Commitment Fee


Also found in: Dictionary, Financial.
Related to Commitment Fee: Management fee, Upfront Fee

Commitment Fee

Compensation paid to a lender by a borrower for the lender's promise to give a mortgage at some future time.

A commitment fee, frequently employed in real estate transactions, is an expense separate from interest charged on the loan to be secured by the mortgage. The controversy surrounding nonrefundable commitment fees arises when a borrower decides not to proceed with the loan and then demands return of the fee on the premise that the lender has performed no services to earn it. The courts have consistently rejected this contention and held that the lender is entitled to the commitment fee either as Liquidated Damages for breach of contract or as compensation for earmarking the funds for loan to the borrower.

References in periodicals archive ?
Why should I have my grandson pay for a commitment fee for a project that is lousy anyway?
This deferral of the deadlines provides the Company with an opportunity to reduce commitment fees and interest costs as it does not expect to need to access any funds until the first quarter of 2017 based upon the currently anticipated level and timing of capital expenditures.
YA Global is entitled to a one-time commitment fee of EUR200,000 in shares and has already received customary structuring and due diligence fees.
The terms of the credit facility include a 50 basis point commitment fee, an interest rate of LIBOR plus 3.
The new Fit for Life membership package means that, by paying an initial commitment fee, you can now join from just pounds 20 per month, taking advantage of the fully equipped gym, cardiovascular suite, over 100 free classes, 25 metre pool, steam room, sauna and the new-look brasserie.
The commitment fee included both refundable and nonrefundable portions.
The Fund has also made access to funds from the CCL simpler and faster in the event of crisis, and reduced the interest rate and commitment fee on any lines of credit.
35) Like cancellation fees, the commitment fee is to compensate the arbitrators for lost employment.
According to Hidayat, the advance fee is on top of the usual commitment fee, which ranges between 0.
Based on LTC's current leverage ratios, the amended facility provides for interest annually at LIBOR plus 125 basis points and an unused commitment fee of 25 basis points.
The Company has agreed to pay a US$20,000 commitment fee on maturity and, in addition, to issue to the lenders, as a bonus for making the Loan, warrants exercisable to purchase up to 3,000,000 shares of the Company for $0.
The Lender charged a no commitment fee and the loan has a sliding scale penalty of 3-2-1-0-0% for ach 5 year period in the case of prepayment.