A payment blockage clause with no cap on consecutive periods, and what a junior lender can realistically get changed.
Take a subordination agreement a senior sends over on a gap piece, where two clauses are doing a lot of work. One: the senior may deliver a payment blockage notice on any default and block all payments to the junior for 180 days, and there is no limit on how many blockage periods there can be or how close together. On a 12 month deal that is the entire term, twice, at the senior's discretion. Two: protective advances get added to the senior obligations with priority over all junior amounts, and protective advances is defined as any sum the senior deems necessary to preserve the collateral or complete the improvements. Completing the improvements on a construction rehab is the whole $180k budget. So the senior can grow ahead of the junior without limit and call it protection. What has anyone actually gotten changed here? A reasonable ask is one blockage period per 360 days with a cap of 90 days, and protective advances capped at a hard dollar number with new construction draws carved out of the definition. Is that a normal ask on a small deal or does the senior just walk?