Takeout Commitment

Definition: A lender's commitment to provide longer-term financing that will replace interim financing when stated conditions are met.

Example

A developer arranges permanent financing to take out the construction loan after completion and required leasing conditions.

Keep the distinction clear

A commitment is subject to its terms, deadlines, and conditions. It is not an unconditional promise that funding will occur regardless of project performance.

Related terms

Mortgage Lender · Underwriting · Performance (Contract)

Keep studying

Mortgages: Borrower, Lender, Ownership, and Key Clauses

References: California DRE: real estate glossary · CFPB: mortgage key terms

Pronunciation (US): TAYK-owt kuh-MIT-munt (capitals show stress)

Pronunciation reference: Merriam-Webster