Yes. Lenders can take a mortgage over land and buildings on the land.
2.1 The distinction between mortgages on land and buildings on the land?
There is no distinction in law: the definition of ‘land’ includes all fixtures attached to it. Accordingly, all buildings (unless they are movable) by definition constitute ‘land’ and are subject to the same mortgage as the plot of land on which they are situated.
2.2 Are mortgage certificates for a certain value issued? What is the cost? Are they transferable?
Land Registry mortgage certificates for a certain value are not issued. Mortgage-backed securities can be issued evidencing debt secured by mortgage in a securitisation transaction. The cost depends on the complexity of the transaction. These are transferable.
2.3 Can second ranking security be taken? If so, how is it registered? Is a priority deed also registered?
Yes. Second ranking security can be taken. The registration is effected the same way as for the first-ranking security. It is usual in commercial transactions for a priority deed to be entered into and registered at the Land Registry.
2.4 Can the real estate be transferred to a third party (being still subject to the mortgage) without the lender’s consent?
Yes, but it is usual in commercial transactions for a lender to agree with the owner to place a restriction on the title at the Land Registry to ensure that prior consent is obtained.
2.5 Are there any preferred creditors (other than a prior ranking mortgage holders)?
No.
2.6 Can “all monies” mortgages be taken?
Yes.
2.7 Can a landlord’s right to receive rent be charged, assigned or transferred to a lender by way of security? If so, how?
Yes. A lender can take security over rent by way of first fixed charge or security assignment. However, a mortgage over land gives the lender the ability to sell the land with all rents receivable.
2.8 It is customary/possible for a lender to take a charge/security over bank accounts of the borrower? Is it usual for lenders to contractually restrict rights to withdraw funds in accounts until the scheduled interest and capital repayments are made?
Yes. Such security can be taken by way of first fixed charge or security assignment. However, the creation of a fixed security (charge or assignment) requires the lender to exercise control over the charged accounts i.e. to restrict the chargor’s rights to withdraw funds. This is often not practicable in the case of operational accounts. These are therefore left to be freely operated by the chargor until the bank decides to enforce its security. Still, such accounts are subject to a floating charge which ranks behind fixed charges and preferred creditors.
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