A Notice of Default is a formal communication issued by a lender or creditor to a borrower, informing them that they have failed to meet the terms and conditions of a loan or contractual agreement. Typically, this occurs when the borrower misses one or more payments or breaches other terms of the agreement. The notice typically outlines the specific default, the actions required to cure it, and the consequences of failing to do so. In many cases, the notice sets forth a period within which the borrower must remedy the default to avoid further legal action, such as foreclosure in the case of a mortgage loan. The Notice of Default serves as a formal warning to the borrower, providing them with an opportunity to address the issue before more serious consequences ensue.
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This glossary post was last updated: 29th March, 2024.
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