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Real Estate Glossary

Debt Covenants

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Written by Luis Escobar

These are rules included in loan documents that govern the behavior of the borrower once the debt is issued. There are two types: affirmative and negative covenant. Affirmative covenant permit while negative covenant restrict the borrower’s ability to perform specific actions. In the event a borrower breaks a covenant, the lender is entitled to call back the loan.

These are rules included in loan documents that govern the behavior of the borrower once the debt is issued. There are two types: affirmative and negative covenant. Affirmative covenant permit while negative covenant restrict the borrower’s ability to perform specific actions. In the event a borrower breaks a covenant, the lender is entitled to call back the loan.

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Luis Escobar

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