When working with new borrowers who plan to replace equipment, build or purchase a laundromat, Eastern Funding sometimes requires that the landlord of the space sign a Landlord Waiver or a Landlord Lender Agreement.
These documents provide mutual protections for the interests of both Eastern Funding and the landlord, and are part of the process to help laundry business owners obtain the loans that they need. Understanding why, where and in which situations these documents are used can be beneficial in helping laundromat owners to prepare their new landlords for an upcoming project.
Typically, Eastern Funding asks for a Landlord Waiver to secure laundry equipment we have financed, like washer and dryer machines. These machines are used as collateral on a loan, so we need the ability to file a clear lien and access them should a laundry business owner default on that loan. In some instances, we need written permission from a landlord of the space on which they are kept to do this, and a Landlord Waiver provides that.
It bears mentioning that laundry equipment is of considerably more value to us when installed in a business than when sold in parts. As a result, the Landlord Waiver and our right to repossess equipment is only used as a last resort. In some states, a Landlord Waiver is not required on all loans but may help business owners to qualify for loans that otherwise might not be in reach. In the following states, Eastern Funding must obtain a Landlord Waiver on all loans, regardless of dollar amount: AR, AZ, FL, IA, KY, LA, NV, NJ, NM, PA, TX, UT, WA, WV and VA.
Landlord Lender Agreement
A Collateral Assignment of the Location Lease- also known as – A Landlord Lender Agreement gives Eastern Funding the right to find a replacement tenant during a set period of time, should it become necessary. This agreement is generally used in cases where the borrower either abandons a laundromat or is evicted from the space.
Frequently, a Landlord Lender Agreement helps to save both Eastern Funding and the landlord money. Finding a new tenant to continue the lease can save the landlord the costs of returning the commercial space to a “vanilla box” and finding a new tenant. In many cases, Eastern Funding will even continue to pay rent on the space while it is unoccupied. In return, Eastern Funding has the opportunity to leave the equipment in place and sell the business to another operator.
A Landlord Waiver and Landlord Lender Agreement exist to ensure an alignment of interests between a landlord and Eastern Funding in the worst case scenario. These agreements don’t ask that a landlord surrender any rights that he or she has against a tenant in the event of default, but help to protect against losses and build the business of our partners in the long run.
When financing is required, we always suggest that laundry owners present a draft of the Landlord Lender Agreement to the prospective landlord before signing a new lease. Eastern Funding is willing to assist with this as a part of the loan application process. Speak to a loan officer today to find out more.