If the Trump Organization, recently convicted of tax fraud, has “Bad Boy” clauses in its loan agreements, it may have more troubles ahead. Lenders could demand full payment – or even force properties into foreclosure. The commonly-used clause is designed to protect lenders if the borrower knowingly does something wrong. Bisnow examines the issue, including whether the fraud conviction could trigger the carve-out. MMM’s Betsy Karmin, a partner in the Real Estate and Finance Practices, analyzes how likely lenders may – or may not be – to invoke the clause.
