As published on our Talking Property blog on 23 November 2017, when acting for a lender, which is taking a legal charge over commercial property, due diligence is undertaken always with the aim of ensuring that good and marketable title will be obtained. It is not uncommon for lenders to secure a loan against a long leasehold interest, usually with a term of 50 years or more, which has a capital value and for which a premium is payable by the tenant in addition to an annual ground rent. Where this is the case, compared to freehold property, there tends to be greater potential for issues to arise which put the value of the lender’s security at risk. A classic example is forfeiture provisions which appear in many long leases.
This blog is intended only as a synopsis of certain recent developments. If any matter referred to in this blog is sought to be relied upon, further advice should be obtained.
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