Commercial Property Finance Solicitors

The legal process for commercial property finance is very structured and heavily regulated. The lender wants a watertight legal charge over the property as security for its loan.

To achieve this, both sides’ solicitors must carry out detailed due diligence, draft and negotiate the finance documents, and register the security properly at HM Land Registry and (if applicable) Companies House.

• Once your lender has issued an indicative offer letter setting out the loan amount and terms, you will need to instruct a solicitor.
• Your solicitor will carry out due diligence to ensure the property and borrower are legally sound. This will involve investigating the title to confirm ownership, ordering searches, reviewing planning and building regulations and addressing any defects in the title. The lender’s solicitor will review the title report and, if everything is in order, confirm the property is acceptable as security. They will also verify the borrower’s identity.
• The next step is to draft and negotiate the commercial property finance documentation. This includes the facility agreement, legal charge, for companies the debenture, any guarantee and a certificate of title.
• Before releasing funds, the lender’s conditions precedent needs to be satisfied. To achieve this, the lender will require evidence of a clean title and searches, signed loan and security documents, insurance, a valuation report, company board resolutions authorising the borrowing and solicitor’s undertakings to register the security and apply the loan proceeds. When all of these conditions are met, the lender’s solicitor will issue a safe to lend letter.
• Completion (or drawdown) can now take place with the funds released and transferred from the lender’s solicitor to the borrower’s. A property purchase can now be completed or, if refinancing, an existing lender repaid.

After completion, the lender’s solicitor will handle the registrations. For example, registering the lender’s charge with Companies House for companies, registering the legal charge against the property title with Land Registry. Copies of the updated title and charge will be issued to both lender and borrower.