Release of Debt Service Reserve Clause Samples

The 'Release of Debt Service Reserve' clause defines the conditions under which funds held in a debt service reserve account can be released, typically to the borrower or project company. This clause specifies the triggers for release, such as the achievement of certain financial ratios, repayment milestones, or the end of a specified period without default. Its core function is to ensure that excess reserved funds are returned when they are no longer needed as security, thereby improving cash flow for the borrower while maintaining lender protection until key obligations are met.
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Release of Debt Service Reserve. All amounts contained in the Debt Service Reserve shall be released to Borrower upon satisfaction of the following conditions: (i) Borrower has delivered to Administrative Agent a certification from Borrower certifying that (A) as of the date of the most recent financial statements required to be delivered pursuant to Section 7.1(a)(i), (1) the Project Yield, based upon the six (6) month period ending on such date, is equal to or greater than 9.00%, and (2) the Debt Service Coverage Ratio, based upon the three (3) month period ending on such date, is equal to or greater than 1.25 to 1.00 and (B) all construction necessary for occupation of at least thirty-two (32) Residential Units by assisted living or memory care residents has been completed; (ii) the Relicensing has occurred, and Borrower has delivered to Administrative Agent a copy of any Primary License necessary to operate the Project as an assisted senior living or memory care facility; (iii) Administrative Agent shall have verified to its reasonable satisfaction that the Project Yield and the Debt Service Coverage Ratio as of the date certified by Borrower pursuant to clause (i) of this Section and as of the date of the most recent financial statements required to be delivered pursuant to Section 7.1(a)(i), is equal to or greater than 9.00% and 1.25 to 1.00, respectively, as of the last day of the periods specified in clause (i); (iv) if requested by Administrative Agent, Administrative Agent shall have inspected the Project; and (v) no Potential Default or Event of Default is in existence as of the date of such release.
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Release of Debt Service Reserve. At such time that (i) the Project is fully stabilized for a full calendar year and (ii) the Debt Service Coverage Ratio is greater than 1.50:1.0, as evidenced by B▇▇▇▇▇▇▇’s Financial Statements, the Debt Service Reserve shall be released to Borrower.
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Release of Debt Service Reserve. Following the date which is twelve (12) months after the date that Borrower actually deposits funds in the Debt Service Reserve Deposit or delivers the Letter of Credit, upon written request from Borrower, Lender shall, on each Payment Date (until all funds in the Debt Service Reserve have been applied), apply a portion of the Debt Service Reserve or reduce the Letter of Credit by an amount equal to the Monthly Debt Service Payment Amount due for such Payment Date provided that (i) no Event of Default has occurred and is continuing, (ii) the Debt Service Coverage Ratio for the twelve (12) full calendar month period immediately preceding the date of the applicable Payment Date (assuming an interest rate constant equal to the Cure Contract Rate) is at least equal to 1.65:1.00 (the “Required Application Ratio”). Notwithstanding the foregoing, in the event that Lender commences applying the funds in the Debt Service Reserve pursuant to Section 7.5 hereof (such period the “Application Period”) and the Required Application Ratio is not maintained during the Application Period, Lender shall suspend applying the Debt Service Reserve until the later of (i) the Payment Date that is three months from the date of such suspension and (ii) the Payment Date upon which the Required Application Ratio is achieved.
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Release of Debt Service Reserve. Amounts on deposit in the Debt Service Reserve shall be released and applied in accordance with the provisions of the Mortgage Loan Agreement.
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Related to Release of Debt Service Reserve

  • Debt Service Reserve Borrower shall establish and maintain a debt service reserve account (“Debt Service Reserve”). The account shall be deposited with Lender or in a safe and responsible depository designated by Lender. Such funds shall at all times remain under the control of Lender, whether in the form of a cash deposit or invested in obligations of, or fully guaranteed as to principal by, the United States of America or in such other investments as may be allowed by HUD. Such funds are to be drawn upon only with HUD’s consent, which consent may require replenishment to the minimum balance. The purpose of this reserve is to protect the insured loan in circumstances where ▇▇▇▇▇▇▇▇’s funds generated by the Project are insufficient to make the required debt service payments on the Note while other Project obligations remain current. Borrower shall deposit at endorsement of the Note an initial amount of $_________. Thereafter, the minimum allowable balance shall be $___________, and if at any time the balance of the Debt Service Reserve is less than the minimum allowable balance, Borrower shall make such deposits as necessary to cause the balance to be no less than such minimum allowable balance. The Borrower may make or take no Distribution at any time when the balance of that account is below the minimum allowable balance. Borrower shall carry the balance in this account on the financial records as a restricted asset. The Debt Service Reserve shall be invested in accordance with Program Obligations, and any interest earned on the investment shall be deposited in the Debt Service Reserve. Disbursements from such account shall only be made after consent, in writing, of HUD, which may be given or withheld in HUD’s sole discretion and upon such terms as approved by HUD. In the event of a notification of default under the terms of the Borrower’s Security Instrument pursuant to which the Indebtedness has been accelerated, a written notification by HUD to Borrower of a violation of this Agreement, or at such other times as determined solely by HUD, HUD may direct the application of the balance in such account to the amount due on the Indebtedness as accelerated or for such other purposes as may be determined solely by HUD. Where the Mortgaged Property is already subject to a security instrument insured or held by HUD as of the date hereof and this Agreement is now being executed by Borrower as of the date hereof, the Debt Service Reserve now to be established shall be equal to the amount due to be in such account under this Agreement, and payments hereunder shall begin with the first payment due on the Borrower’s Note after acquisition, unless some other method of establishing and maintaining the account is approved in writing by HUD. Upon ▇▇▇▇▇▇▇▇’s full satisfaction of all Lender and HUD obligations, Borrower shall receive any monies remaining in the Debt Service Reserve.

  • Debt Service Reserve Account Borrower shall fund and maintain a debt service reserve in the Debt Service Reserve Account, in an amount equal to twelve (12) monthly payments of principal and interest on the Term Loan as determined from time to time by the Lender (the “Debt Service Reserve Amount”). Beginning with the first fiscal year end after the Effective Date, and at each fiscal year end thereafter, until such time as the balance in the Debt Service Reserve Account is equal to or greater than the Debt Service Reserve Amount, one hundred percent (100%) of Excess Cash Flow shall be deposited in the Debt Service Reserve Account by Borrower within 120 days of each fiscal year end. The balance held in the Debt Service Reserve Account shall earn interest at the rate determined by the Lender from time to time. If at any time after the Debt Service Reserve Amount has been fully funded by the Borrower the balance in the Debt Service Reserve Account is less than sixty-seven percent (67.0%) of the applicable Debt Service Reserve Amount, the Borrower shall, within sixty (60) days after receipt of notice from the Lender as provided herein, deposit in the Debt Service Reserve Account an amount sufficient to restore the balance in the Debt Service Reserve Account to an amount not less than the Debt Service Reserve Amount; provided, however, Borrower shall not be required to make a deposit in the Debt Service Reserve Account to the extent that such a deposit would exceed one hundred percent (100%) of Excess Cash Flow, calculated based upon unaudited monthly financial statements required by Section 5.01(c)(ii) of this Agreement for the month ending immediately prior to receipt of notice from the Lender. In the event that Borrower is not required to fully restore the balance in the Debt Service Reserve Account pursuant to the foregoing sentence, Borrower shall at the earliest possible date thereafter, to the extent of Excess Cash Flow determined on unaudited monthly financial statements required by Section 5.01(c)(ii) of this Agreement or audited financial statements required by Section 5.01(c)(i) of this Agreement, as applicable, deposit in the Debt Service Reserve Account such additional amounts as will restore the balance in the Debt Service Reserve Account to an amount not less than the Debt Service Reserve Amount. As and when any of the Loan Obligations are past due, after any applicable grace periods have expired, under any Loan Document, Lender, in its sole discretion, may withdraw from the Debt Service Reserve Account the amount of the then past due Loan Obligations and apply such amounts to the payment of the past due Loan Obligations. Notwithstanding the foregoing sentence, if an Event of Default has occurred and is continuing under the Loan Documents, the Lender may, after any applicable grace periods have expired, withdraw amounts in the Debt Service Reserve Account, in its sole discretion, and apply such amounts to the payment of the Loan Obligations in such order and manner as Lender shall determine in its sole discretion. Withdrawals by the Lender of any amounts from the Debt Service Reserve Account to pay any Loan Obligations as provided in this Section 2.14 may be made without the requirement of any consent by or notice to the Borrower, provided that Lender shall provide to Borrower notice that such withdrawal was made within a reasonable time thereafter. Borrower recognizes and acknowledges that its obligation to pay the Loan Obligations are absolute and unconditional and it is not dependent upon sufficient deposits in the Debt Service Reserve Account being available to make payment on any Loan Obligations, and nothing herein shall be construed to negate or modify the Borrower’s absolute and unconditional obligation to pay the Loan Obligations in accordance with the terms and conditions of this Agreement and the Loan Documents. Borrower shall execute and deliver to the Lender any and all deposit account control agreements the Lender may reasonably request in accordance with the terms and conditions of the Loan Documents, and take all actions and deliver all documents the Lender may reasonably request or require to perfect the Lender’s security interest in the Debt Service Reserve Account, in accordance with the terms and conditions of the Loan Documents.

  • Debt Service The provisions of this Section 3.9 regarding disbursements shall include the payment of debt service related to any mortgages of the Property, unless otherwise instructed in writing by Owner.

  • Debt Service Coverage Ratio Calculation: If school owns its facility or if the school leases its facility and the lease is capitalized: (Net Income + Depreciation Expense + Interest Expense) divided by (Principal + Interest + Lease Payments) If school leases its facility and the lease is not capitalized: (Facility Lease Payments + Net Income + Depreciation Expense + Interest Expense) divided by (Principal + Interest + Lease Payments) Data Source: Annual Fiscal Audit Report

  • Minimum Debt Service Coverage Ratio Commencing September 30, 2025, and as of the last day of each calendar quarter thereafter, the Borrowers will not permit the Debt Service Coverage Ratio to be less than 1.25 to 1.00.