Prepayment Penalty Clauses: Contract for Real Property, also known as prepayment clauses, are legal clauses included in contracts for the sale or loan of real property that require a borrower or buyer to pay an additional fee if they pay off the loan or purchase agreement earlier than the specified time. These clauses can be used to discourage buyers from taking out a loan they may not be able to repay, or to recover interest that the lender would have received if the agreement had been fulfilled. There are two main types of Prepayment Penalty Clauses: Contract for Real Property: fixed-rate and adjustable-rate clauses. Fixed-rate clauses require the borrower to pay a set sum, usually a percentage of the loan amount, if they pay off the loan before the end of the agreed term. This fee may be calculated as a percentage of the original loan amount or as a flat fee. Adjustable-rate clauses require the borrower to pay an additional fee if they pay off the loan before the end of the agreed term, and the amount of the fee varies depending on the changes in interest rates. This type of clause is usually used in mortgages to protect the lender from losses if interest rates go up during the term of the loan.