A cure period clause acts as a formal “second chance” within contracts, especially common in loans, leases, and business agreements. When a breach occurs—such as a missed mortgage payment or failure to meet loan conditions—the other party must send a written notice detailing the issue and required corrective actions. This notice triggers the cure period, often spanning 15 to 30 days, during which the breaching party can remedy the breach to prevent default consequences like foreclosure or eviction.
Unlike a grace period, which is a short courtesy window immediately following a payment due date to avoid late fees or penalties, a cure period starts after a breach has occurred and requires specific action to rectify the problem. For example, a mortgage borrower might have a 15-day grace period to pay late without penalty but, if that expires unpaid, a cure period allows additional time to avoid foreclosure proceedings.
Cure period clauses are prevalent in:
- Mortgage and auto loans: Ensuring borrowers can fix missed payments before repossession or foreclosure.
- Business loans: Allowing businesses to meet financial covenants or submit overdue documents before default.
- Residential leases: Giving tenants time to fix lease violations like unauthorized pets or property damage before eviction.
For both parties, cure periods provide practical benefits. Borrowers and tenants get a chance to avoid immediate harsh penalties, while lenders and landlords avoid costly legal actions when disputes are resolved promptly. To effectively navigate a cure period, carefully review the breach notice, act quickly to address it, keep documentation of all communications and payments, and maintain open communication with the other party.
For more on related mortgage terms, see our Mortgage Relief Programs and Late Payment Fee articles. To understand the financial timing aspects, check out our guide on Taxpayer Payment Grace Periods.
References:
- Cornell Law School, Legal Information Institute: Right to Cure Default
- Consumer Financial Protection Bureau: Breach Letter
- Investopedia: Cure Period Definition
(Information accurate as of 2025.)
