The ability to raise finance is an integral part of any commercial property enterprise – enabling businesses to expand and grow, take on new ventures, acquire new or additional properties and carry out development. At Land Law whether you are borrowing funds or lending them our expert property finance lawyers can guide you through the process.
Borrowers
Whether you are acquiring a new property with the assistance of bank funding, refinancing a property you already own or raising development finance your lender will want a solicitor to carry out due diligence on their behalf, and check that the property will provide them with good security for their loan. Where you are buying a new property, the legal process for raising finance will cover much of the same ground and check many of the things that you will want your solicitor to check for you in relation to your purchase.
In some cases, the same solicitor can act for the borrower and the lender. This can be beneficial and save time and costs. Where a purchase is taking place, it avoids two different lawyers duplicating due diligence. In the case of a property refinance, appointing a lawyer who is already familiar with and has a good working knowledge of your property can help the process to run smoothly. Whether this will be possible will depend however on your lender’s requirements, whether they will be using their standard (and non-negotiable) security documents and sometimes on the size of the loan you will be taking.
Where we act for a lender and borrower, we must ensure that we fulfil our duties to both, and that no conflict of interest arises. We will therefore report to your lender on all the same things that we will have covered in our reports to you when you are acquiring/acquired the property. Your lender will however have their own preferred form of report, focused on the issues that matter most to them and the quality of the property for security purposes. We will also report to you on the terms of their standard loan and security documents, so you know what you will be committing to and what the consequences of breaching their terms may be.
If the loan agreement or security documents need to be negotiated, perhaps because the loan arrangements are bespoke or for a large facility, or if your lender has any other reason for requiring separate representation, then our role will focus on providing the lender’s solicitor with all the information they need to report to their client and helping you satisfy any conditions precedent to drawdown.
Before drawdown can take place, your security documents will all need to be executed and completed by both you and your lender. We will therefore ensure everything is executed correctly and deal with any other requirements that your lender may have as a precondition to you drawing down your loan.
Once your facility agreement and security documents have completed we will, where applicable arrange drawdown of your loan, with the proceeds being applied to complete your purchase, refinance or facilitate your development, in accordance with your instructions and the terms of your facility agreement.
Lenders
Whether we are acting for you at the same time as your borrower, or just on your own behalf we will undertake a thorough review of the title and property documents to ensure that the property being offered as security for the loan will meet your lending requirements.
We will carry out company searches of the borrower, conveyancing searches, raise enquiries, provide reports on title and lease (where applicable) in your standard form. We can also, where required, provide City of London Law Society certificates of title.
Where any title issues are identified, we will always try to provide our recommendations for how they might be resolved – whether by obtaining confirmation from your valuer that they don’t impact on the value of the property, by obtaining title insurance policies, tracking down or commissioning missing items or anything else that might enable the property reports to be signed off.
We can also assist with the preparation of loan agreements and security documents, or work with your securities team to produce signature versions of your preferred forms of documents. We will oversee execution, ensure borrowers and guarantors receive any required independent legal advice and procure solicitors letters for your benefit confirming that any required advice has been provided to and acknowledged by your borrower.
We will guide your borrower through any conditions precedent that need to be satisfied before drawdown can take place. We will keep you appraised of any required timescales and deadlines for completion and will always try to provide you with all your reports and paperwork in plenty of time to enable you to clear your internal checks in a timely fashion.
On completion we will make sure that any prior security over the property is released (either by dealing with this ourselves or by obtaining undertakings from the solicitor(s) acting for prior owners or lenders and will assist with the movement of any funds that are drawdown.
Once completion has taken place, we will attend to any formalities needed to register the any security documents, both at Companies House and the Land Registry and do everything that is required to perfect your security. We can then either hold any original documents on your behalf in our deeds storage facility, until such time as the facility is repaid, or send them onto your securities centre for safe keeping by you.
If you would like our assistance with your property finance matter please do not hesitate to get in touch with one of our property finance experts.