Commitment Fee

(redirected from Commitment Fees)
Also found in: Dictionary, Financial.
Related to Commitment Fees: Upfront Fee, Management 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 ?
The Fortress agreement, which can be increased to the same $150 million, lowers commitment fees, allows Arcapita to shop for better terms from other lenders, and limits the circumstances under which Fortress can terminate the loan.
The IRS argued that the nonrefundable portion of the commitment fees should have been included in Freddie Mac's income in the year of receipt, because the taxpayer had met the Sec.
arbitrators who are considering the adoption of cancellation and commitment fees.
9 million, amortization of the upfront commitment fee on the Company's Amended and Restated Omnibus Credit Agreement (Omnibus Credit Agreement) of $9.
The reduction in the size of the Treasury Facility will reduce the amount of unused commitment fees paid by Main Street.
Commitment fees of 1% are common, although lower fees can sometimes be negotiated.
They expressly provided for T's payment of commitment fees and certain other costs, including amounts X earned in its capacity as an agent.
Given the Company's strong current and projected future cash flow generation capability from its operations at NagaWorld (including the recoupment of commitment fees paid and the Company's share of net wins from its machine installed base at NagaWorld), the state of the previously-owned gaming machine market, and its strong relationships with gaming equipment manufacturers, Elixir Gaming anticipates funding its 2010 gaming machine purchases for its existing project pipeline from cash on hand and expected net cash flow from operations.
Under the new credit facility the Company will pay quarterly commitment fees, as applicable under the agreement, at a rate of 12.
The loans were structured on 5- to 15-year terms at fixed rates with no commitment fees.
The terms of the new facility include an interest rate of the London Interbank Offered Rate (LIBOR) plus 250 basis points for amounts outstanding under the facility and commitment fees of 37.
In addition, the maturity of the revolver was extended from June 2007 to January 2010, and other favorable changes were made, including reduced grid pricing on interest margins and commitment fees.