Loan Clauses Flashcards
(25 cards)
What is an acceleration clause?
Allows lender to demand full repayment if borrower defaults.
What is an alienation clause (due-on-sale)?
Requires full loan payoff if property is sold or transferred.
What is a prepayment clause?
Allows borrower to pay off loan early (may involve penalty).
What is a defeasance clause?
Lender releases lien when loan is fully paid.
What is an escrow clause?
Requires borrower to deposit property taxes and insurance payments into escrow account.
What is a subordination clause?
Allows a new lender’s lien to take priority over an existing one.
What is an exculpatory clause?
Limits lender’s ability to hold borrower personally liable for loan default.
What is an assumption clause?
Allows buyer to assume seller’s mortgage with lender’s approval.
What is a release clause?
Allows portions of property (in blanket mortgage) to be released from lien as debt is paid.
What is a lock-in clause?
Prevents borrower from refinancing for a set time period.
What is an interest escalation clause?
Allows lender to raise interest rate under specific conditions (e.g., late payments).
What is a partial release clause?
Allows partial releases in blanket mortgage as parcels are sold.
What is a power of sale clause?
Authorizes lender to sell property without court action if borrower defaults (NY = judicial foreclosure state; power of sale rare).
What is an estoppel certificate?
Borrower certifies outstanding loan balance to third party (used in sale/transfer).
What is a dragnet clause?
Secures current and future debts under same mortgage.
What is a covenant of seisin?
Borrower promises they own property and can mortgage it.
What is a covenant of insurance?
Borrower agrees to keep property insured.
What is a covenant of maintenance?
Borrower agrees to maintain property condition.
What is a condemnation clause?
Outlines rights if property is taken by eminent domain.
What is a rent assignment clause?
Lender can collect rents directly if borrower defaults.
What is a security agreement?
Document pledging personal property as loan collateral.
What is a cross-default clause?
Default on one loan triggers default on others.
What is a waiver of homestead rights clause?
Borrower waives protection against forced sale of primary residence.
What is an indemnity clause?
Borrower agrees to reimburse lender for certain losses.
