LITHUANIA Law and Practice Contributed by: Evaldas Klimas and Mantas Lideika, WALLESS
3.2 Typical Security Created by Commercial Investors
atlantic Integration. A legal person is required to be established in – or a natural person is required to hold the citizenship or a permanent residency of – countries that are not part of political, mili - tary, economic or other unions or alliances of states established on the basis of the former Union of Soviet Socialist Republics and that are members of at least one of the following organi - sations and treaties: • the European Union (EU); • the North Atlantic Treaty Organisation (NATO); • the Agreement on the European Economic Area (EEA); or • the Organisation for Economic Co-operation and Development (OECD). A list of land for which acquisition is restricted for foreign investors is defined by law (nature reserves, state parks, special economic zones, etc). Foreign investors may use and hold (without owning) land on some other legal basis (eg, leas - ing) without restrictions.
A security package for the financing of the acqui - sition and/or development of real estate in Lithu - ania is tailored to each transaction, considering the specific circumstances and the risk profile of the borrower. Usually, at least the following security is sought by the lenders in Lithuania: • a pledge over shares in the borrower; • a pledge over the borrower’s receivables (rental income) and funds in bank accounts; • a mortgage over the borrower’s real estate – land (or land leasehold rights) and/or building(s) (or premises); and • upstream or cross-stream guarantees. 3.3 Restrictions on Granting Security Over Real Estate to Foreign Lenders There are no restrictions under Lithuanian law on granting security over real estate to foreign lenders, nor on repayments being made to a for - eign lender under any security document or loan agreement. 3.4 Taxes or Fees Relating to the Granting and Enforcement of Security The creation and perfection of Lithuanian law- governed security over real estate involves a notary and registration fee, which is calculated as follows: • up to EUR360 (the exact amount depends on the value of the real estate that is subject to the mortgage) multiplied by the number of different real estate assets that are subject to the mortgage; plus • registry expenses (these are usually around EUR150 for each security instrument). Enforcement of Lithuanian law-governed secu - rity over real estate also involves:
3. Real Estate Finance 3.1 Financing Acquisitions of Commercial Real Estate
The acquisition of commercial real estate in Lithuania is financed by both equity and debt, with the ratio between them depending on the market. Equity is often provided downstream in the form of shareholder loans, which are expected to be subordinated to the debt financing. In the case of insufficient equity, additional funds are sought by way of mezzanine or senior debt.
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