Document background
The Loan Assumption Agreement is commonly used in Pakistan when there is a need to transfer existing loan obligations from one party to another, often in real estate transactions or corporate restructuring. This document becomes necessary when the original borrower wishes to be released from their loan obligations and a new party agrees to take on these responsibilities. The agreement must comply with Pakistani banking regulations, including the State Bank of Pakistan's requirements and, where applicable, Islamic banking principles. It typically includes details of the original loan, outstanding amounts, security arrangements, and conditions for the assumption to take effect. The agreement is particularly relevant in situations involving property transfers, business acquisitions, or debt restructuring, where the assuming party takes over both the benefits and obligations of the original loan agreement while maintaining the security structure.
