In commercial real estate loan transactions, as in all finance transactions, prepayment of a loan may result in unanticipated economic consequences to the lender, including loss of the bargained-for interest payment, increased tax liability and costs associated with reinvestment. New York’s common law “perfect tender in time” rule, which has been settled law since the 19th century, provides a certain level of comfort to lenders in the event the loan documents are silent as to prepayment. Under this rule, the borrower has no right to pay off its loan prior to the stated maturity date absent statutory authority or an express clause in the loan documents permitting prepayment.
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