A cure right gives the mezz lender the contractual ability to remedy a senior-loan default , most commonly by paying current debt service or curing a covenant breach, within a defined window. It prevents senior acceleration and foreclosure that would otherwise wipe out the mezz collateral.
Why does the mezz lender need it?
Mezz collateral is the equity in the SPE. If the senior forecloses on the property, the equity is worth zero. The cure right lets the mezz lender step in, pay the senior current, and pursue its own remedies on the equity collateral instead of losing the position entirely.
What cure windows are typical?
Five business days for monetary defaults, with the right to make ongoing monthly cure payments for a stated period. Thirty days plus reasonable extensions for non-monetary defaults that are susceptible of cure. Both windows are negotiated and codified in the intercreditor agreement.
Sources
- Quarterly Survey of Commercial/Multifamily Mortgage Bankers Originations · Mortgage Bankers Association · 2026-Q1