I would very much wish to take you on a trip into the history of Real Estate law and the practice before creativity came into play.
Do you know anything about Tillie Feldman? If not, I am pleased to convey the history, to wit:
- In the “good old days”, borrowers and their counsel were quite concerned about the issue of personal liability with respect to notes and mortgages for real estate development.
- It was not in vogue to utilize corporations or other entities as the borrower; primarily, the reason was the cost.
- It was not in vogue for lenders to demand personal guaranty of loans, with or without carve-outs.
- Lenders were satisfied to obtain a mortgage and title policy insuring the first lien position.
- Accordingly, a bright representative of a title company in NYC proposed the use of a “nominee”.
- Of course, the “nominee” had to be someone who was judgment-proof and readily available.
That person was Tillie Feldman; she was in great demand and you were required to book her appearance well in advance.
She received a fixed fee for her appearance and execution of documents.
None of the Lenders (institutional), their counsel or title insurers blinked an eyelash and this was true even when Tillie was utilized in multiple transactions involving the same parties.
Tillie was the “dummy” involved in transactions all over the City in the 50s, 60s and early 70s.