Lender’s Right to Protect Collateral and Perform Covenants and Other Obligations Clause Samples
This clause grants the lender the authority to take necessary actions to protect the collateral securing a loan and to fulfill any covenants or obligations that the borrower fails to perform. In practice, this may include paying insurance premiums, taxes, or maintenance costs related to the collateral if the borrower neglects these responsibilities. By allowing the lender to step in and address such issues, the clause ensures the value of the collateral is preserved and the lender’s interests are safeguarded, thereby mitigating the risk of loss due to borrower default or neglect.
Lender’s Right to Protect Collateral and Perform Covenants and Other Obligations. If Borrower or Guarantor fails to perform the covenants and agreements contained in this Agreement or any of the other Loan Documents, then Lender at Lender’s option may make such appearances, disburse such sums and take such action as Lender deems necessary, in its sole discretion, to protect Lender’s interest, including (a) disbursement of reasonable attorneys’ fees, (b) entry upon the Mortgaged Property to make repairs and replacements, (c) procurement of satisfactory insurance as provided in Section 5 of the Security Instrument encumbering the Mortgaged Property, and (d) if the Security Instrument is on a leasehold, exercise of any option to renew or extend the ground lease on behalf of Borrower and the curing of any default of Borrower in the terms and conditions of the ground lease. Any amounts disbursed by Lender pursuant to this Section 12.03, with interest thereon, shall become additional Indebtedness of Borrower secured by the Loan Documents. Unless Borrower and Lender agree to other terms of payment, such amounts shall be immediately due and payable and shall bear interest from the date of disbursement at the weighted average, as determined by Lender, of the interest rates in effect from time to time for each Advance unless collection from Borrower of interest at such rate would be contrary to Applicable Law, in which event such amounts shall bear interest at the highest rate which may be collected from Borrower under Applicable Law. Nothing contained in this Section 12.03 shall require Lender to incur any expense or take any action hereunder.