A clause from form 6-4 in this chapter should be added to a prepayment clause allowing partial prepayments if the prepayment clause does not specify how the prepayment will be applied. The attorney may wish to add clause 6-3-11 to a prepayment clause that includes a premium payment or a yield maintenance amount.
Prepayment Clauses
Prepayment
Borrower may prepay this note in any amount at any time before the Maturity Date without penalty or premium.
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Borrower may prepay at any time before the Maturity Date the entire unpaid principal balance of this note with interest to the date of prepayment plus a premium of [percent] percent ([percent]%) of the amount of the principal balance.
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On or after [number] years after the date of this note, Borrower may prepay on any monthly installment date the entire unpaid principal balance, with interest to the date of prepayment, or any part of it in multiples of [amount] DOLLARS ($[amount]), with interest to the date of prepayment, in addition to the monthly installment then payable.
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Borrower has the option at any time to pay [amount] DOLLARS ($[amount]) or multiples of that amount on any installment date before the Maturity Date, but the total prepayments in any one year may not exceed
[percent] percent ([percent]%) of the Principal Amount of this note. Before exercising this option, Borrower will give [number] days’ written notice to Lender.
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Borrower has the option at any time to make prepayments on this note on any installment date before the Maturity Date, subject to these conditions: If the total prepayments during any one year do not exceed [percent] percent ([percent]%) of the Principal Amount of this note, no premium for prepayment will be due; if total prepayments during any one year exceed that amount, Borrower will pay a premium equal to [percent] percent ([percent]%) of the amount by which prepayments exceed the amount allowed without premium.
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6
Borrower may prepay on any monthly installment date before the Maturity Date all or any part of the unpaid principal balance plus accrued interest on the amount of principal prepaid, and Borrower agrees to pay a premium of [percent] percent ([percent]%) of any amount of principal prepaid.
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Borrower has the option at any time to prepay on any installment date before the Maturity Date all or any part of the unpaid principal balance plus accrued interest on the amount of principal prepaid, and Borrower agrees to pay a premium of [percent] percent ([percent]%) of the amount of principal prepaid; however, during the first three years of this note, prepayments of unpaid principal must be [amount] DOLLARS ($[amount]) or multiples of that amount, and in each of those years total prepayments may not exceed [percent] percent ([percent]%) of the Principal Amount of this note.
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Borrower has the option at any time of doubling the regular principal payment payable on any principal payment date; however, all additional payments will be applied to the final maturing installment or installments of principal.
Yield Maintenance Clause
On or after [number] [years/months] following the date of this note and thirty days following Lender’s receipt of written notice of Borrower’s election to prepay, Borrower may prepay the entire unpaid principal balance plus all accrued interest plus the greater of the Yield Maintenance Amount or a premium of 1 percent (1%) of the unpaid principal balance.
The Yield Maintenance Amount is an amount, never less than zero, equal to the present value of a series of Monthly Amounts, assumed to be paid at the end of each month remaining from the prepayment date through the Maturity Date, discounted at the U.S. Securities Rate.
The Monthly Amount is the Annual Interest Rate minus the yield (U.S. Securities Rate), as of the prepayment date, as published by the Federal Reserve System in its “Statistical Release H.15(519), Selected Interest Rates” under the caption “U.S. Government Securities/Treasury Constant Maturities,” for a U.S. Government Security with a term equal to that remaining on this note on the prepayment date (which term may be obtained by interpolating between the yields published for specific whole years), divided by twelve and the quotient then multiplied by the amount prepaid on the prepayment date.
No Right of Prepayment
Borrower may not make any prepayments without the prior written consent of Lender.
Prepayment because of Casualty or Condemnation
If Borrower prepays this note because of a casualty or condemnation the [premium/Yield Maintenance Amount] will not apply.