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Springing Cash Dominion
Last Updated: Jun 7, 2019
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Under normal circumstances, the Borrower maintains control of their own lockbox and all cash receipts (where they have the option to transfer cash into their Operating Account or can choose to pay down the Line of Credit). However, in the event of a default (if a covenant is tripped, etc.) the Lender has the right to apply all Cash Receipts to pay down the loan ("sweep the loan"). They also have the option to take control over the physical lockbox account.