Loan & Security Agreements Lawyers

A Loan & Security Agreements Lawyer That You Can Trust

When you need to raise or access finance, you may need to develop both short- and long-term strategies to deliver your goals. Whether you are taking out a home loan to finance the purchase of properties or other loan for a business startup or additional funding to expand your existing operations, we can help you to make sure you know exactly what you are signing up for. Often, the loan agreements are thick with lots of legal jargon that could be quite daunting for a lay person to understand.

Loan agreements are often prepared by the financial institutions, and you may not have any bargaining power to negotiate on the terms. The terms contained in the mortgage and/or loan agreements are rather complex, and it is important to know what you are contracting for because this is a long-term commitment. A security agreement is a type of legal document that provides lenders with the right to make claims over specific assets or property that borrowers pledge as loan collateral.

You can rely on our lawyers’ pragmatic approach and sophisticated knowledge to go over your loan documents with a fine-toothed comb, making sure that there are no surprises and that you understand all the salient provisions.

We have assisted our clients with even the most complicated loan agreements with top tier banks in the hundreds of millions. We offer an efficient and personalised service, always focusing on your best interests and particular requirements.

When your loan is approved, the financier will require you to sign loan agreements like mortgage forms, Memorandum of Mortgage, General Security Agreement, Facility Agreement and a Deed of Guarantee. We can review these for you.

Please contact us for further information.

At JS Law Group, we can review this for you and advise you on the implication of each of the loan documentation.

• Memorandum of Mortgage – A Memorandum of Mortgage is a charge document prepared by the financier in which the borrower will be required to execute in favour of the lender in consideration for the loan. This forms part of a real property mortgage facility. This document sets out the registered terms and conditions of your mortgage. These terms are registered in the relevant land registry to secure the loan over the property as a condition of the financier lending you the money. In the event of default, the financier can sell your property to pay off your loan sum and any outstanding interest owing.
• General security agreement – With a general security agreement, a lender can efficiently and effectively obtain security over personal property. In the event that the borrower fails to repay or defaults on their loan, the lender may have the rights to seize or sell the secured property.
• Facility Agreement – This is basically a loan agreement between the lender and the borrower which contains the terms and conditions in consideration for the loan granted by the lender. This creates rights and obligations for you and the financial institution providing you the loan. It is important that you enter into a written agreement to protect the interests of both parties.
• Deed of Guarantee – A deed of guarantee is a promise made by a person or company, which ensures that the obligations made between another party and the beneficiary will be met. In the case of a loan, in the event that the borrower defaults on their payments or cannot fulfil other obligations under their loan agreement, the beneficiary will go after the guarantor who is responsible to complete the duties.

What can JS Law Group do for you to mitigate your risk?

Most of the time, we can’t really amend the terms in the Facility Agreement or the General security agreement as these are prescribed terms by the financier in consideration of your loan. However we can advise you on the implication of the clauses and what you should be aware of.

Nevertheless we can assist you by drawing any serious pitfalls to your attention and assist you with negotiating better terms for the guarantee, such as limiting the operation of the guarantee or making provision for its release on occurrence of certain events.

While it is common that personal guarantees are now secured by a mortgage over real property in favour of the third party, the absence of security does not prevent your assets from being made available to the third party. By being a personal guarantor, any asset that you hold personally, or which you have an entitlement to receive (such as distributions from a trust) is at risk. In the event that you are unable to perform your guaranteed obligations, the third party may seek judgment from a Court for any amounts owing to it.

If successful, the third party will be entitled to utilise all methods of enforcement available to it by law to receive performance. Enforcement options vary according to circumstance, but include a warrant on title to sell any real property or, if there are insufficient assets, issuing of a bankruptcy notice, and if not complied with, a creditor’s petition.

Providing a guarantee may also affect your personal capacity to borrow as it is a present liability even if it has yet to be called upon (and may never be).

These significant risks make it prudent to consult JS Law team to:

• Obtain legal advice as to the nature and effect of the guarantee should you be asked to provide a guarantee.
• Obtain advice from your financial advisor as to your ability to meet your obligations should you be required to perform your obligations as guarantor and to ensure your assets are appropriately structured to minimise exposure. You should also consider how the guarantee may affect your future personal financial plans.
• Keep yourself appraised of the principal’s liabilities to the third party and, at the earliest possible time, seek a release from your obligations as guarantor.

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