A Forbearance Agreement is a negotiated arrangement between a lender and borrower where the lender agrees to temporarily refrain from enforcing its rights—such as acceleration or repossession—despite a default having occurred. In UK property development finance, these agreements offer breathing space for developers facing cashflow issues or project delays, allowing time to restructure finance or remedy breaches. The agreement typically includes revised milestones, interim payments, or performance conditions, and helps avoid immediate litigation while preserving the lender’s security rights.
A Forbearance Agreement sits within Litigation, Disputes, and Enforcement, reflecting its function in managing lender remedies following a borrower default without immediate enforcement action. In UK property development finance it is commonly used in stressed or transitional scenarios where the development timeline has slipped or covenants have been breached. It can be particularly relevant where the planned exit relies on a Mini-Perm Loan, allowing time for refinancing or stabilisation of income before permanent debt is secured. The arrangement protects lender security while giving the borrower a structured period to correct performance issues and realign the project with its original financial strategy.
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