What is cross default in a lease document?

What is cross default in a lease document?

• A. A default on one lease triggers default on all leases with the same lessor
• B. A single lease default has no effect on others
• C. Default on one lease must be filed separately from others
• D. Cross default only applies to financial covenants

Answer: (A)

Cross default links multiple leases with the same lessor so that a default under one lease can trigger a default under all of them. This protects the lessor by preventing a borrower from keeping several agreements in good standing while failing on one, giving the ability to declare overall acceleration or remedies across the portfolio. It isn’t about separate filings for each lease, and it isn’t limited to financial covenants only—the default can apply to various breach types defined in the documents.

Cross default links multiple leases with the same lessor so that a default under one lease can trigger a default under all of them. This protects the lessor by preventing a borrower from keeping several agreements in good standing while failing on one, giving the ability to declare overall acceleration or remedies across the portfolio. It isn’t about separate filings for each lease, and it isn’t limited to financial covenants only—the default can apply to various breach types defined in the documents.