£1m loan secured after navigating legal maze!

Our clients, an engineering company, owned two commercial investment properties. They wished to buy a third light industrial property for £1 million adjacent to the two they own where they would relocate their business. Simple you might think, however they needed to borrow the full purchase price plus stamp duty and VAT. They approached their own bank who declined to assist. However, we made a more compelling application to the same bank and were able to demonstrate that they could afford the repayments on the total debt, and that taking a charge on one of the existing properties together with the new one would be sufficient security for them to lend against. 

The bank agreed. Valuations were done, signed off and solicitor instructed. The client’s solicitor then informed us of a little-known piece of English law stating that if someone owns a number of adjacent properties, the rights and easements fall away and if the bank had to exercise its rights over the properties being offered for security, then these two units would not have the rights required… The only way was to offer the bank security over all three units. Luckily we knew the right people to approach at the bank and this was quickly proposed by us and subsequently executed with the correct caveats and the transaction moved to completion.