Real estate finance—taking security over the key development contracts — 2022
Published by Duncan Bateson of Ince & Co
Last updated on 12/08/2022

The following Banking & Finance practice note provides comprehensive and up to date legal information covering:

  • Real estate finance—taking security over the key development contracts
  • The package of development documentation
  • Which contracts should the lender take security over?
  • Building contract
  • Parent company bond or guarantee (if applicable)
  • The professional consultant appointments
  • The borrower's rights under the insurance policies
  • Collateral warranties
  • Methods of taking security over the borrower's rights under the key development contracts
  • Assignments by way of security
  • More...

Real estate finance—taking security over the key development contracts

The development documents are key to any real estate finance transaction involving the development of property. They deal with the nature of the development, the development team's relationships and respective responsibilities and the cost of the development.

The value of any property will be significantly compromised if development works are not completed. It is in the lender's interests (as much as the borrower's interests) that the development of a property is completed on time and on budget.

The lender will typically take security over the borrower's rights under the key development contracts in the form of an assignment by way of security and this will give the lender the right to call on the other party to the contract to perform the contract if there is a problem with the borrower.

This Practice Note explains:

  1. the key development documents that a lender will want to take security over

  2. how to take security over the key development contracts, and

  3. points to check when taking an assignment by way of security over development contracts

The package of development documentation

Typical development documentation in development facilities are:

  1. a building contract between the borrower and a building contractor

  2. parent company guarantee or bond provided by the parent company of the building contractor to the borrower in respect of the building contractor's obligations to the borrower under

Related documents:
Key definition:
Parent company guarantee definition
What does Parent company guarantee mean?

A promise by another company, usually the holding company, to take responsibility for any shortfall in the pension fund if the sponsor employer fails.

Popular documents