Because the rules governing REMICs limit changes to the collateral, and because it will be difficult to reach someone with whom one can even discuss desirable changes, it is critical in negotiating these loans to thoroughly think through changes to the property and its tenants that could possibly be desirable over the term of the loan.

Important issues to negotiate include:

*Future leases, or modifications to existing leases. While a lender normally wants a lot of control over the lease agreements that create the cash flow that pays the debt service, the requirement that the borrower go back to the servicers for each lease will be frustrating and time-consuming, and may well cost a borrower lease deals. The borrower should negotiate for standards (e.g., maximum square footage, rents, a standard lease form) within which it can make, amend and terminate leases without any consent from the servicers.

*Alterations to the property. Loan servicers are not well equipped to evaluate the pros and cons of improvements the borrower feels will enhance both its return and the lender's collateral, and the process of vetting needed or desirable changes is often quite frustrating. The borrower should negotiate for the right to make alterations and improvements required in connection with leases or for code compliance, and others below a cost threshold at a percentage of the loan amount without any consent from the servicers.

*Changes in ownership. Common draft loan documents prohibit transfers of the property as well as transfers of any interests in the borrower, all the way up the ownership entity chain, potentially including transfers of shares of publicly traded companies. It is important to negotiate a set of transfers permitted without any consent of the servicers, such as publicly traded shares, non-managing joint venturer interests, buy/sell rights in the borrower's joint venture agreements and the right to bring in a joint venturer.

Lender's counsel in these negotiations will often attempt to retain control by suggesting that the servicers have consent rights, but will be reasonable. Don't go there. Once you're required to obtain the servicer's consent, experience suggests you cannot always count on a timely or reasonable response, no matter what the loan documents provide.

Tom Muller is co-chair of the land use and real estate practice group at Manatt, Phelps & Phillips LLP. The views expressed in this column are the author's own.