[§166E-13] Rights of holders of security interests. (a) Prior board action shall be required when an institutional lender acquires the lessee's interest through a foreclosure sale, judicial or nonjudicial, or by way of assignment in lieu of foreclosure, or when the institutional lender sells or causes the sale of the lessee's interest in a lease by way of a foreclosure sale, judicial or nonjudicial. The institutional lender shall convey a copy of the sale or assignment as recorded in the bureau of conveyances.
(b) Notwithstanding any provisions of this chapter, if any lease is subject to a security interest held by an institutional lender and if the institutional lender has given to the board a copy of the encumbrance as recorded in the bureau of conveyances:
(c) Ownership of both the lease and the security interest by an institutional lender shall not effect or cause a merger thereof, and both interests shall remain distinct and in full force and effect unless the institutional lender elects in writing to merge the estates with the consent of the board.
(d) The board may include in any consent form or document provisions consistent with the intent of this section as may be required to make a lease mortgageable or more acceptable for mortgageability by an institutional lender.
(e) The rights of a purchaser, assignee, or transferee of an institutional lender's security interest, including a junior lien holder, shall be exercisable by the purchaser, assignee, or transferee as successor in interest to the institutional lender; provided that:
Other purchasers may not be precluded from acquiring the institutional lender's security interest but shall not have exercisable rights as successor in interest to the original institutional lender.
(f) For the purposes of this section:
"Institutional lender" means a federal, state, or private lending institution licensed to do business in the State and that makes loans to qualified applicants under this chapter on the basis of a lease awarded pursuant to this chapter for security, in whole or in part, together with any other entity that acquires all or substantially all of an institutional lender's loan portfolio.
"Making a loan" means lending of new money or the renewal or extension of indebtedness owing by a qualified applicant to an institutional lender, after June 30, 2006.
"Security interest" means any interest created or perfected by a mortgage, assignment by way of mortgage, or by a financing statement and encumbering a lease, land demised by the lease, or personal property located at, affixed or to be affixed to, or growing or to be grown upon the demised land. [L 2006, c 157, pt of §1]