Which are the Some covenants that may be included in the mortgage document?
Covenants is a contract specifying the rules and regulations between the borrower and sender.
There are three types Covenants which are mainly included in mortgage document:
1.Affirmative Covenants- This covenant is included in mortgage document so that the borrower can be reminded of to perform certain activities so that the business operations run smoothly.
Examples:
The lender assumes that all the book of accounts will be maintained.
lender want all the tax obligations to be paid on time.
2.Negative Covenants- This covenant is included in mortgage document so that the lender can create limitations for company and its owners. This limitation is related to financial matters.
Examples:
Restriction on payment of dividend to shareholders.
Restriction on management fee .
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