Tighten the MAC clause by enumerating the specific events covered (casualty, condemnation, loss of major tenant), excluding general market and industry conditions, requiring permanence and material adversity, and adding notice plus a defined cure period . Most lenders accept a tightened MAC when the rest of the term sheet is competitive.
Why this is the highest-leverage structural negotiation
The Material Adverse Change clause is the single largest retrade lever a lender holds between term sheet and closing. The standard lender draft, any material adverse change in the financial condition, operations, business, or prospects of the borrower, any guarantor, or the property, is so broad it functions as a free option for the lender to reprice or withdraw the commitment.
Borrower-friendly tightening proceeds in four steps: (1) enumerate the specific events covered (property casualty, condemnation, loss of an anchor tenant, legal violation that materially impairs operations); (2) exclude general market conditions, industry-wide events, or rate-environment changes; (3) require both materiality and adversity and require the change to be likely to permanently impair, not transient; (4) require written notice from the lender and a defined cure period before the MAC can be invoked.
Most institutional lenders will accept a tightened MAC when the deal is competitive. A tight MAC is one of the most valuable structural concessions a placement firm can win at the term-sheet stage.
Sources
- Quarterly Survey of Commercial/Multifamily Mortgage Bankers Originations · Mortgage Bankers Association · 2026-Q1
- Financial Stability Report · Board of Governors of the Federal Reserve System · 2025-11