Cure PeriodCredit Repair Definition
A specified timeframe allowed for a party to fix (cure) a default or breach of contract before facing penalties.
Definition
A cure period is a specific amount of time granted within a contract or agreement (such as a loan agreement or lease) that allows a party who has defaulted or breached a term to correct the violation before the other party can take legal action or impose penalties. For example, a loan agreement might state that if a borrower misses a payment, they have a 15-day cure period to make the payment before it's officially considered a default triggering late fees or acceleration. Similarly, a lease might give a tenant a cure period to fix a violation (like unauthorized pets) before eviction proceedings begin. The length of the cure period, if any, is defined in the contract itself or sometimes by state law.
Frequently Asked Questions
Is a cure period the same as a grace period?
They are similar but not identical. A grace period is typically a short window after a payment due date during which payment can be made without penalty (though interest may still accrue). A cure period is a broader term referring to the time allowed to fix any type of default or breach (not just payment) before more severe consequences take effect. A grace period can be considered a type of cure period specifically for payments.
Does every contract have a cure period?
No, not all contracts include a cure period. Its existence and duration depend on the specific terms negotiated and written into the agreement, or sometimes on applicable state laws (especially in areas like landlord-tenant or mortgage law).
What happens if the default is not cured within the cure period?
If the defaulting party fails to correct the breach within the specified cure period, the non-breaching party can then typically exercise the remedies outlined in the contract or allowed by law, such as imposing penalties, terminating the contract, demanding full repayment (acceleration), or initiating legal action (e.g., foreclosure, eviction, lawsuit for damages).
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