V. Gina Giannelli has more than 21 years managing high-profile projects for Chicago Title Insurance Co.’s Chicago Commercial Center, including Chicago’s Trump Tower and Block 37 transactions. As resident vice president and associate regional counsel, Giannelli helps law firms, government and corporate clients coordinate, underwrite and close large and multicommercial real estate transactions.
Q. What happens to tenants during a foreclosure?
We leave it up to the bank to decide or the foreclosing party to decide whether they actually want to affect the interest of the tenant. Let’s say this is a lease to Macy’s and Macy’s is an excellent tenant. Maybe that lender is not going to want to kick out or boot out Macy’s, so they won’t even name Macy’s in the foreclosure because they have no interest in affecting the interest of that lease. But let’s say there is a tenant who is slow in paying their rent money and the lender decides that they really don’t want that tenant in possession any more, so that bank will choose to name that particular tenant. It’s up to the tenant then to complain in the foreclosure before the judge and the foreclosure action on whether their interest is really junior to the interest of the bank doing the foreclosure. Or perhaps there was a subordination nondisturbance agreement completed by the bank and the tenant, which says the tenant will not be disturbed in a foreclosure action.
Q. What can tenants do to protect themselves?
The title industry offers a leasehold policy to tenants. If you have a substantial lease that you’re getting ready to enter into, you’re going to want to make sure that you’re entering into the lease with the right party, the right landlord. It’s a leasehold policy ensuring the tenant as to the status of who the landlord is and any recorded documents and the status of real estate taxes, as well.
Q. How long does the foreclosure process take?
It’s never shorter than six months. It can be (as long as) eight or nine months.