Don't Forget the Waiver

By: Lawrence G. Lerman

One may ask why we always include a waiver of all claims when we prepare an amendment or modification to existing loan documents. Similarly, we include a waiver of all claims against the lender in all forbearance agreements and similar loan restructuring agreements. In a recent case, the North Carolina Supreme Court demonstrated the value and importance of including a waiver of any and all potential claims against a lender in consideration for the restructuring or amending of the terms of a loan.


In the case, a husband and wife guaranteed a real estate development loan. When the loan went into default for the second time, the lender pursued an action against the guarantors. The wife alleged that the lender obtained her guaranty in violation of the Equal Credit Opportunity Act (ECOA), which prohibits requiring a spouse to guarantee a loan without financial necessity simply because the spouse is married to the borrower or guarantor involved in the business.

Prior to the default, which resulted in this litigation, there was an earlier default at which time the lender, borrower, and guarantors entered into a forbearance agreement that contained language by which the borrower and guarantors waived and released all claims, defenses, and cause of actions against the lender in consideration for the lender’s forbearance. The trial court ruled in favor of the spousal guarantor finding that her guarantee obtained violated the ECOA, and this violation constituted an affirmative defense to the pursuit of the guarantor under the guarantee.

However, on appeal, the Supreme Court ruled that the spouse waived any possible claim under the ECOA when she executed the forbearance agreement. The Supreme Court found that the waiver of the ECOA defense was not unconscionable and did not violate public policy. When the spouse executed the forbearance agreement, she acknowledged the enforceability of her guarantee and waived all potential claims in exchange for more favorable loan repayment terms. Whether courts in Maryland, Virginia or the District of Columbia would rule similarly is not certain. However, we recommend including waivers in all loan modifications and forbearance agreements. 

Larry Lerman is a commercial lending and real estate attorney 

at Lerch, Early & Brewer in Bethesda, Maryland who structures and documents
complex commercial lending arrangements and represents parties who are buying,
selling, leasing and financing commercial real estate. For more information on
waivers in loan modifications and forbearance agreements, contact Larry at (301)
657-0163 or This email address is being protected from spambots. You need JavaScript enabled to view it..

This article originally appeared in Lerch Early's Commercial Lending Bulletin. To subscribe, visit