BELGIUM Law and Practice Contributed by: Pieter Puelinckx, Yves Moreau, Donald Krols and Astrid Laga, Linklaters
Financial leasing, in which the lessor/financier acquires full ownership or real rights of a real estate asset and leases the property to the les - see/debtor, with an option to acquire the (resid - ual) ownership rights upon expiry of the agree - ment is also common for financing commercial real estate (as the case may be, in the context of a sale and lease-back). 3.2 Typical Security Created by Commercial Investors Usual securities for real estate financing are: • a mortgage on the real estate asset; • in case of share deals, a pledge over the shares of the special purpose vehicle; • security on the income generated by the real estate asset (eg, pledge on rent receivables, bank accounts, and insurance receivables); and • potentially also parent guarantees. 3.3 Restrictions on Granting Security Over Real Estate to Foreign Lenders In principle, security over real estate can be granted to foreign lenders without restrictions, and payments can be made to them under secu - rity arrangements or loan agreements, as long as they do not provide regulated banking or invest - ment services in Belgium without a licence or authorisation. 3.4 Taxes or Fees Relating to the Granting and Enforcement of Security The granting of a mortgage on a real estate asset is subject to registration duties at a rate of 1% and a mortgage duty at a rate of 0.3%, calculat - ed on the secured amount. In addition, mortgage register and notary fees will be due. Although less common, the granting of a mort - gage on a limited percentage of the secured
amount in combination with a mortgage man - date (where costs are lower than those associat - ed with mortgages) convertible into a mortgage in case of default on the remaining part of the secured amount, is still observed. 3.5 Legal Requirements Before an Entity Can Give Valid Security Belgian companies are prohibited from advanc - ing funds, granting loans, or providing security with a view to the acquisition or subscription of their own shares by a third party (unless certain conditions are met) and transactions entered into by a Belgian grantor must fall within its cor - porate purpose and serve its corporate benefit. 3.6 Formalities When a Borrower Is in Default In the event of a debtor’s default, a lender can enforce its (validly established) mortgage or oth - er security right. Enforcement of mortgages may only take place by sale of mortgaged assets at public auction or direct sale of pledged assets pursuant to proce - dures decided by the court. Lenders with valid security interests over the real estate asset will have priority, depending on their ranking, over unsecured lenders regarding the proceeds of the sale. The timing for the enforcement of a mortgage varies, depending on the duration of court pro - ceedings required for the verification of the claim and the formalities related to selling the asset but may easily take up to one year from the claim before the courts. Generally, the execution of the notarial deed of sale takes several months. Enforcement of a security interest is not depend - ent on the debtor’s insolvency.
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