Forbearance Contract (Commercial Property Loan) (Pre-Workout) (California)

The Forbearance Contract (Commercial Property Loan) (Pre-Workout) (California) is a legal template designed to outline the terms and conditions of a forbearance agreement between a lender and borrower regarding a commercial property loan. It specifically applies to situations where the borrower is experiencing financial difficulties, leading them to default on their loan obligations, and seeks a temporary reprieve.

Under USA law, particularly California regulations, this template aims to provide a framework for negotiating a temporary forbearance agreement prior to initiating a more comprehensive workout plan. The agreement serves as a mutual understanding between the lender and the borrower, providing a structured approach to alleviate the financial strain and offer a potential path to resolving the default.

The contract encompasses a range of essential provisions, including the effective date, identification of the lender and borrower, precise definition of the default, and the terms for which the forbearance will be granted. It will outline the predetermined period of forbearance, during which the lender agrees not to exercise their rights or remedies resulting from the borrower's default.

The template will also specify the borrower's obligations during the forbearance period, such as partial or full payment of interest, maintenance of insurance, and other relevant requirements. Additionally, it may address the disbursement of any funds that may be received during the forbearance, ensuring proper allocation and transparency.

Furthermore, the agreement may contain dispute resolution mechanisms, confidentiality clauses, and provisions entitling the lender to terminate the forbearance contract in the event of non-compliance by the borrower.

By utilizing this legal template, lenders and borrowers in California can establish a formal agreement that preserves the commercial property loan while providing the borrower an opportunity to stabilize their financial situation and potentially reestablish compliance with the loan terms.