Representations and guarantees: these should be carefully considered in all transactions. It should be noted, however, that the purpose of insurance and guarantees in a facility agreement differs from its purpose in purchase and sale contracts. The lender will not attempt to sue the borrower for breach of representation and guarantee – instead, it will use an infringement as a mechanism to call a default event and/or ask for repayment of the loan. A disclosure letter is therefore not required with respect to insurance and guarantees in the facility agreements. A facility agreement can be divided into four sections: the agreement provides that the money is paid to the borrower in a single day. The refund is also made on a fixed date. However, there is a provision that allows the lender to require repayment of the loan at any time, subject to written notification. The borrower is required to repay the loan at the end of the contract notice period (for example.B. could be set at one month to allow the borrower sufficient time to find the funds). Finally, an agreement on union facilities will contain many provisions concerning a bank of agents and its role. These will often not be of immediate importance to the borrower, but it should consider whether the agent bank can only be replaced by its consent and that the agent bank has sufficient powers to act autonomously to give the borrower the flexibility it needs. A borrower does not wish to obtain the agreement or waiver declarations of a large consortium of lenders.
If you need more information on this topic, check out our extensive home loan guide for first-time homebuyers in India. Potential Standard/Standard: A facility contract contains a standard provision to cover events, although these are not yet events that probably do not occur. These values are called default or sometimes potential values. They are often negotiated by borrowers who do not want to be exposed to “hair triggers” from which they may lose access to their banking facilities. The term “advance” refers to a refund that goes beyond the amount of the ME set out in the agreement. Typically, these surpluses are settled with the outstanding principal at the time of payment. The amount of the advance may be only a fraction of the loan amount or the total loan amount. The clause defines the financial impact of these advances that must be made.