casemark/loan-forbearance

Loan Forbearance Agreement

Produce a lender-protective, temporary forbearance agreement for a commercial loan default.

Prerequisites

1. Loan documents — note, loan agreement, security agreement, mortgages, guaranties, prior amendments
2. Parties — legal names, entity types, state of formation, addresses, signing authority, guarantors
3. Default facts — specific defaults, dates, amounts, covenant breaches, notices given
4. Payoff data — principal, accrued interest, fees, default interest, protective advances
5. Collateral — description, perfection status, valuations, insurance
6. Forbearance terms — start/end dates, payment schedule, deferred amount treatment, fees
7. Reporting — required financials, frequency, format, deadlines
8. Governing law/venue — per existing loan documents unless business reason to change
9. Approvals — lender credit approval, borrower board/consents if required

Output Structure / Process

1. Title and Parties

| Role | Legal Name | Entity Type/State | Address | Defined Term | | --- | --- | --- | --- | --- | | Lender | | | | "Lender" | | Borrower | | | | "Borrower" | | Guarantor(s) | | | | "Guarantor" |

2. Recitals (Contractual)

• Original loan documents with dates and principal
• Current outstanding balance and maturity
• Collateral summary
• Specific defaults (list each)
• Borrower request; lender discretionary accommodation
• Acknowledgment of debt, lien validity, and no defenses
• State that recitals are contractual and incorporated

3. Defined Terms

Define at minimum: "Forbearance Period," "Forbearance Payments," "Existing Defaults," "Deferred Amounts," "Forbearance Termination Date," "Loan Documents."

4. Forbearance Terms

| Item | Term | | --- | --- | | Effective Date | | | Forbearance Period Start/End | | | Forbearance Fee | | | Payment Amounts/Dates | | | Interest Rate During Period | | | Default Rate Applies? | | | Late Fees During Period | | | Deferred Amount Treatment | | | Maturity Extension | | | Application of Payments | |

Required clauses:

• Scope: only specific listed remedies are suspended
• No waiver of rights; all rights reserved
• Forbearance applies only to Existing Defaults

5. Conditions Precedent

• [ ] Execution and delivery by all parties
• [ ] Payment of forbearance fee and costs
• [ ] Current financial statements delivered
• [ ] Evidence of insurance; lender as loss payee/additional insured
• [ ] UCC/real property perfection status confirmed
• [ ] All required consents/authorizations delivered

6. Ongoing Covenants

• [ ] Timely forbearance payments, no grace period
• [ ] Taxes and insurance current
• [ ] No additional debt or liens without consent
• [ ] No asset sales outside ordinary course
• [ ] Maintain legal existence and good standing
• [ ] Periodic financial reporting (define cadence and deadline)
• [ ] Collateral preservation and inspection access

7. Representations and Acknowledgments

Borrower: authority and enforceability; no defenses, offsets, or counterclaims; accuracy of financials; no undisclosed MAC; debt and liens are valid and enforceable.

Lender: authority to enter; holder of note (if applicable).

8. Events of Default and Termination

| Trigger | Notice/Cure? | | --- | --- | | Missed forbearance payment | | | Breach of covenant | | | New default under loan docs | | | Misrepresentation | | | Insolvency/bankruptcy/receivership | | | Attachment/levy | | | Unauthorized transfer | |

Consequences: forbearance terminates immediately; all amounts due; lender may exercise all remedies under loan documents and law.

9. Releases, Waivers, Reaffirmations

• Borrower release of claims through Effective Date
• Waiver of defenses and counterclaims
• Reaffirmation of all loan documents and liens
• No novation

10. Miscellaneous

• Governing law; venue; jurisdiction
• Attorneys' fees to prevailing party (if consistent with loan docs)
• Integration; amendments in writing only
• Notices (method and addresses)
• Counterparts; electronic signatures
• Assignment limits (borrower restricted)

11. Exhibits

• Exhibit A: Payment Schedule
• Exhibit B: Payoff Statement
• Exhibit C: Collateral Schedule
• Exhibit D: Guarantor Acknowledgment

12. Signature Blocks

Provide blocks for Lender, Borrower, Guarantor(s), and Notary (if required by governing law or real property rules).

Guidelines

• Align governing law, venue, and arbitration with existing loan documents unless there is a specific reason to change
• Do not convert forbearance into a permanent modification unless expressly approved
• Ensure release and waiver language is enforceable under the governing state — [VERIFY] if unsure
• If collateral includes real property, confirm notarization and recording requirements
• If borrower is in bankruptcy or imminently filing, flag that court approval and automatic stay analysis may be required
• If any consumer lending elements exist, add applicable consumer compliance terms and disclosures
• Keep scope limited to Existing Defaults; reserve all remedies for new defaults
• Avoid representations about future lender accommodations
• Verify default interest, late fees, and usury limits for the governing state with [VERIFY]