Real estate partners Peter Fisch and Salvatore Gogliormella’s latest Expert Opinion column, “‘Shanghai Commercial Bank:’ Practical Implications for Transactions in New York,” was published in the September 1 issue of the New York Law Journal. The authors examine the New York County Supreme Court’s decision in Shanghai Commercial Bank Ltd. v. New Tent, LLC, which addresses the legal risks associated with deeds in lieu of foreclosure often used in commercial real estate loan workouts. They explain that courts may recharacterize a deed delivered as part of a forbearance arrangement as a mortgage, even where transaction documents expressly state otherwise, if the underlying debt remains outstanding. The authors also discuss the decision’s implications for buyers, lenders and title insurers, emphasizing the need for heightened diligence when a deed in lieu appears in a property’s chain of title and highlighting the potential title risks that may arise if the conveyance is later deemed to be additional security rather than an absolute transfer. Associate Konstantine Tettonis assisted in the preparation of this article.
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