Forbearance Agreement Template for Netherlands

A Forbearance Agreement provides temporary relief when a borrower can't meet their loan obligations. It's a formal arrangement where the lender agrees not to enforce their legal rights (like foreclosure or debt collection) for a specific period, giving the borrower time to get back on track.

Under Dutch civil law, these agreements help prevent immediate defaults while protecting both parties' interests. The lender maintains their legal claim but pauses enforcement, while the borrower commits to specific terms - like partial payments or a revised payment schedule. Banks and mortgage lenders in the Netherlands often use forbearance as an early intervention tool before considering stricter measures.

Consider a Forbearance Agreement when your business faces temporary financial difficulties and needs breathing room from loan obligations. This tool proves especially valuable during unexpected market downturns, cash flow disruptions, or when restructuring operations impacts your ability to make regular payments.

Under Dutch banking regulations, it's crucial to initiate forbearance discussions before actually defaulting on payments. The agreement works best when you can demonstrate a clear path to recovery and maintain open communication with your lender. Many Dutch financial institutions prefer this approach over immediate enforcement, particularly for commercial mortgages and business loans where the underlying business remains viable.

• Payment Modification: Adjusts the original payment terms, often reducing monthly amounts or extending the repayment period under Dutch financial regulations
• Temporary Suspension: Pauses all payment obligations for a defined period, common in Dutch commercial real estate financing
• Partial Payment: Allows reduced payments while maintaining the loan's status, typically used for business loans
• Interest-Only: Temporarily converts the loan to interest-only payments, popular in mortgage forbearance
• Conditional Forbearance: Links payment relief to specific business performance metrics or restructuring milestones

• Financial Institutions: Dutch banks and lenders who grant temporary relief from loan obligations while maintaining their legal rights
• Business Borrowers: Companies facing temporary financial challenges who need breathing room to restructure or recover
• Legal Advisors: Dutch attorneys who draft and negotiate the agreement terms, ensuring compliance with banking regulations
• Financial Controllers: Internal finance professionals who monitor compliance with forbearance terms
• Insolvency Practitioners: Specialists who may recommend forbearance as part of broader restructuring plans

• Loan Details: Gather original loan agreement, current balance, payment history, and any previous modifications
• Financial Assessment: Document current financial situation, cash flow projections, and recovery timeline
• Proposed Terms: Outline specific relief needed, including duration and modified payment structure
• Security Review: Confirm existing collateral arrangements and any changes needed under Dutch law
• Compliance Check: Ensure alignment with Dutch banking regulations and financial sector guidelines
• Documentation: Use our platform to generate a compliant agreement that includes all required elements

• Identification Details: Full legal names and addresses of all parties, original loan reference numbers
• Original Agreement: Clear reference to the underlying loan agreement and current obligations
• Modified Terms: Specific details of payment adjustments, duration, and conditions of forbearance
• Default Provisions: Consequences of breaching the forbearance terms under Dutch law
• Preservation Clause: Statement that original loan terms remain valid except as modified
• Governing Law: Explicit reference to Dutch law and jurisdiction
• Signatures: Authorized signatory requirements and execution formalities

A Forbearance Agreement differs significantly from an Amendment Agreement, though both modify existing loan terms. While forbearance provides temporary relief without permanently changing the original agreement, an Amendment Agreement makes permanent modifications to the underlying contract terms.

• Duration: Forbearance offers temporary relief for a specific period, while amendments create permanent changes
• Legal Effect: Forbearance suspends enforcement rights while keeping original terms intact; amendments permanently alter the original agreement's provisions
• Implementation: Forbearance requires less complex documentation and approval processes under Dutch law
• Recovery Focus: Forbearance specifically addresses financial distress situations, while amendments serve broader contract modification needs
• Future Rights: Forbearance preserves the lender's original rights after the relief period; amendments permanently modify these rights