Firm Commitment Law and Legal Definition

A firm commitment is a commitment under which a party voluntarily binds to an agreement. In a loan transaction, a firm commitment is an agreement to make a loan to a specific borrower within a specific period of time and on a specific property. It is a lending institution's promise to enter into a loan agreement. The terms to be followed in the entire transaction will be specified by the bank at the time of commitment. Usually the commitment will be for a specified amount for a certain percentage of the appraised value. Usually, a firm commitment includes a statement of anticipated legal fees and other expenses. A firm commitment can also negotiate on counsel charges.