Sheldon (not his real name, which was Jasper…ha,ha) was retiring as an insurance agent for a national insurance company, and wanted to sell his business, and his commercial property which housed the business, to a new agent.
Sheldon owed $10,000 on the property, a loan he had been paying on for twenty years with never a late payment. He wanted to sell the property for $300,000, but couldn’t because the contract with the bank had a “due-on-sale” clause, which meant that if he sold the property, the bank loan had to be paid off.
He went to the local branch of the national lender and requested an exemption from the restrictive clause, and try as they might, neither the local branch manager nor a regional manager could find anyone up the chain of command to okay an exception. After three months, the national bank could not come up with an answer, yea or nay. Amazing, huh?
I arranged a $100,000 payoff loan with a private money lender taking a first lien position, paying off the national bank and allowing Sheldon to sell the property to the new agent, who would begin making payments to Sheldon on the loan, plus paying Sheldon on the remaining $200,000 of the sales price. Sheldon would then forward the payments on the first lien to the private lender.
The loan was at 10% interest with interest only payments for twenty-four months, at which time the new agent would be expected to refinance the $100,000 and pay off the remaining $200,000 as well.
It was a win/win for all involved.
Secondarily, the “too-big-to-fail” national bank could not, even after three months, muster enough professionalism or ability to come up with an answer for Sheldon. My advice to you, dear reader, is to, whenever possible, deal with a local community bank or credit union. At least they can and will respond to your needs.