Prepayment Charge Enforceability Clause Samples
The Prepayment Charge Enforceability clause establishes the lender's right to impose a fee if the borrower repays a loan before its scheduled maturity date. In practice, this clause typically applies to loans such as mortgages or commercial financing, where the lender may lose expected interest income if the loan is paid off early. By ensuring that prepayment charges are legally enforceable, the clause protects the lender's financial interests and discourages borrowers from refinancing or settling debts prematurely without compensating the lender for potential losses.
Prepayment Charge Enforceability. The Mortgage Loan Documents with respect to each Mortgage Loan subject to Prepayment Charge specifically authorizes such Prepayment Charge to be collected, such Prepayment Charge is permissible and enforceable in accordance with the terms of the related Mortgage Loan Documents and all federal, state and local laws applicable to the Mortgage Loans (except to the extent that the enforceability thereof may be limited by bankruptcy, insolvency, moratorium, receivership and other similar laws relating to creditors’ rights generally or the collectability thereof may be limited due to acceleration in connection with a foreclosure); and