Right to Cure Default Clause

Right to Cure Default Clause

A Right to Cure Default Clause is a provision typically included in contracts, particularly in real estate and loan agreements, that grants a party the opportunity to rectify a breach of contract before the other party can take further action, such as terminating the contract or accelerating loan payments.

This clause serves to protect the party in default by providing a specified period during which they can correct their non-compliance with the terms of the contract. For instance, in a residential lease, if a tenant fails to pay rent on time, the lease may include a Right to Cure Default Clause that allows the tenant a certain number of days to pay the overdue rent before the landlord can proceed with eviction.

In the context of a loan agreement, if a borrower misses a payment, the Right to Cure Default Clause might permit the borrower to make the payment within a specified timeframe to avoid default status and any subsequent penalties or actions from the lender. This clause can enhance relationships between parties by providing a mechanism for resolution rather than immediate punitive measures.