Common use of Consent Rights Clause in Contracts

Consent Rights. The Intercreditor Agreement will also delineate in considerable detail when and which provisions of the loan documents cannot be amended or modified without the opposing lender’s consent. As a general rule, the mezzanine lender will, for example, have considerable rights to consent to proposed changes to the senior loan document while the senior loan is performing. These consent rights will be curtailed significantly if the senior loan is in default and/or not being cured by the mezzanine lender. Depending on the nature of the deal, there may be additional concepts in the underlying loan documents that a party will want to incorporate into the standard list of provisions that cannot be amended without its prior consent. It is customary that the consent of the other lender will be required for loan document modifications that will increase the financial obligations of the borrower or stress the performance of the underlying property, or decrease the likelihood of repayment of the opposing lender’s loan.