UK Law and Practice Contributed by: Colin Rodrigues and Harminder Sandhu, Hawkins Hatton Corporate Lawyers Ltd
3.4 Taxes or Fees Relating to the Granting and Enforcement of Security A modest fee is payable for registering security over property or a company. This fee is payable to either the Land Registry in respect of a legal charge/mortgage or to Companies House in relation to a debenture or charge over shares. In addition, enforcement of security would attract court fees and legal fees. 3.5 Legal Requirements Before an Entity Can Give Valid Security Before an entity can give valid security over its real estate assets, a private company director will need to ascertain their director’s duties and whether the transaction is for the company’s benefit. They also need to confirm that the com - pany is solvent in accordance with the Compa - nies Act 2006. If the corporate benefit of giving security cannot be established, a director could be in breach of their duties to the company. Directors are encouraged to record the basis of their decisions in board minutes and identify the corporate benefit. It is also advisable to ask the company’s auditor to confirm the company’s solvency. 3.6 Formalities When a Borrower Is in Default Provided the lender has secured its mortgage through registration of a legal charge against the property asset with the Land Registry, there are usually no obstacles to enforcing its secu - rity in the case of a default. A lender will usu - ally enforce the security by the appointment of a Law of Property Act (LPA) receiver, who will manage the disposal of the property asset and repayment of the debt (together with the cost of realisation) from the sale proceeds. At the point of enforcement, no further steps can be taken to give priority to the lender’s security
See under The Economic Crime (Transparency and Enforcement) Act 2022 in 1.3 Proposals for Reform .
3. Real Estate Finance 3.1 Financing Acquisitions of Commercial Real Estate
Acquisitions of commercial property are gen - erally financed by borrowing from institutional banks/lenders. However, many companies also purchase property using their available resourc - es, without the need for any finance. There are also a number of private companies that offer finance to developers to assist with projects and development opportunities. 3.2 Typical Security Created by Commercial Investors A lender will require a first legal charge to be registered against the property as security for the advanced loan. If the purchaser of a property is a company, the lender will usually require a debenture over the company’s assets. If a holding company (ie, a company that does not trade) purchases a property, the lender will usually require a lease between the holding company and its trading company so that the monthly repayments under the mortgage can be secured. 3.3 Restrictions on Granting Security Over Real Estate to Foreign Lenders There are no restrictions other than compliance with the anti-money laundering legislation.
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