Legal terms and documentation

Access rights
Easements that grant the right to access a property for a specific purpose and in some cases, for a limited period of time.

Certificate of title
A certificate that is produced by the solicitor dealing with the property/land purchase. The certificate will cover all the pertinent matters relating to the property and the ownership.

Collateral warranties
A legal undertaking by a party that runs alongside another contract.

Debenture
A medium to long term debt instrument used by companies to borrow money at a fixed rate of interest.

Deed of priority
A legal agreement between two or more creditors that determines the order of priority in which their respective security from a common debtor will rank and the respective rights which they will have in relation to the debts owed to them by the borrower. A Deed of Priority is used when a borrower has more than one type of loan from different lenders and all of those lenders may have different right secured against the same assets of the borrower. The Document ranks creditors in order of their rights to negotiate the debts owed and payment plans.

Floating charge
A flexible form of security for a loan that covers changing business assets until something serious happens—then it becomes fixed.

Freehold
A property ownership arrangement where the buyer owns both the building and the land it sits on, offering full control over the property.

Guarantees
A Guarantee and indemnity from the guarantor to the lender to cover the indebtedness (whole or part) of the borrower.

Leasehold
A property arrangement where the buyer owns the property for a set period (usually many years) but does not own the land it sits on. Common in some residential developments.

Legal charge
A legal charge over the land/property that is registered at HM Land Registry to secure the loan.

Letter of Non Crystallisation
A Letter of Non Crystallisation is a letter from a lender (like a bank) saying that their floating charge over a company’s assets is still floating and has not become fixed.

Restrictive covenants
An agreement or promise restricting the person or persons giving the covenant from taking certain actions.

Rights of way
The legal right, established by usage or grant, to pass along a specific route through grounds or property belonging to another.

Section 106 agreement
A legal agreement that is implemented in residential property development plannings known as planning obligations. Planning obligations are negotiated between a developer and the local authority and are secured through a S106

Security documentation
Legal documents that establish ownership of a property. These are typically reviewed by lenders during the loan approval process.

Step in rights
Contractual mechanisms through which lenders, upon certain events pre agreed, may intervene in a project company that they are financing to perform certain actions, to either cure a specific breach or recover the project.

Title Indemnity insurance
A type of insurance that protects owners and lenders from financial loss caused by defects or challenges in the title to a property.

Development terms

Build cost
The total cost incurred in constructing a development project, including materials, labour, and other direct construction expenses.

Build cost drawdowns
The process of accessing funds from a loan facility. In property development, this could refer to the staged release of loan funds based on progress or milestones achieved during construction.

Building regulations
Requirements for the design and construction of buildings. They ensure that new buildings, conversions, renovations and extensions are safe healthy and high performing.

Capital appreciation
The increase in the value of a property over time, often a key factor in a developer’s decision to hold a property for future resale.

Cash flow forecast
A projection of the cash inflows and outflows for a property development project, helping developers and lenders assess whether the project is financially viable and whether the developer can repay the loan.

Contaminated land
Contains substances in or under the land that are definitively or potentially hazardous to health or the environment.

Contingency fund
A portion of the development budget set aside for unexpected costs or delays that may arise during the construction process. Typically, this is a percentage of the total project cost.

Cost overrun
When the actual cost of a project is higher than the planned costs.

Development exit strategy
A detailed plan outlining how a developer will pay back the loan used for the development project once the development is completed, either through selling, refinancing, or renting the property.

Developer’s equity
The amount of money the developer personally invests in the project, typically as a percentage of the total development cost.

Drawdown schedule
A pre agreed timeline or schedule outlining when funds will be released to the borrower during the construction phase, typically based on project milestones.

GDV (Gross development value)
The projected value of a property development once it is completed.

LTC (Loan to cost)
A measure used to ascertain the percentage between the total amount of debt financing the project and the total cost of the building project (total loan amount/total costs).

LTGDV (Loan to gross development value)
A measure used to ascertain the percentage between the total amount of debt financing the project and the projected value of the developed properties once completed (Total Loan amount/Gross Development Value).

LTV (Loan to value)
A financial term that expresses the ratio of a loan to the value of an asset purchased. In property development, it often refers to the ratio of the loan amount compared to the property’s appraised value.

Main Contractor
The Main Contractor is the party which enters into a contract with the employer and is responsible for overseeing and managing all elements of the building project.

Outline planning permission
An initial form of planning permission whereby the applicant gains feedback as regards the scale and nature of a proposed development from the local planning authority.

Planning permission
Approval from the local government or planning authority to proceed with construction or development of a property. Essential for developers to legally build on a site.

Practical completion
Completion for all practical purposes.

Pre development costs
Costs incurred before the actual construction begins, such as legal fees, planning application fees, and due diligence costs.

Project monitor (Monitoring surveyor)
A Project Monitor will track a projects metrics, progress and associated tasks to ensure everything is completed on time, on budget and according to project requirements and standards.

Refinance
The process of replacing an existing loan with a new one, often to secure better terms or to access additional capital once a property is developed or refurbished.

Refurbishment loan
A loan designed specifically for the renovation or upgrading of an existing property. These loans can help cover the costs of repairs, renovations, and improvements to make a property suitable for sale or rent.

Reinstatement sum insured
A reinstatement policy seeks to fully cover repair or rebuild costs if a property is damaged or destroyed.

Risk assessment
The process of identifying and analysing potential risks in a property development project, such as market risks, financial risks, and construction delays.

Sub contractor(s)
A firm or person that carries out work for a company as part of a larger project.

Valuer
A person whose job is to estimate the value of something that is to be purchased.