Lockout Period

Typical Lockout Structure

CMBS conduit: 2–3 year lockout, then yield maintenance or defeasance for the remainder of the term, with an open window for the final 3–6 months. Life company: 1–3 year lockout, then yield maintenance. Agency multifamily: typically no hard lockout, just yield maintenance or step-down prepay throughout.

Lockout During Sale or Refinance

A lockout makes the property effectively non-salable except as a loan assumption (where the buyer assumes the existing debt). For sellers under lockout, the practical options are wait for lockout expiration, sell with assumption to a qualified buyer, or accept the deal economics absent prepayment.

Why CMBS Has Strict Lockouts

CMBS loans are securitized into bond pools sold to investors who underwrite to projected cash flows. Allowing early prepayment would create investor pricing uncertainty. The lockout-then-yield-maintenance structure ensures bond investors get either the contractual interest stream or a make-whole equivalent.

Calculate Your Prepay Penalty

See whether yield maintenance or defeasance is the cheaper exit — and whether the math beats waiting for lockout expiration.

What is a lockout period in a commercial loan?

A defined early-term window during which the borrower is contractually prohibited from prepaying the loan at all — not even with a penalty. Most common on CMBS conduit (2–3 years) and life company loans (1–3 years).

Can I sell a property during a lockout period?

Only with loan assumption — the buyer takes over the existing loan with lender consent. Selling for cash and paying off the loan is not permitted during lockout. Loan assumptions on CMBS require special servicer consent and a 1% transfer fee.

What is the difference between lockout and yield maintenance?

Lockout: prepayment not allowed at all. Yield maintenance: prepayment allowed but with a penalty calculated to make the lender whole for lost yield. Most CMBS and life company loans combine the two — lockout for the first 2–3 years, yield maintenance for the remainder.

Is there an open prepayment window?

Yes — most CMBS and life company loans include an "open" period during the final 3–6 months of the term, during which the loan can be prepaid without penalty. This window facilitates refinancing into permanent debt at maturity.

Article Summary

Lockout Period is a foundational commercial real estate concept that Florida investors, owners, and tenants encounter routinely. A lockout period is a defined window early in a commercial mortgage term during which the borrower is contractually prohibited from prepaying the loan at all — most common on CMBS conduit and life company loans. Michael R. Linton at Linton Global Solutions applies Lockout Period to every Florida CRE transaction across multifamily, office, industrial, retail, hotels, NNN, distressed, and 1031 exchange execution — backed by 39 years of closed deal experience and REOMind.ai-powered analytics.

Key Takeaways

• ✓A lockout period is a defined window early in a commercial mortgage term during which the borrower is contractually prohibited from prepaying the loan at all — most common on CMBS conduit and life company loans.
• ✓Lockout Period is relevant across virtually every Florida commercial real estate asset class.
• ✓Florida-specific considerations — insurance, no state income tax, judicial foreclosure, hurricane risk — affect application.
• ✓Michael R. Linton (FL Broker BK703722) has 39 years of Florida CRE transaction experience including this concept.
• ✓Linton Global Solutions combines local market expertise with REOMind.ai's 96% valuation accuracy.
• ✓For deal-specific application, contact Michael directly at (312) 612-1031.

About Michael R. Linton

Michael R. Linton — also known as Michael Linton or Mike Linton — is a Florida-licensed commercial real estate broker and advisor based in the Tampa–Orlando I-4 corridor. With 39+ years of experience closing commercial transactions, he leads Linton Global Solutions and HireMikeLinton.com, serving investors, owners, and tenants across all major commercial real estate asset classes — multifamily, office, industrial, retail, hotels & hospitality, land, mixed-use, special-purpose, self-storage, and life sciences.

Michael holds the NCREA (National Commercial Real Estate Advisor) and CREIPS (Certified Real Estate Investment Property Specialist) designations, is a REALTOR®, and is a Florida Real Estate Broker (License #BK703722). He is also the founder of Linton Global Technologies, which operates the REOMind.ai AI-powered REO disposition platform serving 500+ banks.

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Works Cited

1. Internal Revenue Service. "Tax Information for Real Estate Investors." IRS, https://www.irs.gov/. Accessed Jun 13, 2026.
2. Florida Department of Business and Professional Regulation. "Florida Real Estate Commission." Florida DBPR, https://www.myfloridalicense.com/. Accessed Jun 13, 2026.
3. NAIOP Commercial Real Estate Development Association. "NAIOP Research." NAIOP, https://www.naiop.org/. Accessed Jun 13, 2026.
4. Urban Land Institute. "ULI Research Library." ULI, https://americas.uli.org/research/. Accessed Jun 13, 2026.
5. Mortgage Bankers Association. "Commercial & Multifamily Research." MBA, https://www.mba.org/. Accessed Jun 13, 2026.

Disclosure & Compliance

Disclosure: This article discusses proprietary technology developed by Linton Global Technologies. Michael R. Linton is the founder of Linton Global Technologies and a licensed real estate professional with Linton Global Solutions (FL Broker License #BK703722). This content is for informational purposes only and does not constitute investment, legal, or financial advice.

Compliance Statement: All CREDDS and REOMind.ai operations adhere to OCC requirements, fair housing standards, and environmental regulations. Properties discussed may be subject to Regulation 506(c)/(D) requirements where applicable, and investments may be restricted to accredited investors. Readers should conduct their own due diligence and consult with qualified professionals — including a licensed Florida real estate attorney, tax advisor, and certified public accountant — before making investment decisions. Past performance does not guarantee future results.