Your Property, Our Priority: Turning Defects Into Solutions - A Smooth Refinance Achieved

We recently completed a refinance of commercial office and retail space for a client following a referral from a valued lender partner. The brief received was that the property in question was let to several commercial occupiers on a mixture of leases and licences. During the due diligence stage a number of tenancy discrepancies came to light including inconsistent lease terms and unregistered leases and incomplete property compliance. 

Identifying and Resolving the Issues

The issues created uncertainty around the tenancy arrangements and did not meet the lender’s security requirements.

We acted quickly to:

• Scope out how to regularise the defective provisions with our client which resulted in:-

  
  

  • The negotiation and settlement of a surrender and re-grant of leases;

    
    

  • Variation of leases to address discrepancies and align key obligations and rights with modern standards; and

    
    

  • Organisation of property compliance.

    
    

Successful Outcome

We worked closely with the client and the lender’s solicitor to oversee the regularisation of the property issues minimum delays. The lender confirmed the security was acceptable and the refinance completed smoothly. The client achieved their funding objectives, and the lender obtained a clear and reliable security position.

The takeaway

This matter highlights the importance of property owners ensuring their lease/tenancy documentation are to a standard that would meet lending criteria.  From an investment point of view it makes sense for landlords to ensure that their property portfolio is compliant as this affects the value of the security they can offer and can affect the lender’s security requirements, some lenders will insist on personal guarantees from directors where the security is not robust.  Any discrepancies may be construed as defects and fail to meet lender’s requirements and thus it is essential to have complete and accurate documents. Even small gaps or errors can slow progress, impact lender requirements or create uncertainty.

For more information about getting your property portfolio ready for refinancing get in touch with Harshinder Hundal Principal and Head of Commercial Real Estate

Contact Harshinder Hundal on 0808 172 93 22 for Commercial Real Estate advice or complete our quick contact form  for a no obligation discussion.

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  This update is for general guidance only and advice should be taken in relation to a particular set of circumstances.