The actions permitted by a contract and applicable law that a party may take to protect and recover its property interests in the event of default of another party to the contract are default rights and remedies. A remedy is a means to achieve justice in any matter involving legal rights by court order, agreement (settlement) or the automatic operation of law. Default remedies upon declaration of lessee default on a lease include the lessor’s right to immediately:
- Cancellation or termination of the lease;
- Acceleration of the lease by demanding immediate payment of the full outstanding rental due;
- Repossession and disposal of the asset;
- Demand damages, including amounts attributable to the lessor’s unrealized tax benefits and impairment of its residual interest.
| Interest and Principal Components in a Defaulted Lease |
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