Bernstein & Feldman, P.A.

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Changing banking interests in commercial real estate

Maryland developers may find that there are fewer financing choices in commercial real estate as smaller banks face regulatory challenges in this sector. Federal regulation of this type of lending has recently resulted in greater scrutiny, which has caused many small banks to move away from these financing options. Small banks have begun to sell the commercial real estate loans that they hold, and they are reducing their future lending in this area as well.

Larger banks have also been affected in the commercial real estate industry because they are less likely to be able to sell new loans to smaller banks in light of the regulatory changes. The reduction of banks making these loans has also caused a reduction in competition for new loans. In response, foreign banks are increasing their activity in this sector. Overall, foreign banks represent nearly $52 billion in commercial loans. Although many U.S. banks have pulled back in lending for commercial properties, there are still some small banks that continue to actively lend in this sector.

Adverse economic conditions can create major financial challenges for those needing commercial properties to further their business interests. As dealings with foreign banks and entities are considered, sound legal insight could be needed to ensure that the terms of loans are clear. While those with extensive experience in this industry might work consistently with legal counsel to ensure that their interests are protected, newcomers to commercial property development might face unexpected difficulties if they fail to obtain sound counsel.

A commercial real estate lawyer could be helpful for identifying the pros and cons of a given property in terms of zoning issues, financing, traffic patterns, and other legal matters. It can also be important to work with a lawyer when negotiating the terms for buying and financing a property.

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