In one sentence
A search for pending or past litigation involving the borrower, guarantor, or property, informing risk assessment.
The longer version
Litigation searches reveal disputes that could affect the borrower's capacity or the property's status. Material litigation may require disclosure in the legal opinion or additional analysis.
What the search finds can reshape underwriting or add conditions, which is why it belongs in early diligence.
Common questions
- What is a litigation search?
- A search of court records for pending or past lawsuits involving the borrower, guarantor or property, used in credit and legal diligence.
- What litigation matters concern a lender?
- Suits that could affect the property or its title, the borrower's ability to pay, or the guarantor's net worth, such as construction disputes or large claims against the sponsor.
- Does the borrower disclose litigation separately?
- Yes, usually through representations in the loan documents. The search tests those representations independently.
Keep reading
- The due diligence checklist, built to be runChecklists as systems, not documents.
- The commercial loan closing checklistWhat goes on the list and who owns each line.
- The commercial loan closing processThe five stages from term sheet to funded.
- Commercial loan softwareWhere this sits in the lending stack.