In one sentence
A requirement that must be satisfied before a lender is obligated to fund, listed in the loan documents.
The longer version
Conditions precedent are the gates to funding: everything from executed documents to title, insurance, and opinions that must be in place before money moves. The loan agreement's list of them is effectively the closing checklist.
Reading the conditions precedent against the actual request list at kickoff is how closers make sure the checklist matches what the documents require.
Common questions
- What is a condition precedent in a loan?
- A requirement that must be satisfied before the lender is obligated to fund, listed in the commitment or loan agreement.
- What are common conditions precedent to funding?
- Executed loan documents, title policy commitment, survey, third-party reports, insurance, organizational documents, legal opinions and payoffs.
- Can conditions precedent be waived?
- Yes, by the lender, often converting them into post-closing covenants. The waiver and its approver should be recorded so it does not become an undocumented exception.
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