What does the "Is Loan Assumable" feature do?

Description

There are three options you can select.  The options are No Right to Transfer, Right to Transfer Once, and Right to Transfer Multiple times.

GoDocs loan documents address the Borrower entity at the top level, so if that entity is unchanged, there is nothing in the loan documents to modify. A buyout and loan continuation, for example, is handled administratively by the Lender under the transfer provisions in Section E of the Loan Agreement: a change in the LLC's membership interest is a Transfer, and a Transfer the Lender consents to is not an Event of Default. The Lender reviews and consents under its existing controls, at its own determination and discretion, on whatever conditions it sets for the owner(s). Any non-compliance would be an Event of Default, which encourages the Borrower to cure the situation or gives the Lender a path to proceed at its determination.

Not selecting the one-time assumption option does not change this. Every Loan Agreement carries these transfer provisions and the lender-consent carve-out regardless of that setting, so the Lender can consent case by case. Including a one-time assumption or a Pre-Approved Transfer only outlines the specific scenarios and conditions under which the Lender would not unreasonably withhold or delay its consent.

One distinction worth flagging: if ownership is instead moving into a new entity, for example a new LLC taking title with a grant deed transferring the collateral, that would be an assumption rather than an internal ownership change, and GoDocs can document that through our ModDocs product.

User Interface

Navigate to the "Loan Tab" and scroll down to the "Is Loan Assumable" section. 

Select the appropriate drop-down option to match your order's intention. 

(a) No Right to Transfer

(b) Right to Transfer Once 

(c) Right to Transfer Multiple times

GoDocs Software Output Sample

(a) No Right to Transfer

No transfers are pre-contemplated or permited except for those specificly identified. The Lender retains the option to permit at their discretion. Transfers that occure via normal business processes, life occurances and are otherwise not a full transfer that impacts the Lender's collateral are acceptable.

(b) Right to Transfer Once 

The section included to reflect the permitted transfers are added to the section. (The amount, ratio and percentage values are controllable at the Lender level.)

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Section E.1(f)(i) above can be further limited with the following langauge (in 12 month or 18 month versions) via product settings.

(c) Right to Transfer Multiple times

The Right to Transfer Multiple times is similar to Right to Transfer Once, but removes the "one time only" limitation.