Call Provision | Propertylogy

Call Provision

By on November 29, 2018

A call provision is a clause written into loan contracts whereby lenders are given the right to recall the debt due to the occurrence of certain events.

Much like provision clauses that home buyers include in agreement of sale contracts, call provisions help protect lenders from unpaid and bad debts.

One of such clauses is the acceleration clause which a lender can trigger to demand full repayment of a home loan should the property be sold.

Other such clauses include those concerning:

  • Bankruptcy
  • Property value falling below the loan amount
  • Dragnet clauses
  • etc

Borrowers should note that many homeowners who feel that call provisions were unreasonably used have taken lenders to court.

And it seems that judges favor borrowers in such cases.

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