Real Estate Finance and Investment

This Practice note has been superseded by the section on Accounting for leases in Practice note, Equipment leasing: tax. An update page summarising the activities and decisions of the joint IASB and FASB project on accounting for leases is available on the FASB website: IASB/FASB: Leases - Project Update.

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).

A practice note discussing the details of the bank levy applying from 1 January 2011.

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.

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.

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 provides a general overview of primary issues and concerns that arise in the context of commercial real estate workouts from the perspective of a creditor/lender.

A note on some of the issues that may arise in finance transactions where lenders and/or borrowers are required to participate in the CRC Energy Efficiency Scheme.

A summary of the various enhanced capital allowance (ECA) schemes aimed at promoting environmental measures.

Overview of the key legal requirements relating to the execution of deeds and documents under the laws of England and Wales. It reflects the law on execution from 1 October 2009. For details of the law governing execution of deeds and documents before 1 October 2009, see Practice note, Execution of deeds and documents: pre-1 October 2009.

This Note discusses the purpose of forbearance agreements, their benefits for both lenders and borrowers, their structure and key terms, and risks and other considerations for lenders entering into these agreements.

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 for UK finance lawyers.

A Practice note providing a guide for subtenants and other third parties on what happens when the tenant becomes insolvent and the lease is disclaimed.

An overview of leasing as a financing technique for buying an asset. This note provides an introduction to different leasing structures including finance leases, operating leases, hire-purchase arrangements and sale and leaseback. It also considers the advantages and disadvantages of leasing as a finance technique. This note links to a multi-jurisdictional guide to finance, which includes issues relating to various types of commercial security, including hire-purchase, retention of title and sale and leaseback in other jurisdictions.

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 looks at the enforcement powers available to collecting authorities in relation to outstanding Community Infrastructure Levy (CIL) debts and breaches of payment.  

This note looks at the consultation and examination procedure for the charging schedule that sets out the Community Infrastructure Levy (CIL) rates in a charging authority's area.

An overview of the direct tax regime for property authorised investment funds.

This note provides an overview of property derivatives.

This Practice note focuses on: The rule that there cannot be a clog on the equity of redemption. The rules that collateral advantages may be unenforceable.

A note outlining the law under the Companies Act 2006 on the registration of charges created on or after 1 October 2009 (but before 6 April 2013) by companies and limited liability partnerships registered in England and Wales. The relevant sections of the Companies Act 2006 referred to in this note came into force on 1 October 2009. For a note setting out the registration regime under the Companies Act 1985, the regime that applied to charges created before 1 October 2009, see Practice note, Registration of charges under the Companies Act 1985. Note: The regime for registering charges at Companies House changed on 6 April 2013. For more information, see Practice note, Registration of charges created by companies and limited liability partnerships on or after 6 April 2013.

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.

An overview of materials on Stamp Duty Land Tax.

A note on the rates of SDLT on land transactions and the historic rates of stamp duty applicable to transfers of property other than shares.

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.

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

A note on whether parties can use deeds of substituted security in secured property finance transactions.

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.

This practice note looks at the revocation of an option to tax.

A note outlining different types of lending (categorised by the number of lenders) and loan facilities. This note also links to a multi-jurisdictional guide to finance (that covers issues relating to secured lending) and to a note on corporate loan facilities and bank loans in the United States.

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.

This practice note explains the VAT consequences of property sales by a mortgagee following a default by the mortgagor in an insolvency.

An explanation of the capital goods scheme in so far as it relates to land and buildings.

A practice note providing a brief summary of the operation of the rules governing the transfer of a business as a going concern where the assets transferred include land and buildings.