RPJ Partner Alice Jump Featured in Morningstar Article “Can a Felon Get a Commercial Real-Estate Loan?”

Written by Joy Wiltermuth, Featuring Alice Jump

Donald Trump’s real-estate business has been dealt another blow by another guilty verdict in New York.

Can a felon get a commercial real-estate loan?

That’s one of the many financial questions to emerged after the historic criminal conviction of former President Donald Trump in New York on 34 felony counts relating to a plot to influence the 2016 election through hush-money payments to a porn star.

MarketWatch has been working on unpacking the conviction, which Trump vowed on Friday to appeal, while parsing what it could mean for the presumptive Republican candidate’s finances, real-estate business and his anticipated third run for the White House. Trump made his name in the commercial real estate industry and his business interest firmly remain tied to office and multi-family buildings, as well as hotels and golf courses. Access to loans has long been the lifeblood of Trump’s business and the U.S. real-estate industry in general.

Here’s what legal experts had to say in response to questions from MarketWatch about what barriers Trump, or other felons, likely will face.

“There is no blanket prohibition,” said Alice Jump, a partner at New York law firm Reavis Page Jump, in terms of whether a felon can apply for or receive a new property loan. That said, every bank or lender will have a policy around the type of risks they are willing to take. “It’s certainly not going to help,” Jump said. “But there’s no legal prohibition against doing that if you want to take the risk.”

Trump in a Friday news conference denied any wrongdoing related to the felony conviction, while vowing to appeal. “If they can do this to me, they can do this to anyone,” Trump said, while repeating unsubstantiated claims about a “rigged” trial.

Importantly, Trump in February also was found guilty of fraud by a Manhattan judge in a separate New York civil case relating to his family’s real-estate business. That ruling required him to pay a roughly $360 million fine, plus interest, along with other powerful sanctions against Trump and the Trump Organization’s business operations for up to three years. The combined impact of those two decisions could severely curtail Trump’s real estate businesses and may have far-reaching implications beyond obtaining new loans.

“In any loan agreement for real estate, operating capital or credit lines, usually they take a look at the background of anyone convicted of a felony,” said Bryan Sullivan, a partner at law firm Early Sullivan Wright Gizer & McRae, which is based out of Los Angeles. “It also could be deemed a breach of an existing loan or credit agreement,” he said. In simple terms, any real estate lender owed money by Trump might now need to consider whether or not he is now in default. “There are a lot of conditions in these agreements, and one usually is that if a borrower is convicted of a felony, the lender has the right to hold them in default,” Sullivan said, while adding that not all lenders opt to exercise such options. But if they do, “normally, the debt and interest is accelerated and immediately due,” Sullivan said. That typically would be one of the first steps toward a foreclosure process.

Trump on Friday railed against the charges of falsified business records relating to $130,000 in hush-money payments to adult film industry actor and director Stormy Daniels in the run-up to the 2016 election, saying the payments were business expenses and “totally legal.”

Of note, Trump would need to prevail in an appeals court to have the New York verdicts overturned.

Trump on Friday used Friday’s news conference to scold New York City officials for being too soft on crime, but Trump also could stand to benefit from criminal justice reforms in the state.

“One sort of ironic point is that New York has considered a criminal history to be a protected category,” said Jump at Reavis Page Jump, pointing to reforms aimed at helping convicted people gain future employment. “You can’t just say: you are a felon. I can’t hire you.”