A debtor may ask the Bank either before or after a default has occurred for a waiver of the prospective or existing default. Waiver is the relinquishment of a known right (i.e., the right of the bank to declare a default and exercise its remedies under the loan documents).
In real estate lending, a waiver may take the form of a request by the debtor for a waiver of a “no additional liens” covenant to allow a new third-party to take a second lien on the real estate and provide additional funds to the debtor. In this instance, the second lien lender should require as a condition to the new loan that the first lien lender sign a Consent and Estoppel Letter evidencing its consent to the second lien. A form is located at the end of this Chapter.