3900 Wisconsin Avenue, NW
Washington, DC 20016-2892
MASTER LEASE REVIEW CHECKLIST
MASTER LESSOR
MASTER LESSEE
[HISTORIC TAX
CREDIT INVESTOR]
LEASE DATE
REVIEW DATE
Must satisfy Guide requirements for Borrower structure.
Must satisfy Guide requirements for Borrower structure (provided
that the property ownership requirements will be satisfied pursuant
to the Master Lessee’s interest in the Master Lease).
(If applicable)
The subject matters discussed below in this Master Lease Review Checklist are not intended to
be exhaustive. The Lender and its counsel must review, negotiate, and approve the Master Lease
in accordance with applicable Fannie Mae and other prudent underwriting standards, and explain
below any significant risks and proposed mitigants to such risks. The Lender is required to fully
underwrite the Master Lease to confirm that the terms of the Master Lease, and the rights of the
parties to the Master Lease, do not:

conflict with the Loan Documents;

impair the Master Lessor’s or any guarantor’s ability to comply with the Loan
Documents; or

impair the Lender’s exercise of remedies under the Loan Documents.
The requirements set forth in this Master Lease Checklist also apply to Sub-Master Leases.
References to the “Master Lessor” are intended to mean the “Borrower” unless the context
indicates otherwise.
The reviewer comments should reference the appropriate section numbers in the applicable
Master Lease, Sub-Master Lease, sublease, operating lease, or other lease document, including
any exhibits or amendments. This Master Lease Review Checklist must be delivered to Fannie
Mae with the underwriting narrative, together with executed copies of all such lease documents.
Any deviation from the requirements set forth herein must be approved by Fannie Mae.
Master Lease Review Checklist
Fannie Mae
Form 4201
10-14
Page 1
© 2014 Fannie Mae
GENERAL MASTER LEASE REQUIREMENTS
ITEM
REVIEWER
COMMENTS
(REFERENCE
APPLICABLE
SECTION
NUMBERS)
SUBJECT MATTER
REQUIREMENTS
1.
Master Lessee
Affiliation
Describe the relationship between the Master Lessee and the
Master Lessor, and any Sub-Master Lessee, Guarantor, Key
Principal, operator, manager, or sublessee, identifying any that is
an affiliate or that controls, is controlled by, or is under common
control with the Master Lessee. Provide organizational charts,
as applicable.
2.
Mortgage Loan
Authorized
The Master Lease must contain an acknowledgement by the
Master Lessee that the Master Lessor may enter into the
Mortgage Loan, encumber the fee estate and the other
Mortgaged Property as described in the Loan Documents, and
assign its interest in the Master Lease Documents as described in
the Loan Documents.
3.
No Abatement or
Setoff; Rental Amount
There is no free rent, rent abatement, or rent rebate under the
Master Lease and no fees are owed by the Master Lessor to the
Master Lessee. See below for Seniors Housing Property specific
exceptions.
The rent payments by the Master Lessee under the Master Lease
must cover all payment (including funding of escrows and
reserves) and indemnification obligations of the Master Lessor
under the Loan Documents, as well as any late charges caused
by the Master Lessee’s late payments. Unless otherwise covered
by an “overpayment” of rent, the Master Lease shall specify a
default rate that is at least equal to that in the Loan Agreement.
The Master Lease rent payments may be reduced to match a
reduction in payment obligations under the Loan Documents.
The Master Lease must be a so-called triple-net, absolute net, or
bondable lease with no right of abatement or set-off,
notwithstanding any force majeure provision.
4.
Term of Master Lease;
Extension/Renewal
Options
Identify the Master Lease commencement and expiration dates,
as well as the terms of and requirements for exercising any
extension or renewal options.
The Master Lease term may not expire prior to 90 days after the
Maturity Date of the Mortgage Loan. The Master Lease must
include appropriate Lender notices for extension/renewal terms.
5.
Indemnification
The Master Lessee must be responsible for indemnifying or
reimbursing the Master Lessor for its indemnification,
Master Lease Review Checklist
Fannie Mae
Form 4201
10-14
Page 2
© 2014 Fannie Mae
ITEM
SUBJECT MATTER
REVIEWER
COMMENTS
(REFERENCE
APPLICABLE
SECTION
NUMBERS)
REQUIREMENTS
reimbursement, and other similar obligations to the Lender.
Appropriate insurance shall be maintained by the Master Lessee
for such purposes.
6.
Representations;
Warranties; Covenants
The Master Lessee must make appropriate corresponding
representations, warranties, and covenants to support those made
by the Master Lessor in the Loan Agreement.
7.
Full Force and Effect
The Master Lease must be in full force and effect, with all
conditions precedent having been satisfied or waived in writing.
8.
Estoppel Certificates
The Master Lease must require the Master Lessee to furnish the
Master Lessor with estoppel certificates as described in the Loan
Agreement.
9.
Compliance with Laws
The Master Lease must require that the Master Lessee and the
Mortgaged Property comply with all applicable laws.
10.
Alterations
The Master Lessee must be prohibited from making alterations
to the Mortgaged Property in violation of the Loan Documents.
11.
Entry; Inspection;
Audit
The Master Lessor and its agents shall have the right to enter
and inspect the Mortgaged Property, and to audit the Master
Lessee’s books and records upon the terms set forth in the Loan
Agreement.
12.
Mortgaged Property
Ownership, Condition,
Maintenance and
Repair
Except as otherwise disclosed in the Loan Agreement and
approved by Fannie Mae, all real and personal property required
for the ownership, operation, and management of the Mortgaged
Property must be (i) owned by the Master Lessor, (ii) leased by
the Master Lessee pursuant to the Master Lease, (iii) included
among the Mortgaged Property, and (iv) pledged to the Lender
as the first priority Lien holder.
The Mortgaged Property must be conveyed to the Master Lessee
in “as is, where is, with all faults” condition.
Repair and maintenance requirements in the Master Lease must
satisfy the Loan Document requirements for repair and
maintenance of the Mortgaged Property. If the Master Lease
provides that the Master Lessor is responsible for all repairs to
and maintenance of the Mortgaged Property, the Master Lessee
must assume such responsibilities in writing.
The Master Lessee must make corresponding representations,
warranties, and covenants with respect to the condition and
maintenance of the Mortgaged Property as the Master Lessor is
required to make to the Lender in the Loan Documents.
Master Lease Review Checklist
Fannie Mae
Form 4201
10-14
Page 3
© 2014 Fannie Mae
ITEM
REVIEWER
COMMENTS
(REFERENCE
APPLICABLE
SECTION
NUMBERS)
SUBJECT MATTER
REQUIREMENTS
Use Restrictions;
Transfer of Mortgaged
Property
The Master Lease must restrict use of the Mortgaged Property in
the same manner as the Loan Agreement.
14.
Property Management
The Master Lessee’s engagement of a property manager and the
amendment and termination of any property management
agreement must comply with the criteria set forth in the Loan
Agreement.
15.
Assignability of Leases,
Rents, Security
Deposits
All leases, rents and security deposits from the Mortgaged
Property must be assigned to the Lender.
16.
Amendment/
Modification
The Master Lease must provide that neither the Master Lease
nor any other Master Lease Document (i.e., any supplemental
agreements entered into in connection with the Master Lease)
may be amended, modified, cancelled, surrendered, or
terminated without the consent of the Lender.
17.
Bankruptcy
The Master Lease must provide that a Master Lessee bankruptcy
shall be an automatic default under the Master Lease.
18.
Waiver of de facto
Guarantor’s Rights
The Master Lessee must waive its rights to claim landlord/tenant
or de facto guarantor protections.
19.
No Brokerage/
Commissions
The Master Lessee must warrant that no brokerage or
commission is due.
20.
Non-Merger Clause;
Acceptance of
Surrender
The Master Lease must contain a non-merger clause (i.e., a
clause providing that the Master Lease shall not terminate
because of the conveyance of the Master Lessee's leasehold
interest to the Master Lessor, or the conveyance of the Master
Lessor's fee interest to the Master Lessee). No surrender of the
Master Lease shall become effective without the Lender’s
written consent.
21.
No Personal Liability
None of the Lender, the Master Lessor, nor their respective
affiliates, successors or assigns, shall have personal liability
under the Master Lease.
13.
The Master Lease must prohibit the Master Lessee from
removing, selling, or transferring any part of the Mortgaged
Property (including personal property) other than obsolete or
worn out personalty that are contemporaneously replaced by
unencumbered items of equal or better function and quality or as
otherwise expressly permitted by the Loan Agreement.
Master Lease Review Checklist
Fannie Mae
Form 4201
10-14
Page 4
© 2014 Fannie Mae
ITEM
22.
REVIEWER
COMMENTS
(REFERENCE
APPLICABLE
SECTION
NUMBERS)
SUBJECT MATTER
REQUIREMENTS
Surrender
The Master Lessee must surrender the Mortgaged Property to
the Master Lessor upon the expiration/termination of the term in
the condition required by the Loan Documents.
Upon request, the Master Lessee must surrender the Mortgaged
Property to the Lender, its agent, or a receiver upon such party’s
taking possession.
The Master Lease must include a holdover charge (and payment
of associated costs and fees) appropriate for the jurisdiction.
23.
Termination by Master
Lessee
Other than for a Seniors Housing Property transaction, the
Master Lease must provide that an Affiliated Master Lessee
shall have no right to terminate the Master Lease.
In a non-Seniors Housing Property transaction, the Master Lease
may provide a non-Affiliated Master Lessee the right to
terminate the Master Lease upon a default provided (a) the
Lender shall be entitled to the reasonable opportunity to cure the
Master Lessor’s default, and (b) if the Lender cannot or does not
cure such default, following a foreclosure under the Security
Instrument (or a deed in lieu of foreclosure or any other
comparable exercise of remedies), the Lender or its successor or
assignee shall have the right to enter into a replacement master
lease with the Master Lessee on terms equivalent to those
contained in the Master Lease. Identify and evaluate any nonAffiliated Master Lessee termination right.
See below for Seniors Housing Property specific termination
provisions.
24.
Lender’s Termination
Right; Foreclosure;
Lender’s Liability
The Master Lease must provide that upon an Event of Default
under the Loan Documents, irrespective of the existence of a
default under the Master Lease, the Lender shall have the right
to exercise all remedies set forth in the Loan Documents
including:
Master Lease Review Checklist
Fannie Mae

termination of the Master Lease and the other Master
Lease Documents;

foreclosure (or exercise of similar rights) under the
Security Instrument, subject to the Master Lease and
the other Master Lease Documents; or

foreclosure (or exercise of similar rights) under the
Security Instrument and termination of the Master
Lease, any other Master Lease Documents, and any
supplemental agreements entered into in connection
with the Master Lease including the Master Lessee’s
agreements with third parties.
Form 4201
10-14
Page 5
© 2014 Fannie Mae
ITEM
SUBJECT MATTER
REVIEWER
COMMENTS
(REFERENCE
APPLICABLE
SECTION
NUMBERS)
REQUIREMENTS
All of Master Lessee’s agreements with third parties must be
terminable upon no more than 30 days notice and without
penalty, irrespective of the existence of a default under the
Master Lease.
Each of the Lender and its successors and assigns must have its
liability limited to (a) its interest in the Mortgaged Property, and
(b) gross negligence, willful misconduct, or wrongful acts or
omissions occurring during the time it holds record title to the
Mortgaged Property.
25.
Subordination to
Lender/Fannie Mae
Mortgage
The leasehold estate must be subject and subordinate to the
Security Instrument and all liens created thereunder, either
through express subordination language in the Master Lease or
through a separate subordination agreement executed by the
Master Lessee.
If contained in the Master Lease, the subordination language
must specify that the Lender’s exercise of remedies under the
Loan Documents shall not be affected or impaired by the terms
of the Master Lease, or by whether a Master Lease default has
occurred.
Additionally, the Master Lessee’s and any Guarantor’s claims
against the Master Lessor shall be subordinated to the Lender’s
claims. All subordination agreements must be recorded in the
land records unless the laws of the Mortgaged Property
jurisdiction provide effectiveness otherwise.
26.
Title Policy
An ALTA Loan Policy must be obtained that (a) insures that the
Master Lease is subordinate to the Mortgage Loan, and (b)
otherwise satisfies standard Fannie Mae title policy
requirements as set forth in the Guide.
27.
Financial Reporting
The Master Lease must require the Master Lessee to deliver
financial reports and reports regarding the Mortgaged Property
to the Master Lessor that comply with the requirements in the
Loan Documents.
28.
Insurance and Escrows
The insurance requirements in the Master Lease must satisfy the
Loan Documents and Guide requirements for insurance. If the
Master Lease provides that the Master Lessor shall obtain and
maintain property damage insurance for the improvements, or
pay or maintain insurance escrows, the Master Lessee must
assume these responsibilities in writing and pay any related
amounts as part of its rent payments. Force majeure shall not
excuse the Master Lessee’s compliance with the insurance
requirements.
Master Lease Review Checklist
Fannie Mae
Form 4201
10-14
Page 6
© 2014 Fannie Mae
ITEM
29.
REVIEWER
COMMENTS
(REFERENCE
APPLICABLE
SECTION
NUMBERS)
SUBJECT MATTER
REQUIREMENTS
Condemnation/
Casualty Payments;
Restoration
The Master Lease must require the Master Lessee to transfer and
assign to the Master Lessor any rights, title, and interest in any
condemnation award or insurance proceeds to which the Master
Lessee is entitled. The casualty and condemnation provisions of
the Master Lease must satisfy the Loan Document requirements
for how casualty and condemnation proceeds are administered.
The Master Lessee must not be entitled to make any claim for
condemnation/casualty proceeds on account of its leasehold
interest in the Mortgaged Property.
Restoration obligations, procedures, and schedules must meet
the applicable requirements set forth in the Loan Documents.
30.
Total Loss or
Condemnation
The Master Lease may provide that, upon a total loss or
condemnation of the Mortgaged Property, the Master Lease
shall terminate upon payment in full of the Mortgage Loan,
including any Prepayment Premium owing as a result of such
event and any other amounts required under the Loan
Documents.
In the event of a total loss due to casualty, the Master Lease may
provide the Master Lessee an option to purchase the Mortgaged
Property, provided that exercise of the purchase option results in
payment in full of the Mortgage Loan, including all prepayment
premiums and any other amounts required under the Loan
Documents.
In the event of a condemnation of the entire Mortgaged
Property, the Master Lease may provide the Master Lessor an
option to require the Master Lessee to purchase the Mortgaged
Property, provided that exercise of the option results in payment
in full of the Mortgage Loan, including all prepayment
premiums and any other amounts required under the Loan
Documents.
31.
Purchase Options
The Master Lease Documents may not contain any option to
purchase, right of first refusal to purchase, or right of first offer
to purchase the Mortgaged Property or any portion thereof.
See below for Seniors Housing Property specific exceptions.
32.
Assignability/Transfers
The Master Lease must prohibit any assignment, sublease, or
transfer of the Master Lessee’s interest in the Master Lease,
without the prior written consent of the Master Lessor and the
Lender. If the Master Lessor and the Lender consent to such an
assignment or transfer of the Master Lease, then the Master
Lessee must also assign or transfer its rights in all other Master
Lease Documents and any supplemental agreements entered into
in connection with the Master Lease.
Master Lease Review Checklist
Fannie Mae
Form 4201
10-14
Page 7
© 2014 Fannie Mae
ITEM
SUBJECT MATTER
REVIEWER
COMMENTS
(REFERENCE
APPLICABLE
SECTION
NUMBERS)
REQUIREMENTS
The Master Lessor may consent to a sublease of the Master
Lease, provided that all of the obligations of the Master Lessee
under the Master Lease Documents are performed by the SubMaster Lessee and all of the rights and interests of the Master
Lessee under such Sub-Master Lease (including the assignment
of all leases and rents from the Mortgaged Property) are
assigned to the Master Lessor or to the Lender.
However, in any case, the Master Lessee must not be permitted
to make or allow any Transfers prohibited by the Loan
Agreement.
Any assignment or transfer of the Master Lease by the Master
Lessor must include an assignment or transfer of the Master
Lessor’s rights in all other Master Lease Documents and any
supplemental agreements entered into in connection with the
Master Lease.
The Master Lease must permit the Lender (and its assignee or
nominee) to transfer the lessor’s interest in the Master Lease
without notice to or consent of the Master Lessee following a
foreclosure under the Security Instrument (or a deed in lieu of
foreclosure or any other comparable exercise of remedies).
33.
Future Mortgages or
Encumbrances
The Master Lease must prohibit the Master Lessee from
mortgaging or encumbering its lessee interest in the Master
Lease, its leasehold interest in the Mortgaged Property, or its fee
or leasehold interest in any personalty that comprises the
Mortgaged Property or is otherwise used for the operation or
maintenance of the Mortgaged Property.
34.
No Liens
The Master Lessee must keep the Mortgaged Property free from
Liens in accordance with the Loan Agreement.
35.
Recording
Neither the Master Lease nor any memorandum thereof shall be
recorded among the land records unless (a) required by law, (b)
required to effectuate a permitted option, or (c) required to
effectuate any collateral assignments in favor of the Lender. If
recorded, the Master Lessee shall be required to deliver a
termination in recordable format upon expiration or earlier
termination of the Master Lease.
36.
Taxes
If the Master Lease provides that taxes and assessments relating
to all or any portion of the Mortgaged Property or the Master
Lease, or any escrows therefor, shall be paid by the Master
Lessor, the Master Lessee must assume such responsibilities in
writing and pay such amounts as part of its rent payment.
Master Lease Review Checklist
Fannie Mae
Form 4201
10-14
Page 8
© 2014 Fannie Mae
ITEM
REVIEWER
COMMENTS
(REFERENCE
APPLICABLE
SECTION
NUMBERS)
SUBJECT MATTER
REQUIREMENTS
37.
Tax Appeals/Contests
The Master Lessee must not engage in a tax appeal/contest
without the Master Lessor’s consent. The Master Lessee must
have no greater right to participate in or settle a tax
appeal/contest than the Master Lessor.
38.
Replacement/Repair
Escrows
The replacement/repair escrow requirements of the Master
Lease must satisfy the Loan Document requirements for
Replacement/ Repair Escrows. If the Master Lease provides that
the Master Lessor shall make replacement/repair escrow
deposits, the Master Lessee must assume such responsibilities in
writing and pay any related amounts as part of its rent payment.
39.
Cure Periods
There must not be a cure period for any Master Lessee
obligation under the Master Lease for which there is not a
corresponding cure period otherwise granted under the Loan
Documents (e.g. there can be no cure period relating to rent
payments or maintenance of insurance). The Master Lessee cure
periods in the Master Lease must run concurrently with any
corresponding cure period in the Loan Agreement.
40.
Defaults; Remedies
Summarize and evaluate each non-standard Master Lessor and
Master Lessee event of default, associated cure right, and (for
non-Affiliated Master Lessees) any resulting termination right.
The Master Lessee must not take any act or suffer any omission
that would cause a default under the Loan Documents.
All applicable remedies available to the Lender under the Loan
Documents must be available to the Master Lessor under the
Lease.
A non-Affiliated Master Lessee’s remedies must be limited to
specific performance. In no event shall the Master Lessee be
entitled to special, consequential, or punitive damages. The
Master Lessor’s liability must be limited to its interest in the
Mortgaged Property.
The Master Lessor and the Master Lessee must copy the Lender
on any notice of default delivered under the Master Lease or any
other Master Lease Document.
41.
Limited Cross-Default
A default under the Loan Documents must not be an automatic
default under the Master Lease. However, a default under the
Master Lease must be an automatic default under the Loan
Documents.
42.
Remedies Cumulative;
No Duty to Mitigate
The Master Lessor’s election of one remedy under the Master
Lease must not impair the exercise of alternate or additional
remedies or constitute a waiver thereof.
Master Lease Review Checklist
Fannie Mae
Form 4201
10-14
Page 9
© 2014 Fannie Mae
ITEM
SUBJECT MATTER
REVIEWER
COMMENTS
(REFERENCE
APPLICABLE
SECTION
NUMBERS)
REQUIREMENTS
The Master Lessor must have no duty to mitigate damages
unless required by law.
43.
Master Lessor’s Cure
Rights; Lender’s
Performance
The Master Lessor must have the right to cure the Master Lessee
defaults under the Master Lease at the Master Lessee’s expense.
The Master Lessee shall be obligated to accept the Lender’s
performance.
44.
Power of Attorney
The Master Lease must include a power of attorney from the
Master Lessee to the Master Lessor (which shall be expressly
permitted to be assigned to the Lender) to permit the Master
Lessor (and the Lender on its behalf) to exercise the attorney in
fact rights set forth in the Loan Documents.
45.
Governing Law
The Master Lease must be governed by the laws of the
Mortgaged Property jurisdiction.
46.
Successors and Assigns
The Master Lease must be binding upon the Master Lessor’s and
the Master Lessee’s respective permitted successors and assigns.
47.
Counterparts
The Master Lease may be executed in counterparts.
48.
Integration;
Severability
The Master Lease must include integration and severability
clauses.
49.
No Deemed Consent
The Master Lessor’s consent must never be deemed.
50.
Notices
Notices under the Master Lease must be given in the same
manner as set forth in the Loan Agreement. The Master Lessor
must be authorized to deliver any notice, request, report, or other
communication received from the Master Lessee to the Lender.
51.
Disclosure of
Information
The Master Lessor and the Lender must be permitted to disclose
all information received from the Master Lessee concerning the
Master Lessee, the Master Lease Documents, or the Mortgaged
Property.
52.
Time of the Essence
The Master Lease must state that time is of the essence.
53.
Jury Trial Waiver;
Consent to
Jurisdiction; No
Arbitration
The Master Lease must contain a jury trial waiver and consent to
jurisdiction in the State and Federal courts of the Mortgaged
Property jurisdiction. The Master Lease must not contain an
arbitration requirement.
Master Lease Review Checklist
Fannie Mae
Form 4201
10-14
Page 10
© 2014 Fannie Mae
ADDITIONAL REQUIREMENTS AND EXCEPTIONS FOR
SHARIA AND HISTORIC TAX CREDIT MASTER LEASE TRANSACTIONS
ITEM
REVIEWER
COMMENTS
(REFERENCE
APPLICABLE
SECTION
NUMBERS)
SUBJECT MATTER
REQUIREMENTS
1.
Master Lessor’s Put
Option
The Master Lease may provide the Master Lessor an option to
require the Master Lessee to purchase the Mortgaged Property
or the equity in the Master Lessor (a “put option”) after a default
by the Master Lessee, a condemnation of the entire Mortgaged
Property, or a termination of the Master Lease, provided that the
exercise of the put option results in payment in full of the
Mortgage Loan, including all prepayment premiums and any
other amounts required under the Loan Documents.
2.
Master Lessee’s Call
Option
Identify and analyze any option given to the Master Lessee to
purchase the Mortgaged Property or the equity in the Master
Lessor (a “call option”). The exercise of a call option must
result in payment in full of the Mortgage Loan, including all
prepayment premiums and any other amounts required under the
Loan Documents.
3.
Sharia Compliance;
Diplomatic Immunity
The Master Lessee shall warrant that the Master Lease has been
reviewed by the Sharia Supervisory Board of the Master Lessee
for compliance with the principles of Islamic Ijara contracts.
The Master Lessee shall warrant that it is not eligible for
diplomatic immunity (or that it has waived such immunity and
provided an opinion of counsel on the enforceability of such
waiver).
Master Lease Review Checklist
Fannie Mae
Form 4201
10-14
Page 11
© 2014 Fannie Mae
ADDITIONAL REQUIREMENTS AND EXCEPTIONS FOR
SENIORS HOUSING PROPERTY TRANSACTIONS
Note that in the context of a Seniors Housing Property, the terms “Operator” and “Operating
Lease” often appear in lieu of “Master Lessee” and “Master Lease,” respectively.
ITEM
REVIEWER
COMMENTS
(REFERENCE
APPLICABLE
SECTION NUMBERS)
SUBJECT MATTER
REQUIREMENTS
1.
Landlord Identity
The Lender must obtain an approved waiver if a party other than
the Borrower is the Master Lessor under the Master Lease.
2.
Ownership/Management
Describe the roles and responsibilities of the Master Lessor,
Master Lessee, and manager, and identify any common
ownership between or among them. Organizational charts must
be obtained by the Lender.
3.
Licenses
Identify the party obligated to hold and maintain the operating
licenses (e.g., Master Lessor, Master Lessee, sublessee, manager,
etc.).
4.
Personal Property
Identify any owner (other than the Master Lessor) of any
personal property utilized for the ownership and operation of the
Mortgaged Property.
5.
Collateral
Identify and evaluate any assignment or pledge by the Master
Lessee, its parent, or its affiliate of any Mortgage Loan
collateral, other than to the Master Lessor as landlord under the
Master Lease.
6.
Assignment of Leases
Identify the party entering into the residency agreements or
leases with the tenants. All leases and residency agreements, and
rents therefrom, must be assigned to the Lender.
7.
Other Properties
Identify any properties other than the Mortgaged Property that
are subject to the Master Lease.
8.
Master Lessee Financing
Identify and evaluate any financing involving the Master Lessee,
its parent, or other affiliate.
9.
Rent
Describe the Master Lease rent calculus, including base rent,
additional or percentage rent, and rent escalation clauses or cost
of living increases (e.g., Consumer Price Index).
10.
Rent Abatement
Identify any rent abatement provisions and analyze the effect of
the termination of such rent abatement provisions if the Master
Lease payment to Debt Service Coverage Ratio is at the
minimum required ratio.
Master Lease Review Checklist
Fannie Mae
Form 4201
10-14
Page 12
© 2014 Fannie Mae
ITEM
REVIEWER
COMMENTS
(REFERENCE
APPLICABLE
SECTION NUMBERS)
SUBJECT MATTER
REQUIREMENTS
11.
Purchase Options
Identify and evaluate any option to purchase, right of first refusal
to purchase, or right of first offer to purchase the Mortgaged
Property or any portion thereof, and its impact upon the
Mortgaged Property, including (a) whether the option/right
expires prior to the Mortgage Loan Maturity Date, (b) whether
the purchase price will be sufficient to pay off the Mortgage
Loan, and (c) whether any option/right that contemplates the
Master Lessee’s assumption of the Mortgage Loan is subject to
Lender approval.
12.
Security Deposits
Identify each Master Lease security deposit and guaranty, and
confirm that the same shall be assigned to the Lender as security
for the Mortgage Loan.
13.
Reserves; Additional
Rent
Characterize the Master Lease (e.g., triple net, absolute net, etc.),
and (a) identify the party responsible for funding replacements
reserves, repair escrows, insurance reserves, real estate tax
reserves, or similar reserves required under the Master Lease,
and (b) identify and analyze other payments (e.g., utilities, taxes,
insurance, etc.) required to be made by the Master Lessor,
Master Lessee, manager or other party.
14.
Capital Improvements
Escrow
Identify the party responsible for capital improvements under the
Master Lease. The Lender must establish a Replacement
Reserve if the Master Lessor is responsible for capital
improvements.
15.
Casualty Insurance
Identify each of Fannie Mae’s insurance requirements for the
Mortgaged Property and the party that holds each insurance
policy, and summarize the applicable casualty and condemnation
provisions.
16.
Lender Rights
Identify and evaluate any provision obligating the Master Lessee
to amend the Master Lease as requested by the Lender.
17.
SASA
Identify each party (i.e., Master Lessor, Master Lessee, and each
operator, manager, sublessee, or other party responsible for the
operation or management of the Mortgaged Property, as well as
any other party with a right, title or interest in any of the rents,
leases or contracts) that will be required to execute a
Subordination, Assignment and Security Agreement (“SASA”)
(Form 4079 or Form 6446, as applicable) at closing.
18.
Defaults; Remedies
Summarize and evaluate each Master Lessor and Master Lessee
event of default and associated cure right.
19.
Termination
Identify any rights given to the Master Lessee (including an
affiliated Master Lessee) to terminate the Master Lease, both
upon a default and upon the occurrence of other events. Identify
Master Lease Review Checklist
Fannie Mae
Form 4201
10-14
Page 13
© 2014 Fannie Mae
ITEM
SUBJECT MATTER
REVIEWER
COMMENTS
(REFERENCE
APPLICABLE
SECTION NUMBERS)
REQUIREMENTS
and evaluate any termination rights given to the Master Lessee
and accompanying termination fees, not tied to defaults, as well
as any notices required in connection with any termination right.
20.
Term
Notwithstanding the requirement above, confirm that the Master
Lease term for a Seniors Housing Property transaction must
extend at least 3 years beyond the Mortgage Loan Maturity Date.
21.
Assignment; Change of
Ownership
Identify any right of the Master Lessee to assign the Master
Lease or an interest therein, or suffer a material ownership
change, without the Master Lessor’s consent.
Master Lease Review Checklist
Fannie Mae
Form 4201
10-14
Page 14
© 2014 Fannie Mae