At Relendex, we aim to secure first legal charge against the property for deals that we put up on the platform. Aside from first charge, there are occasions whereby we take a guarantee or additional collateral from the borrower.

If you are unfamiliar with property lending, we thought we’d clarify some security that is used.

First legal charge

This is a legal charge of the property which gives the lender the right to decide what to do with it should the borrower be unable to repay his/her loan.

In the event of a default by a borrower, Relendex, acting as agent for the relevant lender group and after taking appropriate professional advice, could sell the property in question in order to recover lenders' principal and interest.

Personal guarantee

Where a loan is made to a limited company/special-purpose-vehicle, a guarantee can be obtained from the Director(s) of the business. This means that the borrower can be held personally liable for the loan or the pre-agreed amount of the personal guarantee.

Debenture

A debenture is an agreement that will have the terms and conditions of the loan set out. This will allow the lender to register a charge against the assets of the company.

This can sometimes be accompanied by a floating charge which will rank the lender above unsecured creditors should the borrowing company enter into insolvency. A floating charge ‘crystallises’ when a receiver or administrator is appointed.

When it comes to commercial real estate lending, there are a lot of terms specific to the industry. We have a comprehensive list of terms that you would find when looking at commercial property documents. Why not have a look at the Relendex Glossary of Terms and let us know if there’s anything we have missed out.