Loan Particiapation

We are in a participation loan where we are not the lead bank. We were not provided with a borrower resolution or board minutes authorizing the loan request. It seems like that would have been taken care of by the lead bank. We were written up in a Large Loan Audit for not having this authorization. Would the loan agreement suffice for us as the secondary bank in this case?

The participation agreement will normally say that you have reviewed the loan documents and are going into this transaction with eyes wide open (to paraphrase). Your participation agreement should protect you from gross negligence but a general documentation error? That could be a court fight.

I've gone into too many participation relationships whereby something wasn't right in the file - documentation, flood, .... A preliminary review is the way to go, in my opinion.