect to any Mortgaged Property, if, as a result of any such action, the Trustee, on behalf of the Certificateholders, could, in the reasonable judgment of the applicable Special Servicer, exercised in accordance with the Servicing Standard, be considered to hold title to, to be a “mortgagee-in-possession” of, or to be an “owner” or “operator” of such Mortgaged Property within the meaning of CERCLA or any comparable law, unless: (i) the applicable Special Servicer has previously determined in accordance with the Servicing Standard, based on a Phase I Environmental Assessment (and any additional environmental testing that the applicable Special Servicer deems necessary and prudent) of such Mortgaged Property conducted by an Independent Person who regularly conducts Phase I Environmental Assessments and performed during the nine-month period preceding any such acquisition of title or other action, that such Mortgaged Property is in compliance with applicable environmental laws and regulations and there are no circumstances or conditions present at the Mortgaged Property relating to the use, management or disposal of Hazardous Materials for which investigation, testing, monitoring, containment, clean-up or remediation could be required under any applicable environmental laws and regulations; or (ii) if the determination described in clause (c)(i) above cannot be made, the applicable Special Servicer has previously determined in accordance with the Servicing Standard, on the same basis as described in clause (c)(i) above, and taking into account the coverage provided under the related Environmental Insurance Policy, that it would maximize the recovery to the Certificateholders and, in the case of a Mortgaged Property securing a Serviced Loan Combination, to the related Serviced Pari Passu Companion Loan Holder(s) (as a collective whole) on a present value basis (the relevant discounting of anticipated collections that will be distributable to Certificateholders and, in the case of a Mortgaged Property securing a Serviced Loan Combination, to the related Serviced Pari Passu Companion Loan Holder(s), to be performed at the related Net Mortgage Rate (or (x) in the case of an ARD Mortgage Loan after its Anticipated Repayment Date, at the related Net Mortgage Rate immediately prior to the Anticipated Repayment Date, or (y) in the case of a Serviced Loan Combination, at the weighted average of the Net Mortgage Rates for the related notes)) to acquire title to or possession of the Mortgaged Property and to take such remedial, corrective and/or other further actions as are necessary to bring the Mortgaged Property into compliance with applicable environmental laws and regulations and to appropriately address any of the circumstances and conditions referred to in clause (c)(i) above. Any such determination by the applicable Special Servicer contemplated by clause (i) or clause (ii) of the preceding paragraph shall be evidenced by an Officer’s Certificate to such effect delivered to the Trustee, the applicable Master Servicer, the Subordinate Class Representative and the Majority Subordinate Certificateholder (and, in the case of a Mortgaged Property securing a Serviced Loan Combination, to the related Serviced Pari Passu Companion Loan Holder(s)), specifying all of the bases for such determination, such Officer’s Certificate to be accompanied by all related environmental reports. The cost of such Phase I Environmental Assessment and any such additional environmental testing, as well as the cost of any remedial, corrective or other further action contemplated by clause (i) and/or clause (ii) above of the first paragraph of Section 3.09(c), shall be paid out of the Collection Account (subject to, if it relates to one or more Mortgage Loans in a Serviced Loan Combination, the proviso at the end of the first paragraph (that is, the initial paragraph that includes the enumerated clauses (i) through (xxiii) of Section 3.05(a)(I)). (d) If neither of the conditions set forth in clauses (i) and (ii) of the first paragraph of Section 3.09(c) has been satisfied with respect to any Mortgaged Property securing a defaulted Serviced Mortgage Loan (or, if applicable, a Serviced Loan Combination), the applicable Special Servicer shall take such action as is in accordance with the Servicing Standard (other than proceeding against the Mortgaged Property) and, at such time as it deems appropriate, may, on behalf of the Trust and, if applicable, any related Serviced Pari Passu Companion Loan Holder(s), release all or a portion of such Mortgaged Property from the lien of the related Mortgage; provided that both (i) if such Serviced Mortgage Loan has a then-outstanding principal balance greater than $1,000,000, then prior to the release of all or a portion of the related Mortgaged Property from the lien of the related Mortgage, the applicable Special Servicer shall have notified the Rating Agencies (subject to Section 3.27), the Subordinate Class Representative, the Majority Subordinate Certificateholder, the Trustee, the Certificate Administrator and the applicable Master Servicer, in writing of its intention to so release all or a portion of such Mortgaged Property and the basis for the determination that such intention, in the applicable Special Servicer’s good faith judgment, was consistent with the Servicing Standard and (ii) if any Serviced Loan Combination is involved, the holders of the related Serviced Pari Passu Companion Loan or their representatives shall have the rights, if any, in respect thereof that are enumerated in the related Intercreditor Agreement. (e) The applicable Special Servicer shall report to the Trustee, the applicable Master Servicer, the Majority Subordinate Certificateholder, the Trust Advisor (during any Collective Consultation Period and any Senior Consultation Period), the Subordinate Class Representative (during any Subordinate Control Period and any Collective Consultation Period), and, in case of a Mortgaged Property securing a Serviced Loan Combination, the related Serviced Pari Passu Companion Loan Holder(s), monthly in writing as to any actions taken by the applicable Special Servicer with respect to any Mortgaged Property as to which neither of the conditions set forth in clauses (i) and (ii) of the first paragraph of Section 3.09(c) has been satisfied, in each case until the earliest to occur of satisfaction of either of such conditions, release of the lien of the related Mortgage on such Mortgaged Property and the related Mortgage Loan’s (or in the case of a Serviced Loan Combination, each of the related Mortgage Loan and any related Serviced Pari Passu Companion Loan) becoming a Corrected Mortgage Loan. (f) The applicable Special Servicer shall have the right to determine, in accordance with the Servicing Standard, with respect to any Specially Serviced Mortgage Loan, the advisability of seeking to obtain a deficiency judgment if the state in which the related Mortgaged Property is located and the terms of the subject Mortgage Loan permit such an action and shall, in accordance with the Servicing Standard, seek such deficiency judgment if it deems advisable. The applicable Master Servicer, at the direction of the applicable Special Servicer, shall make a Servicing Advance for the costs incurred in pursuing any such deficiency action, provided that the applicable Master Servicer shall not be obligated in connection therewith to advance any funds, which if so advanced would constitute a Nonrecoverable Advance. (g) Annually in each January, each Master Servicer shall, with the reasonable cooperation of the applicable Special Servicer, prepare and file with the IRS on a timely basis the information returns with respect to the reports of foreclosures and abandonments and reports relating to any cancellation of indebtedness income with respect to any Serviced Mortgage Loan, or Mortgaged Property securing a Serviced Mortgage Loan and any Serviced Loan Combination, required by Sections 6050H (as applicable), 6050J and 6050P of the Code. Contemporaneously therewith, the applicable Master Servicer shall deliver a copy of such information returns to the applicable Special Servicer and the Trustee. (h) As soon as the applicable Special Servicer makes a Final Recovery Determination (during any Subordinate Control Period and any Collective Consultation Period, such determination to be made in consultation with the Subordinate Class Representative and the related calculations to be subject to the approval of such Subordinate Class Representative) with respect to any Mortgage Loan, Serviced Loan Combination or REO Property, it shall promptly notify the Certificate Administrator, the Trustee, the Rating Agencies (subject to Section 3.27), the applicable Master Servicer (unless it is the one making the determination), the Trust Advisor (during any Collective Consultation Period and any Senior Consultation Period) and the Subordinate Class Representative (during any Subordinate Control Period and any Collective Consultation Period). The applicable Special Servicer shall maintain accurate records, prepared by a Servicing Officer, of each such Final Recovery Determination (if any) made by it and the basis thereof. Each such Final Recovery Determination (if any) shall be evidenced by an Officer’s Certificate delivered to the Certificate Administrator, the Trustee, the applicable Master Servicer (unless it is the one making the determination), the Trust Advisor (during any Collective Consultation Period and any Senior Consultation Period) and the Subordinate Class Representative (during any Subordinate Control Period and any Collective Consultation Period) no later than ten (10) Business Days following such Final Recovery Determination. (i) Notwithstanding anything the contrary, to the extent that the applicable Special Servicer acquires a Mortgaged Property that is a hospitality property on behalf of the Trust and such hospitality property has a franchise or licensing agreement that requires a successor or replacement franchisee or licensee to have a specified net worth, the applicable Special Servicer shall, to the extent consistent with the Servicing Standard, take all actions reasonably necessary to permit the Mortgaged Property to maintain its franchise or license with the same franchisor or licensor in place prior to such foreclosure.

Appears in 2 contracts

Samples: Pooling and Servicing Agreement (Bear Stearns Commercial Mortgage Securities Trust 2005-Pwr10), Pooling and Servicing Agreement (Bear Stearns Commercial Mortgage Securities Trust 2006-Pwr11)

Realization Upon Defaulted Serviced Mortgage Loans. (a) The ~~applicable~~ Special Servicer shall, subject to Sections 3.09(b), 3.09(c), 3.09(d~~), Section~~ ) and 3.24~~, Section 3.26 and/or Section 3.28, as applicable~~, exercise reasonable efforts, consistent with the Servicing Standard, to foreclose upon or otherwise comparably convert the ownership of the real property and other collateral securing any Serviced Mortgage Loan ~~or Serviced Loan Combination~~ that comes into and continues in default and as to which no satisfactory arrangements can be made for collection of delinquent payments, including pursuant to Section 3.20; provided that neither Master Servicer shall, with respect to any Serviced Mortgage Loan that is an ARD Mortgage Loan after its Anticipated Repayment Date, take any enforcement action with respect to the payment of Post-ARD Additional Interest (other than the making of requests for its collection), and the Special Servicer may take such enforcement action only if (i) the taking of an enforcement action with respect to the payment of other amounts due under such Mortgage Loan is, in the reasonable judgment of the Special Servicer, and without regard to such Post-ARD Additional Interest, also necessary, appropriate and consistent with the Servicing Standard or (ii) all other amounts due under such Mortgage Loan have been paid, the payment of such Post-ARD Additional Interest has not been forgiven in accordance with Section 3.20 and, in the reasonable judgment of the Special Servicer, the Liquidation Proceeds expected to be recovered in connection with such enforcement action will cover the anticipated costs of such enforcement action and, if applicable, any associated Advance Interest. In connection with the foregoing, in the event of a default under any Serviced Mortgage ~~Loan, Serviced~~ Loan ~~Combination~~ or Cross-Collateralized Group that is secured by real properties located in multiple states, and such states include California or another state with a statute, rule or regulation comparable to California~~’s “~~'s "one action rule”", then the ~~applicable~~ Special Servicer shall consult Independent counsel regarding the order and manner in which the ~~applicable~~ Special Servicer should foreclose upon or comparably proceed against such properties. The ~~applicable~~ Special Servicer may direct the applicable Master Servicer to advance, as contemplated by Section 3.19(b), all costs and expenses (including ~~attorneys’~~ attorneys fees and litigation costs and expenses) to be incurred on behalf of the Trust in any such proceedings or such consultation, subject to the applicable Master Servicer being entitled to reimbursement for any such advance as a Servicing Advance as provided in Section 3.05(a), and further subject to the ~~applicable~~ Special Servicer’s 's being entitled to pay out of the related Liquidation Proceeds, Insurance Proceeds and/or Condemnation Proceeds any Liquidation Expenses incurred in respect of any Serviced Mortgage ~~Loan or Serviced Loan Combination~~Loan, which Liquidation Expenses were outstanding at the time such proceeds are received. Nothing contained in this Section 3.09 shall be construed so as to require the ~~applicable~~ Special Servicer, on behalf of the Trust, to make a bid on any Mortgaged Property at a foreclosure sale or similar proceeding that is in excess of the fair market value of such property, as determined by the ~~applicable~~ Special Servicer taking into account the factors described in Section 3.18 and the results of any appraisal obtained pursuant to the following sentence or otherwise, all such cash bids to be made in a manner consistent with the Servicing Standard. If and when the applicable Master Servicer or the ~~applicable~~ Special Servicer deems it necessary in accordance with the Servicing Standard for purposes of establishing the fair market value of any Mortgaged Property securing a defaulted Serviced Mortgage ~~Loan or Serviced Loan Combination~~Loan, whether for purposes of bidding at foreclosure or otherwise, ~~the applicable~~ such Master Servicer or the ~~applicable~~ Special Servicer (as the case may be) is authorized to have an Appraisal completed with respect to such property (the cost of which appraisal shall be covered by, and be reimbursable as, a Servicing Advance). The applicable Master Servicer shall not foreclose upon or otherwise comparably convert, including by taking title thereto, any real property or other collateral securing a Defaulted Mortgage Loan or Serviced Loan Combination. (b) Notwithstanding the foregoing provisions of this Section 3.09, no Mortgaged Property shall be acquired by the applicable Special Servicer on behalf of the Trust (and, in the case of a Serviced Loan Combination, the related Serviced Pari Passu Companion Loan Holder(s)) under such circumstances, in such manner or pursuant to such terms as would (i) cause such Mortgaged Property to fail to qualify as “foreclosure property” within the meaning of Section 860G(a)(8) of the Code (unless the portion of such REO Property that is not treated as “foreclosure property” and that is held by any REMIC Pool at any given time constitutes not more than a de minimis amount of the assets of such REMIC Pool within the meaning of Treasury Regulations Section 1.860D-1(b)(3)(i) and (ii)), or (ii) except as permitted by Section 3.17(a), subject the Trust to the imposition of any federal income or prohibited transaction taxes under the Code. Subject to the foregoing, however, a Mortgaged Property may be acquired through a single-member limited liability company. In addition, except as permitted under Section 3.17(a), the applicable Special Servicer shall not acquire any personal property on behalf of the Trust (and, in the case of a Serviced Loan Combination, the related Serviced Pari Passu Companion Loan Holder(s) pursuant to this Section 3.09 unless either: (i) such personal property is incident to real property (within the meaning of Section 856(e)(1) of the Code) so acquired by the applicable Special Servicer; or (ii) the applicable Special Servicer shall have obtained an Opinion of Counsel (the cost of which shall be covered by, and reimbursable as, a Servicing Advance) to the effect that the holding of such personal property as part of the Trust Fund will not result in an Adverse REMIC Event with respect to any REMIC Pool or an Adverse Grantor Trust Event with respect to the Grantor Trust Pool. (c) Notwithstanding the foregoing provisions of this Section 3.09, the applicable Special Servicer shall not, on behalf of the Trust (and, in the case of a Serviced Loan Combination, the related Serviced Pari Passu Companion Loan Holder(s)), have a receiver of rents appointed with respect to a Mortgaged Property, or obtain title to a Mortgaged Property by foreclosure, deed in lieu of foreclosure or otherwise, or take any other action with respect to any Mortgaged Property, if, as a result of any such action, the Trustee, on behalf of the Certificateholders, could, in the reasonable judgment of the applicable Special Servicer, exercised in accordance with the Servicing Standard, be considered to hold title to, to be a “mortgagee-in-possession” of, or to be an “owner” or “operator” of such Mortgaged Property within the meaning of CERCLA or any comparable law, unless: (i) the applicable Special Servicer has previously determined in accordance with the Servicing Standard, based on a Phase I Environmental Assessment (and any additional environmental testing that the applicable Special Servicer deems necessary and prudent) of such Mortgaged Property conducted by an Independent Person who regularly conducts Phase I Environmental Assessments and performed during the nine-month period preceding any such acquisition of title or other action, that such Mortgaged Property is in compliance with applicable environmental laws and regulations and there are no circumstances or conditions present at the Mortgaged Property relating to the use, management or disposal of Hazardous Materials for which investigation, testing, monitoring, containment, clean-up or remediation could be required under any applicable environmental laws and regulations; or (ii) if the determination described in clause (c)(i) above cannot be made, the applicable Special Servicer has previously determined in accordance with the Servicing Standard, on the same basis as described in clause (c)(i) above, and taking into account the coverage provided under the related Environmental Insurance Policy, that it would maximize the recovery to the Certificateholders and, in the case of a Mortgaged Property securing a Serviced Loan Combination, to the related Serviced Pari Passu Companion Loan Holder(s) (as a collective whole) on a present value basis (the relevant discounting of anticipated collections that will be distributable to Certificateholders and, in the case of a Mortgaged Property securing a Serviced Loan Combination, to the related Serviced Pari Passu Companion Loan Holder(s), to be performed at the related Net Mortgage Rate (or (x) in the case of an ARD Mortgage Loan after its Anticipated Repayment Date, at the related Net Mortgage Rate immediately prior to the Anticipated Repayment Date, or (y) in the case of a Serviced Loan Combination, at the weighted average of the Net Mortgage Rates for the related notes)) to acquire title to or possession of the Mortgaged Property and to take such remedial, corrective and/or other further actions as are necessary to bring the Mortgaged Property into compliance with applicable environmental laws and regulations and to appropriately address any of the circumstances and conditions referred to in clause (c)(i) above. Any such determination by the applicable Special Servicer contemplated by clause (i) or clause (ii) of the preceding paragraph shall be evidenced by an Officer’s Certificate to such effect delivered to the Trustee, the applicable Master Servicer, the Subordinate Class Representative and the Majority Subordinate Certificateholder (and, in the case of a Mortgaged Property securing a Serviced Loan Combination, to the related Serviced Pari Passu Companion Loan Holder(s)), specifying all of the bases for such determination, such Officer’s Certificate to be accompanied by all related environmental reports. The cost of such Phase I Environmental Assessment and any such additional environmental testing, as well as the cost of any remedial, corrective or other further action contemplated by clause (i) and/or clause (ii) above of the first paragraph of Section 3.09(c), shall be paid out of the Collection Account (subject to, if it relates to one or more Mortgage Loans in a Serviced Loan Combination, the proviso at the end of the first paragraph (that is, the initial paragraph that includes the enumerated clauses (i) through (xxiii) of Section 3.05(a)(I)). (d) If neither of the conditions set forth in clauses (i) and (ii) of the first paragraph of Section 3.09(c) has been satisfied with respect to any Mortgaged Property securing a defaulted Serviced Mortgage Loan (or, if applicable, a Serviced Loan Combination), the applicable Special Servicer shall take such action as is in accordance with the Servicing Standard (other than proceeding against the Mortgaged Property) and, at such time as it deems appropriate, may, on behalf of the Trust and, if applicable, any related Serviced Pari Passu Companion Loan Holder(s), release all or a portion of such Mortgaged Property from the lien of the related Mortgage; provided that both (i) if such Serviced Mortgage Loan has a then-outstanding principal balance greater than $1,000,000, then prior to the release of all or a portion of the related Mortgaged Property from the lien of the related Mortgage, the applicable Special Servicer shall have notified the Rating Agencies (subject to Section 3.27), the Subordinate Class Representative, the Majority Subordinate Certificateholder, the Trustee, the Certificate Administrator and the applicable Master Servicer, in writing of its intention to so release all or a portion of such Mortgaged Property and the basis for the determination that such intention, in the applicable Special Servicer’s good faith judgment, was consistent with the Servicing Standard and (ii) if any Serviced Loan Combination is involved, the holders of the related Serviced Pari Passu Companion Loan or their representatives shall have the rights, if any, in respect thereof that are enumerated in the related Intercreditor Agreement. (e) The applicable Special Servicer shall report to the Trustee, the applicable Master Servicer, the Majority Subordinate Certificateholder, the Trust Advisor (during any Collective Consultation Period and any Senior Consultation Period), the Subordinate Class Representative (during any Subordinate Control Period and any Collective Consultation Period), and, in case of a Mortgaged Property securing a Serviced Loan Combination, the related Serviced Pari Passu Companion Loan Holder(s), monthly in writing as to any actions taken by the applicable Special Servicer with respect to any Mortgaged Property as to which neither of the conditions set forth in clauses (i) and (ii) of the first paragraph of Section 3.09(c) has been satisfied, in each case until the earliest to occur of satisfaction of either of such conditions, release of the lien of the related Mortgage on such Mortgaged Property and the related Mortgage Loan’s (or in the case of a Serviced Loan Combination, each of the related Mortgage Loan and any related Serviced Pari Passu Companion Loan) becoming a Corrected Mortgage Loan. (f) The applicable Special Servicer shall have the right to determine, in accordance with the Servicing Standard, with respect to any Specially Serviced Mortgage Loan, the advisability of seeking to obtain a deficiency judgment if the state in which the related Mortgaged Property is located and the terms of the subject Mortgage Loan permit such an action and shall, in accordance with the Servicing Standard, seek such deficiency judgment if it deems advisable. The applicable Master Servicer, at the direction of the applicable Special Servicer, shall make a Servicing Advance for the costs incurred in pursuing any such deficiency action, provided that the applicable Master Servicer shall not be obligated in connection therewith to advance any funds, which if so advanced would constitute a Nonrecoverable Advance. (g) Annually in each January, each Master Servicer shall, with the reasonable cooperation of the applicable Special Servicer, prepare and file with the IRS on a timely basis the information returns with respect to the reports of foreclosures and abandonments and reports relating to any cancellation of indebtedness income with respect to any Serviced Mortgage Loan, or Mortgaged Property securing a Serviced Mortgage Loan and any Serviced Loan Combination, required by Sections 6050H (as applicable), 6050J and 6050P of the Code. Contemporaneously therewith, the applicable Master Servicer shall deliver a copy of such information returns to the applicable Special Servicer and the Trustee. (h) As soon as the applicable Special Servicer makes a Final Recovery Determination (during any Subordinate Control Period and any Collective Consultation Period, such determination to be made in consultation with the Subordinate Class Representative and the related calculations to be subject to the approval of such Subordinate Class Representative) with respect to any Mortgage Loan, Serviced Loan Combination or REO Property, it shall promptly notify the Certificate Administrator, the Trustee, the Rating Agencies (subject to Section 3.27), the applicable Master Servicer (unless it is the one making the determination), the Trust Advisor (during any Collective Consultation Period and any Senior Consultation Period) and the Subordinate Class Representative (during any Subordinate Control Period and any Collective Consultation Period). The applicable Special Servicer shall maintain accurate records, prepared by a Servicing Officer, of each such Final Recovery Determination (if any) made by it and the basis thereof. Each such Final Recovery Determination (if any) shall be evidenced by an Officer’s Certificate delivered to the Certificate Administrator, the Trustee, the applicable Master Servicer (unless it is the one making the determination), the Trust Advisor (during any Collective Consultation Period and any Senior Consultation Period) and the Subordinate Class Representative (during any Subordinate Control Period and any Collective Consultation Period) no later than ten (10) Business Days following such Final Recovery Determination. (i) Notwithstanding anything the contrary, to the extent that the applicable Special Servicer acquires a Mortgaged Property that is a hospitality property on behalf of the Trust and such hospitality property has a franchise or licensing agreement that requires a successor or replacement franchisee or licensee to have a specified net worth, the applicable Special Servicer shall, to the extent consistent with the Servicing Standard, take all actions reasonably necessary to permit the Mortgaged Property to maintain its franchise or license with the same franchisor or licensor in place prior to such foreclosure.

Appears in 2 contracts

Samples: Pooling and Servicing Agreement (Bear Stearns Commercial Mortgage Securities Trust 2004-Pwr6), Pooling and Servicing Agreement (Bear Stearns Commercial Mortgage Securities Trust 2004-Pwr5)

Realization Upon Defaulted Serviced Mortgage Loans. (a) The applicable Special Servicer shall, subject to Sections 3.09(b), 3.09(c), 3.09(d), ~~Section~~ 3.24, ~~Section 3.26 and/or Section~~ 3.27 and 3.28~~, as applicable~~, exercise reasonable efforts, consistent with the Servicing Standard, to foreclose upon or otherwise comparably convert the ownership of the real property and other collateral securing any Serviced Mortgage Loan ~~or Serviced Loan Combination~~ that comes into and continues in default and as to which no satisfactory arrangements can be made for collection of delinquent payments, including pursuant to Section 3.20; provided that neither Master Servicer shall, with respect to any Serviced Mortgage Loan that is an ARD Mortgage Loan after its Anticipated Repayment Date, take any enforcement action with respect to the payment of Post-ARD Additional Interest (other than the making of requests for its collection), and the applicable Special Servicer may take such enforcement action only if (i) the taking of an enforcement action with respect to the payment of other amounts due under such Mortgage Loan is, in the reasonable judgment of the applicable Special Servicer, and without regard to such Post-ARD Additional Interest, also necessary, appropriate and consistent with the Servicing Standard or (ii) all other amounts due under such Mortgage Loan have been paid, the payment of such Post-ARD Additional Interest has not been forgiven in accordance with Section 3.20 and, in the reasonable judgment of the applicable Special Servicer, the Liquidation Proceeds expected to be recovered in connection with such enforcement action will cover the anticipated costs of such enforcement action and, if applicable, any associated Advance Interest. In connection with the foregoing, in the event of a default under any Serviced Mortgage ~~Loan, Serviced~~ Loan ~~Combination~~ or Cross-Collateralized Group that is secured by real properties located in multiple states, and such states include California or another state with a statute, rule or regulation comparable to California~~’s “~~'s "one action rule”", then the applicable Special Servicer shall consult Independent counsel regarding the order and manner in which the applicable Special Servicer should foreclose upon or comparably proceed against such properties. The applicable Special Servicer may direct the applicable Master Servicer to advance, as contemplated by Section 3.19(b), all costs and expenses (including ~~attorneys’~~ attorneys fees and litigation costs and expenses) to be incurred on behalf of the Trust in any such proceedings or such consultation, subject to the applicable Master Servicer being entitled to reimbursement for any such advance as a Servicing Advance as provided in Section 3.05(a), and further subject to the applicable Special Servicer’s 's being entitled to pay out of the related Liquidation Proceeds, Insurance Proceeds and/or Condemnation Proceeds any Liquidation Expenses incurred in respect of any Serviced Mortgage ~~Loan or Serviced Loan Combination~~Loan, which Liquidation Expenses were outstanding at the time such proceeds are received. Nothing contained in this Section 3.09 shall be construed so as to require the applicable Special Servicer, on behalf of the Trust, to make a bid on any Mortgaged Property at a foreclosure sale or similar proceeding that is in excess of the fair market value of such property, as determined by the applicable Special Servicer taking into account the factors described in Section 3.18 and the results of any appraisal obtained pursuant to the following sentence or otherwise, all such cash bids to be made in a manner consistent with the Servicing Standard. If and when the applicable Master Servicer or the applicable Special Servicer deems it necessary in accordance with the Servicing Standard for purposes of establishing the fair market value of any Mortgaged Property securing a defaulted Serviced Mortgage ~~Loan or Serviced Loan Combination~~Loan, whether for purposes of bidding at foreclosure or otherwise, ~~the applicable~~ such Master Servicer or ~~the applicable~~ such Special Servicer (as the case may be) is authorized to have an Appraisal completed with respect to such property (the cost of which appraisal shall be covered by, and be reimbursable as, a Servicing Advance). The applicable Master Servicer shall not foreclose upon or otherwise comparably convert, including by taking title thereto, any real property or other collateral securing a Defaulted Mortgage Loan or Serviced Loan Combination. (b) Notwithstanding the foregoing provisions of this Section 3.09, no Mortgaged Property shall be acquired by the applicable Special Servicer on behalf of the Trust (and, in the case of a Serviced Loan Combination, the related Serviced Pari Passu Companion Loan Holder(s)) under such circumstances, in such manner or pursuant to such terms as would (i) cause such Mortgaged Property to fail to qualify as “foreclosure property” within the meaning of Section 860G(a)(8) of the Code (unless the portion of such REO Property that is not treated as “foreclosure property” and that is held by any REMIC Pool at any given time constitutes not more than a de minimis amount of the assets of such REMIC Pool within the meaning of Treasury Regulations Section 1.860D-1(b)(3)(i) and (ii)), or (ii) except as permitted by Section 3.17(a), subject the Trust to the imposition of any federal income or prohibited transaction taxes under the Code. Subject to the foregoing, however, a Mortgaged Property may be acquired through a single-member limited liability company. In addition, except as permitted under Section 3.17(a), the applicable Special Servicer shall not acquire any personal property on behalf of the Trust (and, in the case of a Serviced Loan Combination, the related Serviced Pari Passu Companion Loan Holder(s) pursuant to this Section 3.09 unless either: (i) such personal property is incident to real property (within the meaning of Section 856(e)(1) of the Code) so acquired by the applicable Special Servicer; or (ii) the applicable Special Servicer shall have obtained an Opinion of Counsel (the cost of which shall be covered by, and reimbursable as, a Servicing Advance) to the effect that the holding of such personal property as part of the Trust Fund will not result in an Adverse REMIC Event with respect to any REMIC Pool or an Adverse Grantor Trust Event with respect to the Grantor Trust Pool. (c) Notwithstanding the foregoing provisions of this Section 3.09, the applicable Special Servicer shall not, on behalf of the Trust (and, in the case of a Serviced Loan Combination, the related Serviced Pari Passu Companion Loan Holder(s)), have a receiver of rents appointed with respect to a Mortgaged Property, or obtain title to a Mortgaged Property by foreclosure, deed in lieu of foreclosure or otherwise, or take any other action with respect to any Mortgaged Property, if, as a result of any such action, the Trustee, on behalf of the Certificateholders, could, in the reasonable judgment of the applicable Special Servicer, exercised in accordance with the Servicing Standard, be considered to hold title to, to be a “mortgagee-in-possession” of, or to be an “owner” or “operator” of such Mortgaged Property within the meaning of CERCLA or any comparable law, unless: (i) the applicable Special Servicer has previously determined in accordance with the Servicing Standard, based on a Phase I Environmental Assessment (and any additional environmental testing that the applicable Special Servicer deems necessary and prudent) of such Mortgaged Property conducted by an Independent Person who regularly conducts Phase I Environmental Assessments and performed during the nine-month period preceding any such acquisition of title or other action, that such Mortgaged Property is in compliance with applicable environmental laws and regulations and there are no circumstances or conditions present at the Mortgaged Property relating to the use, management or disposal of Hazardous Materials for which investigation, testing, monitoring, containment, clean-up or remediation could be required under any applicable environmental laws and regulations; or (ii) if the determination described in clause (c)(i) above cannot be made, the applicable Special Servicer has previously determined in accordance with the Servicing Standard, on the same basis as described in clause (c)(i) above, and taking into account the coverage provided under the related Environmental Insurance Policy, that it would maximize the recovery to the Certificateholders and, in the case of a Mortgaged Property securing a Serviced Loan Combination, to the related Serviced Pari Passu Companion Loan Holder(s) (as a collective whole) on a present value basis (the relevant discounting of anticipated collections that will be distributable to Certificateholders and, in the case of a Mortgaged Property securing a Serviced Loan Combination, to the related Serviced Pari Passu Companion Loan Holder(s), to be performed at the related Net Mortgage Rate (or (x) in the case of an ARD Mortgage Loan after its Anticipated Repayment Date, at the related Net Mortgage Rate immediately prior to the Anticipated Repayment Date, or (y) in the case of a Serviced Loan Combination, at the weighted average of the Net Mortgage Rates for the related notes)) to acquire title to or possession of the Mortgaged Property and to take such remedial, corrective and/or other further actions as are necessary to bring the Mortgaged Property into compliance with applicable environmental laws and regulations and to appropriately address any of the circumstances and conditions referred to in clause (c)(i) above. Any such determination by the applicable Special Servicer contemplated by clause (i) or clause (ii) of the preceding paragraph shall be evidenced by an Officer’s Certificate to such effect delivered to the Trustee, the applicable Master Servicer, the Subordinate Class Representative and the Majority Subordinate Certificateholder (and, in the case of a Mortgaged Property securing a Serviced Loan Combination, to the related Serviced Pari Passu Companion Loan Holder(s)), specifying all of the bases for such determination, such Officer’s Certificate to be accompanied by all related environmental reports. The cost of such Phase I Environmental Assessment and any such additional environmental testing, as well as the cost of any remedial, corrective or other further action contemplated by clause (i) and/or clause (ii) above of the first paragraph of Section 3.09(c), shall be paid out of the Collection Account (subject to, if it relates to one or more Mortgage Loans in a Serviced Loan Combination, the proviso at the end of the first paragraph (that is, the initial paragraph that includes the enumerated clauses (i) through (xxiii) of Section 3.05(a)(I)). (d) If neither of the conditions set forth in clauses (i) and (ii) of the first paragraph of Section 3.09(c) has been satisfied with respect to any Mortgaged Property securing a defaulted Serviced Mortgage Loan (or, if applicable, a Serviced Loan Combination), the applicable Special Servicer shall take such action as is in accordance with the Servicing Standard (other than proceeding against the Mortgaged Property) and, at such time as it deems appropriate, may, on behalf of the Trust and, if applicable, any related Serviced Pari Passu Companion Loan Holder(s), release all or a portion of such Mortgaged Property from the lien of the related Mortgage; provided that both (i) if such Serviced Mortgage Loan has a then-outstanding principal balance greater than $1,000,000, then prior to the release of all or a portion of the related Mortgaged Property from the lien of the related Mortgage, the applicable Special Servicer shall have notified the Rating Agencies (subject to Section 3.27), the Subordinate Class Representative, the Majority Subordinate Certificateholder, the Trustee, the Certificate Administrator and the applicable Master Servicer, in writing of its intention to so release all or a portion of such Mortgaged Property and the basis for the determination that such intention, in the applicable Special Servicer’s good faith judgment, was consistent with the Servicing Standard and (ii) if any Serviced Loan Combination is involved, the holders of the related Serviced Pari Passu Companion Loan or their representatives shall have the rights, if any, in respect thereof that are enumerated in the related Intercreditor Agreement. (e) The applicable Special Servicer shall report to the Trustee, the applicable Master Servicer, the Majority Subordinate Certificateholder, the Trust Advisor (during any Collective Consultation Period and any Senior Consultation Period), the Subordinate Class Representative (during any Subordinate Control Period and any Collective Consultation Period), and, in case of a Mortgaged Property securing a Serviced Loan Combination, the related Serviced Pari Passu Companion Loan Holder(s), monthly in writing as to any actions taken by the applicable Special Servicer with respect to any Mortgaged Property as to which neither of the conditions set forth in clauses (i) and (ii) of the first paragraph of Section 3.09(c) has been satisfied, in each case until the earliest to occur of satisfaction of either of such conditions, release of the lien of the related Mortgage on such Mortgaged Property and the related Mortgage Loan’s (or in the case of a Serviced Loan Combination, each of the related Mortgage Loan and any related Serviced Pari Passu Companion Loan) becoming a Corrected Mortgage Loan. (f) The applicable Special Servicer shall have the right to determine, in accordance with the Servicing Standard, with respect to any Specially Serviced Mortgage Loan, the advisability of seeking to obtain a deficiency judgment if the state in which the related Mortgaged Property is located and the terms of the subject Mortgage Loan permit such an action and shall, in accordance with the Servicing Standard, seek such deficiency judgment if it deems advisable. The applicable Master Servicer, at the direction of the applicable Special Servicer, shall make a Servicing Advance for the costs incurred in pursuing any such deficiency action, provided that the applicable Master Servicer shall not be obligated in connection therewith to advance any funds, which if so advanced would constitute a Nonrecoverable Advance. (g) Annually in each January, each Master Servicer shall, with the reasonable cooperation of the applicable Special Servicer, prepare and file with the IRS on a timely basis the information returns with respect to the reports of foreclosures and abandonments and reports relating to any cancellation of indebtedness income with respect to any Serviced Mortgage Loan, or Mortgaged Property securing a Serviced Mortgage Loan and any Serviced Loan Combination, required by Sections 6050H (as applicable), 6050J and 6050P of the Code. Contemporaneously therewith, the applicable Master Servicer shall deliver a copy of such information returns to the applicable Special Servicer and the Trustee. (h) As soon as the applicable Special Servicer makes a Final Recovery Determination (during any Subordinate Control Period and any Collective Consultation Period, such determination to be made in consultation with the Subordinate Class Representative and the related calculations to be subject to the approval of such Subordinate Class Representative) with respect to any Mortgage Loan, Serviced Loan Combination or REO Property, it shall promptly notify the Certificate Administrator, the Trustee, the Rating Agencies (subject to Section 3.27), the applicable Master Servicer (unless it is the one making the determination), the Trust Advisor (during any Collective Consultation Period and any Senior Consultation Period) and the Subordinate Class Representative (during any Subordinate Control Period and any Collective Consultation Period). The applicable Special Servicer shall maintain accurate records, prepared by a Servicing Officer, of each such Final Recovery Determination (if any) made by it and the basis thereof. Each such Final Recovery Determination (if any) shall be evidenced by an Officer’s Certificate delivered to the Certificate Administrator, the Trustee, the applicable Master Servicer (unless it is the one making the determination), the Trust Advisor (during any Collective Consultation Period and any Senior Consultation Period) and the Subordinate Class Representative (during any Subordinate Control Period and any Collective Consultation Period) no later than ten (10) Business Days following such Final Recovery Determination. (i) Notwithstanding anything the contrary, to the extent that the applicable Special Servicer acquires a Mortgaged Property that is a hospitality property on behalf of the Trust and such hospitality property has a franchise or licensing agreement that requires a successor or replacement franchisee or licensee to have a specified net worth, the applicable Special Servicer shall, to the extent consistent with the Servicing Standard, take all actions reasonably necessary to permit the Mortgaged Property to maintain its franchise or license with the same franchisor or licensor in place prior to such foreclosure.

Appears in 2 contracts

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

Realization Upon Defaulted Serviced Mortgage Loans. (a) The ~~applicable~~ Special Servicer shall, subject to Sections 3.09(b), 3.09(c), 3.09(d), Section 3.24, Section 3.26 and/or Section 3.28, as applicable, exercise reasonable efforts, consistent with the Servicing Standard, to foreclose upon or otherwise comparably convert the ownership of the real property and other collateral securing any Serviced Mortgage Loan or Serviced Loan Combination that comes into and continues in default and as to which no satisfactory arrangements can be made for collection of delinquent payments, including pursuant to Section 3.20. In connection with the foregoing, in the event of a default under any Serviced Mortgage Loan, Serviced Loan Combination or Cross-Collateralized Group that is secured by real properties located in multiple states, and such states include California or another state with a statute, rule or regulation comparable to California’s “one action rule”, then the ~~applicable~~ Special Servicer shall consult Independent counsel regarding the order and manner in which the ~~applicable~~ Special Servicer should foreclose upon or comparably proceed against such properties. The ~~applicable~~ Special Servicer may direct the ~~applicable~~ Master Servicer to advance, as contemplated by Section 3.19(b), all costs and expenses (including attorneys’ fees and litigation costs and expenses) to be incurred on behalf of the Trust in any such proceedings or such consultation, subject to the ~~applicable~~ Master Servicer being entitled to reimbursement for any such advance as a Servicing Advance as provided in Section 3.05(a), and further subject to the ~~applicable~~ Special Servicer’s being entitled to pay out of the related Liquidation Proceeds, Insurance Proceeds and/or Condemnation Proceeds any Liquidation Expenses incurred in respect of any Serviced Mortgage Loan or Serviced Loan Combination, which Liquidation Expenses were outstanding at the time such proceeds are received. Nothing contained in this Section 3.09 shall be construed so as to require the ~~applicable~~ Special Servicer, on behalf of the Trust, to make a bid on any Mortgaged Property at a foreclosure sale or similar proceeding that is in excess of the fair market value of such property, as determined by the ~~applicable~~ Special Servicer taking into account the factors described in Section 3.18 and the results of any appraisal obtained pursuant to the following sentence or otherwise, all such cash bids to be made in a manner consistent with the Servicing Standard. If and when the ~~applicable~~ Master Servicer or the ~~applicable~~ Special Servicer deems it necessary in accordance with the Servicing Standard for purposes of establishing the fair market value of any Mortgaged Property securing a defaulted Serviced Mortgage Loan or Serviced Loan Combination, whether for purposes of bidding at foreclosure or otherwise, the ~~applicable~~ Master Servicer or the ~~applicable~~ Special Servicer (as the case may be) is authorized to have an Appraisal completed with respect to such property (the cost of which appraisal shall be covered by, and be reimbursable as, a Servicing Advance). The ~~applicable~~ Master Servicer shall not foreclose upon or otherwise comparably convert, including by taking title thereto, any real property or other collateral securing a Defaulted Mortgage Loan or Serviced Loan Combination. (b) Notwithstanding the foregoing provisions of this Section 3.09, no Mortgaged Property shall be acquired by the ~~applicable~~ Special Servicer on behalf of the Trust (and, in the case of a Serviced Loan Combination, the related Serviced Pari Passu Companion Loan Holder(s)) under such circumstances, in such manner or pursuant to such terms as would (i) cause such Mortgaged Property to fail to qualify as “foreclosure property” within the meaning of Section 860G(a)(8) of the Code (unless the portion of such REO Property that is not treated as “foreclosure property” and that is held by any REMIC Pool at any given time constitutes not more than a de minimis amount of the assets of such REMIC Pool within the meaning of Treasury Regulations Section 1.860D-1(b)(3)(i) and (ii)), or (ii) except as permitted by Section 3.17(a), subject the Trust to the imposition of any federal income or prohibited transaction taxes under the Code. Subject to the foregoing, however, a Mortgaged Property may be acquired through a single-member limited liability company. In addition, except as permitted under Section 3.17(a), the ~~applicable~~ Special Servicer shall not acquire any personal property on behalf of the Trust (and, in the case of a Serviced Loan Combination, the related Serviced Pari Passu Companion Loan Holder(s) pursuant to this Section 3.09 unless either: (i) such personal property is incident to real property (within the meaning of Section 856(e)(1) of the Code) so acquired by the ~~applicable~~ Special Servicer; or (ii) the ~~applicable~~ Special Servicer shall have obtained an Opinion of Counsel (the cost of which shall be covered by, and reimbursable as, a Servicing Advance) to the effect that the holding of such personal property as part of the Trust Fund will not result in an Adverse REMIC Event with respect to any REMIC Pool or an Adverse Grantor Trust Event with respect to the Grantor Trust Pool. (c) Notwithstanding the foregoing provisions of this Section 3.09, the ~~applicable~~ Special Servicer shall not, on behalf of the Trust (and, in the case of a Serviced Loan Combination, the related Serviced Pari Passu Companion Loan Holder(s)), have a receiver of rents appointed with respect to a Mortgaged Property, or obtain title to a Mortgaged Property by foreclosure, deed in lieu of foreclosure or otherwise, or take any other action with respect to any Mortgaged Property, if, as a result of any such action, the Trustee, on behalf of the Certificateholders, could, in the reasonable judgment of the ~~applicable~~ Special Servicer, exercised in accordance with the Servicing Standard, be considered to hold title to, to be a “mortgagee-in-possession” of, or to be an “owner” or “operator” of such Mortgaged Property within the meaning of CERCLA or any comparable law, unless: (i) the ~~applicable~~ Special Servicer has previously determined in accordance with the Servicing Standard, based on a Phase I Environmental Assessment (and any additional environmental testing that the ~~applicable~~ Special Servicer deems necessary and prudent) of such Mortgaged Property conducted by an Independent Person who regularly conducts Phase I Environmental Assessments and performed during the nine-month period preceding any such acquisition of title or other action, that such Mortgaged Property is in compliance with applicable environmental laws and regulations and there are no circumstances or conditions present at the Mortgaged Property relating to the use, management or disposal of Hazardous Materials for which investigation, testing, monitoring, containment, clean-up or remediation could be required under any applicable environmental laws and regulations; or (ii) if the determination described in clause (c)(i) above cannot be made, the ~~applicable~~ Special Servicer has previously determined in accordance with the Servicing Standard, on the same basis as described in clause (c)(i) above, and taking into account the coverage provided under the related Environmental Insurance Policy, that it would maximize the recovery to the Certificateholders and, in the case of a Mortgaged Property securing a Serviced Loan Combination, to the related Serviced Pari Passu Companion Loan Holder(s) (as a collective whole) on a present value basis (the relevant discounting of anticipated collections that will be distributable to Certificateholders and, in the case of a Mortgaged Property securing a Serviced Loan Combination, to the related Serviced Pari Passu Companion Loan Holder(s), to be performed at the related Net Mortgage Rate (or (x) in the case of an ARD Mortgage Loan after its Anticipated Repayment Date, at the related Net Mortgage Rate immediately prior to the Anticipated Repayment Date, or (y) in the case of a Serviced Loan Combination, at the weighted average of the Net Mortgage Rates for the related notes)), to be performed at the related Net Mortgage Rate) to acquire title to or possession of the Mortgaged Property and to take such remedial, corrective and/or other further actions as are necessary to bring the Mortgaged Property into compliance with applicable environmental laws and regulations and to appropriately address any of the circumstances and conditions referred to in clause (c)(i) above. Any such determination by the ~~applicable~~ Special Servicer contemplated by clause (i) or clause (ii) of the preceding paragraph shall be evidenced by an Officer’s Certificate to such effect delivered to the Trustee, the ~~applicable~~ Master Servicer, the Subordinate Class Representative and the Majority Subordinate Certificateholder (and, in the case of a Mortgaged Property securing a Serviced Loan Combination, to the related Serviced Pari Passu Companion Loan Holder(s)), specifying all of the bases for such determination, such Officer’s Certificate to be accompanied by all related environmental reports. The cost of such Phase I Environmental Assessment and any such additional environmental testing, as well as the cost of any remedial, corrective or other further action contemplated by clause (i) and/or clause (ii) ~~above~~ of the ~~first paragraph of Section 3.09(c)~~preceding paragraph, shall be paid out of the Collection Account (subject to, if it relates to one or more Mortgage Loans in a Serviced Loan Combination, the proviso at the end of the first paragraph (that is, the initial paragraph that includes the enumerated clauses (i) through (xxiii) of subsection (I) of Section ~~3.05(a)(I~~3.05(a)). (d) If neither of the conditions set forth in clauses (i) and (ii) of the first paragraph of Section 3.09(c) has been satisfied with respect to any Mortgaged Property securing a defaulted Serviced Mortgage Loan (or, if applicable, a Serviced Loan Combination), the ~~applicable~~ Special Servicer shall take such action as is in accordance with the Servicing Standard (other than proceeding against the Mortgaged Property) and, at such time as it deems appropriate, may, on behalf of the Trust and, if applicable, any related Serviced Pari Passu Companion Loan Holder(s), release all or a portion of such Mortgaged Property from the lien of the related Mortgage; provided that both (i) if such Serviced Mortgage Loan has a then-outstanding principal balance greater than $~~1,000,000~~1 million, then prior to the release of all or a portion of the related Mortgaged Property from the lien of the related Mortgage, the ~~applicable~~ Special Servicer shall have notified the Rating Agencies (subject to Section 3.27), the Subordinate Class Representative, the Majority Subordinate Certificateholder, the Trustee, the Certificate Administrator and the ~~applicable~~ Master Servicer, in writing of its intention to so release all or a portion of such Mortgaged Property and the basis for the determination that such intention, in the ~~applicable~~ Special Servicer’s good faith judgment, was consistent with the Servicing Standard and (ii) if any Serviced Loan Combination is involved, the holders of the related Serviced Pari Passu Companion Loan or their representatives shall have the rights, if any, in respect thereof that are enumerated in the related Intercreditor Agreement. (e) The ~~applicable~~ Special Servicer shall report to the Trustee, the ~~applicable~~ Master Servicer, the Majority Subordinate Certificateholder, the Trust Advisor (during any Collective Consultation Period and any Senior Consultation Period), the Subordinate Class Representative (during any Subordinate Control Period and any Collective Consultation Period), and, in case of a Mortgaged Property securing a Serviced Loan Combination, the related Serviced Pari Passu Companion Loan Holder(s), monthly in writing as to any actions taken by the ~~applicable~~ Special Servicer with respect to any Mortgaged Property as to which neither of the conditions set forth in clauses (i) and (ii) of the first paragraph of Section 3.09(c) has been satisfied, in each case until the earliest to occur of satisfaction of either of such conditions, release of the lien of the related Mortgage on such Mortgaged Property and the related Mortgage Loan’s (or in the case of a Serviced Loan Combination, each of the related Mortgage Loan and any related Serviced Pari Passu Companion Loan) becoming a Corrected Mortgage Loan. (f) The ~~applicable~~ Special Servicer shall have the right to determine, in accordance with the Servicing Standard, with respect to any Specially Serviced Mortgage Loan, the advisability of seeking to obtain a deficiency judgment if the state in which the related Mortgaged Property is located and the terms of the subject Mortgage Loan permit such an action and shall, in accordance with the Servicing Standard, seek such deficiency judgment if it deems advisable. The ~~applicable~~ Master Servicer, at the direction of the ~~applicable~~ Special Servicer, shall make a Servicing Advance for the costs incurred in pursuing any such deficiency action, provided that the ~~applicable~~ Master Servicer shall not be obligated in connection therewith to advance any funds, which if so advanced would constitute a Nonrecoverable Advance. (g) Annually in each January, ~~each~~ the Master Servicer shall, with the reasonable cooperation of the ~~applicable~~ Special Servicer, prepare and file with the IRS on a timely basis the information returns with respect to the reports of foreclosures and abandonments and reports relating to any cancellation of indebtedness income with respect to any Serviced Mortgage Loan, or Mortgaged Property securing a Serviced Mortgage Loan and any Serviced Loan Combination, required by Sections 6050H (as applicable), 6050J and 6050P of the Code. Contemporaneously therewith, the ~~applicable~~ Master Servicer shall deliver a copy of such information returns to the ~~applicable~~ Special Servicer and the Trustee. (h) As soon as the ~~applicable~~ Special Servicer makes a Final Recovery Determination (during any Subordinate Control Period and any Collective Consultation Period, such determination to be made in consultation with the Subordinate Class Representative and the related calculations to be subject to the approval of such Subordinate Class Representative) with respect to any Mortgage Loan, Serviced Loan Combination or REO Property, it shall promptly notify the Certificate Administrator, the Trustee, the Rating Agencies (subject to Section 3.27), the ~~applicable~~ Master Servicer (unless it is the one making the determination), the Trust Advisor (during any Collective Consultation Period and any Senior Consultation Period) and the Subordinate Class Representative (during any Subordinate Control Period and any Collective Consultation Period). The applicable Special Servicer shall maintain accurate records, prepared by a Servicing Officer, of each such Final Recovery Determination (if any) made by it and the basis thereof. Each such Final Recovery Determination (if any) shall be evidenced by an Officer’s Certificate delivered to the Certificate Administrator, the Trustee, the applicable Master Servicer (unless it is the one making the determination), the Trust Advisor (during any Collective Consultation Period and any Senior Consultation Period) and the Subordinate Class Representative (during any Subordinate Control Period and any Collective Consultation Period) no later than ten (10) Business Days following such Final Recovery Determination. (i) Notwithstanding anything the contrary, to the extent that the applicable Special Servicer acquires a Mortgaged Property that is a hospitality property on behalf of the Trust and such hospitality property has a franchise or licensing agreement that requires a successor or replacement franchisee or licensee to have a specified net worth, the applicable Special Servicer shall, to the extent consistent with the Servicing Standard, take all actions reasonably necessary to permit the Mortgaged Property to maintain its franchise or license with the same franchisor or licensor in place prior to such foreclosure.Consultation

Appears in 1 contract

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

Realization Upon Defaulted Serviced Mortgage Loans. (a) The ~~applicable~~ Special Servicer shall, subject to ~~Sections 3.09(b~~SECTIONS 3.09(B), ~~3.09(c~~3.09(C), ~~3.09(d), Section 3.24, Section 3.26 and/or Section 3.28, as applicable~~3.09(D) and 3.24 of this Agreement, exercise reasonable efforts, consistent with the Servicing Standard, to foreclose upon or otherwise comparably convert the ownership of the real property and other collateral securing any Serviced Mortgage Loan ~~or Serviced Loan Combination~~ that comes into and continues in default and as to which no satisfactory arrangements can be made for collection of delinquent payments, including pursuant to ~~Section~~ SECTION 3.20; PROVIDED that the Master Servicer shall not, with respect to any Serviced Mortgage Loan that is an ARD Mortgage Loan, take any enforcement action with respect to the payment of Post-ARD Additional Interest (other than the making of requests for its collection), and the Special Servicer will do so only if such Mortgage Loan has become a Specially Serviced Mortgage Loan and either (i) the taking of an enforcement action with respect to the payment of other amounts due under such Mortgage Loan is, in the reasonable judgment of the Special Servicer, and without regard to such Post-ARD Additional Interest, also necessary, appropriate and consistent with the Servicing Standard or (ii) all other amounts due under such Mortgage Loan have been paid, the payment of such Post-ARD Additional Interest has not been forgiven in accordance with SECTION 3.20 and, in the reasonable judgment of the Special Servicer, the Liquidation Proceeds expected to be recovered in connection with such enforcement action will cover the anticipated costs of such enforcement action and, if applicable, any associated Advance Interest. In connection with the foregoing, in the event of a default under any Serviced Mortgage ~~Loan, Serviced~~ Loan ~~Combination~~ or Cross-Collateralized Group that is secured by real properties located in multiple states, and such states include California or another state with a statute, rule or regulation comparable to California~~’s “~~'s "one action rule”", then the ~~applicable~~ Special Servicer shall consult Independent counsel regarding the order and manner in which the ~~applicable~~ Special Servicer should foreclose upon or comparably proceed against such properties. The ~~applicable~~ reasonable costs of such consultation shall be paid by, and shall be reimbursable to, the Special Servicer ~~may direct the applicable Master Servicer~~ (or, subject to ~~advance, as contemplated by Section 3.19(b~~SECTION 3.19(B), the Master Servicer) as a Servicing Advance. In addition, all other costs and expenses ~~(including attorneys’ fees and litigation costs and expenses) to be~~ incurred ~~on behalf of the Trust~~ in any ~~such proceedings~~ foreclosure sale or ~~such consultation~~similar proceeding shall be paid by, and reimbursable to, the Special Servicer (or, subject to SECTION 3.19(B), the ~~applicable~~ Master ~~Servicer being entitled to reimbursement for any such advance~~ Servicer) as a Servicing Advance as provided in Section 3.05(a), and further subject to the applicable Special Servicer’s being entitled to pay out of the related Liquidation Proceeds, Insurance Proceeds and/or Condemnation Proceeds any Liquidation Expenses incurred in respect of any Serviced Mortgage Loan or Serviced Loan Combination, which Liquidation Expenses were outstanding at the time such proceeds are receivedAdvance. Nothing contained in this ~~Section~~ SECTION 3.09 shall be construed so as to require the ~~applicable~~ Special Servicer, on behalf of the Trust, to make a bid on any Mortgaged Property at a foreclosure sale or similar proceeding that is in excess of the fair market value of such property, as determined by the ~~applicable~~ Special Servicer taking into account the factors described in ~~Section~~ SECTION 3.18 and the results of any appraisal obtained pursuant to the following sentence or otherwise, all such ~~cash~~ bids to be made in a manner consistent with the Servicing Standard. If and when the ~~applicable Master Servicer or the applicable~~ Special Servicer deems it necessary in accordance with the Servicing Standard for purposes of establishing the fair market value of any Mortgaged Property securing a defaulted Serviced Mortgage ~~Loan or Serviced Loan Combination~~Loan, whether for purposes of bidding at foreclosure or otherwise, the ~~applicable Master Servicer or the applicable~~ Special Servicer ~~(as the case may be)~~ is authorized to have an Appraisal completed with respect to such property (the cost of which appraisal shall be covered by, and be reimbursable as, a Servicing Advance). The ~~applicable~~ Master Servicer shall not foreclose upon or otherwise comparably convert, including by taking title thereto, any real property or other collateral securing a ~~Defaulted~~ defaulted Serviced Mortgage Loan or (and, except as expressly provided for in ARTICLE XII, neither the Master Servicer nor the Special Servicer shall take any such action with respect to the [Separately Serviced ~~Loan Combination~~Mortgage Loan]). (b) Notwithstanding ~~the foregoing provisions~~ any other provision of this ~~Section 3.09~~Agreement, no the Special Servicer shall not acquire a Mortgaged Property ~~shall be acquired by the applicable Special Servicer~~ on behalf of the Trust ~~(and, in the case of a Serviced Loan Combination, the related Serviced Pari Passu Companion Loan Holder(s))~~ under such circumstances, in such manner or pursuant to such terms as would (i) cause such Mortgaged Property to fail to qualify as “foreclosure property” within the meaning of Section 860G(a)(8) of the Code (unless the portion of such REO Property that is not treated as “foreclosure property” and that is held by any REMIC Pool at any given time constitutes not more than a de minimis amount of the assets of such REMIC Pool within the meaning of Treasury Regulations Section 1.860D-1(b)(3)(i) and (ii)), or (ii) except as permitted by Section 3.17(a), subject the Trust to the imposition of any federal income or prohibited transaction taxes under the Code. Subject to the foregoing, however, a Mortgaged Property may be acquired through a single-member limited liability company. In addition, except as permitted under Section 3.17(a), the applicable Special Servicer shall not acquire any personal property on behalf of the Trust (and, in the case of a Serviced Loan Combination, the related Serviced Pari Passu Companion Loan Holder(s) pursuant to this Section 3.09 unless either: (i) such personal property is incident to real property (within the meaning of Section 856(e)(1) of the Code) so acquired by the applicable Special Servicer; or (ii) the applicable Special Servicer shall have obtained an Opinion of Counsel (the cost of which shall be covered by, and reimbursable as, a Servicing Advance) to the effect that the holding of such personal property as part of the Trust Fund will not result in an Adverse REMIC Event with respect to any REMIC Pool or an Adverse Grantor Trust Event with respect to the Grantor Trust Pool. (c) Notwithstanding the foregoing provisions of this Section 3.09, the applicable Special Servicer shall not, on behalf of the Trust (and, in the case of a Serviced Loan Combination, the related Serviced Pari Passu Companion Loan Holder(s)), have a receiver of rents appointed with respect to a Mortgaged Property, or obtain title to a Mortgaged Property by "foreclosure, deed in lieu of foreclosure or otherwise, or take any other action with respect to any Mortgaged Property, if, as a result of any such action, the Trustee, on behalf of the Certificateholders, could, in the reasonable judgment of the applicable Special Servicer, exercised in accordance with the Servicing Standard, be considered to hold title to, to be a “mortgagee-in-possession” of, or to be an “owner” or “operator” of such Mortgaged Property within the meaning of CERCLA or any comparable law, unless: (i) the applicable Special Servicer has previously determined in accordance with the Servicing Standard, based on a Phase I Environmental Assessment (and any additional environmental testing that the applicable Special Servicer deems necessary and prudent) of such Mortgaged Property conducted by an Independent Person who regularly conducts Phase I Environmental Assessments and performed during the nine-month period preceding any such acquisition of title or other action, that such Mortgaged Property is in compliance with applicable environmental laws and regulations and there are no circumstances or conditions present at the Mortgaged Property relating to the use, management or disposal of Hazardous Materials for which investigation, testing, monitoring, containment, clean-up or remediation could be required under any applicable environmental laws and regulations; or (ii) if the determination described in clause (c)(i) above cannot be made, the applicable Special Servicer has previously determined in accordance with the Servicing Standard, on the same basis as described in clause (c)(i) above, and taking into account the coverage provided under the related Environmental Insurance Policy, that it would maximize the recovery to the Certificateholders and, in the case of a Mortgaged Property securing a Serviced Loan Combination, to the related Serviced Pari Passu Companion Loan Holder(s) (as a collective whole) on a present value basis (the relevant discounting of anticipated collections that will be distributable to Certificateholders and, in the case of a Mortgaged Property securing a Serviced Loan Combination, to the related Serviced Pari Passu Companion Loan Holder(s), to be performed at the related Net Mortgage Rate (or (x) in the case of an ARD Mortgage Loan after its Anticipated Repayment Date, at the related Net Mortgage Rate immediately prior to the Anticipated Repayment Date, or (y) in the case of a Serviced Loan Combination, at the weighted average of the Net Mortgage Rates for the related notes)) to acquire title to or possession of the Mortgaged Property and to take such remedial, corrective and/or other further actions as are necessary to bring the Mortgaged Property into compliance with applicable environmental laws and regulations and to appropriately address any of the circumstances and conditions referred to in clause (c)(i) above. Any such determination by the applicable Special Servicer contemplated by clause (i) or clause (ii) of the preceding paragraph shall be evidenced by an Officer’s Certificate to such effect delivered to the Trustee, the applicable Master Servicer, the Subordinate Class Representative and the Majority Subordinate Certificateholder (and, in the case of a Mortgaged Property securing a Serviced Loan Combination, to the related Serviced Pari Passu Companion Loan Holder(s)), specifying all of the bases for such determination, such Officer’s Certificate to be accompanied by all related environmental reports. The cost of such Phase I Environmental Assessment and any such additional environmental testing, as well as the cost of any remedial, corrective or other further action contemplated by clause (i) and/or clause (ii) above of the first paragraph of Section 3.09(c), shall be paid out of the Collection Account (subject to, if it relates to one or more Mortgage Loans in a Serviced Loan Combination, the proviso at the end of the first paragraph (that is, the initial paragraph that includes the enumerated clauses (i) through (xxiii) of Section 3.05(a)(I)). (d) If neither of the conditions set forth in clauses (i) and (ii) of the first paragraph of Section 3.09(c) has been satisfied with respect to any Mortgaged Property securing a defaulted Serviced Mortgage Loan (or, if applicable, a Serviced Loan Combination), the applicable Special Servicer shall take such action as is in accordance with the Servicing Standard (other than proceeding against the Mortgaged Property) and, at such time as it deems appropriate, may, on behalf of the Trust and, if applicable, any related Serviced Pari Passu Companion Loan Holder(s), release all or a portion of such Mortgaged Property from the lien of the related Mortgage; provided that both (i) if such Serviced Mortgage Loan has a then-outstanding principal balance greater than $1,000,000, then prior to the release of all or a portion of the related Mortgaged Property from the lien of the related Mortgage, the applicable Special Servicer shall have notified the Rating Agencies (subject to Section 3.27), the Subordinate Class Representative, the Majority Subordinate Certificateholder, the Trustee, the Certificate Administrator and the applicable Master Servicer, in writing of its intention to so release all or a portion of such Mortgaged Property and the basis for the determination that such intention, in the applicable Special Servicer’s good faith judgment, was consistent with the Servicing Standard and (ii) if any Serviced Loan Combination is involved, the holders of the related Serviced Pari Passu Companion Loan or their representatives shall have the rights, if any, in respect thereof that are enumerated in the related Intercreditor Agreement. (e) The applicable Special Servicer shall report to the Trustee, the applicable Master Servicer, the Majority Subordinate Certificateholder, the Trust Advisor (during any Collective Consultation Period and any Senior Consultation Period), the Subordinate Class Representative (during any Subordinate Control Period and any Collective Consultation Period), and, in case of a Mortgaged Property securing a Serviced Loan Combination, the related Serviced Pari Passu Companion Loan Holder(s), monthly in writing as to any actions taken by the applicable Special Servicer with respect to any Mortgaged Property as to which neither of the conditions set forth in clauses (i) and (ii) of the first paragraph of Section 3.09(c) has been satisfied, in each case until the earliest to occur of satisfaction of either of such conditions, release of the lien of the related Mortgage on such Mortgaged Property and the related Mortgage Loan’s (or in the case of a Serviced Loan Combination, each of the related Mortgage Loan and any related Serviced Pari Passu Companion Loan) becoming a Corrected Mortgage Loan. (f) The applicable Special Servicer shall have the right to determine, in accordance with the Servicing Standard, with respect to any Specially Serviced Mortgage Loan, the advisability of seeking to obtain a deficiency judgment if the state in which the related Mortgaged Property is located and the terms of the subject Mortgage Loan permit such an action and shall, in accordance with the Servicing Standard, seek such deficiency judgment if it deems advisable. The applicable Master Servicer, at the direction of the applicable Special Servicer, shall make a Servicing Advance for the costs incurred in pursuing any such deficiency action, provided that the applicable Master Servicer shall not be obligated in connection therewith to advance any funds, which if so advanced would constitute a Nonrecoverable Advance. (g) Annually in each January, each Master Servicer shall, with the reasonable cooperation of the applicable Special Servicer, prepare and file with the IRS on a timely basis the information returns with respect to the reports of foreclosures and abandonments and reports relating to any cancellation of indebtedness income with respect to any Serviced Mortgage Loan, or Mortgaged Property securing a Serviced Mortgage Loan and any Serviced Loan Combination, required by Sections 6050H (as applicable), 6050J and 6050P of the Code. Contemporaneously therewith, the applicable Master Servicer shall deliver a copy of such information returns to the applicable Special Servicer and the Trustee. (h) As soon as the applicable Special Servicer makes a Final Recovery Determination (during any Subordinate Control Period and any Collective Consultation Period, such determination to be made in consultation with the Subordinate Class Representative and the related calculations to be subject to the approval of such Subordinate Class Representative) with respect to any Mortgage Loan, Serviced Loan Combination or REO Property, it shall promptly notify the Certificate Administrator, the Trustee, the Rating Agencies (subject to Section 3.27), the applicable Master Servicer (unless it is the one making the determination), the Trust Advisor (during any Collective Consultation Period and any Senior Consultation Period) and the Subordinate Class Representative (during any Subordinate Control Period and any Collective Consultation Period). The applicable Special Servicer shall maintain accurate records, prepared by a Servicing Officer, of each such Final Recovery Determination (if any) made by it and the basis thereof. Each such Final Recovery Determination (if any) shall be evidenced by an Officer’s Certificate delivered to the Certificate Administrator, the Trustee, the applicable Master Servicer (unless it is the one making the determination), the Trust Advisor (during any Collective Consultation Period and any Senior Consultation Period) and the Subordinate Class Representative (during any Subordinate Control Period and any Collective Consultation Period) no later than ten (10) Business Days following such Final Recovery Determination. (i) Notwithstanding anything the contrary, to the extent that the applicable Special Servicer acquires a Mortgaged Property that is a hospitality property on behalf of the Trust and such hospitality property has a franchise or licensing agreement that requires a successor or replacement franchisee or licensee to have a specified net worth, the applicable Special Servicer shall, to the extent consistent with the Servicing Standard, take all actions reasonably necessary to permit the Mortgaged Property to maintain its franchise or license with the same franchisor or licensor in place prior to such foreclosure.

Appears in 1 contract

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

Realization Upon Defaulted Serviced Mortgage Loans. (a) The applicable Special Servicer shall, subject to Sections 3.09(b), 3.09(c), 3.09(d), ~~Section~~ 3.24, ~~Section 3.26 and/or Section 3.28~~3.27, ~~as applicable~~3.28 and 3.29, exercise reasonable efforts, consistent with the Servicing Standard, to foreclose upon or otherwise comparably convert the ownership of the real property and other collateral securing any Serviced Mortgage Loan ~~or Serviced Loan Combination~~ that comes into and continues in default and as to which no satisfactory arrangements can be made for collection of delinquent payments, including pursuant to Section 3.20; provided that neither Master Servicer shall, with respect to any Serviced Mortgage Loan that is an ARD Mortgage Loan after its Anticipated Repayment Date, take any enforcement action with respect to the payment of Post-ARD Additional Interest (other than the making of requests for its collection), and the applicable Special Servicer may take such enforcement action only if (i) the taking of an enforcement action with respect to the payment of other amounts due under such Mortgage Loan is, in the reasonable judgment of the applicable Special Servicer, and without regard to such Post-ARD Additional Interest, also necessary, appropriate and consistent with the Servicing Standard or (ii) all other amounts due under such Mortgage Loan have been paid, the payment of such Post-ARD Additional Interest has not been forgiven in accordance with Section 3.20 and, in the reasonable judgment of the applicable Special Servicer, the Liquidation Proceeds expected to be recovered in connection with such enforcement action will cover the anticipated costs of such enforcement action and, if applicable, any associated Advance Interest. In connection with the foregoing, in the event of a default under any Serviced Mortgage ~~Loan, Serviced~~ Loan ~~Combination~~ or Cross-Collateralized Group that is secured by real properties located in multiple states, and such states include California or another state with a statute, rule or regulation comparable to California~~’s “~~'s "one action rule”", then the applicable Special Servicer shall consult Independent counsel regarding the order and manner in which the applicable Special Servicer should foreclose upon or comparably proceed against such properties. The applicable Special Servicer may direct the applicable Master Servicer to advance, as contemplated by Section 3.19(b), all costs and expenses (including ~~attorneys’~~ attorneys fees and litigation costs and expenses) to be incurred on behalf of the Trust in any such proceedings or such consultation, subject to the applicable Master Servicer being entitled to reimbursement for any such advance as a Servicing Advance as provided in Section 3.05(a), and further subject to the applicable Special Servicer’s 's being entitled to pay out of the related Liquidation Proceeds, Insurance Proceeds and/or Condemnation Proceeds any Liquidation Expenses incurred in respect of any Serviced Mortgage ~~Loan or Serviced Loan Combination~~Loan, which Liquidation Expenses were outstanding at the time such proceeds are received. Nothing contained in this Section 3.09 shall be construed so as to require the applicable Special Servicer, on behalf of the Trust, to make a bid on any Mortgaged Property at a foreclosure sale or similar proceeding that is in excess of the fair market value of such property, as determined by the applicable Special Servicer taking into account the factors described in Section 3.18 and the results of any appraisal obtained pursuant to the following sentence or otherwise, all such cash bids to be made in a manner consistent with the Servicing Standard. If and when the applicable Master Servicer or the applicable Special Servicer deems it necessary in accordance with the Servicing Standard for purposes of establishing the fair market value of any Mortgaged Property securing a defaulted Serviced Mortgage ~~Loan or Serviced Loan Combination~~Loan, whether for purposes of bidding at foreclosure or otherwise, ~~the applicable~~ such Master Servicer or ~~the applicable~~ such Special Servicer (as the case may be) is authorized to have an Appraisal completed with respect to such property (the cost of which appraisal shall be covered by, and be reimbursable as, a Servicing Advance). ~~The applicable~~ Neither Master Servicer shall foreclose upon or otherwise comparably convert, including by taking title thereto, any real property or other collateral securing a defaulted Serviced Mortgage Loan. The Special Servicers and the Master Servicers shall not foreclose upon or otherwise comparably convert, including by taking title thereto, any real property or other collateral securing a ~~Defaulted~~ Non-Trust-Serviced Pooled Mortgage ~~Loan or Serviced Loan Combination~~Loan. (b) Notwithstanding the foregoing provisions of this Section 3.09, no Mortgaged Property shall be acquired by the applicable Special Servicer on behalf of the Trust (and, in the case of a Serviced Mortgage Loan ~~Combination~~Group, the related Serviced ~~Pari Passu Companion~~ Non-Pooled Mortgage Loan ~~Holder(s~~Noteholder(s)) under such circumstances, in such manner or pursuant to such terms as would (i) cause such Mortgaged Property to fail to qualify as “"foreclosure property” " within the meaning of Section 860G(a)(8) of the Code (unless the portion of such REO Property that is not treated as “"foreclosure property” " and that is held by any REMIC Pool at any given time constitutes not more than a de minimis amount of the assets of such REMIC Pool within the meaning of Treasury Regulations Section 1.860D-1(b)(3)(i) and (ii)), or (ii) except as permitted by Section 3.17(a), subject the Trust to the imposition of any federal income or prohibited transaction taxes under the Code. Subject to the foregoing, however, a Mortgaged Property may be acquired through a ~~single-~~single member limited liability company. In addition, except as permitted under Section 3.17(a), the applicable Special Servicer shall not acquire any personal property on behalf of the Trust (and, in the case of a Serviced Mortgage Loan ~~Combination~~Group, the related Serviced ~~Pari Passu Companion~~ Non-Pooled Mortgage Loan ~~Holder(s~~Noteholder(s)) pursuant to this Section 3.09 unless either: (i) such personal property is incident to real property (within the meaning of Section 856(e)(1) of the Code) so acquired by the applicable Special Servicer; or (ii) the applicable Special Servicer shall have obtained an Opinion of Counsel (the cost of which shall be covered by, and reimbursable as, a Servicing Advance) to the effect that the holding of such personal property as part of the Trust Fund will not result in an Adverse REMIC Event with respect to any REMIC Pool or an Adverse Grantor Trust Event with respect to the Grantor Trust Pool. (c) Notwithstanding the foregoing provisions of this Section 3.09, the applicable Special Servicer shall not, on behalf of the Trust (and, in the case of a Serviced Loan Combination, the related Serviced Pari Passu Companion Loan Holder(s)), have a receiver of rents appointed with respect to a Mortgaged Property, or obtain title to a Mortgaged Property by foreclosure, deed in lieu of foreclosure or otherwise, or take any other action with respect to any Mortgaged Property, if, as a result of any such action, the Trustee, on behalf of the Certificateholders, could, in the reasonable judgment of the applicable Special Servicer, exercised in accordance with the Servicing Standard, be considered to hold title to, to be a “mortgagee-in-possession” of, or to be an “owner” or “operator” of such Mortgaged Property within the meaning of CERCLA or any comparable law, unless: (i) the applicable Special Servicer has previously determined in accordance with the Servicing Standard, based on a Phase I Environmental Assessment (and any additional environmental testing that the applicable Special Servicer deems necessary and prudent) of such Mortgaged Property conducted by an Independent Person who regularly conducts Phase I Environmental Assessments and performed during the nine-month period preceding any such acquisition of title or other action, that such Mortgaged Property is in compliance with applicable environmental laws and regulations and there are no circumstances or conditions present at the Mortgaged Property relating to the use, management or disposal of Hazardous Materials for which investigation, testing, monitoring, containment, clean-up or remediation could be required under any applicable environmental laws and regulations; or (ii) if the determination described in clause (c)(i) above cannot be made, the applicable Special Servicer has previously determined in accordance with the Servicing Standard, on the same basis as described in clause (c)(i) above, and taking into account the coverage provided under the related Environmental Insurance Policy, that it would maximize the recovery to the Certificateholders and, in the case of a Mortgaged Property securing a Serviced Loan Combination, to the related Serviced Pari Passu Companion Loan Holder(s) (as a collective whole) on a present value basis (the relevant discounting of anticipated collections that will be distributable to Certificateholders and, in the case of a Mortgaged Property securing a Serviced Loan Combination, to the related Serviced Pari Passu Companion Loan Holder(s), to be performed at the related Net Mortgage Rate (or (x) in the case of an ARD Mortgage Loan after its Anticipated Repayment Date, at the related Net Mortgage Rate immediately prior to the Anticipated Repayment Date, or (y) in the case of a Serviced Loan Combination, at the weighted average of the Net Mortgage Rates for the related notes)) to acquire title to or possession of the Mortgaged Property and to take such remedial, corrective and/or other further actions as are necessary to bring the Mortgaged Property into compliance with applicable environmental laws and regulations and to appropriately address any of the circumstances and conditions referred to in clause (c)(i) above. Any such determination by the applicable Special Servicer contemplated by clause (i) or clause (ii) of the preceding paragraph shall be evidenced by an Officer’s Certificate to such effect delivered to the Trustee, the applicable Master Servicer, the Subordinate Class Representative and the Majority Subordinate Certificateholder (and, in the case of a Mortgaged Property securing a Serviced Loan Combination, to the related Serviced Pari Passu Companion Loan Holder(s)), specifying all of the bases for such determination, such Officer’s Certificate to be accompanied by all related environmental reports. The cost of such Phase I Environmental Assessment and any such additional environmental testing, as well as the cost of any remedial, corrective or other further action contemplated by clause (i) and/or clause (ii) above of the first paragraph of Section 3.09(c), shall be paid out of the Collection Account (subject to, if it relates to one or more Mortgage Loans in a Serviced Loan Combination, the proviso at the end of the first paragraph (that is, the initial paragraph that includes the enumerated clauses (i) through (xxiii) of Section 3.05(a)(I)). (d) If neither of the conditions set forth in clauses (i) and (ii) of the first paragraph of Section 3.09(c) has been satisfied with respect to any Mortgaged Property securing a defaulted Serviced Mortgage Loan (or, if applicable, a Serviced Loan Combination), the applicable Special Servicer shall take such action as is in accordance with the Servicing Standard (other than proceeding against the Mortgaged Property) and, at such time as it deems appropriate, may, on behalf of the Trust and, if applicable, any related Serviced Pari Passu Companion Loan Holder(s), release all or a portion of such Mortgaged Property from the lien of the related Mortgage; provided that both (i) if such Serviced Mortgage Loan has a then-outstanding principal balance greater than $1,000,000, then prior to the release of all or a portion of the related Mortgaged Property from the lien of the related Mortgage, the applicable Special Servicer shall have notified the Rating Agencies (subject to Section 3.27), the Subordinate Class Representative, the Majority Subordinate Certificateholder, the Trustee, the Certificate Administrator and the applicable Master Servicer, in writing of its intention to so release all or a portion of such Mortgaged Property and the basis for the determination that such intention, in the applicable Special Servicer’s good faith judgment, was consistent with the Servicing Standard and (ii) if any Serviced Loan Combination is involved, the holders of the related Serviced Pari Passu Companion Loan or their representatives shall have the rights, if any, in respect thereof that are enumerated in the related Intercreditor Agreement. (e) The applicable Special Servicer shall report to the Trustee, the applicable Master Servicer, the Majority Subordinate Certificateholder, the Trust Advisor (during any Collective Consultation Period and any Senior Consultation Period), the Subordinate Class Representative (during any Subordinate Control Period and any Collective Consultation Period), and, in case of a Mortgaged Property securing a Serviced Loan Combination, the related Serviced Pari Passu Companion Loan Holder(s), monthly in writing as to any actions taken by the applicable Special Servicer with respect to any Mortgaged Property as to which neither of the conditions set forth in clauses (i) and (ii) of the first paragraph of Section 3.09(c) has been satisfied, in each case until the earliest to occur of satisfaction of either of such conditions, release of the lien of the related Mortgage on such Mortgaged Property and the related Mortgage Loan’s (or in the case of a Serviced Loan Combination, each of the related Mortgage Loan and any related Serviced Pari Passu Companion Loan) becoming a Corrected Mortgage Loan. (f) The applicable Special Servicer shall have the right to determine, in accordance with the Servicing Standard, with respect to any Specially Serviced Mortgage Loan, the advisability of seeking to obtain a deficiency judgment if the state in which the related Mortgaged Property is located and the terms of the subject Mortgage Loan permit such an action and shall, in accordance with the Servicing Standard, seek such deficiency judgment if it deems advisable. The applicable Master Servicer, at the direction of the applicable Special Servicer, shall make a Servicing Advance for the costs incurred in pursuing any such deficiency action, provided that the applicable Master Servicer shall not be obligated in connection therewith to advance any funds, which if so advanced would constitute a Nonrecoverable Advance. (g) Annually in each January, each Master Servicer shall, with the reasonable cooperation of the applicable Special Servicer, prepare and file with the IRS on a timely basis the information returns with respect to the reports of foreclosures and abandonments and reports relating to any cancellation of indebtedness income with respect to any Serviced Mortgage Loan, or Mortgaged Property securing a Serviced Mortgage Loan and any Serviced Loan Combination, required by Sections 6050H (as applicable), 6050J and 6050P of the Code. Contemporaneously therewith, the applicable Master Servicer shall deliver a copy of such information returns to the applicable Special Servicer and the Trustee. (h) As soon as the applicable Special Servicer makes a Final Recovery Determination (during any Subordinate Control Period and any Collective Consultation Period, such determination to be made in consultation with the Subordinate Class Representative and the related calculations to be subject to the approval of such Subordinate Class Representative) with respect to any Mortgage Loan, Serviced Loan Combination or REO Property, it shall promptly notify the Certificate Administrator, the Trustee, the Rating Agencies (subject to Section 3.27), the applicable Master Servicer (unless it is the one making the determination), the Trust Advisor (during any Collective Consultation Period and any Senior Consultation Period) and the Subordinate Class Representative (during any Subordinate Control Period and any Collective Consultation Period). The applicable Special Servicer shall maintain accurate records, prepared by a Servicing Officer, of each such Final Recovery Determination (if any) made by it and the basis thereof. Each such Final Recovery Determination (if any) shall be evidenced by an Officer’s Certificate delivered to the Certificate Administrator, the Trustee, the applicable Master Servicer (unless it is the one making the determination), the Trust Advisor (during any Collective Consultation Period and any Senior Consultation Period) and the Subordinate Class Representative (during any Subordinate Control Period and any Collective Consultation Period) no later than ten (10) Business Days following such Final Recovery Determination. (i) Notwithstanding anything the contrary, to the extent that the applicable Special Servicer acquires a Mortgaged Property that is a hospitality property on behalf of the Trust and such hospitality property has a franchise or licensing agreement that requires a successor or replacement franchisee or licensee to have a specified net worth, the applicable Special Servicer shall, to the extent consistent with the Servicing Standard, take all actions reasonably necessary to permit the Mortgaged Property to maintain its franchise or license with the same franchisor or licensor in place prior to such foreclosure.

Appears in 1 contract

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

Realization Upon Defaulted Serviced Mortgage Loans. (a) The ~~applicable~~ Special Servicer shall, subject to Sections 3.09(b), 3.09(c), 3.09(d), Section 3.24, Section 3.26 and/or Section 3.28, as applicable, exercise reasonable efforts, consistent with the Servicing Standard, to foreclose upon or otherwise comparably convert the ownership of the real property and other collateral securing any Serviced Mortgage Loan or Serviced Loan Combination that comes into and continues in default and as to which no satisfactory arrangements can be made for collection of delinquent payments, including pursuant to Section 3.20. In connection with the foregoing, in the event of a default under any Serviced Mortgage Loan, Serviced Loan Combination or Cross-Collateralized Group that is secured by real properties located in multiple states, and such states include California or another state with a statute, rule or regulation comparable to California’s “one action rule”, then the ~~applicable~~ Special Servicer shall consult Independent counsel regarding the order and manner in which the ~~applicable~~ Special Servicer should foreclose upon or comparably proceed against such properties. The ~~applicable~~ Special Servicer may direct the ~~applicable~~ Master Servicer to advance, as contemplated by Section 3.19(b), all costs and expenses (including attorneys’ fees and litigation costs and expenses) to be incurred on behalf of the Trust in any such proceedings or such consultation, subject to the ~~applicable~~ Master Servicer being entitled to reimbursement for any such advance as a Servicing Advance as provided in Section 3.05(a), and further subject to the ~~applicable~~ Special Servicer’s being entitled to pay out of the related Liquidation Proceeds, Insurance Proceeds and/or Condemnation Proceeds any Liquidation Expenses incurred in respect of any Serviced Mortgage Loan or Serviced Loan Combination, which Liquidation Expenses were outstanding at the time such proceeds are received. Nothing contained in this Section 3.09 shall be construed so as to require the ~~applicable~~ Special Servicer, on behalf of the Trust, to make a bid on any Mortgaged Property at a foreclosure sale or similar proceeding that is in excess of the fair market value of such property, as determined by the ~~applicable~~ Special Servicer taking into account the factors described in Section 3.18 and the results of any appraisal obtained pursuant to the following sentence or otherwise, all such cash bids to be made in a manner consistent with the Servicing Standard. If and when the ~~applicable~~ Master Servicer or the ~~applicable~~ Special Servicer deems it necessary in accordance with the Servicing Standard for purposes of establishing the fair market value of any Mortgaged Property securing a defaulted Serviced Mortgage Loan or Serviced Loan Combination, whether for purposes of bidding at foreclosure or otherwise, the ~~applicable~~ Master Servicer or the ~~applicable~~ Special Servicer (as the case may be) is authorized to have an Appraisal completed with respect to such property (the cost of which appraisal shall be covered by, and be reimbursable as, a Servicing Advance). The ~~applicable~~ Master Servicer shall not foreclose upon or otherwise comparably convert, including by taking title thereto, any real property or other collateral securing a Defaulted Mortgage Loan or Serviced Loan Combination. (b) Notwithstanding the foregoing provisions of this Section 3.09, no Mortgaged Property shall be acquired by the ~~applicable~~ Special Servicer on behalf of the Trust (and, in the case of a Serviced Loan Combination, the related Serviced Pari Passu Companion Loan Holder(s)) under such circumstances, in such manner or pursuant to such terms as would (i) cause such Mortgaged Property to fail to qualify as “foreclosure property” within the meaning of Section 860G(a)(8) of the Code (unless the portion of such REO Property that is not treated as “foreclosure property” and that is held by any REMIC Pool at any given time constitutes not more than a de minimis amount of the assets of such REMIC Pool within the meaning of Treasury Regulations Section 1.860D-1(b)(3)(i) and (ii)), or (ii) except as permitted by Section 3.17(a), subject the Trust to the imposition of any federal income or prohibited transaction taxes under the Code. Subject to the foregoing, however, a Mortgaged Property may be acquired through a single-member limited liability company. In addition, except as permitted under Section 3.17(a), the ~~applicable~~ Special Servicer shall not acquire any personal property on behalf of the Trust (and, in the case of a Serviced Loan Combination, the related Serviced Pari Passu Companion Loan Holder(s) pursuant to this Section 3.09 unless either: (i) such personal property is incident to real property (within the meaning of Section 856(e)(1) of the Code) so acquired by the ~~applicable~~ Special Servicer; or (ii) the ~~applicable~~ Special Servicer shall have obtained an Opinion of Counsel (the cost of which shall be covered by, and reimbursable as, a Servicing Advance) to the effect that the holding of such personal property as part of the Trust Fund will not result in an Adverse REMIC Event with respect to any REMIC Pool or an Adverse Grantor Trust Event with respect to the Grantor Trust Pool. (c) Notwithstanding the foregoing provisions of this Section 3.09, the ~~applicable~~ Special Servicer shall not, on behalf of the Trust (and, in the case of a Serviced Loan Combination, the related Serviced Pari Passu Companion Loan Holder(s)), have a receiver of rents appointed with respect to a Mortgaged Property, or obtain title to a Mortgaged Property by foreclosure, deed in lieu of foreclosure or otherwise, or take any other action with respect to any Mortgaged Property, if, as a result of any such action, the Trustee, on behalf of the Certificateholders, could, in the reasonable judgment of the ~~applicable~~ Special Servicer, exercised in accordance with the Servicing Standard, be considered to hold title to, to be a “mortgagee-in-possession” of, or to be an “owner” or “operator” of such Mortgaged Property within the meaning of CERCLA or any comparable law, unless: (i) the ~~applicable~~ Special Servicer has previously determined in accordance with the Servicing Standard, based on a Phase I Environmental Assessment (and any additional environmental testing that the ~~applicable~~ Special Servicer deems necessary and prudent) of such Mortgaged Property conducted by an Independent Person who regularly conducts Phase I Environmental Assessments and performed during the nine-month period preceding any such acquisition of title or other action, that such Mortgaged Property is in compliance with applicable environmental laws and regulations and there are no circumstances or conditions present at the Mortgaged Property relating to the use, management or disposal of Hazardous Materials for which investigation, testing, monitoring, containment, clean-up or remediation could be required under any applicable environmental laws and regulations; or (ii) if the determination described in clause (c)(i) above cannot be made, the ~~applicable~~ Special Servicer has previously determined in accordance with the Servicing Standard, on the same basis as described in clause (c)(i) above, and taking into account the coverage provided under the related Environmental Insurance Policy, that it would maximize the recovery to the Certificateholders and, in the case of a Mortgaged Property securing a Serviced Loan Combination, to the related Serviced Pari Passu Companion Loan Holder(s) (as a collective whole) on a present value basis (the relevant discounting of anticipated collections that will be distributable to Certificateholders and, in the case of a Mortgaged Property securing a Serviced Loan Combination, to the related Serviced Pari Passu Companion Loan Holder(s), to be performed at the related Net Mortgage Rate (or (x) in the case of an ARD Mortgage Loan after its Anticipated Repayment Date, at the related Net Mortgage Rate immediately prior to the Anticipated Repayment Date, or (y) in the case of a Serviced Loan Combination, at the weighted average of the Net Mortgage Rates for the related notes)) to acquire title to or possession of the Mortgaged Property and to take such remedial, corrective and/or other further actions as are necessary to bring the Mortgaged Property into compliance with applicable environmental laws and regulations and to appropriately address any of the circumstances and conditions referred to in clause (c)(i) above. Any such determination by the ~~applicable~~ Special Servicer contemplated by clause (i) or clause (ii) of the preceding paragraph shall be evidenced by an Officer’s Certificate to such effect delivered to the Trustee, the ~~applicable~~ Master Servicer, the Subordinate Class Representative and the Majority Subordinate Certificateholder (and, in the case of a Mortgaged Property securing a Serviced Loan Combination, to the related Serviced Pari Passu Companion Loan Holder(s)), specifying all of the bases for such determination, such Officer’s Certificate to be accompanied by all related environmental reports. The cost of such Phase I Environmental Assessment and any such additional environmental testing, as well as the cost of any remedial, corrective or other further action contemplated by clause (i) and/or clause (ii) above of the first paragraph of Section 3.09(c), shall be paid out of the Collection Account (subject to, if it relates to one or more Mortgage Loans in a Serviced Loan Combination, the proviso at the end of the first paragraph (that is, the initial paragraph that includes the enumerated clauses (i) through (xxiii) of Section 3.05(a)(I)). (d) If neither of the conditions set forth in clauses (i) and (ii) of the first paragraph of Section 3.09(c) has been satisfied with respect to any Mortgaged Property securing a defaulted Serviced Mortgage Loan (or, if applicable, a Serviced Loan Combination), the ~~applicable~~ Special Servicer shall take such action as is in accordance with the Servicing Standard (other than proceeding against the Mortgaged Property) and, at such time as it deems appropriate, may, on behalf of the Trust and, if applicable, any related Serviced Pari Passu Companion Loan Holder(s), release all or a portion of such Mortgaged Property from the lien of the related Mortgage; provided that both (i) if such Serviced Mortgage Loan has a then-outstanding principal balance greater than $1,000,000, then prior to the release of all or a portion of the related Mortgaged Property from the lien of the related Mortgage, the ~~applicable~~ Special Servicer shall have notified the Rating Agencies (subject to Section 3.27), the Subordinate Class Representative, the Majority Subordinate Certificateholder, the Trustee, the Certificate Administrator and the ~~applicable~~ Master Servicer, in writing of its intention to so release all or a portion of such Mortgaged Property and the basis for the determination that such intention, in the ~~applicable~~ Special Servicer’s good faith judgment, was consistent with the Servicing Standard and (ii) if any Serviced Loan Combination is involved, the holders of the related Serviced Pari Passu Companion Loan or their representatives shall have the rights, if any, in respect thereof that are enumerated in the related Intercreditor Agreement. (e) The ~~applicable~~ Special Servicer shall report to the Trustee, the ~~applicable~~ Master Servicer, the Majority Subordinate Certificateholder, the Trust Advisor (during any Collective Consultation Period and any Senior Consultation Period), the Subordinate Class Representative (during any Subordinate Control Period and any Collective Consultation Period), and, in case of a Mortgaged Property securing a Serviced Loan Combination, the related Serviced Pari Passu Companion Loan Holder(s), monthly in writing as to any actions taken by the ~~applicable~~ Special Servicer with respect to any Mortgaged Property as to which neither of the conditions set forth in clauses (i) and (ii) of the first paragraph of Section 3.09(c) has been satisfied, in each case until the earliest to occur of satisfaction of either of such conditions, release of the lien of the related Mortgage on such Mortgaged Property and the related Mortgage Loan’s (or in the case of a Serviced Loan Combination, each of the related Mortgage Loan and any related Serviced Pari Passu Companion Loan) becoming a Corrected Mortgage Loan. (f) The ~~applicable~~ Special Servicer shall have the right to determine, in accordance with the Servicing Standard, with respect to any Specially Serviced Mortgage Loan, the advisability of seeking to obtain a deficiency judgment if the state in which the related Mortgaged Property is located and the terms of the subject Mortgage Loan permit such an action and shall, in accordance with the Servicing Standard, seek such deficiency judgment if it deems advisable. The ~~applicable~~ Master Servicer, at the direction of the ~~applicable~~ Special Servicer, shall make a Servicing Advance for the costs incurred in pursuing any such deficiency action, provided that the ~~applicable~~ Master Servicer shall not be obligated in connection therewith to advance any funds, which if so advanced would constitute a Nonrecoverable Advance. (g) Annually in each January, ~~each~~ the Master Servicer shall, with the reasonable cooperation of the ~~applicable~~ Special Servicer, prepare and file with the IRS on a timely basis the information returns with respect to the reports of foreclosures and abandonments and reports relating to any cancellation of indebtedness income with respect to any Serviced Mortgage Loan, or Mortgaged Property securing a Serviced Mortgage Loan and any Serviced Loan Combination, required by Sections 6050H (as applicable), 6050J and 6050P of the Code. Contemporaneously therewith, the ~~applicable~~ Master Servicer shall deliver a copy of such information returns to the ~~applicable~~ Special Servicer and the Trustee. (h) As soon as the ~~applicable~~ Special Servicer makes a Final Recovery Determination (during any Subordinate Control Period and any Collective Consultation Period, such determination to be made in consultation with the Subordinate Class Representative and the related calculations to be subject to the approval of such Subordinate Class Representative) with respect to any Mortgage Loan, Serviced Loan Combination or REO Property, it shall promptly notify the Certificate Administrator, the Trustee, the Rating Agencies (subject to Section 3.27), the ~~applicable~~ Master Servicer (unless it is the one making the determination), the Trust Advisor (during any Collective Consultation Period and any Senior Consultation Period) and the Subordinate Class Representative (during any Subordinate Control Period and any Collective Consultation Period). The ~~applicable~~ Special Servicer shall maintain accurate records, prepared by a Servicing Officer, of each such Final Recovery Determination (if any) made by it and the basis thereof. Each such Final Recovery Determination (if any) shall be evidenced by an Officer’s Certificate delivered to the Certificate Administrator, the Trustee, the ~~applicable~~ Master Servicer (unless it is the one making the determination), the Trust Advisor (during any Collective Consultation Period and any Senior Consultation Period) and the Subordinate Class Representative (during any Subordinate Control Period and any Collective Consultation Period) no later than ten (10) Business Days following such Final Recovery Determination. (i) Notwithstanding anything the contrary, to the extent that the ~~applicable~~ Special Servicer acquires a Mortgaged Property that is a hospitality property on behalf of the Trust and such hospitality property has a franchise or licensing agreement that requires a successor or replacement franchisee or licensee to have a specified net worth, the ~~applicable~~ Special Servicer shall, to the extent consistent with the Servicing Standard, take all actions reasonably necessary to permit the Mortgaged Property to maintain its franchise or license with the same franchisor or licensor in place prior to such foreclosure.

Appears in 1 contract

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

Realization Upon Defaulted Serviced Mortgage Loans. ~~(a)~~ The ~~applicable~~ Special Servicer shall, subject to Sections 3.09(b), 3.09(c), 3.09(d), ~~Section 3.24, Section 3.26 and/or Section 3.28, as applicable~~3.24 and 3.27, exercise reasonable efforts, consistent with the Servicing Standard, to foreclose upon or otherwise comparably convert the ownership of the real property and other collateral securing any Serviced Mortgage Loan ~~or Serviced Loan Combination~~ that comes into and continues in default and as to which no satisfactory arrangements can be made for collection of delinquent payments, including pursuant to Section 3.20; provided that neither Master Servicer shall, with respect to any Serviced Mortgage Loan that is an ARD Mortgage Loan after its Anticipated Repayment Date, take any enforcement action with respect to the payment of Post-ARD Additional Interest (other than the making of requests for its collection), and the Special Servicer may take such enforcement action only if (i) the taking of an enforcement action with respect to the payment of other amounts due under such Mortgage Loan is, in the reasonable judgment of the Special Servicer, and without regard to such Post-ARD Additional Interest, also necessary, appropriate and consistent with the Servicing Standard or (ii) all other amounts due under such Mortgage Loan have been paid, the payment of such Post-ARD Additional Interest has not been forgiven in accordance with Section 3.20 and, in the reasonable judgment of the Special Servicer, the Liquidation Proceeds expected to be recovered in connection with such enforcement action will cover the anticipated costs of such enforcement action and, if applicable, any associated Advance Interest. In connection with the foregoing, in the event of a default under any Serviced Mortgage ~~Loan, Serviced~~ Loan ~~Combination~~ or Cross-Collateralized Group that is secured by real properties located in multiple states, and such states include California or another state with a statute, rule or regulation comparable to California~~’s “~~'s "one action rule”", then the ~~applicable~~ Special Servicer shall consult Independent counsel regarding the order and manner in which the ~~applicable~~ Special Servicer should foreclose upon or comparably proceed against such properties. The ~~applicable~~ Special Servicer may direct the applicable Master Servicer to advance, as contemplated by Section 3.19(b), all costs and expenses (including ~~attorneys’~~ attorneys fees and litigation costs and expenses) to be incurred on behalf of the Trust in any such proceedings or such consultation, subject to the applicable Master Servicer being entitled to reimbursement for any such advance as a Servicing Advance as provided in Section 3.05(a), and further subject to the ~~applicable~~ Special Servicer’s 's being entitled to pay out of the related Liquidation Proceeds, Insurance Proceeds and/or Condemnation Proceeds any Liquidation Expenses incurred in respect of any Serviced Mortgage ~~Loan or Serviced Loan Combination~~Loan, which Liquidation Expenses were outstanding at the time such proceeds are received. Nothing contained in this Section 3.09 shall be construed so as to require the ~~applicable~~ Special Servicer, on behalf of the Trust, to make a bid on any Mortgaged Property at a foreclosure sale or similar proceeding that is in excess of the fair market value of such property, as determined by the ~~applicable~~ Special Servicer taking into account the factors described in Section 3.18 and the results of any appraisal obtained pursuant to the following sentence or otherwise, all such cash bids to be made in a manner consistent with the Servicing Standard. If and when the applicable Master Servicer or the ~~applicable~~ Special Servicer deems it necessary in accordance with the Servicing Standard for purposes of establishing the fair market value of any Mortgaged Property securing a defaulted Serviced Mortgage ~~Loan or Serviced Loan Combination~~Loan, whether for purposes of bidding at foreclosure or otherwise, ~~the applicable~~ such Master Servicer or the ~~applicable~~ Special Servicer (as the case may be) is authorized to have an Appraisal completed with respect to such property (the cost of which appraisal shall be covered by, and be reimbursable as, a Servicing Advance). ~~The applicable~~ Neither Master Servicer shall foreclose upon or otherwise comparably convert, including by taking title thereto, any real property or other collateral securing a defaulted Serviced Mortgage Loan. The Special Servicer and the Master Servicers shall not foreclose upon or otherwise comparably convert, including by taking title thereto, any real property or other collateral securing a ~~Defaulted Mortgage Loan or~~ Non-Trust-Serviced Loan Combination. (b) Notwithstanding the foregoing provisions of this Section 3.09, no Mortgaged Property shall be acquired by the applicable Special Servicer on behalf of the Trust (and, in the case of a Serviced Loan Combination, the related Serviced Pari Passu Companion Loan Holder(s)) under such circumstances, in such manner or pursuant to such terms as would (i) cause such Mortgaged Property to fail to qualify as “foreclosure property” within the meaning of Section 860G(a)(8) of the Code (unless the portion of such REO Property that is not treated as “foreclosure property” and that is held by any REMIC Pool at any given time constitutes not more than a de minimis amount of the assets of such REMIC Pool within the meaning of Treasury Regulations Section 1.860D-1(b)(3)(i) and (ii)), or (ii) except as permitted by Section 3.17(a), subject the Trust to the imposition of any federal income or prohibited transaction taxes under the Code. Subject to the foregoing, however, a Mortgaged Property may be acquired through a single-member limited liability company. In addition, except as permitted under Section 3.17(a), the applicable Special Servicer shall not acquire any personal property on behalf of the Trust (and, in the case of a Serviced Loan Combination, the related Serviced Pari Passu Companion Loan Holder(s) pursuant to this Section 3.09 unless either: (i) such personal property is incident to real property (within the meaning of Section 856(e)(1) of the Code) so acquired by the applicable Special Servicer; or (ii) the applicable Special Servicer shall have obtained an Opinion of Counsel (the cost of which shall be covered by, and reimbursable as, a Servicing Advance) to the effect that the holding of such personal property as part of the Trust Fund will not result in an Adverse REMIC Event with respect to any REMIC Pool or an Adverse Grantor Trust Event with respect to the Grantor Trust Pool. (c) Notwithstanding the foregoing provisions of this Section 3.09, the applicable Special Servicer shall not, on behalf of the Trust (and, in the case of a Serviced Loan Combination, the related Serviced Pari Passu Companion Loan Holder(s)), have a receiver of rents appointed with respect to a Mortgaged Property, or obtain title to a Mortgaged Property by foreclosure, deed in lieu of foreclosure or otherwise, or take any other action with respect to any Mortgaged Property, if, as a result of any such action, the Trustee, on behalf of the Certificateholders, could, in the reasonable judgment of the applicable Special Servicer, exercised in accordance with the Servicing Standard, be considered to hold title to, to be a “mortgagee-in-possession” of, or to be an “owner” or “operator” of such Mortgaged Property within the meaning of CERCLA or any comparable law, unless: (i) the applicable Special Servicer has previously determined in accordance with the Servicing Standard, based on a Phase I Environmental Assessment (and any additional environmental testing that the applicable Special Servicer deems necessary and prudent) of such Mortgaged Property conducted by an Independent Person who regularly conducts Phase I Environmental Assessments and performed during the nine-month period preceding any such acquisition of title or other action, that such Mortgaged Property is in compliance with applicable environmental laws and regulations and there are no circumstances or conditions present at the Mortgaged Property relating to the use, management or disposal of Hazardous Materials for which investigation, testing, monitoring, containment, clean-up or remediation could be required under any applicable environmental laws and regulations; or (ii) if the determination described in clause (c)(i) above cannot be made, the applicable Special Servicer has previously determined in accordance with the Servicing Standard, on the same basis as described in clause (c)(i) above, and taking into account the coverage provided under the related Environmental Insurance Policy, that it would maximize the recovery to the Certificateholders and, in the case of a Mortgaged Property securing a Serviced Loan Combination, to the related Serviced Pari Passu Companion Loan Holder(s) (as a collective whole) on a present value basis (the relevant discounting of anticipated collections that will be distributable to Certificateholders and, in the case of a Mortgaged Property securing a Serviced Loan Combination, to the related Serviced Pari Passu Companion Loan Holder(s), to be performed at the related Net Mortgage Rate (or (x) in the case of an ARD Mortgage Loan after its Anticipated Repayment Date, at the related Net Mortgage Rate immediately prior to the Anticipated Repayment Date, or (y) in the case of a Serviced Loan Combination, at the weighted average of the Net Mortgage Rates for the related notes)) to acquire title to or possession of the Mortgaged Property and to take such remedial, corrective and/or other further actions as are necessary to bring the Mortgaged Property into compliance with applicable environmental laws and regulations and to appropriately address any of the circumstances and conditions referred to in clause (c)(i) above. Any such determination by the applicable Special Servicer contemplated by clause (i) or clause (ii) of the preceding paragraph shall be evidenced by an Officer’s Certificate to such effect delivered to the Trustee, the applicable Master Servicer, the Subordinate Class Representative and the Majority Subordinate Certificateholder (and, in the case of a Mortgaged Property securing a Serviced Loan Combination, to the related Serviced Pari Passu Companion Loan Holder(s)), specifying all of the bases for such determination, such Officer’s Certificate to be accompanied by all related environmental reports. The cost of such Phase I Environmental Assessment and any such additional environmental testing, as well as the cost of any remedial, corrective or other further action contemplated by clause (i) and/or clause (ii) above of the first paragraph of Section 3.09(c), shall be paid out of the Collection Account (subject to, if it relates to one or more Mortgage Loans in a Serviced Loan Combination, the proviso at the end of the first paragraph (that is, the initial paragraph that includes the enumerated clauses (i) through (xxiii) of Section 3.05(a)(I)). (d) If neither of the conditions set forth in clauses (i) and (ii) of the first paragraph of Section 3.09(c) has been satisfied with respect to any Mortgaged Property securing a defaulted Serviced Mortgage Loan (or, if applicable, a Serviced Loan Combination), the applicable Special Servicer shall take such action as is in accordance with the Servicing Standard (other than proceeding against the Mortgaged Property) and, at such time as it deems appropriate, may, on behalf of the Trust and, if applicable, any related Serviced Pari Passu Companion Loan Holder(s), release all or a portion of such Mortgaged Property from the lien of the related Mortgage; provided that both (i) if such Serviced Mortgage Loan has a then-outstanding principal balance greater than $1,000,000, then prior to the release of all or a portion of the related Mortgaged Property from the lien of the related Mortgage, the applicable Special Servicer shall have notified the Rating Agencies (subject to Section 3.27), the Subordinate Class Representative, the Majority Subordinate Certificateholder, the Trustee, the Certificate Administrator and the applicable Master Servicer, in writing of its intention to so release all or a portion of such Mortgaged Property and the basis for the determination that such intention, in the applicable Special Servicer’s good faith judgment, was consistent with the Servicing Standard and (ii) if any Serviced Loan Combination is involved, the holders of the related Serviced Pari Passu Companion Loan or their representatives shall have the rights, if any, in respect thereof that are enumerated in the related Intercreditor Agreement. (e) The applicable Special Servicer shall report to the Trustee, the applicable Master Servicer, the Majority Subordinate Certificateholder, the Trust Advisor (during any Collective Consultation Period and any Senior Consultation Period), the Subordinate Class Representative (during any Subordinate Control Period and any Collective Consultation Period), and, in case of a Mortgaged Property securing a Serviced Loan Combination, the related Serviced Pari Passu Companion Loan Holder(s), monthly in writing as to any actions taken by the applicable Special Servicer with respect to any Mortgaged Property as to which neither of the conditions set forth in clauses (i) and (ii) of the first paragraph of Section 3.09(c) has been satisfied, in each case until the earliest to occur of satisfaction of either of such conditions, release of the lien of the related Mortgage on such Mortgaged Property and the related Mortgage Loan’s (or in the case of a Serviced Loan Combination, each of the related Mortgage Loan and any related Serviced Pari Passu Companion Loan) becoming a Corrected Pooled Mortgage Loan. (f) The applicable Special Servicer shall have the right to determine, in accordance with the Servicing Standard, with respect to any Specially Serviced Mortgage Loan, the advisability of seeking to obtain a deficiency judgment if the state in which the related Mortgaged Property is located and the terms of the subject Mortgage Loan permit such an action and shall, in accordance with the Servicing Standard, seek such deficiency judgment if it deems advisable. The applicable Master Servicer, at the direction of the applicable Special Servicer, shall make a Servicing Advance for the costs incurred in pursuing any such deficiency action, provided that the applicable Master Servicer shall not be obligated in connection therewith to advance any funds, which if so advanced would constitute a Nonrecoverable Advance. (g) Annually in each January, each Master Servicer shall, with the reasonable cooperation of the applicable Special Servicer, prepare and file with the IRS on a timely basis the information returns with respect to the reports of foreclosures and abandonments and reports relating to any cancellation of indebtedness income with respect to any Serviced Mortgage Loan, or Mortgaged Property securing a Serviced Mortgage Loan and any Serviced Loan Combination, required by Sections 6050H (as applicable), 6050J and 6050P of the Code. Contemporaneously therewith, the applicable Master Servicer shall deliver a copy of such information returns to the applicable Special Servicer and the Trustee. (h) As soon as the applicable Special Servicer makes a Final Recovery Determination (during any Subordinate Control Period and any Collective Consultation Period, such determination to be made in consultation with the Subordinate Class Representative and the related calculations to be subject to the approval of such Subordinate Class Representative) with respect to any Mortgage Loan, Serviced Loan Combination or REO Property, it shall promptly notify the Certificate Administrator, the Trustee, the Rating Agencies (subject to Section 3.27), the applicable Master Servicer (unless it is the one making the determination), the Trust Advisor (during any Collective Consultation Period and any Senior Consultation Period) and the Subordinate Class Representative (during any Subordinate Control Period and any Collective Consultation Period). The applicable Special Servicer shall maintain accurate records, prepared by a Servicing Officer, of each such Final Recovery Determination (if any) made by it and the basis thereof. Each such Final Recovery Determination (if any) shall be evidenced by an Officer’s Certificate delivered to the Certificate Administrator, the Trustee, the applicable Master Servicer (unless it is the one making the determination), the Trust Advisor (during any Collective Consultation Period and any Senior Consultation Period) and the Subordinate Class Representative (during any Subordinate Control Period and any Collective Consultation Period) no later than ten (10) Business Days following such Final Recovery Determination. (i) Notwithstanding anything the contrary, to the extent that the applicable Special Servicer acquires a Mortgaged Property that is a hospitality property on behalf of the Trust and such hospitality property has a franchise or licensing agreement that requires a successor or replacement franchisee or licensee to have a specified net worth, the applicable Special Servicer shall, to the extent consistent with the Servicing Standard, take all actions reasonably necessary to permit the Mortgaged Property to maintain its franchise or license with the same franchisor or licensor in place prior to such foreclosure.

Appears in 1 contract

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

Realization Upon Defaulted Serviced Mortgage Loans. (a) The applicable Special Servicer shall, subject to Sections 3.09(b), 3.09(c), 3.09(d), Section 3.24, Section 3.26 and/or Section 3.28, as applicable, exercise reasonable efforts, consistent with the Servicing Standard, to foreclose upon or otherwise comparably convert the ownership of the real property and other collateral securing any Serviced Mortgage Loan or Serviced Loan Combination that comes into and continues in default and as to which no satisfactory arrangements can be made for collection of delinquent payments, including pursuant to Section 3.20. In connection with the foregoing, in the event of a default under any Serviced Mortgage Loan, Serviced Loan Combination or Cross-Collateralized Group that is secured by real properties located in multiple states, and such states include California or another state with a statute, rule or regulation comparable to California’s “one action rule”, then the applicable Special Servicer shall consult Independent counsel regarding the order and manner in which the applicable Special Servicer should foreclose upon or comparably proceed against such properties. The applicable Special Servicer may direct the applicable Master Servicer to advance, as contemplated by Section 3.19(b), all costs and expenses (including attorneys’ fees and litigation costs and expenses) to be incurred on behalf of the Trust in any such proceedings or such consultation, subject to the applicable Master Servicer being entitled to reimbursement for any such advance as a Servicing Advance as provided in Section 3.05(a), and further subject to the applicable Special Servicer’s being entitled to pay out of the related Liquidation Proceeds, Insurance Proceeds and/or Condemnation Proceeds any Liquidation Expenses incurred in respect of any Serviced Mortgage Loan or Serviced Loan Combination, which Liquidation Expenses were outstanding at the time such proceeds are received. Nothing contained in this Section 3.09 shall be construed so as to require the applicable Special Servicer, on behalf of the Trust, to make a bid on any Mortgaged Property at a foreclosure sale or similar proceeding that is in excess of the fair market value of such property, as determined by the applicable Special Servicer taking into account the factors described in Section 3.18 and the results of any appraisal obtained pursuant to the following sentence or otherwise, all such cash bids to be made in a manner consistent with the Servicing Standard. If and when the applicable Master Servicer or the applicable Special Servicer deems it necessary in accordance with the Servicing Standard for purposes of establishing the fair market value of any Mortgaged Property securing a defaulted Serviced Mortgage Loan or Serviced Loan Combination, whether for purposes of bidding at foreclosure or otherwise, the applicable Master Servicer or the applicable Special Servicer (as the case may be) is authorized to have an Appraisal completed with respect to such property (the cost of which appraisal shall be covered by, and be reimbursable as, a Servicing Advance). The applicable Master Servicer shall not foreclose upon or otherwise comparably convert, including by taking title thereto, any real property or other collateral securing a Defaulted Mortgage Loan or Serviced Loan Combination. (b) Notwithstanding the foregoing provisions of this Section 3.09, no Mortgaged Property shall be acquired by the applicable Special Servicer on behalf of the Trust (and, in the case of a Serviced Loan Combination, the related Serviced Pari Passu Companion Loan Holder(s)) under such circumstances, in such manner or pursuant to such terms as would (i) cause such Mortgaged Property to fail to qualify as “foreclosure property” within the meaning of Section 860G(a)(8) of the Code (unless the portion of such REO Property that is not treated as “foreclosure property” and that is held by any REMIC Pool at any given time constitutes not more than a de minimis amount of the assets of such REMIC Pool within the meaning of Treasury Regulations Section 1.860D-1(b)(3)(i) and (ii)), or (ii) except as permitted by Section 3.17(a), subject the Trust to the imposition of any federal income or prohibited transaction taxes under the Code. Subject to the foregoing, however, a Mortgaged Property may be acquired through a ~~single-~~single member limited liability company. In addition, except as permitted under Section 3.17(a), the applicable Special Servicer shall not acquire any personal property on behalf of the Trust (and, in the case of a Serviced Loan Combination, the related Serviced Pari Passu Companion Loan Holder(s) pursuant to this Section 3.09 unless either: (i) such personal property is incident to real property (within the meaning of Section 856(e)(1) of the Code) so acquired by the applicable Special Servicer; or (ii) the applicable Special Servicer shall have obtained an Opinion of Counsel (the cost of which shall be covered by, and reimbursable as, a Servicing Advance) to the effect that the holding of such personal property as part of the Trust Fund will not result in an Adverse REMIC Event with respect to any REMIC Pool or an Adverse Grantor Trust Event with respect to the Grantor Trust Pool. (c) Notwithstanding the foregoing provisions of this Section 3.09, the applicable Special Servicer shall not, on behalf of the Trust (and, in the case of a Serviced Loan Combination, the related Serviced Pari Passu Companion Loan Holder(s)), have a receiver of rents appointed with respect to a Mortgaged Property, or obtain title to a Mortgaged Property by foreclosure, deed in lieu of foreclosure or otherwise, or take any other action with respect to any Mortgaged Property, if, as a result of any such action, the Trustee, on behalf of the Certificateholders, could, in the reasonable judgment of the applicable Special Servicer, exercised in accordance with the Servicing Standard, be considered to hold title to, to be a “mortgagee-in-possession” of, or to be an “owner” or “operator” of such Mortgaged Property within the meaning of CERCLA or any comparable law, unless: (i) the applicable Special Servicer has previously determined in accordance with the Servicing Standard, based on a Phase I Environmental Assessment (and any additional environmental testing that the applicable Special Servicer deems necessary and prudent) of such Mortgaged Property conducted by an Independent Person who regularly conducts Phase I Environmental Assessments and performed during the nine-month period preceding any such acquisition of title or other action, that such Mortgaged Property is in compliance with applicable environmental laws and regulations and there are no circumstances or conditions present at the Mortgaged Property relating to the use, management or disposal of Hazardous Materials for which investigation, testing, monitoring, containment, clean-up or remediation could be required under any applicable environmental laws and regulations; or (ii) if the determination described in clause (c)(i) above cannot be made, the applicable Special Servicer has previously determined in accordance with the Servicing Standard, on the same basis as described in clause (c)(i) above, and taking into account the coverage provided under the related Environmental Insurance Policy, that it would maximize the recovery to the Certificateholders and, in the case of a Mortgaged Property securing a Serviced Loan Combination, to the related Serviced Pari Passu Companion Loan Holder(s) (as a collective whole) on a present value basis (the relevant discounting of anticipated collections that will be distributable to Certificateholders and, in the case of a Mortgaged Property securing a Serviced Loan Combination, to the related Serviced Pari Passu Companion Loan Holder(s), to be performed at the related Net Mortgage Rate (or (x) in the case of an ARD Mortgage Loan after its Anticipated Repayment Date, at the related Net Mortgage Rate immediately prior to the Anticipated Repayment Date, or (y) in the case of a Serviced Loan Combination, at the weighted average of the Net Mortgage Rates for the related notes)), to be performed at the related Net Mortgage Rate) to acquire title to or possession of the Mortgaged Property and to take such remedial, corrective and/or other further actions as are necessary to bring the Mortgaged Property into compliance with applicable environmental laws and regulations and to appropriately address any of the circumstances and conditions referred to in clause (c)(i) above. Any such determination by the applicable Special Servicer contemplated by clause (i) or clause (ii) of the preceding paragraph shall be evidenced by an Officer’s Certificate to such effect delivered to the Trustee, the applicable Master Servicer, the Subordinate Class Representative and the Majority Subordinate Certificateholder (and, in the case of a Mortgaged Property securing a Serviced Loan Combination, to the related Serviced Pari Passu Companion Loan Holder(s)), specifying all of the bases for such determination, such Officer’s Certificate to be accompanied by all related environmental reports. The cost of such Phase I Environmental Assessment and any such additional environmental testing, as well as the cost of any remedial, corrective or other further action contemplated by clause (i) and/or clause (ii) ~~above~~ of the ~~first paragraph of Section 3.09(c)~~preceding paragraph, shall be paid out of the Collection Account (subject to, if it relates to one or more Mortgage Loans in a Serviced Loan Combination, the proviso at the end of the first paragraph (that is, the initial paragraph that includes the enumerated clauses (i) through (~~xxiii~~xxii) of subsection (I) of Section ~~3.05(a)(I~~3.05(a)). (d) If neither of the conditions set forth in clauses (i) and (ii) of the first paragraph of Section 3.09(c) has been satisfied with respect to any Mortgaged Property securing a defaulted Serviced Mortgage Loan (or, if applicable, a Serviced Loan Combination), the applicable Special Servicer shall take such action as is in accordance with the Servicing Standard (other than proceeding against the Mortgaged Property) and, at such time as it deems appropriate, may, on behalf of the Trust and, if applicable, ~~any~~ the related Serviced Pari Passu Companion Loan Holder(s), release all or a portion of such Mortgaged Property from the lien of the related Mortgage; provided that both (i) if such Serviced Mortgage Loan has a ~~then-~~then outstanding principal balance greater than $~~1,000,000~~1 million, then prior to the release of all or a portion of the related Mortgaged Property from the lien of the related Mortgage, the applicable Special Servicer shall have notified the Rating Agencies (subject to Section 3.27), the Subordinate Class Representative, the Majority Subordinate Certificateholder, the Trustee, the Certificate Administrator and the applicable Master Servicer, in writing of its intention to so release all or a portion of such Mortgaged Property and the basis for the determination that such intention, in the applicable Special Servicer’s good faith judgment, was consistent with the Servicing Standard and (ii) if ~~any~~ the Serviced Loan Combination is involved, the holders of the related Serviced Pari Passu Companion Loan or their representatives shall have the rights, if any, in respect thereof that are enumerated in the related Intercreditor Agreement. (e) The applicable Special Servicer shall report to the Trustee, the applicable Master Servicer, the Majority Subordinate Certificateholder, the Trust Advisor (during any Collective Consultation Period and any Senior Consultation Period), the Subordinate Class Representative (during any Subordinate Control Period and any Collective Consultation Period), and, in case of a Mortgaged Property securing a Serviced Loan Combination, the related Serviced Pari Passu Companion Loan Holder(s), monthly in writing as to any actions taken by the applicable Special Servicer with respect to any Mortgaged Property as to which neither of the conditions set forth in clauses (i) and (ii) of the first paragraph of Section 3.09(c) has been satisfied, in each case until the earliest to occur of satisfaction of either of such conditions, release of the lien of the related Mortgage on such Mortgaged Property and the related Mortgage Loan’s (or in the case of a Serviced Loan Combination, each of the related Mortgage Loan and ~~any~~ the related Serviced Pari Passu Companion Loan) becoming a Corrected Mortgage Loan. (f) The applicable Special Servicer shall have the right to determine, in accordance with the Servicing Standard, with respect to any Specially Serviced Mortgage Loan, the advisability of seeking to obtain a deficiency judgment if the state in which the related Mortgaged Property is located and the terms of the subject Mortgage Loan permit such an action and shall, in accordance with the Servicing Standard, seek such deficiency judgment if it deems advisable. The applicable Master Servicer, at the direction of the applicable Special Servicer, shall make a Servicing Advance for the costs incurred in pursuing any such deficiency action, provided that the applicable Master Servicer shall not be obligated in connection therewith to advance any funds, which if so advanced would constitute a Nonrecoverable Advance. (g) Annually in each January, each Master Servicer shall, with the reasonable cooperation of the applicable Special Servicer, prepare and file with the IRS on a timely basis the information returns with respect to the reports of foreclosures and abandonments and reports relating to any cancellation of indebtedness income with respect to any Serviced Mortgage Loan, or Mortgaged Property securing a Serviced Mortgage Loan and any Serviced Loan Combination, required by Sections 6050H (as applicable), 6050J and 6050P of the Code. Contemporaneously therewith, the applicable Master Servicer shall deliver a copy of such information returns to the applicable Special Servicer and the Trustee. (h) As soon as the applicable Special Servicer makes a Final Recovery Determination (during any Subordinate Control Period and any Collective Consultation Period, such determination to be made in consultation with the Subordinate Class Representative and the related calculations to be subject to the approval of such Subordinate Class Representative) with respect to any Mortgage Loan, Serviced Loan Combination or REO Property, it shall promptly notify the Certificate Administrator, the Trustee, the Rating Agencies (subject to Section 3.27), the applicable Master Servicer (unless it is the one making the determination), the Trust Advisor (during any Collective Consultation Period and any Senior Consultation Period) and the Subordinate Class Representative (during any Subordinate Control Period and any Collective Consultation Period). The applicable Special Servicer shall maintain accurate records, prepared by a Servicing Officer, of each such Final Recovery Determination (if any) made by it and the basis thereof. Each such Final Recovery Determination (if any) shall be evidenced by an Officer’s Certificate delivered to the Certificate Administrator, the Trustee, the applicable Master Servicer (unless it is the one making the determination), the Trust Advisor (during any Collective Consultation Period and any Senior Consultation Period) and the Subordinate Class Representative (during any Subordinate Control Period and any Collective Consultation Period) no later than ten (10) Business Days following such Final Recovery Determination. (i) Notwithstanding anything the contrary, to the extent that the applicable Special Servicer acquires a Mortgaged Property that is a hospitality property on behalf of the Trust and such hospitality property has a franchise or licensing agreement that requires a successor or replacement franchisee or licensee to have a specified net worth, the applicable Special Servicer shall, to the extent consistent with the Servicing Standard, take all actions reasonably necessary to permit the Mortgaged Property to maintain its franchise or license with the same franchisor or licensor in place prior to such foreclosure.

Appears in 1 contract

Samples: Pooling and Servicing Agreement (WFRBS Commercial Mortgage Trust 2013-C16)

Realization Upon Defaulted Serviced Mortgage Loans. (a) The ~~applicable~~ Special Servicer shall, subject to Sections 3.09(b), 3.09(c), 3.09(d~~), Section~~ ) and 3.24~~, Section 3.26 and/or Section 3.28, as applicable~~, exercise reasonable efforts, consistent with the Servicing Standard, to foreclose upon or otherwise comparably convert the ownership of the real property and other collateral securing any Serviced Mortgage Loan ~~or Serviced Loan Combination~~ that comes into and continues in default and as to which no satisfactory arrangements can be made for collection of delinquent payments, including pursuant to Section 3.20; provided that neither Master Servicer shall, with respect to any Serviced Mortgage Loan that is an ARD Mortgage Loan after its Anticipated Repayment Date, take any enforcement action with respect to the payment of Post-ARD Additional Interest (other than the making of requests for its collection), and the Special Servicer may do so only if (i) the taking of an enforcement action with respect to the payment of other amounts due under such Mortgage Loan is, in the reasonable judgment of the Special Servicer, and without regard to such Post-ARD Additional Interest, also necessary, appropriate and consistent with the Servicing Standard or (ii) all other amounts due under such Mortgage Loan have been paid, the payment of such Post-ARD Additional Interest has not been forgiven in accordance with Section 3.20 and, in the reasonable judgment of the Special Servicer, the Liquidation Proceeds expected to be recovered in connection with such enforcement action will cover the anticipated costs of such enforcement action and, if applicable, any associated Advance Interest. In connection with the foregoing, in the event of a default under any Serviced Mortgage ~~Loan, Serviced~~ Loan ~~Combination~~ or Cross-Collateralized Group that is secured by real properties located in multiple states, and such states include California or another state with a statute, rule or regulation comparable to California~~’s “~~'s "one action rule”", then the ~~applicable~~ Special Servicer shall consult Independent counsel regarding the order and manner in which the ~~applicable~~ Special Servicer should foreclose upon or comparably proceed against such properties. The ~~applicable~~ Special Servicer may direct the applicable Master Servicer to advance, as contemplated by Section 3.19(b), all costs and expenses (including ~~attorneys’~~ attorneys fees and litigation costs and expenses) to be incurred on behalf of the Trust in any such proceedings or such consultation, subject to the applicable Master Servicer being entitled to reimbursement for any such advance as a Servicing Advance as provided in Section 3.05(a), and further subject to the ~~applicable~~ Special Servicer’s 's being entitled to pay out of the related Liquidation Proceeds, Insurance Proceeds and/or Condemnation Proceeds any Liquidation Expenses incurred in respect of any Serviced Mortgage ~~Loan or Serviced Loan Combination~~Loan, which Liquidation Expenses were outstanding at the time such proceeds are received. Nothing contained in this Section 3.09 shall be construed so as to require the ~~applicable~~ Special Servicer, on behalf of the Trust, to make a bid on any Mortgaged Property at a foreclosure sale or similar proceeding that is in excess of the fair market value of such property, as determined by the ~~applicable~~ Special Servicer taking into account the factors described in Section 3.18 and the results of any appraisal obtained pursuant to the following sentence or otherwise, all such cash bids to be made in a manner consistent with the Servicing Standard. If and when the applicable Master Servicer or the ~~applicable~~ Special Servicer deems it necessary in accordance with the Servicing Standard for purposes of establishing the fair market value of any Mortgaged Property securing a defaulted Serviced Mortgage ~~Loan or Serviced Loan Combination~~Loan, whether for purposes of bidding at foreclosure or otherwise, ~~the applicable~~ such Master Servicer or the ~~applicable~~ Special Servicer (as the case may be) is authorized to have an Appraisal completed with respect to such property (the cost of which appraisal shall be covered by, and be reimbursable as, a Servicing Advance). ~~The applicable~~ Neither Master Servicer shall foreclose upon or otherwise comparably convert, including by taking title thereto, any real property or other collateral securing a defaulted Serviced Mortgage Loan. The Special Servicer and the Master Servicers shall not foreclose upon or otherwise comparably convert, including by taking title thereto, any real property or other collateral securing ~~a Defaulted~~ the 1290 Avenue of the Americas Pooled Mortgage ~~Loan or Serviced Loan Combination~~Loan. (b) Notwithstanding the foregoing provisions of this Section 3.09, no Mortgaged Property shall be acquired by the ~~applicable~~ Special Servicer on behalf of the Trust (and, in the case of a ~~Serviced~~ Mortgage Loan ~~Combination~~Pair, the related ~~Serviced Pari Passu Companion Loan Holder(s)~~B-Note Holder) under such circumstances, in such manner or pursuant to such terms as would (i) cause such Mortgaged Property to fail to qualify as “"foreclosure property” " within the meaning of Section 860G(a)(8) of the Code (unless the portion of such REO Property that is not treated as “"foreclosure property” " and that is held by any REMIC Pool at any given time constitutes not more than a de minimis amount of the assets of such REMIC Pool within the meaning of Treasury ~~Regulations Section~~ regulations section 1.860D-1(b)(3)(i) and (ii)), or (ii) except as permitted by Section 3.17(a), subject the Trust to the imposition of any federal income or prohibited transaction taxes under the Code. Subject to the foregoing, however, a Mortgaged Property may be acquired through a ~~single-~~single member limited liability company. In addition, except as permitted under Section 3.17(a), the ~~applicable~~ Special Servicer shall not acquire any personal property on behalf of the Trust (and, in the case of a ~~Serviced~~ Mortgage Loan ~~Combination~~Pair, the related ~~Serviced Pari Passu Companion Loan Holder(s~~B-Note Holder) pursuant to this Section 3.09 unless either: (i) such personal property is incident to real property (within the meaning of Section 856(e)(1) of the Code) so acquired by the ~~applicable~~ Special Servicer; or (ii) the ~~applicable~~ Special Servicer shall have obtained an Opinion of Counsel (the cost of which shall be covered by, and reimbursable as, a Servicing Advance) to the effect that the holding of such personal property as part of the Trust Fund will not result in an Adverse REMIC Event with respect to any REMIC Pool or an Adverse Grantor Trust Event with respect to ~~the~~ either Grantor Trust Pool. (c) Notwithstanding the foregoing provisions of this Section 3.09, the ~~applicable~~ Special Servicer shall not, on behalf of the Trust (and, in the case of a ~~Serviced~~ Mortgage Loan ~~Combination~~Pair, the related ~~Serviced Pari Passu Companion Loan Holder(s)~~B-Note Holder), have a receiver of rents appointed with respect to a Mortgaged Property, or obtain title to a Mortgaged Property by foreclosure, deed in lieu of foreclosure or otherwise, or take any other action with respect to any Mortgaged Property, if, as a result of any such action, the Trustee, on behalf of the Certificateholders, could, in the reasonable judgment of the ~~applicable~~ Special Servicer, exercised in accordance with the Servicing Standard, be considered to hold title to, to be a “"mortgagee-in-possession” " of, or to be an “"owner” " or “"operator” " of such Mortgaged Property within the meaning of CERCLA or any comparable law, unless: (i) the ~~applicable~~ Special Servicer has previously determined in accordance with the Servicing Standard, based on a Phase I Environmental Assessment (and any additional environmental testing that the ~~applicable~~ Special Servicer deems necessary and prudent) of such Mortgaged Property conducted by an Independent Person who regularly conducts Phase I Environmental Assessments and performed during the ~~nine~~12-month period preceding any such acquisition of title or other action, that such Mortgaged Property is in compliance with applicable environmental laws and regulations and there are no circumstances or conditions present at the Mortgaged Property relating to the use, management or disposal of Hazardous Materials for which investigation, testing, monitoring, containment, clean-up or remediation could be required under any applicable environmental laws and regulations; or (ii) if in the event that the determination described in clause (c)(i) above cannot be made, the ~~applicable~~ Special Servicer has previously determined in accordance with the Servicing Standard, on the same basis as described in clause (c)(i) above, and taking into account the coverage provided under the related Environmental Insurance Policy, that it would maximize the recovery to the Certificateholders and, in the case of a Mortgaged Property securing a ~~Serviced~~ Mortgage Loan ~~Combination~~Pair, to the related ~~Serviced Pari Passu Companion Loan Holder(s)~~ B-Note Holder (as a collective whole) on a present value basis (the relevant discounting of anticipated collections that will be distributable to Certificateholders and, in the case of the a Mortgaged Property securing a ~~Serviced~~ Mortgage Loan ~~Combination~~Pair, to the related ~~Serviced Pari Passu Companion Loan Holder(s)~~B-Note Holder, to be performed at the related Net Mortgage Rate (~~or (x)~~ or, in the case of an ARD Mortgage Loan after its Anticipated Repayment Date, at the related Net Mortgage Rate immediately prior to the Anticipated Repayment Date~~, or (y) in the case of a Serviced Loan Combination, at the weighted average of the Net Mortgage Rates for the related notes~~)) to acquire title to or possession of the Mortgaged Property and to take such remedial, corrective and/or other further actions as are necessary to bring the Mortgaged Property into compliance with applicable environmental laws and regulations and to appropriately address any of the circumstances and conditions referred to in clause (c)(i) above. Any such determination by the ~~applicable~~ Special Servicer contemplated by clause (i) or clause (ii) of the preceding paragraph shall be evidenced by an Officer’s 's Certificate to such effect delivered to the Trustee, the applicable Master ~~Servicer,~~ Servicer and the ~~Subordinate~~ Controlling Class Representative ~~and the Majority Subordinate Certificateholder~~ (and, in the case of a Mortgaged Property securing a ~~Serviced~~ Mortgage Loan ~~Combination~~Pair, to the related ~~Serviced Pari Passu Companion Loan Holder(s)~~B-Note Holder), specifying all of the bases for such determination, such Officer’s 's Certificate to be accompanied by all related environmental reports. The cost of such Phase I Environmental Assessment and any such additional environmental testing, as well as the cost of any remedial, corrective or other further action contemplated by clause (i) and/or clause (ii) ~~above~~ of the ~~first paragraph of Section 3.09(c)~~preceding paragraph, shall be paid out of the applicable Collection Account (~~subject to~~and, ~~if it relates to one or more~~ in the case of a Mortgaged Property securing a Mortgage ~~Loans in a Serviced~~ Loan ~~Combination~~Pair, ~~the proviso at the end~~ out of the ~~first paragraph (that is, the initial paragraph that includes the enumerated clauses (i~~related B-Note Account) ~~through (xxiii) of~~ pursuant to Section ~~3.05(a)(I))~~3.05. (d) If neither of the conditions set forth in clauses (i) and (ii) of the first paragraph of Section 3.09(c) has been satisfied with respect to any Mortgaged Property securing a defaulted Serviced Mortgage ~~Loan (or, if applicable, a Serviced Loan Combination)~~Loan, the ~~applicable~~ Special Servicer shall take such action as is in accordance with the Servicing Standard (other than proceeding against the Mortgaged Property) and, at such time as it deems appropriate, may, on behalf of the Trust and, if applicable, any ~~related Serviced Pari Passu Companion Loan Holder(s)~~affected B-Note Holder, release all or a portion of such Mortgaged Property from the lien of the related Mortgage; provided ~~that both (i)~~ that, if such Serviced Mortgage Loan has a ~~then-~~then outstanding principal balance greater than $~~1,000,000~~1 million, then prior to the release of all or a portion of the related Mortgaged Property from the lien of the related Mortgage, (i) the ~~applicable~~ Special Servicer shall have notified the Rating ~~Agencies (subject to Section 3.27)~~Agencies, the ~~Subordinate~~ Controlling Class Representative, the ~~Majority Subordinate Certificateholder, the Trustee, the Certificate Administrator~~ Trustee and the applicable Master ~~Servicer,~~ Servicer in writing of its intention to so release all or a portion of such Mortgaged Property and the ~~basis~~ bases for such intention and (ii) the ~~determination that~~ Controlling Class Representative shall not have objected to such ~~intention~~release within 30 days of such notice or, if the Controlling Class Representative shall have objected, such objection, in the ~~applicable~~ Special Servicer’s 's good faith judgment, was ~~consistent~~ inconsistent with the Servicing Standard and (ii) if any Serviced Loan Combination is involved, the holders of the related Serviced Pari Passu Companion Loan or their representatives shall have the rights, if any, in respect thereof that are enumerated in the related Intercreditor AgreementStandard. (e) The ~~applicable~~ Special Servicer shall report to the Trustee, the applicable Master ~~Servicer,~~ Servicer and the ~~Majority Subordinate Certificateholder, the Trust Advisor (during any Collective Consultation Period and any Senior Consultation Period), the Subordinate~~ Controlling Class Representative (~~during any Subordinate Control Period and any Collective Consultation Period),~~ and, in the case of a Mortgaged Property securing a ~~Serviced~~ Mortgage Loan ~~Combination~~Pair, the related ~~Serviced Pari Passu Companion Loan Holder(s),~~ B-Note Holder) monthly in writing as to any actions taken by the ~~applicable~~ Special Servicer with respect to any Mortgaged Property as to which neither of the conditions set forth in clauses (i) and (ii) of the first paragraph of Section 3.09(c) has been satisfied, in each case until the earliest to occur of satisfaction of either of such conditions, release of the lien of the related Mortgage on such Mortgaged Property and the related Serviced Mortgage Loan’s 's (or or, in the case of a ~~Serviced~~ Mortgage Loan ~~Combination~~Pair, each of the related Serviced Mortgage ~~Loan and any related Serviced Pari Passu Companion~~ Loan's) becoming a Corrected Mortgage Loan. (f) The ~~applicable~~ Special Servicer shall have the right to determine, in accordance with the Servicing Standard, with respect to any Specially Serviced Mortgage Loan, the advisability of seeking to obtain a deficiency judgment if the state in which the related Mortgaged Property is located and the terms of the subject Mortgage Loan permit such an action and shall, in accordance with the Servicing Standard, seek such deficiency judgment if it deems advisable. The applicable Master Servicer, at the direction of the ~~applicable~~ Special Servicer, shall make a Servicing Advance for the costs incurred in pursuing any such deficiency action, provided that ~~the applicable~~ such Master Servicer shall not be obligated in connection therewith to advance any funds, which if so advanced would constitute a Nonrecoverable Advance. (g) Annually in each January, ~~each~~ the applicable Master Servicer shall, with the reasonable cooperation of the ~~applicable~~ Special Servicer, prepare and file with the IRS on a timely basis the information returns with respect to the reports of foreclosures and abandonments and reports relating to any cancellation of indebtedness income with respect to any Serviced Mortgage ~~Loan~~Loan for which it is the applicable Master Servicer, or Mortgaged Property securing a Serviced Mortgage Loan ~~and any Serviced Loan Combination~~for which it is the applicable Master Servicer, required by Sections 6050H (as applicable), 6050J and 6050P of the Code. Contemporaneously therewith, the applicable Master Servicer shall deliver a copy of such information returns to the ~~applicable~~ Special Servicer and the Trustee. (h) As soon as the ~~applicable~~ Special Servicer (or, in the case of the 1290 Avenue of the Americas Pooled Mortgage Loan or any related REO Property, the applicable Master Servicer) makes a Final Recovery Determination (~~during any Subordinate Control Period and any Collective Consultation Period,~~ such determination to be made in consultation with the ~~Subordinate~~ Controlling Class Representative (or, in the case of a B-Note Mortgage Loan or the related Mortgaged Property, the related B-Note Holder) and the related calculations to be subject to the approval of such ~~Subordinate~~ Controlling Class ~~Representative~~Representative (or B-Note Holder)) with respect to any Mortgage ~~Loan, Serviced~~ Loan ~~Combination~~ or REO Property, it shall promptly notify the Certificate Administrator, the Trustee, the ~~Rating Agencies (subject to Section 3.27), the~~ applicable Master Servicer (unless it is the one making the determination~~), the Trust Advisor (during any Collective Consultation Period and any Senior Consultation Period~~) and the ~~Subordinate~~ Controlling Class Representative (~~during any Subordinate Control Period and any Collective Consultation Period~~and, in the case of a B-Note Mortgage Loan or the related Mortgaged Property, the related B-Note Holder). The ~~applicable~~ Special Servicer (or, in the case of the 1290 Avenue of the Americas Pooled Mortgage Loan or any related REO Property, the applicable Master Servicer) shall maintain accurate records, prepared by a Servicing Officer, of each such Final Recovery Determination (if any) made by it and the basis thereof. Each such Final Recovery Determination (if any) shall be evidenced by an Officer’s 's Certificate delivered to the Certificate Administrator, the Trustee, the applicable Master Servicer (unless it is the one making the determination~~), the Trust Advisor (during any Collective Consultation Period and any Senior Consultation Period~~) and the ~~Subordinate~~ Controlling Class Representative ~~(during any Subordinate Control Period and any Collective Consultation Period)~~ no later than ten ~~(10)~~ Business Days following such Final Recovery Determination~~. (i) Notwithstanding anything the contrary~~. For purposes of making a Final Recovery Determination, with respect to the ~~extent that the applicable Special Servicer acquires a Mortgaged Property that is a hospitality property on behalf~~ 1290 Avenue of the ~~Trust and such hospitality property has a franchise~~ Americas Pooled Mortgage Loan or ~~licensing agreement that requires a successor or replacement franchisee or licensee to have a specified net worth~~any related REO Property, the applicable Master Servicer shall be entitled and required to rely on any comparable determination made by the 1290 Avenue of the Americas Special Servicer shall, to the extent consistent with the Servicing Standard, take all actions reasonably necessary to permit the Mortgaged Property to maintain its franchise or license with the same franchisor or licensor in place prior to such foreclosureServicer.

Appears in 1 contract

Samples: Pooling and Servicing Agreement (Prudential Securities Sec Fin Corp Com Mort Tr 2003 Pwr1)

Realization Upon Defaulted Serviced Mortgage Loans. (a) The ~~applicable~~ Special Servicer shall, subject to Sections 3.09(b), 3.09(c), 3.09(d~~), Section~~ ) and 3.24~~, Section 3.26 and/or Section 3.28, as applicable~~, exercise reasonable efforts, consistent with the Servicing Standard, to foreclose upon or otherwise comparably convert the ownership of the real property and other collateral securing any Serviced Mortgage Loan ~~or Serviced Loan Combination~~ that comes into and continues in default and as to which no satisfactory arrangements can be made for collection of delinquent payments, including pursuant to Section 3.20; provided that neither Master Servicer shall, with respect to any Serviced Mortgage Loan that is an ARD Mortgage Loan after its Anticipated Repayment Date, take any enforcement action with respect to the payment of Post-ARD Additional Interest (other than the making of requests for its collection), and the Special Servicer may take such enforcement action only if (i) the taking of an enforcement action with respect to the payment of other amounts due under such Mortgage Loan is, in the reasonable judgment of the Special Servicer, and without regard to such Post-ARD Additional Interest, also necessary, appropriate and consistent with the Servicing Standard or (ii) all other amounts due under such Mortgage Loan have been paid, the payment of such Post-ARD Additional Interest has not been forgiven in accordance with Section 3.20 and, in the reasonable judgment of the Special Servicer, the Liquidation Proceeds expected to be recovered in connection with such enforcement action will cover the anticipated costs of such enforcement action and, if applicable, any associated Advance Interest. In connection with the foregoing, in the event of a default under any Serviced Mortgage ~~Loan, Serviced~~ Loan ~~Combination~~ or Cross-Collateralized Group that is secured by real properties located in multiple states, and such states include California or another state with a statute, rule or regulation comparable to California~~’s “~~'s "one action rule”", then the ~~applicable~~ Special Servicer shall consult Independent counsel regarding the order and manner in which the ~~applicable~~ Special Servicer should foreclose upon or comparably proceed against such properties. The ~~applicable~~ Special Servicer may direct the applicable Master Servicer to advance, as contemplated by Section 3.19(b), all costs and expenses (including ~~attorneys’~~ attorneys fees and litigation costs and expenses) to be incurred on behalf of the Trust in any such proceedings or such consultation, subject to the applicable Master Servicer being entitled to reimbursement for any such advance as a Servicing Advance as provided in Section 3.05(a), and further subject to the ~~applicable~~ Special Servicer’s 's being entitled to pay out of the related Liquidation Proceeds, Insurance Proceeds and/or Condemnation Proceeds any Liquidation Expenses incurred in respect of any Serviced Mortgage ~~Loan or Serviced Loan Combination~~Loan, which Liquidation Expenses were outstanding at the time such proceeds are received. Nothing contained in this Section 3.09 shall be construed so as to require the ~~applicable~~ Special Servicer, on behalf of the Trust, to make a bid on any Mortgaged Property at a foreclosure sale or similar proceeding that is in excess of the fair market value of such property, as determined by the ~~applicable~~ Special Servicer taking into account the factors described in Section 3.18 and the results of any appraisal obtained pursuant to the following sentence or otherwise, all such cash bids to be made in a manner consistent with the Servicing Standard. If and when the applicable Master Servicer or the ~~applicable~~ Special Servicer deems it necessary in accordance with the Servicing Standard for purposes of establishing the fair market value of any Mortgaged Property securing a defaulted Serviced Mortgage ~~Loan or Serviced Loan Combination~~Loan, whether for purposes of bidding at foreclosure or otherwise, ~~the applicable~~ such Master Servicer or the ~~applicable~~ Special Servicer (as the case may be) is authorized to have an Appraisal completed with respect to such property (the cost of which appraisal shall be covered by, and be reimbursable as, a Servicing Advance). ~~The applicable~~ Neither Master Servicer shall foreclose upon or otherwise comparably convert, including by taking title thereto, any real property or other collateral securing a defaulted Serviced Mortgage Loan. The Special Servicer and the Master Servicers shall not foreclose upon or otherwise comparably convert, including by taking title thereto, any real property or other collateral securing a ~~Defaulted~~ Non-Trust-Serviced Pooled Mortgage ~~Loan or Serviced Loan Combination~~Loan. (b) Notwithstanding the foregoing provisions of this Section 3.09, no Mortgaged Property shall be acquired by the ~~applicable~~ Special Servicer on behalf of the Trust (and, in the case of a Serviced Mortgage Loan ~~Combination~~Group, the related Serviced ~~Pari Passu Companion~~ Non-Pooled Mortgage Loan ~~Holder(s~~Noteholder(s)) under such circumstances, in such manner or pursuant to such terms as would (i) cause such Mortgaged Property to fail to qualify as “"foreclosure property” " within the meaning of Section 860G(a)(8) of the Code (unless the portion of such REO Property that is not treated as “"foreclosure property” " and that is held by any REMIC Pool at any given time constitutes not more than a de minimis amount of the assets of such REMIC Pool within the meaning of Treasury Regulations Section 1.860D-1(b)(3)(i) and (ii)), or (ii) except as permitted by Section 3.17(a), subject the Trust to the imposition of any federal income or prohibited transaction taxes under the Code. Subject to the foregoing, however, a Mortgaged Property may be acquired through a ~~single-~~single member limited liability company. In addition, except as permitted under Section 3.17(a), the ~~applicable~~ Special Servicer shall not acquire any personal property on behalf of the Trust (and, in the case of a Serviced Mortgage Loan ~~Combination~~Group, the related Serviced ~~Pari Passu Companion~~ Non-Pooled Mortgage Loan ~~Holder(s~~Noteholder(s)) pursuant to this Section 3.09 unless either: (i) such personal property is incident to real property (within the meaning of Section 856(e)(1) of the Code) so acquired by the ~~applicable~~ Special Servicer; or (ii) the ~~applicable~~ Special Servicer shall have obtained an Opinion of Counsel (the cost of which shall be covered by, and reimbursable as, a Servicing Advance) to the effect that the holding of such personal property as part of the Trust Fund will not result in an Adverse REMIC Event with respect to any REMIC Pool or an Adverse Grantor Trust Event with respect to ~~the~~ either Grantor Trust Pool. (c) Notwithstanding the foregoing provisions of this Section 3.09, the ~~applicable~~ Special Servicer shall not, on behalf of the Trust (and, in the case of a Serviced Mortgage Loan ~~Combination~~Group, the related Serviced ~~Pari Passu Companion~~ Non-Pooled Mortgage Loan ~~Holder(s~~Noteholder(s)), have a receiver of rents appointed with respect to a Mortgaged Property, or obtain title to a Mortgaged Property by foreclosure, deed in lieu of foreclosure or otherwise, or take any other action with respect to any Mortgaged Property, if, as a result of any such action, the Trustee, on behalf of the Certificateholders, could, in the reasonable judgment of the ~~applicable~~ Special Servicer, exercised in accordance with the Servicing Standard, be considered to hold title to, to be a “"mortgagee-in-possession” " of, or to be an “"owner” " or “"operator” " of such Mortgaged Property within the meaning of CERCLA or any comparable law, unless: (i) the ~~applicable~~ Special Servicer has previously determined in accordance with the Servicing Standard, based on a Phase I Environmental Assessment (and any additional environmental testing that the ~~applicable~~ Special Servicer deems necessary and prudent) of such Mortgaged Property conducted by an Independent Person who regularly conducts Phase I Environmental Assessments and performed during the ~~nine~~12-month period preceding any such acquisition of title or other action, that such Mortgaged Property is in compliance with applicable environmental laws and regulations and there are no circumstances or conditions present at the Mortgaged Property relating to the use, management or disposal of Hazardous Materials for which investigation, testing, monitoring, containment, clean-up or remediation could be required under any applicable environmental laws and regulations; or (ii) if in the event that the determination described in clause (c)(i) above cannot be made, the ~~applicable~~ Special Servicer has previously determined in accordance with the Servicing Standard, on the same basis as described in clause (c)(i) above, and taking into account the coverage provided under the related Environmental Insurance Policy, that it would maximize the recovery to the Certificateholders and, in the case of a Mortgaged Property securing a Serviced Mortgage Loan ~~Combination~~Group, to the related Serviced ~~Pari Passu Companion~~ Non-Pooled Mortgage Loan ~~Holder(s~~Noteholder(s) (as a collective whole) on a present value basis (the relevant discounting of anticipated collections that will be distributable to Certificateholders and, in the case of a Mortgaged Property securing a Serviced Mortgage Loan ~~Combination~~Group, to the related Serviced ~~Pari Passu Companion~~ Non-Pooled Mortgage Loan ~~Holder(s~~Noteholder(s), to be performed at the related Net Mortgage Rate (or (x) in the case of an ARD Mortgage Loan after its Anticipated Repayment Date, at the related Net Mortgage Rate immediately prior to the Anticipated Repayment Date, or (y) in the case of a Serviced Mortgage Loan ~~Combination~~Group, at the weighted average of the Net Mortgage Rates for the related ~~notes~~Mortgage Loans)) to acquire title to or possession of the Mortgaged Property and to take such remedial, corrective and/or other further actions as are necessary to bring the Mortgaged Property into compliance with applicable environmental laws and regulations and to appropriately address any of the circumstances and conditions referred to in clause (c)(i) above. Any such determination by the ~~applicable~~ Special Servicer contemplated by clause (i) or clause (ii) of the preceding paragraph shall be evidenced by an Officer’s 's Certificate to such effect delivered to the Trustee, the applicable Master ~~Servicer,~~ Servicer and the ~~Subordinate~~ Controlling Class Representative ~~and the Majority Subordinate Certificateholder~~ (and, in the case of a Mortgaged Property securing a Serviced Mortgage Loan ~~Combination~~Group, to the related Serviced ~~Pari Passu Companion~~ Non-Pooled Mortgage Loan ~~Holder(s~~Noteholder(s)), specifying all of the bases for such determination, such Officer’s 's Certificate to be accompanied by all related environmental reports. The cost of such Phase I Environmental Assessment and any such additional environmental testing, as well as the cost of any remedial, corrective or other further action contemplated by clause (i) and/or clause (ii) ~~above~~ of the ~~first paragraph of Section 3.09(c)~~preceding paragraph, shall be paid out of the applicable Collection Account (subject to, if it relates to one or more Mortgage Loans in a Serviced Mortgage Loan ~~Combination~~Group, the proviso at the end of the first paragraph (that is, the initial paragraph that includes the enumerated clauses (i) through (~~xxiii~~xxii)) of subsection (I) of Section ~~3.05(a)(I~~3.05(a)). (d) If neither of the conditions set forth in clauses (i) and (ii) of the first paragraph of Section 3.09(c) has been satisfied with respect to any Mortgaged Property securing a defaulted Serviced Mortgage Loan (or, if applicable, a Serviced Mortgage Loan ~~Combination~~Group), the ~~applicable~~ Special Servicer shall take such action as is in accordance with the Servicing Standard (other than proceeding against the Mortgaged Property) and, at such time as it deems appropriate, may, on behalf of the Trust and, if applicable, ~~any~~ the related Serviced ~~Pari Passu Companion~~ Non-Pooled Mortgage Loan ~~Holder(s~~Noteholder(s), release all or a portion of such Mortgaged Property from the lien of the related Mortgage; provided ~~that both (i)~~ that, if such Serviced Mortgage Loan has a ~~then-~~then outstanding principal balance greater than $~~1,000,000~~1 million, then prior to the release of all or a portion of the related Mortgaged Property from the lien of the related Mortgage, the ~~applicable~~ Special Servicer shall have notified the Rating ~~Agencies (subject to Section 3.27)~~Agencies, the ~~Subordinate~~ Controlling Class Representative~~, the Majority Subordinate Certificateholder~~, the Trustee, the ~~Certificate Administrator and the~~ applicable Master ~~Servicer,~~ Servicer in writing of its intention to so release all or a portion of such Mortgaged Property and the basis for the determination that such intention, in the ~~applicable~~ Special Servicer’s 's good faith judgment, was consistent with the Servicing Standard and (ii) if any Serviced Loan Combination is involved, the holders of the related Serviced Pari Passu Companion Loan or their representatives shall have the rights, if any, in respect thereof that are enumerated in the related Intercreditor AgreementStandard. (e) The ~~applicable~~ Special Servicer shall report to the Trustee, the applicable Master ~~Servicer,~~ Servicer and the ~~Majority Subordinate Certificateholder, the Trust Advisor (during any Collective Consultation Period and any Senior Consultation Period), the Subordinate~~ Controlling Class Representative (during any Subordinate Control Period and any Collective Consultation Period), and, in case of a Mortgaged Property securing a Serviced Loan Combination, the related Serviced Pari Passu Companion Loan Holder(s), monthly in writing as to any actions taken by the ~~applicable~~ Special Servicer with respect to any Mortgaged Property as to which neither of the conditions set forth in clauses (i) and (ii) of the first paragraph of Section 3.09(c) has been satisfied, in each case until the earliest to occur of satisfaction of either of such conditions, release of the lien of the related Mortgage on such Mortgaged Property and the related Serviced Mortgage Loan’s 's (or or, in the case of a Serviced Mortgage Loan ~~Combination~~Group, each of the related Serviced Mortgage ~~Loan and any related Serviced Pari Passu Companion~~ Loan's) becoming a Corrected Mortgage Loan. (f) The ~~applicable~~ Special Servicer shall have the right to determine, in accordance with the Servicing Standard, with respect to any Specially Serviced Mortgage Loan, the advisability of seeking to obtain a deficiency judgment if the state in which the related Mortgaged Property is located and the terms of the subject Mortgage Loan permit such an action and shall, in accordance with the Servicing Standard, seek such deficiency judgment if it deems advisable. The applicable Master Servicer, at the direction of the ~~applicable~~ Special Servicer, shall make a Servicing Advance for the costs incurred in pursuing any such deficiency action, provided that ~~the applicable~~ such Master Servicer shall not be obligated in connection therewith to advance any funds, which if so advanced would constitute a Nonrecoverable Advance. (g) Annually in each January, ~~each~~ the applicable Master Servicer shall, with the reasonable cooperation of the ~~applicable~~ Special Servicer, prepare and file with the IRS on a timely basis the information returns with respect to the reports of foreclosures and abandonments and reports relating to any cancellation of indebtedness income with respect to any Serviced Mortgage ~~Loan~~Loan for which it is the applicable Master Servicer, or Mortgaged Property securing a Serviced Mortgage Loan ~~and any Serviced Loan Combination~~for which it is the applicable Master Servicer, required by Sections 6050H (as applicable), 6050J and 6050P of the Code. Contemporaneously therewith, the applicable Master Servicer shall deliver a copy of such information returns to the ~~applicable~~ Special Servicer and the Trustee. (h) As soon as the ~~applicable~~ Special Servicer (or, in the case of a Non-Trust-Serviced Pooled Mortgage Loan or any related REO Property, the applicable Master Servicer) makes a Final Recovery Determination (~~during any Subordinate Control Period and any Collective Consultation Period,~~ such determination to be made in consultation with the ~~Subordinate~~ Controlling Class Representative and the related calculations to be subject to the approval of ~~such Subordinate~~ the Controlling Class Representative) with respect to any Mortgage ~~Loan, Serviced~~ Loan ~~Combination~~ or REO Property, it shall promptly notify the Certificate Administrator, the Trustee, the ~~Rating Agencies (subject to Section 3.27), the~~ applicable Master Servicer (unless it is the one making the determination~~), the Trust Advisor (during any Collective Consultation Period and any Senior Consultation Period~~) and the ~~Subordinate~~ Controlling Class ~~Representative (during any Subordinate Control Period and any Collective Consultation Period)~~Representative. The ~~applicable~~ Special Servicer (or, in the case of a Non-Trust-Serviced Pooled Mortgage Loan or any related REO Property, the applicable Master Servicer) shall maintain accurate records, prepared by a Servicing Officer, of each such Final Recovery Determination (if any) made by it and the basis thereof. Each such Final Recovery Determination (if any) shall be evidenced by an Officer’s 's Certificate delivered to the Certificate Administrator, the Trustee, the applicable Master Servicer (unless it is the one making the determination~~), the Trust Advisor (during any Collective Consultation Period and any Senior Consultation Period~~) and the ~~Subordinate~~ Controlling Class ~~Representative (during any Subordinate Control Period and any Collective Consultation Period)~~ Representative, no later than ten ~~(10)~~ Business Days following such Final Recovery Determination~~. (i) Notwithstanding anything the contrary,~~ . For purposes of making a Final Recovery Determination with respect to ~~the extent that the applicable Special Servicer acquires~~ a ~~Mortgaged Property that is a hospitality property on behalf of the Trust and such hospitality property has a franchise~~ Non-Trust-Serviced Pooled Mortgage Loan or ~~licensing agreement that requires a successor or replacement franchisee or licensee to have a specified net worth~~any related REO Property, the applicable Master Servicer shall be entitled to rely on any comparable determination made by the related Non-Trust Special Servicer shall, to the extent consistent with the Servicing Standard, take all actions reasonably necessary to permit the Mortgaged Property to maintain its franchise or license with the same franchisor or licensor in place prior to such foreclosureServicer.

Appears in 1 contract

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

Realization Upon Defaulted Serviced Mortgage Loans. (a) The ~~applicable~~ Special Servicer shall, subject to Sections 3.09(b), 3.09(c), 3.09(d~~), Section 3.24, Section 3.26 and/or Section 3.28, as applicable~~) and 3.24 of this Agreement, exercise reasonable efforts, consistent with the Servicing Standard, to foreclose upon or otherwise comparably convert the ownership of the real property and other collateral securing any Serviced Mortgage Loan ~~or Serviced Loan Combination~~ that comes into and continues in default and as to which no satisfactory arrangements can be made for collection of delinquent payments, including pursuant to Section 3.20; provided that the Master Servicer shall not, with respect to any Serviced Mortgage Loan that is an ARD Mortgage Loan, take any enforcement action with respect to the payment of Post-ARD Additional Interest (other than the making of requests for its collection), and the Special Servicer will do so only if such Mortgage Loan has become a Specially Serviced Mortgage Loan and either (i) the taking of an enforcement action with respect to the payment of other amounts due under such Mortgage Loan is, in the reasonable judgment of the Special Servicer, and without regard to such Post-ARD Additional Interest, also necessary, appropriate and consistent with the Servicing Standard or (ii) all other amounts due under such Mortgage Loan have been paid, the payment of such Post-ARD Additional Interest has not been forgiven in accordance with Section 3.20 and, in the reasonable judgment of the Special Servicer, the Liquidation Proceeds expected to be recovered in connection with such enforcement action will cover the anticipated costs of such enforcement action and, if applicable, any associated Advance Interest. In connection with the foregoing, in the event of a default under any Serviced Mortgage ~~Loan, Serviced~~ Loan ~~Combination~~ or Cross-Collateralized Group that is secured by real properties located in multiple states, and such states include California or another state with a statute, rule or regulation comparable to California~~’s “~~'s "one action rule”", then the ~~applicable~~ Special Servicer shall consult Independent counsel regarding the order and manner in which the ~~applicable~~ Special Servicer should foreclose upon or comparably proceed against such properties. The ~~applicable~~ reasonable costs of such consultation shall be paid by, and shall be reimbursable to, the Special Servicer ~~may direct the applicable Master Servicer~~ (or, subject to ~~advance, as contemplated by~~ Section 3.19(b), the Master Servicer) as a Servicing Advance. In addition, all other costs and expenses ~~(including attorneys’ fees and litigation costs and expenses) to be~~ incurred ~~on behalf of the Trust~~ in any ~~such proceedings~~ foreclosure sale or ~~such consultation~~similar proceeding shall be paid by, and reimbursable to, the Special Servicer (or, subject to Section 3.19(b), the ~~applicable~~ Master ~~Servicer being entitled to reimbursement for any such advance~~ Servicer) as a Servicing Advance as provided in Section 3.05(a), and further subject to the applicable Special Servicer’s being entitled to pay out of the related Liquidation Proceeds, Insurance Proceeds and/or Condemnation Proceeds any Liquidation Expenses incurred in respect of any Serviced Mortgage Loan or Serviced Loan Combination, which Liquidation Expenses were outstanding at the time such proceeds are receivedAdvance. Nothing contained in this Section 3.09 shall be construed so as to require the ~~applicable~~ Special Servicer, on behalf of the Trust, to make a bid on any Mortgaged Property at a foreclosure sale or similar proceeding that is in excess of the fair market value of such property, as determined by the ~~applicable~~ Special Servicer taking into account the factors described in Section 3.18 and the results of any appraisal obtained pursuant to the following sentence or otherwise, all such ~~cash~~ bids to be made in a manner consistent with the Servicing Standard. If and when the ~~applicable Master Servicer or the applicable~~ Special Servicer deems it necessary in accordance with the Servicing Standard for purposes of establishing the fair market value of any Mortgaged Property securing a defaulted Serviced Mortgage ~~Loan or Serviced Loan Combination~~Loan, whether for purposes of bidding at foreclosure or otherwise, the ~~applicable Master Servicer or the applicable~~ Special Servicer ~~(as the case may be)~~ is authorized to have an Appraisal completed with respect to such property (the cost of which appraisal shall be covered by, and be reimbursable as, a Servicing Advance). The ~~applicable~~ Master Servicer shall not foreclose upon or otherwise comparably convert, including by taking title thereto, any real property or other collateral securing a ~~Defaulted~~ defaulted Serviced Mortgage Loan or (and, except as expressly provided for in Article XII, neither the Master Servicer nor the Special Servicer shall take any such action with respect to the [Separately Serviced ~~Loan Combination~~Mortgage Loan]). (b) Notwithstanding ~~the foregoing provisions~~ any other provision of this ~~Section 3.09~~Agreement, no the Special Servicer shall not acquire a Mortgaged Property ~~shall be acquired by the applicable Special Servicer~~ on behalf of the Trust ~~(and, in the case of a Serviced Loan Combination, the related Serviced Pari Passu Companion Loan Holder(s))~~ under such circumstances, in such manner or pursuant to such terms as would (i) cause such Mortgaged Property to fail to qualify as “"foreclosure property” " within the meaning of Section 860G(a)(8) of the Code (unless the portion of such REO Property that is not treated as “"foreclosure property” " and that is held by any REMIC Pool at any given time constitutes not more than a de minimis amount of the assets of such REMIC Pool within the meaning of Treasury ~~Regulations Section~~ regulation section 1.860D-1(b)(3)(i) and (ii)), or (ii) except as permitted by Section 3.17(a), subject the Trust to the imposition of any federal income or prohibited transaction taxes under the Code. Subject to the foregoing, however, a Mortgaged Property may be acquired through a ~~single-~~single member limited liability ~~company~~company pursuant to Section 3.16. In addition, ~~except as permitted under Section 3.17(a),~~ the ~~applicable~~ Special Servicer shall not acquire any personal property on behalf of the Trust ~~(and, in the case of a Serviced Loan Combination, the related Serviced Pari Passu Companion Loan Holder(s)~~ pursuant to this Section 3.09 unless either: (i) such personal property is incident to real property (within the meaning of Section 856(e)(1) of the Code) so acquired by the ~~applicable~~ Special Servicer; or (ii) the ~~applicable~~ Special Servicer shall have obtained an Opinion of Counsel (the cost of which shall be covered by, and reimbursable as, a Servicing Advance) to the effect that the holding of such personal property as part of the Trust Fund will not result in an Adverse REMIC Event with respect to any REMIC Pool or an Adverse Grantor Trust Event with respect to ~~the~~ either Grantor Trust Pool. (c) Notwithstanding the foregoing provisions of this Section 3.09, the ~~applicable~~ Special Servicer shall not, on behalf of the ~~Trust (and~~Trust, ~~in the case of a Serviced Loan Combination, the related Serviced Pari Passu Companion Loan Holder(s)), have a receiver of rents appointed with respect to a Mortgaged Property, or~~ obtain title to a Mortgaged Property by foreclosure, deed in -128- lieu of foreclosure or otherwise, or take any other action with respect to any Mortgaged Property, if, as a result of any such action, the Trustee, on behalf of the Certificateholders, could, in the reasonable judgment of the ~~applicable~~ Special Servicer, exercised in accordance with the Servicing Standard, be considered to hold title to, to be a “"mortgagee-in-possession” " of, or to be an “"owner” " or “"operator” " of such Mortgaged Property within the meaning of CERCLA or any comparable law, unless: (i) the ~~applicable~~ Special Servicer has previously determined in accordance with the Servicing Standard, based on a Phase I Environmental Assessment (and any additional environmental testing that the ~~applicable~~ Special Servicer deems necessary and prudent) of ~~such~~ the subject Mortgaged Property conducted ~~by an Independent Person who regularly conducts Phase I Environmental Assessments and performed~~ during the ~~nine~~12-month period preceding any such acquisition of title or other ~~action~~action by an Independent Person who regularly conducts Phase I Environmental Assessments, that such Mortgaged Property is in compliance with applicable environmental laws and regulations and there are no circumstances or conditions present at ~~the~~ such Mortgaged Property relating to the use, management or disposal of Hazardous Materials for which investigation, testing, monitoring, containment, clean-up or remediation could be required under any applicable environmental laws and regulations; or (ii) if subject to Section 3.24 of this Agreement, in the event that the determination described in clause (c)(i) above cannot be made, the ~~applicable~~ Special Servicer has previously determined in accordance with the Servicing Standard, on the same basis as described in clause (c)(i) above, and taking into account the coverage provided under ~~the~~ any related Environmental Insurance Policy, that it would maximize the recovery to the Certificateholders ~~and, in the case of a Mortgaged Property securing a Serviced Loan Combination, to the related Serviced Pari Passu Companion Loan Holder(s)~~ (as a collective whole) on a present value basis (the relevant discounting of anticipated collections that will be distributable to Certificateholders ~~and, in the case of a Mortgaged Property securing a Serviced Loan Combination, to the related Serviced Pari Passu Companion Loan Holder(s),~~ to be performed at the related Net Mortgage Rate (or (x) in the case of an ARD Mortgage Loan after its Anticipated Repayment Date, at the related Net Mortgage Rate immediately prior to the Anticipated Repayment Date, or (y) in the case of a Serviced Loan Combination, at the weighted average of the Net Mortgage Rates for the related notes)Rate) to acquire title to or possession of the subject Mortgaged Property and to take such remedial, corrective and/or other further actions as are necessary to bring the Mortgaged Property into compliance with applicable environmental laws and regulations and to appropriately address any of the circumstances and conditions referred to in clause (c)(i) above. Any such determination by the applicable Special Servicer contemplated by clause (i) or clause (ii) of the preceding paragraph shall be evidenced by an Officer’s Certificate to such effect delivered to the Trustee, the applicable Master Servicer, the Subordinate Class Representative and the Majority Subordinate Certificateholder (and, in the case of a Mortgaged Property securing a Serviced Loan Combination, to the related Serviced Pari Passu Companion Loan Holder(s)), specifying all of the bases for such determination, such Officer’s Certificate to be accompanied by all related environmental reports. The cost of such Phase I Environmental Assessment and any such additional environmental testing, as well as the cost of any remedial, corrective or other further action contemplated by clause (i) and/or clause (ii) above of the first paragraph of Section 3.09(c), shall be paid out of the Collection Account (subject to, if it relates to one or more Mortgage Loans in a Serviced Loan Combination, the proviso at the end of the first paragraph (that is, the initial paragraph that includes the enumerated clauses (i) through (xxiii) of Section 3.05(a)(I)). (d) If neither of the conditions set forth in clauses (i) and (ii) of the first paragraph of Section 3.09(c) has been satisfied with respect to any Mortgaged Property securing a defaulted Serviced Mortgage Loan (or, if applicable, a Serviced Loan Combination), the applicable Special Servicer shall take such action as is in accordance with the Servicing Standard (other than proceeding against the Mortgaged Property) and, at such time as it deems appropriate, may, on behalf of the Trust and, if applicable, any related Serviced Pari Passu Companion Loan Holder(s), release all or a portion of such Mortgaged Property from the lien of the related Mortgage; provided that both (i) if such Serviced Mortgage Loan has a then-outstanding principal balance greater than $1,000,000, then prior to the release of all or a portion of the related Mortgaged Property from the lien of the related Mortgage, the applicable Special Servicer shall have notified the Rating Agencies (subject to Section 3.27), the Subordinate Class Representative, the Majority Subordinate Certificateholder, the Trustee, the Certificate Administrator and the applicable Master Servicer, in writing of its intention to so release all or a portion of such Mortgaged Property and the basis for the determination that such intention, in the applicable Special Servicer’s good faith judgment, was consistent with the Servicing Standard and (ii) if any Serviced Loan Combination is involved, the holders of the related Serviced Pari Passu Companion Loan or their representatives shall have the rights, if any, in respect thereof that are enumerated in the related Intercreditor Agreement. (e) The applicable Special Servicer shall report to the Trustee, the applicable Master Servicer, the Majority Subordinate Certificateholder, the Trust Advisor (during any Collective Consultation Period and any Senior Consultation Period), the Subordinate Class Representative (during any Subordinate Control Period and any Collective Consultation Period), and, in case of a Mortgaged Property securing a Serviced Loan Combination, the related Serviced Pari Passu Companion Loan Holder(s), monthly in writing as to any actions taken by the applicable Special Servicer with respect to any Mortgaged Property as to which neither of the conditions set forth in clauses (i) and (ii) of the first paragraph of Section 3.09(c) has been satisfied, in each case until the earliest to occur of satisfaction of either of such conditions, release of the lien of the related Mortgage on such Mortgaged Property and the related Mortgage Loan’s (or in the case of a Serviced Loan Combination, each of the related Mortgage Loan and any related Serviced Pari Passu Companion Loan) becoming a Corrected Mortgage Loan. (f) The applicable Special Servicer shall have the right to determine, in accordance with the Servicing Standard, with respect to any Specially Serviced Mortgage Loan, the advisability of seeking to obtain a deficiency judgment if the state in which the related Mortgaged Property is located and the terms of the subject Mortgage Loan permit such an action and shall, in accordance with the Servicing Standard, seek such deficiency judgment if it deems advisable. The applicable Master Servicer, at the direction of the applicable Special Servicer, shall make a Servicing Advance for the costs incurred in pursuing any such deficiency action, provided that the applicable Master Servicer shall not be obligated in connection therewith to advance any funds, which if so advanced would constitute a Nonrecoverable Advance. (g) Annually in each January, each Master Servicer shall, with the reasonable cooperation of the applicable Special Servicer, prepare and file with the IRS on a timely basis the information returns with respect to the reports of foreclosures and abandonments and reports relating to any cancellation of indebtedness income with respect to any Serviced Mortgage Loan, or Mortgaged Property securing a Serviced Mortgage Loan and any Serviced Loan Combination, required by Sections 6050H (as applicable), 6050J and 6050P of the Code. Contemporaneously therewith, the applicable Master Servicer shall deliver a copy of such information returns to the applicable Special Servicer and the Trustee. (h) As soon as the applicable Special Servicer makes a Final Recovery Determination (during any Subordinate Control Period and any Collective Consultation Period, such determination to be made in consultation with the Subordinate Class Representative and the related calculations to be subject to the approval of such Subordinate Class Representative) with respect to any Mortgage Loan, Serviced Loan Combination or REO Property, it shall promptly notify the Certificate Administrator, the Trustee, the Rating Agencies (subject to Section 3.27), the applicable Master Servicer (unless it is the one making the determination), the Trust Advisor (during any Collective Consultation Period and any Senior Consultation Period) and the Subordinate Class Representative (during any Subordinate Control Period and any Collective Consultation Period). The applicable Special Servicer shall maintain accurate records, prepared by a Servicing Officer, of each such Final Recovery Determination (if any) made by it and the basis thereof. Each such Final Recovery Determination (if any) shall be evidenced by an Officer’s Certificate delivered to the Certificate Administrator, the Trustee, the applicable Master Servicer (unless it is the one making the determination), the Trust Advisor (during any Collective Consultation Period and any Senior Consultation Period) and the Subordinate Class Representative (during any Subordinate Control Period and any Collective Consultation Period) no later than ten (10) Business Days following such Final Recovery Determination. (i) Notwithstanding anything the contrary, to the extent that the applicable Special Servicer acquires a Mortgaged Property that is a hospitality property on behalf of the Trust and such hospitality property has a franchise or licensing agreement that requires a successor or replacement franchisee or licensee to have a specified net worth, the applicable Special Servicer shall, to the extent consistent with the Servicing Standard, take all actions reasonably necessary to permit the Mortgaged Property to maintain its franchise or license with the same franchisor or licensor in place prior to such foreclosure.

Appears in 1 contract

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

Realization Upon Defaulted Serviced Mortgage Loans. (a) The applicable Special Servicer shall, subject to Sections 3.09(b), 3.09(c), 3.09(d), Section 3.24, Section 3.26 and/or Section 3.28, as applicable, exercise reasonable efforts, consistent with the Servicing Standard, to foreclose upon or otherwise comparably convert the ownership of the real property and other collateral securing any Serviced Mortgage Loan or Serviced Loan Combination that comes into and continues in default and as to which no satisfactory arrangements can be made for collection of delinquent payments, including pursuant to Section 3.20. In connection with the foregoing, in the event of a default under any Serviced Mortgage Loan, Serviced Loan Combination or Cross-Collateralized Group that is secured by real properties located in multiple states, and such states include California or another state with a statute, rule or regulation comparable to California’s “one action rule”, ,” then the applicable Special Servicer shall consult Independent counsel regarding the order and manner in which the applicable Special Servicer should foreclose upon or comparably proceed against such properties. The applicable Special Servicer may direct the applicable Master Servicer to advance, as contemplated by Section 3.19(b), all costs and expenses (including attorneys’ fees and litigation costs and expenses) to be incurred on behalf of the Trust in any such proceedings or such consultation, subject to the applicable Master Servicer being entitled to reimbursement for any such advance as a Servicing Advance as provided in Section 3.05(a), and further subject to the applicable Special Servicer’s being entitled to pay out of the related Liquidation Proceeds, Insurance Proceeds and/or Condemnation Proceeds any Liquidation Expenses incurred in respect of any Serviced Mortgage Loan or Serviced Loan Combination, which Liquidation Expenses were outstanding at the time such proceeds are received. Nothing contained in this Section 3.09 shall be construed so as to require the applicable Special Servicer, on behalf of the Trust, to make a bid on any Mortgaged Property at a foreclosure sale or similar proceeding that is in excess of the fair market value of such property, as determined by the applicable Special Servicer taking into account the factors described in Section 3.18 and the results of any appraisal obtained pursuant to the following sentence or otherwise, all such cash bids to be made in a manner consistent with the Servicing Standard. If and when the applicable Master Servicer or the applicable Special Servicer deems it necessary in accordance with the Servicing Standard for purposes of establishing the fair market value of any Mortgaged Property securing a defaulted Serviced Mortgage Loan or Serviced Loan Combination, whether for purposes of bidding at foreclosure or otherwise, the applicable Master Servicer or the applicable Special Servicer (as the case may be) is authorized to have an Appraisal completed with respect to such property (the cost of which appraisal shall be covered by, and be reimbursable as, a Servicing Advance). The applicable Master Servicer shall not foreclose upon or otherwise comparably convert, including by taking title thereto, any real property or other collateral securing a Defaulted Mortgage Loan or Serviced Loan Combination. (b) Notwithstanding the foregoing provisions of this Section 3.09, no Mortgaged Property shall be acquired by the applicable Special Servicer on behalf of the Trust (and, in the case of a Serviced Loan Combination, the related Serviced Pari Passu Companion Loan Holder(s)) under such circumstances, in such manner or pursuant to such terms as would (i) cause such Mortgaged Property to fail to qualify as “foreclosure property” within the meaning of Section 860G(a)(8) of the Code (unless the portion of such REO Property that is not treated as “foreclosure property” and that is held by any REMIC Pool at any given time constitutes not more than a de minimis amount of the assets of such REMIC Pool within the meaning of Treasury Regulations Section 1.860D-1(b)(3)(i) and (ii)), or (ii) except as permitted by Section 3.17(a), subject the Trust to the imposition of any federal income or prohibited transaction taxes under the Code. Subject to the foregoing, however, a Mortgaged Property may be acquired through a single-member limited liability company. In addition, except as permitted under Section 3.17(a), the applicable Special Servicer shall not acquire any personal property on behalf of the Trust (and, in the case of a Serviced Loan Combination, the related Serviced Pari Passu Companion Loan Holder(s) pursuant to this Section 3.09 unless either: (i) such personal property is incident to real property (within the meaning of Section 856(e)(1) of the Code) so acquired by the applicable Special Servicer; or (ii) the applicable Special Servicer shall have obtained an Opinion of Counsel (the cost of which shall be covered by, and reimbursable as, a Servicing Advance) to the effect that the holding of such personal property as part of the Trust Fund will not result in an Adverse REMIC Event with respect to any REMIC Pool or an Adverse Grantor Trust Event with respect to the Grantor Trust Pool. (c) Notwithstanding the foregoing provisions of this Section 3.09, the applicable Special Servicer shall not, on behalf of the Trust (and, in the case of a Serviced Loan Combination, the related Serviced Pari Passu Companion Loan Holder(s)), have a receiver of rents appointed with respect to a Mortgaged Property, or obtain title to a Mortgaged Property by foreclosure, deed in lieu of foreclosure or otherwise, or take any other action with respect to any Mortgaged Property, if, as a result of any such action, the Trustee, on behalf of the Certificateholders, could, in the reasonable judgment of the applicable Special Servicer, exercised in accordance with the Servicing Standard, be considered to hold title to, to be a “mortgagee-in-possession” of, or to be an “owner” or “operator” of such Mortgaged Property within the meaning of CERCLA or any comparable law, unless: (i) the applicable Special Servicer has previously determined in accordance with the Servicing Standard, based on a Phase I Environmental Assessment (and any additional environmental testing that the applicable Special Servicer deems necessary and prudent) of such Mortgaged Property conducted by an Independent Person who regularly conducts Phase I Environmental Assessments and performed during the nine-month period preceding any such acquisition of title or other action, that such Mortgaged Property is in compliance with applicable environmental laws and regulations and there are no circumstances or conditions present at the Mortgaged Property relating to the use, management or disposal of Hazardous Materials for which investigation, testing, monitoring, containment, clean-up or remediation could be required under any applicable environmental laws and regulations; or (ii) if the determination described in clause (c)(i) above cannot be made, the applicable Special Servicer has previously determined in accordance with the Servicing Standard, on the same basis as described in clause (c)(i) above, and taking into account the coverage provided under the related Environmental Insurance Policy, that it would maximize the recovery to the Certificateholders and, in the case of a Mortgaged Property securing a Serviced Loan Combination, to the related Serviced Pari Passu Companion Loan Holder(s) (as a collective whole) on a present value basis (the relevant discounting of anticipated collections that will be distributable to Certificateholders and, in the case of a Mortgaged Property securing a Serviced Loan Combination, to the related Serviced Pari Passu Companion Loan Holder(s), to be performed at the related Net Mortgage Rate (or (x) in the case of an ARD Mortgage Loan after its Anticipated Repayment Date, at the related Net Mortgage Rate immediately prior to the Anticipated Repayment Date, or (y) in the case of a Serviced Loan Combination, at the weighted average of the Net Mortgage Rates for the related notes)), to be performed at the related Net Mortgage Rate) to acquire title to or possession of the Mortgaged Property and to take such remedial, corrective and/or other further actions as are necessary to bring the Mortgaged Property into compliance with applicable environmental laws and regulations and to appropriately address any of the circumstances and conditions referred to in clause (c)(i) above. Any such determination by the applicable Special Servicer contemplated by clause (i) or clause (ii) of the preceding paragraph shall be evidenced by an Officer’s Certificate to such effect delivered to the Trustee, the applicable Master Servicer, the Subordinate Class Representative and the Majority Subordinate Certificateholder (and, in the case of a Mortgaged Property securing a Serviced Loan Combination, to the related Serviced Pari Passu Companion Loan Holder(s)), specifying all of the bases for such determination, such Officer’s Certificate to be accompanied by all related environmental reports. The cost of such Phase I Environmental Assessment and any such additional environmental testing, as well as the cost of any remedial, corrective or other further action contemplated by clause (i) and/or clause (ii) ~~above~~ of the ~~first paragraph of Section 3.09(c)~~preceding paragraph, shall be paid out of the Collection Account (subject to, if it relates to one or more Mortgage Loans in a Serviced Loan Combination, the proviso at the end of the first paragraph (that is, the initial paragraph that includes the enumerated clauses (i) through (xxiii) of subsection (I) of Section ~~3.05(a)(I~~3.05(a)). (d) If neither of the conditions set forth in clauses (i) and (ii) of the first paragraph of Section 3.09(c) has been satisfied with respect to any Mortgaged Property securing a defaulted Serviced Mortgage Loan (or, if applicable, a Serviced Loan Combination), the applicable Special Servicer shall take such action as is in accordance with the Servicing Standard (other than proceeding against the Mortgaged Property) and, at such time as it deems appropriate, may, on behalf of the Trust and, if applicable, ~~any~~ the related Serviced Pari Passu Companion Loan Holder(s), release all or a portion of such Mortgaged Property from the lien of the related Mortgage; provided that both (i) if such Serviced Mortgage Loan has a ~~then-~~then outstanding principal balance greater than $1,000,000, then prior to the release of all or a portion of the related Mortgaged Property from the lien of the related Mortgage, the applicable Special Servicer shall have notified the Rating Agencies (subject to Section 3.27), the Subordinate Class Representative, the Majority Subordinate Certificateholder, the Trustee, the Certificate Administrator and the applicable Master ~~Servicer,~~ Servicer in writing of its intention to so release all or a portion of such Mortgaged Property and the basis for the determination that such intention, in the applicable Special Servicer’s good faith judgment, was consistent with the Servicing Standard and (ii) if ~~any~~ a Serviced Loan Combination is involved, the holders of the related Serviced Pari Passu Companion Loan or their representatives shall have the rights, if any, in respect thereof that are enumerated in the related Intercreditor Agreement. (e) The applicable Special Servicer shall report to the Trustee, the applicable Master Servicer, the Majority Subordinate Certificateholder, the Trust Advisor (during any Collective Consultation Period and any Senior Consultation Period), the Subordinate Class Representative (during any Subordinate Control Period and any Collective Consultation Period), and, in case of a Mortgaged Property securing a Serviced Loan Combination, the related Serviced Pari Passu Companion Loan Holder(s), monthly in writing as to any actions taken by the applicable Special Servicer with respect to any Mortgaged Property as to which neither of the conditions set forth in clauses (i) and (ii) of the first paragraph of Section 3.09(c) has been satisfied, in each case until the earliest to occur of satisfaction of either of such conditions, release of the lien of the related Mortgage on such Mortgaged Property and the related Mortgage Loan’s (or in the case of a Serviced Loan Combination, each of the related Mortgage Loan and ~~any~~ the related Serviced Pari Passu Companion Loan) becoming a Corrected Mortgage Loan. (f) The applicable Special Servicer shall have the right to determine, in accordance with the Servicing Standard, with respect to any Specially Serviced Mortgage Loan, the advisability of seeking to obtain a deficiency judgment if the state in which the related Mortgaged Property is located and the terms of the subject Mortgage Loan permit such an action and shall, in accordance with the Servicing Standard, seek such deficiency judgment if it deems advisable. The applicable Master Servicer, at the direction of the applicable Special Servicer, shall make a Servicing Advance for the costs incurred in pursuing any such deficiency action, provided that the applicable Master Servicer shall not be obligated in connection therewith to advance any funds, which if so advanced would constitute a Nonrecoverable Advance. (g) Annually in each January, each Master Servicer shall, with the reasonable cooperation of the applicable Special Servicer, prepare and file with the IRS on a timely basis the information returns with respect to the reports of foreclosures and abandonments and reports relating to any cancellation of indebtedness income with respect to any Serviced Mortgage Loan, or Mortgaged Property securing a Serviced Mortgage Loan and any Serviced Loan Combination, required by Sections 6050H (as applicable), 6050J and 6050P of the Code. Contemporaneously therewith, the applicable Master Servicer shall deliver a copy of such information returns to the applicable Special Servicer and the Trustee. (h) As soon as the applicable Special Servicer makes a Final Recovery Determination (during any Subordinate Control Period and any Collective Consultation Period, such determination to be made in consultation with the Subordinate Class Representative and the related calculations to be subject to the approval of such Subordinate Class Representative) with respect to any Mortgage Loan, Serviced Loan Combination or REO Property, it shall promptly notify the Certificate Administrator, the Trustee, the Rating Agencies (subject to Section 3.27), the applicable Master Servicer (unless it is the one making the determination), the Trust Advisor (during any Collective Consultation Period and any Senior Consultation Period) and the Subordinate Class Representative (during any Subordinate Control Period and any Collective Consultation Period). The applicable Special Servicer shall maintain accurate records, prepared by a Servicing Officer, of each such Final Recovery Determination (if any) made by it and the basis thereof. Each such Final Recovery Determination (if any) shall be evidenced by an Officer’s Certificate delivered to the Certificate Administrator, the Trustee, the applicable Master Servicer (unless it is the one making the determination), the Trust Advisor (during any Collective Consultation Period and any Senior Consultation Period) and the Subordinate Class Representative (during any Subordinate Control Period and any Collective Consultation Period) no later than ten (10) Business Days following such Final Recovery Determination. (i) Notwithstanding anything the contrary, to the extent that the applicable Special Servicer acquires a Mortgaged Property that is a hospitality property on behalf of the Trust and such hospitality property has a franchise or licensing agreement that requires a successor or replacement franchisee or licensee to have a specified net worth, the applicable Special Servicer shall, to the extent consistent with the Servicing Standard, take all actions reasonably necessary to permit the Mortgaged Property to maintain its franchise or license with the same franchisor or licensor in place prior to such foreclosure.

Appears in 1 contract

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

Realization Upon Defaulted Serviced Mortgage Loans. (a) The ~~applicable~~ Special Servicer shall, subject to Sections 3.09(b), 3.09(c), 3.09(d), Section 3.24, Section 3.26 and/or Section 3.28, as applicable, exercise reasonable efforts, consistent with the Servicing Standard, to foreclose upon or otherwise comparably convert the ownership of the real property and other collateral securing any Serviced Mortgage Loan or Serviced Loan Combination that comes into and continues in default and as to which no satisfactory arrangements can be made for collection of delinquent payments, including pursuant to Section 3.20. In connection with the foregoing, in the event of a default under any Serviced Mortgage Loan, Serviced Loan Combination or Cross-Collateralized Group that is secured by real properties located in multiple states, and such states include California or another state with a statute, rule or regulation comparable to California’s “one action rule”, then the ~~applicable~~ Special Servicer shall consult Independent counsel regarding the order and manner in which the ~~applicable~~ Special Servicer should foreclose upon or comparably proceed against such properties. The ~~applicable~~ Special Servicer may direct the ~~applicable~~ Master Servicer to advance, as contemplated by Section 3.19(b), all costs and expenses (including attorneys’ fees and litigation costs and expenses) to be incurred on behalf of the Trust in any such proceedings or such consultation, subject to the ~~applicable~~ Master Servicer being entitled to reimbursement for any such advance as a Servicing Advance as provided in Section 3.05(a), and further subject to the ~~applicable~~ Special Servicer’s being entitled to pay out of the related Liquidation Proceeds, Insurance Proceeds and/or Condemnation Proceeds any Liquidation Expenses incurred in respect of any Serviced Mortgage Loan or Serviced Loan Combination, which Liquidation Expenses were outstanding at the time such proceeds are received. Nothing contained in this Section 3.09 shall be construed so as to require the ~~applicable~~ Special Servicer, on behalf of the Trust, to make a bid on any Mortgaged Property at a foreclosure sale or similar proceeding that is in excess of the fair market value of such property, as determined by the ~~applicable~~ Special Servicer taking into account the factors described in Section 3.18 and the results of any appraisal obtained pursuant to the following sentence or otherwise, all such cash bids to be made in a manner consistent with the Servicing Standard. If and when the ~~applicable~~ Master Servicer or the ~~applicable~~ Special Servicer deems it necessary in accordance with the Servicing Standard for purposes of establishing the fair market value of any Mortgaged Property securing a defaulted Serviced Mortgage Loan or Serviced Loan Combination, whether for purposes of bidding at foreclosure or otherwise, the ~~applicable~~ Master Servicer or the ~~applicable~~ Special Servicer (as the case may be) is authorized to have an Appraisal completed with respect to such property (the cost of which appraisal shall be covered by, and be reimbursable as, a Servicing Advance). The ~~applicable~~ Master Servicer shall not foreclose upon or otherwise comparably convert, including by taking title thereto, any real property or other collateral securing a Defaulted Mortgage Loan or Serviced Loan Combination. (b) Notwithstanding the foregoing provisions of this Section 3.09, no Mortgaged Property shall be acquired by the ~~applicable~~ Special Servicer on behalf of the Trust (and, in the case of a Serviced Loan Combination, the related Serviced Pari Passu Companion Loan Holder(s)) under such circumstances, in such manner or pursuant to such terms as would (i) cause such Mortgaged Property to fail to qualify as “foreclosure property” within the meaning of Section 860G(a)(8) of the Code (unless the portion of such REO Property that is not treated as “foreclosure property” and that is held by any REMIC Pool at any given time constitutes not more than a de minimis amount of the assets of such REMIC Pool within the meaning of Treasury Regulations Section 1.860D-1(b)(3)(i) and (ii)), or (ii) except as permitted by Section 3.17(a), subject the Trust to the imposition of any federal income or prohibited transaction taxes under the Code. Subject to the foregoing, however, a Mortgaged Property may be acquired through a single-member limited liability company. In addition, except as permitted under Section 3.17(a), the ~~applicable~~ Special Servicer shall not acquire any personal property on behalf of the Trust (and, in the case of a Serviced Loan Combination, the related Serviced Pari Passu Companion Loan Holder(s) pursuant to this Section 3.09 unless either: (i) such personal property is incident to real property (within the meaning of Section 856(e)(1) of the Code) so acquired by the ~~applicable~~ Special Servicer; or (ii) the ~~applicable~~ Special Servicer shall have obtained an Opinion of Counsel (the cost of which shall be covered by, and reimbursable as, a Servicing Advance) to the effect that the holding of such personal property as part of the Trust Fund will not result in an Adverse REMIC Event with respect to any REMIC Pool or an Adverse Grantor Trust Event with respect to the Grantor Trust Pool. (c) Notwithstanding the foregoing provisions of this Section 3.09, the ~~applicable~~ Special Servicer shall not, on behalf of the Trust (and, in the case of a Serviced Loan Combination, the related Serviced Pari Passu Companion Loan Holder(s)), have a receiver of rents appointed with respect to a Mortgaged Property, or obtain title to a Mortgaged Property by foreclosure, deed in lieu of foreclosure or otherwise, or take any other action with respect to any Mortgaged Property, if, as a result of any such action, the Trustee, on behalf of the Certificateholders, could, in the reasonable judgment of the ~~applicable~~ Special Servicer, exercised in accordance with the Servicing Standard, be considered to hold title to, to be a “mortgagee-in-possession” of, or to be an “owner” or “operator” of such Mortgaged Property within the meaning of CERCLA or any comparable law, unless: (i) the ~~applicable~~ Special Servicer has previously determined in accordance with the Servicing Standard, based on a Phase I Environmental Assessment (and any additional environmental testing that the ~~applicable~~ Special Servicer deems necessary and prudent) of such Mortgaged Property conducted by an Independent Person who regularly conducts Phase I Environmental Assessments and performed during the nine-month period preceding any such acquisition of title or other action, that such Mortgaged Property is in compliance with applicable environmental laws and regulations and there are no circumstances or conditions present at the Mortgaged Property relating to the use, management or disposal of Hazardous Materials for which investigation, testing, monitoring, containment, clean-up or remediation could be required under any applicable environmental laws and regulations; or (ii) if the determination described in clause (c)(i) above cannot be made, the ~~applicable~~ Special Servicer has previously determined in accordance with the Servicing Standard, on the same basis as described in clause (c)(i) above, and taking into account the coverage provided under the related Environmental Insurance Policy, that it would maximize the recovery to the Certificateholders and, in the case of a Mortgaged Property securing a Serviced Loan Combination, to the related Serviced Pari Passu Companion Loan Holder(s) (as a collective whole) on a present value basis (the relevant discounting of anticipated collections that will be distributable to Certificateholders and, in the case of a Mortgaged Property securing a Serviced Loan Combination, to the related Serviced Pari Passu Companion Loan Holder(s), to be performed at the related Net Mortgage Rate (or (x) in the case of an ARD Mortgage Loan after its Anticipated Repayment Date, at the related Net Mortgage Rate immediately prior to the Anticipated Repayment Date, or (y) in the case of a Serviced Loan Combination, at the weighted average of the Net Mortgage Rates for the related notes)) to acquire title to or possession of the Mortgaged Property and to take such remedial, corrective and/or other further actions as are necessary to bring the Mortgaged Property into compliance with applicable environmental laws and regulations and to appropriately address any of the circumstances and conditions referred to in clause (c)(i) above. Any such determination by the ~~applicable~~ Special Servicer contemplated by clause (i) or clause (ii) of the preceding paragraph shall be evidenced by an Officer’s Certificate to such effect delivered to the Trustee, the ~~applicable~~ Master Servicer, the Subordinate Class Representative and the Majority Subordinate Certificateholder (and, in the case of a Mortgaged Property securing a Serviced Loan Combination, to the related Serviced Pari Passu Companion Loan Holder(s)), specifying all of the bases for such determination, such Officer’s Certificate to be accompanied by all related environmental reports. The cost of such Phase I Environmental Assessment and any such additional environmental testing, as well as the cost of any remedial, corrective or other further action contemplated by clause (i) and/or clause (ii) above of the first paragraph of Section 3.09(c), shall be paid out of the Collection Account (subject to, if it relates to one or more Mortgage Loans in a Serviced Loan Combination, the proviso at the end of the first paragraph (that is, the initial paragraph that includes the enumerated clauses (i) through (xxiii) of Section 3.05(a)(I)). (d) If neither of the conditions set forth in clauses (i) and (ii) of the first paragraph of Section 3.09(c) has been satisfied with respect to any Mortgaged Property securing a defaulted Serviced Mortgage Loan (or, if applicable, a Serviced Loan Combination), the ~~applicable~~ Special Servicer shall take such action as is in accordance with the Servicing Standard (other than proceeding against the Mortgaged Property) and, at such time as it deems appropriate, may, on behalf of the Trust and, if applicable, any related Serviced Pari Passu Companion Loan Holder(s), release all or a portion of such Mortgaged Property from the lien of the related Mortgage; provided that both (i) if such Serviced Mortgage Loan has a then-outstanding principal balance greater than $1,000,000, then prior to the release of all or a portion of the related Mortgaged Property from the lien of the related Mortgage, the ~~applicable~~ Special Servicer shall have notified the Rating Agencies (subject to Section 3.27), the Subordinate Class Representative, the Majority Subordinate Certificateholder, the Trustee, the Certificate Administrator and the ~~applicable~~ Master Servicer, in writing of its intention to so release all or a portion of such Mortgaged Property and the basis for the determination that such intention, in the ~~applicable~~ Special Servicer’s good faith judgment, was consistent with the Servicing Standard and (ii) if any Serviced Loan Combination is involved, the holders of the related Serviced Pari Passu Companion Loan or their representatives shall have the rights, if any, in respect thereof that are enumerated in the related Intercreditor Agreement. (e) The ~~applicable~~ Special Servicer shall report to the Trustee, the ~~applicable~~ Master Servicer, the Majority Subordinate Certificateholder, the Trust Advisor (during any Collective Consultation Period and any Senior Consultation Period), the Subordinate Class Representative (during any Subordinate Control Period and any Collective Consultation Period), and, in case of a Mortgaged Property securing a Serviced Loan Combination, the related Serviced Pari Passu Companion Loan Holder(s), monthly in writing as to any actions taken by the ~~applicable~~ Special Servicer with respect to any Mortgaged Property as to which neither of the conditions set forth in clauses (i) and (ii) of the first paragraph of Section 3.09(c) has been satisfied, in each case until the earliest to occur of satisfaction of either of such conditions, release of the lien of the related Mortgage on such Mortgaged Property and the related Mortgage Loan’s (or in the case of a Serviced Loan Combination, each of the related Mortgage Loan and any related Serviced Pari Passu Companion Loan) becoming a Corrected Mortgage ~~Loan~~Loan(s). (f) The ~~applicable~~ Special Servicer shall have the right to determine, in accordance with the Servicing Standard, with respect to any Specially Serviced Mortgage Loan, the advisability of seeking to obtain a deficiency judgment if the state in which the related Mortgaged Property is located and the terms of the subject Mortgage Loan permit such an action and shall, in accordance with the Servicing Standard, seek such deficiency judgment if it deems advisable. The ~~applicable~~ Master Servicer, at the direction of the ~~applicable~~ Special Servicer, shall make a Servicing Advance for the costs incurred in pursuing any such deficiency action, provided that the ~~applicable~~ Master Servicer shall not be obligated in connection therewith to advance any funds, which if so advanced would constitute a Nonrecoverable Advance. (g) Annually in each January, ~~each~~ the Master Servicer shall, with the reasonable cooperation of the ~~applicable~~ Special Servicer, prepare and file with the IRS on a timely basis the information returns with respect to the reports of foreclosures and abandonments and reports relating to any cancellation of indebtedness income with respect to any Serviced Mortgage Loan, or Mortgaged Property securing a Serviced Mortgage Loan and any Serviced Loan Combination, required by Sections 6050H (as applicable), 6050J and 6050P of the Code. Contemporaneously therewith, the ~~applicable~~ Master Servicer shall deliver a copy of such information returns to the ~~applicable~~ Special Servicer and the Trustee. (h) As soon as the ~~applicable~~ Special Servicer makes a Final Recovery Determination (during any Subordinate Control Period and any Collective Consultation Period, such determination to be made in consultation with the Subordinate Class Representative and the related calculations to be subject to the approval of such Subordinate Class Representative) with respect to any Mortgage Loan, Serviced Loan Combination or REO Property, it shall promptly notify the Certificate Administrator, the Trustee, the Rating Agencies (subject to Section 3.27), the ~~applicable~~ Master Servicer (unless it is the one making the determination), the Trust Advisor (during any Collective Consultation Period and any Senior Consultation Period) and the Subordinate Class Representative (during any Subordinate Control Period and any Collective Consultation Period). The ~~applicable~~ Special Servicer shall maintain accurate records, prepared by a Servicing Officer, of each such Final Recovery Determination (if any) made by it and the basis thereof. Each such Final Recovery Determination (if any) shall be evidenced by an Officer’s Certificate delivered to the Certificate Administrator, the Trustee, the ~~applicable~~ Master Servicer (unless it is the one making the determination), the Trust Advisor (during any Collective Consultation Period and any Senior Consultation Period) and the Subordinate Class Representative (during any Subordinate Control Period and any Collective Consultation Period) no later than ten (10) Business Days following such Final Recovery Determination. (i) Notwithstanding anything the contrary, to the extent that the ~~applicable~~ Special Servicer acquires a Mortgaged Property that is a hospitality property on behalf of the Trust and such hospitality property has a franchise or licensing agreement that requires a successor or replacement franchisee or licensee to have a specified net worth, the ~~applicable~~ Special Servicer shall, to the extent consistent with the Servicing Standard, take all actions reasonably necessary to permit the Mortgaged Property to maintain its franchise or license with the same franchisor or licensor in place prior to such foreclosure.

Appears in 1 contract

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

Common use of Realization Upon Defaulted Serviced Mortgage Loans Clause in Contracts