A late payment
Unpaid municipal taxes
Cancelled fire insurance
Common triggers
- A late payment
- Unpaid municipal taxes
- Cancelled fire insurance
- A property left without upkeep
- New debt registered without consent
- Financial statements not filed on time
What follows a default
The lender can demand full repayment. Read the cure period set in the contract.
Cross-default
A default on one loan can trigger defaults on the others.
This clause is common when several properties are financed together.
The cure period
Most contracts allow a few days to correct a default.
It ranges from five to thirty days. Read it before you need it.
What to do if trouble comes
Tell the lender before the default. A negotiated arrangement costs less than enforcement.
Ongoing obligations
- Filing financial statements each year
- Keeping insurance in force
- Paying taxes when due
- Maintaining the property in good condition
- Telling the lender about a significant change
These obligations last the full term, not just the first year.
Re-reading the contract each year
Obligations are quickly forgotten once the loan is in place.
An annual re-read takes an hour and avoids an unintended default.
Put document deadlines in your calendar.
