Free Debt Assumption Agreement Template for New Zealand

A Debt Assumption Agreement lets someone take over another party's debt obligations legally and formally. It's commonly used in NZ business sales, property transfers, and corporate restructuring when one party wants to step into the shoes of an existing borrower and take responsibility for their loan.

Under New Zealand contract law, these agreements need clear consent from all three parties - the original borrower, the new borrower, and the lender. They're particularly useful in commercial property deals where buyers want to take over existing mortgages, or when parent companies assume their subsidiaries' debts. The agreement must spell out the exact debt amount, payment terms, and each party's rights and obligations going forward.

Consider using a Debt Assumption Agreement when you're buying a business with existing loans and want to take over those debts instead of arranging new financing. This approach often saves time and money, especially in NZ commercial property deals where assuming the current mortgage makes more sense than starting fresh.

These agreements work well during company restructures, when parent companies take over subsidiary debts, or in partnership buyouts where remaining partners need to handle departing members' obligations. They're also valuable in succession planning, letting family businesses transfer smoothly without disrupting existing lending relationships. Just ensure you've got written approval from your lender before proceeding.

• Full Debt Transfer: Complete assumption of all outstanding loans and payment obligations, commonly used in business sales or commercial property transfers
• Partial Assumption: Takes over specific debts while leaving others with the original borrower - useful for targeted acquisitions or selective asset purchases
• Conditional Transfer: Links debt assumption to specific triggers or milestones, often used in staged business transitions
• Secured Debt Assumption: Specifically for taking over mortgages or other secured loans, requiring additional property-related documentation
• Guarantor Structure: Keeps original borrower as guarantor while transferring primary payment responsibility to the new party

• Original Borrowers: Companies or individuals looking to transfer their existing debt obligations to another party, often during business sales or restructuring
• New Borrowers: Entities taking on the debt responsibilities, typically buyers in acquisitions or parent companies absorbing subsidiary obligations
• Lenders: Banks or financial institutions who must approve and document the transfer of debt obligations between parties
• Corporate Lawyers: Draft and review agreements to ensure compliance with NZ banking regulations and protect all parties' interests
• Financial Advisors: Guide clients through debt assumption processes and assess financial implications

• Debt Details: Gather exact loan amounts, interest rates, payment schedules, and any security arrangements from existing agreements
• Party Information: Collect legal names, addresses, and registration numbers of original borrower, new borrower, and lender
• Lender Approval: Obtain written consent from the lender for the debt transfer before drafting begins
• Financial Status: Document the new borrower's financial position to demonstrate capacity to take on debt obligations
• Transfer Terms: Specify effective date, payment arrangements, and any conditions for the debt transfer
• Documentation: Attach copies of original loan agreements and related security documents as references

• Party Details: Full legal names, addresses, and registration numbers of original borrower, new borrower, and lender
• Debt Description: Precise details of the debt being transferred, including amount, interest rates, and payment terms
• Transfer Terms: Clear statement of debt assumption, effective date, and conditions of transfer
• Lender Consent: Explicit acknowledgment and approval from the lender for the debt transfer
• Representations: Statements confirming parties' authority and capacity to enter agreement
• Governing Law: Specification that New Zealand law applies and jurisdiction for disputes
• Execution Block: Designated spaces for signatures, dates, and witness details if required

A Debt Assumption Agreement differs significantly from a Debt Settlement Agreement in both purpose and outcome. While assumption transfers debt responsibility to a new party, settlement focuses on resolving existing debt through compromise or payment arrangements.

• Purpose: Debt Assumption maintains the original debt but changes who pays it; Settlement aims to resolve or reduce the debt amount
• Parties Involved: Assumption requires three parties (original borrower, new borrower, lender); Settlement typically involves just the creditor and debtor
• Financial Impact: Assumption keeps the debt amount unchanged; Settlement often results in reduced payment amounts or modified terms
• Timing: Assumption works during business transitions or property transfers; Settlement typically occurs when dealing with financial hardship or debt resolution
• Legal Effect: Assumption creates new payment obligations; Settlement terminates or modifies existing debt obligations