What is the name of your state (only U.S. law)? Florida
A commercial property inherited and held in a trust with 3 beneficiaries and trust has gone through probate. My question, if one of the beneficiaries oversees the property and suggests a refinance of the current mortgage is beneficial, are the other two beneficiaries obligated to provide personal financial statements to the bank for refinance since the estate is holding the property not the individuals. (the loan is less than 60% LTV and refinance is with the original bank that held note of trust property)
Also, does this burden the beneficiaries credit rating if personal financial statements are being requested?
I am going to be a little more detailed in my response. First, you need to determine if refinancing the mortgage is either beneficial, wise, or absolutely necessary. Beneficial or wise might be determined by the current interest rate on the existing mortgage and whether or not additional monies are potentially needed to make major repairs (for example), or if the estate is real estate rich and cash poor, and doesn't have the cash to pay outstanding debts, but you really want to keep the building. Absolutely necessary might be if the lender of the current mortgage will call the loan due if the building changes hands. That may or may not be the case since the building appears to be owned by a trust. If the current lender calls the mortgage, then you either MUST refinance or you must sell the building to pay off the loan.
Second, once you determine that refinancing is something that it would be best or necessary to do, then you need to determine whether or not personal guarantees are needed. Of course a lender would prefer to have personal guarantees, but that does not mean that personal guarantees would truly be necessary to refinance the property. If its a well maintained and well tenanted property, a personal guarantee may not be necessary at all. It might mean fighting the potential lender a bit, but it may not be necessary.
Third, if a refinance is truly necessary, and if personal guarantees are truly necessary, then you have to determine if keeping the building is worth tying up your personal credit, or risking your personal credit in order to keep the building...and yes, if you provide personal financial information and sign a personal guarantee, it has a significant effect on your personal credit.
So...this is not "simple". It is something that needs to be very well researched and a decision made with a lot of thought. Unfortunately, it may be difficult for the three of you to come to an agreement as to how to handle the building...in that case, a sale is probably the wiser option.
