Loan Against Lease Agreement Template for Pakistan

The Loan Against Lease Agreement is a crucial financing document used in Pakistan when businesses or individuals seek to leverage their existing lease rights to obtain financing. This agreement type is particularly relevant in commercial real estate, industrial, and retail sectors where valuable lease rights can serve as collateral. The document establishes the relationship between the loan facility and the underlying lease, detailing how the lease rights serve as security while ensuring compliance with Pakistani banking regulations, property laws, and registration requirements. It includes comprehensive provisions covering loan terms, security creation, covenant packages, and enforcement mechanisms, making it essential for both financial institutions and businesses engaged in lease-based financing structures. The agreement must address specific requirements under Pakistani law regarding security creation over lease rights and incorporate necessary provisions for enforceability.

1. Parties: Identifies all parties to the agreement including the lender, borrower, and any guarantors

2. Background: Sets out the context of the agreement, including details of the existing lease and the purpose of the loan

3. Definitions and Interpretation: Defines key terms used throughout the agreement and establishes interpretation rules

4. Loan Amount and Purpose: Specifies the loan amount, purpose, and any conditions precedent to drawdown

5. Security Creation: Details how the lease rights are assigned/charged as security for the loan

6. Representations and Warranties: Standard and transaction-specific representations and warranties from the borrower

7. Covenants: Positive and negative obligations of the borrower regarding the loan and lease

8. Events of Default: Lists circumstances that constitute default and their consequences

9. Payment Terms: Details of repayment schedule, interest calculations, and payment mechanics

10. Security Enforcement: Procedures for enforcing security over the lease in case of default

11. Assignment and Transfer: Rules regarding transfer of rights under the agreement

12. Notices: Communication procedures between parties

13. Governing Law and Jurisdiction: Confirms Pakistani law as governing law and specifies jurisdiction for disputes

14. Miscellaneous: Standard boilerplate provisions including severability, amendments, etc.