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Can we talk about the interest rate clause that blindsided me
I was at the closing table in Austin last month for a $450k commercial bridge loan when my lawyer pointed out a prepayment penalty buried in the fine print. Turns out it was a 5% fee if I paid off the loan in the first 18 months, which totally messed up my exit strategy. Has anyone else gotten caught by a hidden clause like this and how did you fight it?
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john_cooper18d ago
5% prepayment on a 450k loan? That's a $22,500 sucker punch right there. I'd lawyer up and see if Texas has any disclosure laws you can lean on.
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hunt.quinn18d ago
$22,500 is the number I got too, yeah. I'm with you that it stings. One thing though, @john_cooper, that's actually a 5% fee on the loan amount not the payoff balance so it's a flat $22,500 no matter how much you owe at that point. I had a similar clause pop up on a deal in Houston a few years back, only it was 3% for 12 months. We pushed back at the table and got them to cut it to 2% just by pointing out we could walk and they'd lose the whole deal.
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