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A guide to key resources: real estate finance
Practical Law UK Practice Note Overview 7-501-4017 (Approx. 14 pages)
A guide to key resources: real estate finance
| Maintained • England, Wales |
A guide to our real estate finance (also known as property finance) resources.
Scope of this note
This note is a guide to our resources about real estate finance. Usually, in a real estate finance transaction, a lender or lenders will lend money to a borrower to enable it to do one or more of the following:
- Apply that money towards buying a new or existing property or development.
- Apply that money towards the cost of developing a property or properties.
- Invest that money in its property business generally.
- Use that money to refinance any of the above.
Real estate finance: general
Investment finance
- For an overview of a real estate finance transaction where the loan is used to buy property that has already been built and which will be held for investment purposes, see Practice note, Real estate finance (investment): overview.
- For a note describing an in-house lawyer's role in a real estate finance transaction, see Practice note, The role of a lender's in-house lawyer in a real estate financing.
Development finance (construction finance)
- For an overview of lending for the purpose of constructing or developing commercial or mixed-use (residential and commercial) property, see Practice note, Real estate finance (development): overview.
- For an overview of the development documents encountered in development finance, see Practice note, Real estate finance (development): development documents.
- For information on the roles and responsibilities of a project monitor (sometimes, also known as a technical adviser), including the advantages to a funder and the project if a project monitor is appointed, see Practice note, Project monitoring.
- For a guide to our resources relating to the debt financing of energy, infrastructure and other capital-intensive projects, including private and public sector projects carried out under the private finance initiative (PFI) or as public private partnerships (PPPs), see Practice note, A guide to key resources: project finance.
Types of finance
Loans
- For an outline of various types of loan and a discussion of the advantages and disadvantages of each of them, see Practice note, Types of lending and facilities.
- For an overview of our resources on lending, see Practice note, A guide to key resources: general lending.
Green, social and sustainability-linked loans
- For an overview of green loans, which outlines the nature of a green loan, the Green Loan Principles and drafting points to consider when documenting a green loan, see Practice note, Green loans.
- For an overview of social loans, which looks at the nature of a social loan, the Social Loan Principles and drafting points to consider when documenting a social loan, see Practice note, Social loans.
- For an overview of sustainability-linked loans, which outlines the nature of a sustainability-linked loan, the Sustainability-Linked Loan Principles and drafting points to consider when documenting a sustainability-linked loan, see Practice note, Sustainability-linked loans.
Leasing
For an overview of leasing as a financing technique for buying an asset (including a section on sale and leaseback), see Practice note, Leasing as a financing technique: overview.
Securitisation
The receivables from property loans are frequently securitised. For more information on securitisation (including a section on commercial mortgage-backed securities (CMBS)), see Practice note, Types of securitisation: Real estate-backed assets.
Sharia-compliant financing
Real estate is an important asset class for Sharia-compliant transactions and Islamic banks. For information on the key issues for Sharia-compliant financing of commercial real estate using asset-based and asset-backed structures, see Practice note, Sharia-compliant financing of commercial real estate.
Borrowing vehicles
- Limited liability partnerships (LLPs) are often used as property investment vehicles because an LLP is a flexible, tax transparent entity with limited liability. For an overview of the structure and operation of LLPs incorporated under the Limited Liability Partnerships Act 2000, see Practice note, Limited liability partnerships (LLP): overview.
- Limited partnerships are also sometimes used to hold property. For an overview of the law relating to English limited partnerships formed under the Limited Partnerships Act 1907, see Practice note, Limited partnerships under the Limited Partnerships Act 1907.
Security in real estate finance transactions
Security over assets: general
- For an overview of our resources on security and quasi security arrangements, including taking security over shares, cash deposits and rights under a contract, see Practice note, A guide to key resources: security and quasi-security.
- For an outline of the options available to lenders when taking security, see Practice note, Taking security.
Security over land
- For information on the security that can be taken (or arise) over freehold and leasehold property, see Practice note, Taking security over freehold and leasehold property.
- For an overview of the law relating to mortgages and charges over land, see Practice note, Mortgages and charges over land.
- For the answers to some common queries that arise when dealing with security over property, see Practice note, Security over property: FAQs.
- For information on key drafting and legal issues for a lender's lawyers to consider when drafting a security document creating a legal mortgage over real property (often referred to as a legal charge) and security over related assets, see Practice note, Drafting a legal mortgage: issues to consider.
Security over land in Scotland
For information on taking, perfecting, registering and enforcing security over land in Scotland, see Practice note, Taking security over land in Scotland.
Security in investment finance
For information on key aspects of the security package for a real estate financing involving investment properties, see Practice note, Real estate finance (investment): overview: Key features of security package.
Security in development finance
- For information on taking security for development finance, see Practice note, Real estate finance (development): security.
- For a quick guide to collateral warranties from contractors and other professionals (which create, among other things, step-in rights) as a form of "construction security", see Quick guide, Collateral warranties and third party rights on construction projects.
Security from partnerships
Partnerships are often used to hold property. For information about taking security from a partnership, a limited partnership formed under the Limited Partnerships Act 1907 or an LLP (including how those types of partnership contract and the type of security that can be taken), see Practice note, Taking security from partnerships.
Security trusts
- For an overview of the nature and purpose of a security trust deed in syndicated lending transactions, including a description of the key provisions of such a document and an explanation of practical issues to consider when drafting or advising on their use, see Practice note, Security trust deeds: overview.
- For an introduction to the function of security trusts and the role of security trustees in finance transactions, see Practice note, Security trusts in finance transactions: overview.
Perfection and priority of security
- For an introduction to the different methods of perfecting security, the basic rules governing priority and contractual ways that the rules can be varied, see Practice note, Perfection and priority of security.
- For a note that considers the registration and other formalities for perfecting security interests over freehold and leasehold property, see Practice note, Perfection of security over freehold and leasehold property.
- For a note that considers the priority between mortgages and fixed charges over freehold and leasehold property, see Practice note, Priority of security over freehold and leasehold property.
Cross-border security
- For an overview of the issues that need to be considered when taking security over an asset located outside England or Wales, or from an entity incorporated in a jurisdiction other than England and Wales, see Practice note, Taking cross-border security.
- For a multi-jurisdictional guide to taking security, see Finance Global Guide.
Guarantees and indemnities
For a note on legal and drafting issues relating to guarantees and indemnities, see Practice note, Guarantees and indemnities.
Enforcing security
- For information on how a lender enforces security over the assets of a corporate security provider (including issues to be considered before enforcing security and information on enforcement rights available to a lender, when those rights can be exercised and the main methods of enforcing security), see Practice notes, Enforcing security: overview and Mortgages and charges over land: Lender's remedies.
- For information on mortgagees, their rights and duties, and commonly asked questions when dealing with mortgagees in possession, see Practice note, Mortgagees and mortgagees in possession.
- For information on environmental issues that may need to be considered when enforcing security, see Practice note, Environmental issues in finance transactions: Provisions in a security document.
Intercreditor and subordination arrangements
- For an explanation of the nature and purpose of an intercreditor deed, see Practice note, Intercreditor deeds: overview.
- For a note that examines the legal background and case law relating to subordination of debt and analyses different methods used to alter the priority of debts, see Practice note, Subordination.
Property derivatives
For an overview of property derivatives (including an example of a property total return swap and the reasons for entering into this type of contract), see Practice note, Property derivatives.
Tax in real estate finance transactions
The general tax issues that arise in a real estate finance transaction are similar to those arising in other commercial lending transactions but there are some issues specific to loans secured by property. The following resources provide an overview of these issues.
Tax issues for finance lawyers
For a summary of the tax issues that frequently arise in respect of commercial lending transactions, see Practice note, Tax for banking lawyers.
Withholding tax
For a summary of the UK withholding tax rules on payments of interest and certain other payments, see Practice note, Withholding tax.
VAT
For a note that explains the VAT consequences of property sales by a mortgagee following a default by the mortgagor in an insolvency, see Practice note, VAT and property: mortgagees and insolvency practitioners.
Real estate finance tax issues
For an overview of tax issues particularly relevant to real estate finance, see Practice note, Real estate finance (investment): overview: Key tax issues.
Global Guide to taxes
For a multi-jurisdictional guide to taxes on corporate and finance transactions, see Tax on Transactions Global Guide.
Legal opinions in real estate finance transactions
For links to Practical Law materials on legal opinions issued in connection with loan agreements, see Legal opinions in lending transactions toolkit.
Environmental issues in real estate finance transactions
Environmental issues are important in real estate finance transactions. Lenders usually carry out environmental due diligence on the land to determine what protections and other provisions should be included in the finance documents to address environmental issues. For a note on environmental issues that can arise in finance transactions, see Practice note, Environmental issues in finance transactions.
Insurance in real estate finance transactions
- For a note that explains the various doctrines and principles relating to insurance, including what constitutes an insurable interest, subrogation, joint insurance, composite insurance and noting, see Practice note, Insurance contract law: general principles.
- For an overview of the approach to insurance in real estate finance transactions, see Practice note, Real estate finance (investment): overview: Insurance policies.
Execution of real estate finance documents
For a guide to our resources on executing finance documents, see Practice note, A guide to key resources: general lending: Execution of loan documents.
Key real estate finance standard documents, clauses and drafting notes
Below are links to key real estate finance standard documents and clauses (which contain integrated drafting notes). For a full set of real estate finance standard documents, clauses and drafting notes, see the Standard documents and clauses tab on the Real estate finance topic page.
Facility agreement clauses
- For a set of financial covenants and related definitions for a real estate finance facility agreement, see Standard clauses, Financial covenants: real estate finance.
- For profit share provisions for use in a real estate finance facility agreement, see Standard clauses, Profit share provisions.
- For a set of conditions precedent and related definitions for use in a bilateral real estate finance facility agreement, see Standard clauses, Conditions precedent: real estate finance.
- For a set of events of default for use in a real estate finance facility agreement, see Standard clauses, Events of default: real estate finance.
- For a set of representations and warranties clause for use in a syndicated or bilateral real estate finance facility agreement, see Standard clauses, Representations and warranties: real estate finance.
- For a set of provisions including definitions, conditions precedent, representations and warranties, covenants and events of default for use in a development (construction) finance facility agreement, see Standard clauses, Development (construction) finance provisions: facility agreement.
Security
- For a legal mortgage over a property granted by a company, see Standard documents:
- For definitions and clauses that can be used to convert Standard document, Legal mortgage over property from a company securing specific monies (own liabilities) into a security document securing all monies, see Standard clauses, Legal mortgage: all monies wording.
- For a supplemental mortgage to be used in conjunction with a debenture, see Standard document, Supplemental legal mortgage.
- For a debenture granted by a corporate borrower in favour of a single lender, including a legal mortgage over specified property owned by the borrower at the date of the debenture and a fixed charge over other property, see Standard document, Debenture.
- For a legal mortgage over residential property for use between family members or friends, where the lender, in making the loan, is not carrying on a regulated activity and does not require authorisation under the Financial Services and Markets Act 2000 (FSMA), see Standard document, Mortgage agreement with individual borrower: not by way of business.
Duty of care agreement
For a duty of care agreement between a borrower, a property manager (or managing agent) and a security trustee or lender, see Standard document, Duty of care agreement.
Links to Practical Law's resources on real estate finance and related Practical Law services
Practical Law Finance resources on real estate finance
Links to our resources on real estate finance can be found on the Real estate finance topic page.
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