Real Estate Finance and Investment

This Practice note provides an overview of the money laundering regime that applies to lawyers pursuant to the Money Laundering Regulations 2007 (2007 Regulations). The 2007 Regulations came into force on 15 December 2007 and replace the Money Laundering Regulations 2003 (2003 Regulations). They bring the 2005 Directive on money laundering into effect in the UK. The 2007 Regulations introduce new requirements and vary requirements that were in the 2003 Regulations. In particular, the 2007 Regulations require that: The lawyer is able to identify the beneficial owner of client trusts, companies and partnerships. The lawyer applies customer due diligence measures and monitors client activities according to a risk-based approach, applying less stringent procedures for low risk situations and more stringent procedures in higher risk situations. Training for staff is both regular and covers terrorist financing issues. Lawyers are also to have regard to the Law Society's anti-money laundering practice note published on 6 October 2011, and the Solicitors Regulation Authority's warning cards on money laundering (April 2009), property fraud (April 2009) and bogus law firms and identity theft (March 2012).   Property lawyers should also take account of the joint Land Registry and Law Society practice note on property and registration fraud (September 2010), and the Law Society's note on mortgage fraud (October 2011).

An article answering the question why a buyer should ask for a letter of non-crystallisation even where the floating charge has not been registered at the Land Registry.

A practice note about gross payment status under the construction industry scheme. This note explains what gross payment status is and how a sub-contractor should deal with losing that status.

An note on whether a charge to secure a debt owed by an individual to another party, is caught by the Consumer Credit Act 1974.

This Note provides guidance for conducting due diligence in commercial real estate loans. Though the steps described relate primarily to due diligence conducted for a typical first priority permanent loan secured by a single parcel of real estate, this Note also provides useful information about real estate related due diligence for other types of loans that include real estate, such as corporate loan facilities where the lender's lien is secured only in part by the borrower's real estate assets.

This Practice Note provides a background on a lender's potential environmental liabilities for issuing a loan where real property is the collateral. Specifically, this Note discusses the basic liability framework of the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA) and liability protections available to lenders and borrowers. This Note also discusses some of the other state and federal laws that lenders should examine.

This Practice Note discusses non-recourse carve-out guaranties, often referred to as bad boy guaranties. These guaranties are common in non-recourse loans secured primarily by commercial real estate. This Note provides guidance on negotiating carve-out guaranties, with drafting techniques to help limit excessive risks that may be faced by carve-out guarantors.

This Practice Note discusses non-recourse guaranties and their role in commercial real estate lending. It analyzes developments in non-recourse carve-out guaranties over time and some of the surprising recent court decisions that interpret and apply non-recourse carve-out provisions.  

This practice note gives an overview of direct taxes in the UK tax regime. It covers income tax, corporation tax and capital gains tax. It discusses the principles of calculation, rates, payment and compliance, and reliefs (such as capital allowances and research and development (R&D) relief).

This note explains: In what circumstances lenders are at risk of incurring environmental liabilities. The purpose of, and the various steps involved in, environmental due diligence. The various provisions that can be included in a facility agreement and debenture to address environmental issues.  

Do you have a trainee or newly qualified lawyer joining your finance team? Are you a trainee or newly qualified lawyer wondering what finance transactions are all about? Have you moved in house and find yourself having to get to grips with finance law? If so, have a look at the following materials to get an overview of the law and practice of finance transactions. Remember to arrange for any new recruits to get access to PLC Finance and ensure they are signed up to receive our weekly and/or monthly e-mails. To do this, please e-mail info@practicallaw.com or contact your account manager on 020 7202 1220. If you do not subscribe to PLC Finance, see Request a free trial or call 020 7202 1220 to register your interest in a free trial.

This practice note explains the various doctrines and principles concerned with insurance, including: What constitutes an insurable interest. Subrogation. Joint insurance. Double insurance. Noting. For information about insurance as it relates to commercial property, see Practice note, Property insurance.

Many commercial property transactions are, potentially, liable to direct and indirect taxes. This practice note considers the tax treatment where a corporate taxpayer holds an interest in property.

This note is a general summary of the rules for calculating income for the purposes of UK income tax. It also provides links to notes describing other aspects of the UK income tax rules, such as how income is taxed and exemptions from income tax.

This note is a general summary of the principles underpinning UK income tax. It describes what income is and how it is taxed. It also provides links to notes describing other aspects of the UK income tax rules, such as calculation of income and exemptions from income tax.

A note on whether a Law of Property Act (LPA) receiver can transfer property when the appointing bank has subsequently gone into administration.

This practice note provides an introduction to the various structures commonly used for investment funds (for example, limited partnerships, UK authorised unit trusts, UK open-ended investment companies, offshore trusts and offshore companies) and the importance of tax planning in this area. It also provides links to other, more detailed practice notes, each of which addresses the tax issues relating to a specific type of investment fund.

A note on the JCT Contractor Collateral Warranties, referring to the 2005 editions (incorporating the changes made by the JCT's 2009 Revisions) and the 2011 editions of the collateral warranties in favour of a Funder and a Purchaser or Tenant, known as CWa/FCWa/P&T.

This note summarises the main tax issues to consider when establishing, operating and terminating a UK-based joint venture partnership.

A practice note listing key forthcoming dates in 2013 for corporate tax practitioners.

A note on land banking.

Many commercial property transactions are, potentially, liable to direct and indirect taxes. This practice note considers the tax treatment of leases.

This note gives an overview of the matters to be considered when requesting or responding to a request for an English legal opinion, the form and content of an English legal opinion and the practical steps to be taken when providing an English legal opinion. The note also links to detailed notes on the purpose and structure of legal opinions in finance transactions in the United States, including the purpose and structure of legal opinions delivered in securities offerings in the United States.

The Limited Liability Partnerships Act 2000 is broadly intended to confer tax transparency on limited liability partnerships (LLPs) as is enjoyed by ordinary partnerships. The rules on taxation of partnerships are intended to apply to LLPs and their members.

A practice note on material adverse change (MAC) clauses in finance documents, including points to note for:Lenders when drafting and negotiating MAC clauses.Borrowers when negotiating MAC clauses.Lenders before declaring an event of default based on a MAC or withdrawing from underwriting commitments based on a market MAC.

An overview of mortgages and charges over land (also known as real estate or property). This note describes the types of security that can be created or arise over property, the form and contents of a typical mortgage or fixed charge over property, due diligence and pre-completion issues, potential challenges to security, how security over property is released and a lender's remedies under a mortgage or charge over property.

This practice note examines the various tax issues that arise in respect of offshore companies and offshore unauthorised unit trusts. It also provides a summary of the main UK anti-avoidance provisions that need to be considered in relation to the tax treatment of UK investors investing in offshore funds.

An overview of the main tax issues to consider when setting up a partnership in England and Wales.

This note covers the registration and other formalities for perfecting a security interest over freehold or leasehold property (also known as real estate). The registration and other formalities include whether or not the security interest needs to be signed as a deed or be in writing, registering the security interest at Companies House and the Land Registry and serving notices on landlords and prior mortgagees. The perfection requirements for a range of security interests are covered, including legal mortgages, equitable mortgages, fixed charges, floating charges and liens.

This note provides an overview of the Community Infrastructure Levy (CIL) introduced by the Planning Act 2008 and the CIL Regulations 2010 (SI 2010/948).

This note considers the priority between mortgages and fixed charges over freehold and leasehold property.

This practice note looks at the issues that need to be considered when drafting or negotiating a clause in a property sale contract dealing with plant and machinery capital allowances.  It considers the new rules applicable from April 2012, which impose additional requirements before a buyer can claim plant and machinery capital allowances on property fixtures.

This note examines the fundamental issues in relation to property joint ventures, including structuring and tax considerations.

A note on the position if a charge has been registered at the Land Registry but not at Companies House.

The Finance Act 2003 takes the transfer of land between partners and partnerships, as well as the transfer of interests in partnerships owning land, out of the stamp duty regime and into the stamp duty land tax regime.

A note that looks at the new top rate of SDLT for residential property introduced in the 2012 Budget and how the 7% rate, effective from 22 March 2012, applies to typical land transactions where the purchaser is an individual.

A summary of the main types of agreement that fall within the scope of the Consumer Credit Act 1974 (CCA), and other key priorities of the CCA that people involved with the provision of consumer credit need to be aware of.

This practice note considers the practical impact of stamp duty land tax in the context of commercial transactions. 

This note examines the general principles of subordination, the different methods by which it can be achieved and its advantages both to borrowers and lenders. This note also contains links to a multi-jurisdictional guide to finance (which includes issues relating to subordination) and a detailed note on subordination in the United States.

This note provides an overview of the issues that need to be considered when taking security over a foreign asset and/or from a foreign entity.This note also contains a link to a multi-jurisdictional guide to finance which discusses issues relating to taking security in various jurisdictions.

A note on taking security over choses in action.  A chose in action is an asset that can only be claimed or enforced by action at law or equity, rather than by taking physical possession of the asset. The note looks at how to take security over various types of choses in action such as rights under contracts, debts, financial instruments and cash deposits in bank accounts.

This note looks at taking, perfecting, registering and enforcing security over land in Scotland. It also considers the impact of the reforms to the Scottish system of land registration.

This practice note is a basic summary of the tax issues that frequently arise in respect of commercial lending transactions carried on by banks. Among other things, it considers distribution treatment for interest, withholding tax, stamp duty and VAT.

A document tracking the development of certain notable pieces of proposed new legislation relating to the taxation of investment structures.

This note is a general summary of the UK rules applying to the taxation of chargeable gains. It describes what chargeable gains are, what assets are affected, when disposals arise, the way in which gains are calculated and the manner in which they are taxed, exceptions from taxation, anti-avoidance rules and how allowable losses may be used. This note is intended as a general overview, so you should be aware that the tax treatment in a particular case may differ from the general position described in this note.

An introduction to term sheets in the context of loan finance transactions, including details of what they are used for. This note also considers what provisons are typically included in term sheets and the lender's and borrower's perspectives in drafting and negotiating term sheets.  This note includes links to related resources such as standard documents, term sheets and commitment letters. It also includes a link to an introduction to bank loan term sheets in the US.

This practice note consider situations where, under certain circumstances, an option to tax will be disapplied and not have effect.

A practice note looking at the physical scope of the option to tax, who it affects and the person opting.

A security interest in most types of personal property can be perfected by filing a UCC-1 financing statement. Creditors of a debtor may conduct a search against a debtor to discover any financing statements or other liens filed against that debtor. This Note is a discussion of the issues relating to conducting and reviewing UCC searches.

This practice note examines the various tax issues that arise in respect of UK authorised and unauthorised unit trusts and UK open-ended investment companies. It considers the tax treatment of such funds and of their investors.

A short practice note which explains the tax point of a supply for value added tax purposes in relation to property transactions.

The option to tax (previously referred to as the "election to waive exemption from VAT") plays an important role in property investments and transactions. This practice note sets out when an option can be exercised, the rules governing options and the effect of an option.

This practice note is a summary of the UK withholding tax rules on payments of interest and certain other payments (such as annual payments, guarantee payments, patent royalties and other royalties). It considers when withholding arises (including when interest has a UK source and when it is "yearly interest" rather than "short interest"). It also considers exemptions, such as the Quoted eurobond exemption and exemption under double tax treaties, and outlines the effect of the EU savings tax directive. Further, it discusses documenting for withholding tax, including gross-up clauses, and accounting for tax withheld.

This note explains what Jersey property unit trusts (JPUTs) are, how they are established and why they are used for holding UK property. It considers the current advantages of using JPUTs and contains a table comparing and contrasting JPUTs with UK real estate investment trusts (REITs). This note also examines which categories different types of investors must fall into.

The Solicitors' Code of Conduct 2007 (the Code) came into force on 1 July 2007. The Code replaced, with effect from 1 July 2007, the rules of professional conduct contained in the Solicitors' Practice Rules 1990 (SPR). The Code applies to all solicitors acting in England and Wales. This Practice Note deals with the situation of a solicitor acting for a lender and a borrower in a conveyancing transaction. Rule 3.16 of the Code replaces Rule 6(3) of the SPR, which provides that, as a general rule, a solicitor cannot act for both the lender and borrower on the grant of a mortgage of land. Where the mortgage is a "standard mortgage", however, joint representation is permitted, subject to there being no conflict of interest and to certain conditions being complied with. Note: The Solicitors Regulation Authority (SRA) Handbook, which is fully in force from 6 October 2011, replaces the Solicitors' Code of Conduct 2007. PLC has published the following Practice notes on the new handbook: SRA Handbook 2011 and Code of Conduct. SRA Handbook 2011 and Code of Conduct: issues for property lawyers. SRA Handbook: ten top things for in-house lawyers to think about.