Property Loan Note for the United Kingdom

Property Loan Note Template for England and Wales

A Property Loan Note is a legal document governed by English and Welsh law that evidences a debt secured against property. It sets out the terms under which a lender provides funding to a borrower, including the loan amount, interest rate, repayment terms, and security arrangements. The document includes specific provisions for property-based security, compliance with UK property law, and enforcement mechanisms in case of default. It serves as both a proof of debt and a security instrument, incorporating relevant provisions from the Law of Property Act 1925 and related legislation.

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What is a Property Loan Note?

The Property Loan Note is a crucial financing instrument used in real estate transactions within England and Wales. It is typically employed when a lender provides funding secured against property assets, requiring detailed documentation of the loan terms, security arrangements, and enforcement provisions. The document combines elements of traditional loan agreements with property-specific security provisions, ensuring compliance with English property law and financial regulations. Property Loan Notes are particularly important in commercial real estate financing, property development, and investment transactions, providing lenders with security while giving borrowers access to necessary funding.

What sections should be included in a Property Loan Note?

1. Parties: Details of lender and borrower

2. Background: Context of the loan and property details

3. Definitions: Key terms used throughout the document

4. Loan Amount and Purpose: Specifics of the loan amount and its intended use

5. Interest Rate and Calculations: Interest rate details and calculation methodology

6. Repayment Terms: Schedule and method of repayment

7. Security: Details of property or other assets securing the loan

8. Events of Default: Circumstances constituting default and consequences

What sections are optional to include in a Property Loan Note?

1. Early Repayment Provisions: Terms for early repayment, applicable when early repayment is permitted

2. Guarantor Provisions: Terms relating to guarantors, used when loan is guaranteed by third party

3. Interest Step-Up Provisions: Terms for increasing interest rates under certain conditions, applicable for variable interest rates

What schedules should be included in a Property Loan Note?

1. Property Description Schedule: Detailed description of the secured property

2. Repayment Schedule: Detailed payment schedule including dates and amounts

3. Security Documents: Copies of related security documents

4. Property Valuation Report: Independent valuation of the secured property

5. Notice Provisions: Contact details and methods for formal notices

Authors

Alex Denne

Head of Growth (Open Source Law) @ Genie AI | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

Jurisdiction

England and Wales

Publisher

Genie AI

Document Type

Promissory Note

Sector

Banking

Cost

Free to use
Industries

Law of Property Act 1925: Primary legislation governing real property rights and interests, including requirements for creating legal charges over property

Financial Services and Markets Act 2000: Regulates financial services and markets in the UK, particularly relevant if the loan note constitutes a regulated investment

Consumer Credit Act 1974: Provides consumer protection provisions, applicable if the borrower is an individual or small partnership

Money Laundering Regulations 2017: Sets out due diligence requirements and reporting obligations for financial transactions

Companies Act 2006: Governs corporate entities and includes registration requirements for charges

FCA Regulations: Financial Conduct Authority regulations applicable if the loan note falls under regulated activities

Land Registration Act 2002: Governs the registration of land and charges against registered land

Regulatory Reform (Business Tenancies) Order 2003: Relevant when commercial property is involved in the loan arrangement

Stamp Duty Land Tax legislation: Tax considerations for property transfer aspects of the loan arrangement

Insolvency Act 1986: Covers security enforcement provisions and priority of creditors in case of insolvency

Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks,  Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination,  Severance Pay, Governing Law, Entire Agreemen

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