--- name: loan-forbearance title: Loan Forbearance Agreement description: Drafts lender-protective U.S. commercial loan forbearance agreements that temporarily suspend remedies while preserving all lender rights, capturing existing defaults, payment deferrals, conditions precedent, and borrower releases. Use when drafting or reviewing a forbearance agreement, loan workout, payment deferral, temporary modification, default standstill, lender-borrower restructuring, or cure-period extension. author: CaseMark author_url: https://github.com/CaseMark/skills/tree/main/skills/legal/loan-forbearance license: Apache-2.0 version: 0.1.0 execution_mode: open jurisdiction: us practice: finance language: en tags: [agreement, drafting, transactional] --- # 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]`