Negotiate four points: assumption fee capped at 1.0% of outstanding balance, commercially-reasonable consent standard rather than sole discretion, defined net-worth and liquidity tests for the assuming party (rather than open-ended), and explicit release of the original guarantor on satisfaction of the assumption conditions.
Why this matters at term-sheet rather than at sale
Most institutional perm loans have an assumption right with lender consent. The market terms are well established, but the default lender draft will leave the borrower exposed in three ways that can substantially impair the loan's economic value at sale.
Consent standard: lender draft is sole discretion; push for commercially reasonable. Without that standard, the lender can withhold consent on any pretext, forcing a payoff (with prepay penalty) at sale and stripping the new buyer of the assumption value.
Eligibility tests: lender draft is open-ended (lender to determine acceptability); push for defined net-worth (typically 1.5x to 2.0x loan balance) and liquidity (typically 5% to 10% of loan balance) tests. With defined tests, the borrower can pre-qualify potential buyers; without, the buyer pool is opaque.
Release of original guarantor: lender draft may keep the original guarantor on the hook even after a successful assumption; push for explicit release on satisfaction of the assumption conditions. This is standard on agency multifamily and most life-co perm; bank perm sometimes resists.
Assumption fee: 1.0% of outstanding balance is the institutional standard; some lenders push for 1.5%. On a $20M loan, the difference is $100K and worth negotiating.
Sources
- Quarterly Survey of Commercial/Multifamily Mortgage Bankers Originations · Mortgage Bankers Association · 2026-Q1
- Senior Loan Officer Opinion Survey on Bank Lending Practices (SLOOS) · Board of Governors of the Federal Reserve System · 2026-Q1