First Published 24/05/23
Good legal advice is key.
Provided, of course, that you take it…
Serious macro-economic and political uncertainty seems to be the persistent backdrop to our lives right now. Despite this, and perhaps because the specialist lending sector grew out of the Credit Crunch and subsequent recession of the late noughties, it remains a very positive sector even in the face of current adversity.
As an industry we are well placed to offer support in the current, tough trading environment. Experienced lenders with access to diverse funding lines are offering an ever-wider range of competitive and innovative products but, as they do so, the importance of working with strong legal partners has never been greater.
The short-term lending sector is a fast-paced and highly specialised market which requires a different set of skills and expert knowledge to longer-term lending. The best solicitors in this market have a genuinely commercial outlook, are alive to their lenders client’s needs, offer creative solutions to facilitate complex transactions and all of this whilst working to extremely tight deadlines!
Technical expertise and significant experience combine to ensure these solicitors genuinely do have an ‘insiders’ view and understanding of the market. They are often to be found within partner-led teams that include experts in residential and commercial property, banking, and corporate law. Consequently, they can advise on a wide range of commercial transactions from traditional residential and commercial bridging loans through to more complex development and structured finance projects. Crucially, they are familiar with the incredible variety of properties offered as security.
Market leading law firms such as Howard Kennedy LLP, Field Fisher and Memery Crystal not only look to provide strong, fast, and competitively priced advice; they also work closely with their lenders helping them to enhance their brands. Furthermore, they actively engage with industry trade bodies such as the NACFB, FIBA and the ASTL, to offer ideas and expert advice that in turn helps to drive industry standards and promote and enhance the short-term lending sector.
At Saxon Trust we work closely with the solicitors mentioned above and interact with many more leading firms such as Jury O’Shea, Seddons, Underwoods, Gunner Cooke, Brechers, Brightstone Law and Axiom DWFM to name just a few. Howard Kennedy played an intrinsic role in helping us to draft our original documents and continue to assist us as we refine and enhance our lending proposition. In truth, the best law firms provide so much more than simply day to day conveyancing support on each loan.
Of course, it’s vital that the basics are completed accurately in terms of the review and assessment of all title and covenant documentation, that all charges are registered, and undertakings followed through and that debentures or overriding interests are filed with Companies House. However, in addition to this, the best firms are brilliant at guiding and driving the borrower’s solicitors, particularly those that are unused to the pace and tight deadlines imposed by say an auction purchase bridge.
The best law firms will ensure independent legal advice certificates and legal charges are witnessed in a timely fashion by a qualified solicitor, that information provided is true and accurate, that undertakings are given on land registry requisitions and that official copies of register entries are obtained along with transfers or conveyances for the security property.
Additionally, they will ensure planning permissions, conservation area or listed and standard building consents have all been obtained as appropriate and that the borrowers solicitor holds the required mandatory professional indemnity insurance.
As well as doing all the above and more as required, these firms keep their lenders informed every single step of the way, effectively becoming an extension of the lenders underwriting team.
They also ensure their advice is continually up to date and compliant by working with both legal counsel and specialist compliance advisors to stay on top of regulation.
Fiercely protecting their lender’s interests is what defines the very best law firms, but of course in a market where commercial pressures are stronger than ever and some lenders with large, committed credit facilities risk expensive non-utilisation penalties, legal advice is sometimes ignored in the desperation to get money out of the door.
It’s worth remembering that some of those lenders most guilty of ignoring advice, much to the exasperation of their solicitors, are no longer trading. If you pay for good advice, it’s always wise to take it!