Exclusions

Guidance

This Section does not apply to:

• Soft Preferred EquityPreferred EquityA direct or indirect equity investment in an entity providing that investor with preferred rights to receive dividends, distributions, payments, or returns relative to other equity owners. that does not benefit from any remedial rights related to the failure to make or pay any preferred payment of return; or
• any BorrowerBorrowerPerson who is the obligor per the Note. organizational or capital structures relating solely to the allocation of LIHTCsLIHTCsFederal program offering tax credits to owners of eligible properties that contain low-income occupants and rent restrictions. .

For example, Part III, Chapter 16: Mezzanine Financing and Preferred Equity, Section 1602: Preferred Equity does not apply to:

• Soft Preferred EquityPreferred EquityA direct or indirect equity investment in an entity providing that investor with preferred rights to receive dividends, distributions, payments, or returns relative to other equity owners. that is Preferred EquityPreferred EquityA direct or indirect equity investment in an entity providing that investor with preferred rights to receive dividends, distributions, payments, or returns relative to other equity owners. only because of “promoted interest” or priority “waterfall” distributions in the organizational structure of the BorrowerBorrowerPerson who is the obligor per the Note. , but does not otherwise benefit from remedial rights when distributions are not paid or made.
• Instances where a provision in the Borrower’sBorrower’sPerson who is the obligor per the Note. organizational documents allows or requires a forced sale of the PropertyPropertyMultifamily residential real estate securing the Mortgage Loan, including the fee simple or Leasehold interest, Improvements, and personal property (per the Uniform Commercial Code). to a third party in an arm’s length transaction
  • if preferred payments or returns are not made, or
  • for standard non-recourse guaranties.