Selling a property with a CMBS loan on it

You can sell a property with a CMBS loan four ways: the buyer assumes the loan, you defease it, you prepay with yield maintenance, or you close in the open period and repay at par. Your prepayment schedule decides which are open, and notice periods run 30 to 90 days in a recent agreement (1010 Pacific Street loan agreement, Sections 2.7, 2.8, 6.4).

The due-on-sale clause is what makes this a process. CMBS loans generally let the holder accelerate the loan if the property or a controlling interest in the borrower is sold or encumbered without consent (BANK5 2025-5YR14 prospectus, p. 225). The servicer that grants or withholds consent works for the bondholders, not for you or the buyer.

The four routes compared

Route	When it is available	What it costs the seller	Main risk
Assumption	Any time the documents allow a transfer, usually including lockout	Assumption and processing fees, legal and rating agency costs; a buyer may pay more for a cheap coupon	Servicer approval time and the buyer’s qualification
Defeasance	After the defeasance lockout, at least two years after the REMIC startup day	Cost of the Treasury portfolio plus transaction costs	Cost moves with Treasury yields until you lock it
Yield maintenance or premium	After any lockout, where the loan allows prepayment	The premium, often with a 1% floor	Cost moves with Treasury yields
Open period	The last few payments before maturity (4 to 7 payments in BANK5 2025-5YR14)	None beyond interest to the payoff date	Narrow window; misses force one of the other routes

Step by step

1. Pull the documents. Loan agreement, note, any amendments, and the guaranty. Flag the transfer section, the prepayment section, and the definitions of the open date and the premium.
2. Find where you are in the schedule. Your trust’s prospectus lists each loan’s schedule in Annex A-1, for example L(25),D(28),O(7). Decoder: CMBS prepayment penalties.
3. Ask the master servicer for the current balance, the reserve and escrow balances, the prepayment terms it reads in the documents, and its process and fee schedule for assumptions. Find the servicer on your monthly statement or on master servicers.
4. Price the exits on one date. Run the defeasance calculator and the yield maintenance calculator, and the assumption calculator to see what the existing loan is worth to a buyer at today’s rates.
5. Write the contract to fit. For an assumption, make the servicer’s approval a condition and allow time; the Pacific Street agreement requires the sale contract to be expressly subject to its transfer conditions (Section 6.4(k)). For a payoff or defeasance, set closing after the notice period ends.
6. Give notice in writing to every notice party the loan agreement names, including the master servicer, and keep proof of delivery.

Timing you can plan around

These periods are written into the documents. Real files run longer when packages are incomplete, because most clocks start only when the servicer has everything it asked for.

Event	Period	Source
Notice of an assumption before closing	At least 60 days	Pacific Street loan agreement 6.4(b)
No assumption around a securitization	60 days before and after	Pacific Street loan agreement 6.4
Notice of a defeasance	30 to 90 days	Pacific Street loan agreement 2.8(a)
Draft lien release to lender	15 business days before defeasance	Pacific Street loan agreement 2.8(b)
Notice of an open-period payoff	At least 30 days	Pacific Street loan agreement 2.7(a)
Directing Certificateholder response on a Major Decision	10 business days, deemed approved if silent	BANK5 2025-5YR14 PSA 6.08(a)
Rating agency confirmation, if required	10 business days, then 5 more after a second request	PSA 3.25(a)

Selling part of the property, or part of the company

• One parcel or one property in a portfolio: that is a release, governed by the loan’s release price and REMIC tests. See partial releases.
• Interests in the borrower: transfers of non-controlling or passive interests, and affiliate and estate-planning transfers, are generally permitted without consent within the limits the documents set (BANK5 prospectus, p. 225). A change of control is usually a sale.

On the buy side

If you are the buyer and the existing loan does not fit, you will need new acquisition debt. Janover Capital LLC arranges CMBS and other financing for acquisitions; it is an advisor, not a lender. Get a CMBS quote, or read how CMBS acquisition loans work.

This page describes loan and servicing documents. It is not legal or tax advice; your documents and your counsel govern.

Sources: 1010 Pacific Street loan agreement, October 1, 2025, Sections 2.7, 2.8, 6.3, 6.4; BANK5 2025-5YR14 prospectus, pp. 224-226; BANK5 2025-5YR14 PSA, 3.25(a), 6.08(a).