Buyers who use so-called negative pledge loans do not inform the board about them.

He said that more co-op boards should ask applicants directly if they are getting a negative pledge loan.

Negative pledge clauses are almost universal in modern unsecured commercial loan documents.

Negative pledge covenants protect bondholder claims on the earning power of a corporation's assets.

"Negative pledge loan" is a banking term.

Her business arranging negative pledge financing has grown almost 50 percent from last year, to $140 million - now one-fifth of her sales volume.

Most lenders require the signing of a "negative pledge" - an agreement not to pledge the shares for any other purpose.

The negative pledge loans are basically mortgages written for strict co-op buildings with policies that prohibit such loans.

LASMO gives negative pledge and net worth covenants where considered appropriate.

In Australia, negative pledge lending took off after a substantial deal by Pioneer Concrete in 1978.

That the Internal Revenue Service has ruled that negative pledge loans are deductible only makes them more appealing, she said.

Some brokers said they often refer buyers interested in negative pledge loans to banks and mortgage brokers that they know offer them.

Part of the problem is the complexity of the deal, which requires unwinding dozens of so-called negative pledge agreements, people involved in the discussions said.

A negative pledge bars Vivendi from assigning collateral to new creditors unless it first receives approval from existing lenders.

Yesterday, Mr. Mulligan said his company did not call the loans "unrecognized" or "negative pledge" but referred to them as "collateralized."

Furthermore for those borrowers who have eurobonds outstanding, it is no longer possible to issue bonds with such security in view of the negative pledge on the eurobond.

Two illustrative examples of such devices are (i) the negative pledge clause in unsecured lending and (ii) retention of title by a seller of goods.

Eurobonds are generally bearer bonds (i.e. there is no register of holders), pay interest free of tax, and are usually unsecured but offer a negative pledge.

Negative pledge is a provision in a contract which prohibits a party to the contract from creating any security interests over certain property specified in the provision.

"Since the advent of negative pledge financing - and it hasn't been that long - co-op prices have been driven up, and there's a definite relationship between the two."

The banks, which state that they have no obligation to enforce co-op rules, offer negative pledge loans to their best customers - or to customers they want to lure.

Mr. Klotzbier of Mellon and Ms. DiMarino of First Republic said they would continue to offer the negative pledge loans.

Frederick W. Peters, the president of Ashforth Warburg Real Estate in Manhattan, concurred that the use of negative pledge loans is widespread.

First, where a subsequent holder of a registrable charge is deemed to have notice of a negative pledge clause then this accords priority to the floating charge holder.

One real estate agent with an Upper East Side firm whose company forbade her to speak on the subject said negative pledge loans now make up 70 percent of her co-op sales.