Legal Charges

Bridging finance offers businesses an essential means of accessing short-term capital, especially when traditional financing methods may not be quick or flexible enough. Whether you’re looking to secure funds for a property acquisition, development, or to manage temporary cash flow, bridging loans are often a suitable solution for companies in need of rapid funding. However, understanding the legal requirements around securing such loans is crucial for protecting your business.

One of the most critical aspects of bridging finance is the legal charge. As a company considering bridging finance, understanding how legal charges work, what they entail, and the obligations they impose on borrowers is essential for making informed decisions. At Blackstone Solicitors, we assist businesses across England and Wales in navigating these complex legal structures, ensuring that your interests are protected throughout the process.

Contact our secured lending and property finance solicitors today to find out more about how our specialists can help you and your company. Either call us on 0330 808 0839 or complete our online enquiry form and a member of the team will give you a call back.

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What is a Legal Charge in Bridging Finance?

A legal charge is a form of security that a lender takes over a property or asset to secure the repayment of a loan. In bridging finance, because the loan is typically provided on a short-term basis, lenders will require robust security to mitigate their risk. The legal charge gives the lender the right to take possession of the secured asset if the borrower fails to meet their repayment obligations.

Legal charges are usually registered at HM Land Registry and create a priority over other claims on the property. This means that if the borrower defaults, the lender can enforce the legal charge and recover their loan by selling the property or asset.

Types of Legal Charges

There are two main types of legal charges in bridging finance: first legal charges and second legal charges. The type of charge will depend on whether the property is already subject to an existing charge, such as a mortgage.

1. First Legal Charge

A first legal charge gives the lender the highest priority over the property. If your company defaults on the loan, the lender with the first legal charge has the first claim on any proceeds from the sale of the property.

For instance, if your business is taking out a bridging loan to purchase a new property, and that property is unencumbered (i.e., not subject to any existing mortgage), the lender will take a first legal charge. This type of charge provides the lender with the greatest level of security and is typically required for larger bridging loans.

2. Second Legal Charge

A second legal charge is taken when the property is already subject to an existing charge, such as a mortgage. In this case, the lender of the second legal charge will only be able to recover their funds after the first charge holder has been repaid in full.

For example, if your company has an existing mortgage on a property but requires additional funds via a bridging loan, the bridging lender may take a second legal charge. Since the second charge carries higher risk for the lender (as they are subordinate to the first charge), interest rates and fees on second-charge loans tend to be higher.

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Our Approach

We are 100% committed to ensuring each and every one of our clients receives the highest quality service and we will go the extra mile to ensure that you are happy with the results gained. We understand it can sometimes seem rather complicated to deal with matters relating to property finance this is why our friendly and approachable team always take a sympathetic and understanding approach, ensuring that you receive the support you need.

We believe communication is of the utmost importance. We will therefore keep you updated as things develop, and our solicitors will provide practical, straightforward legal advice so that you can be confident everything is progressing as you would like.

Legal charges are a fundamental part of bridging finance, offering lenders security over a property or asset in exchange for short-term funding. As a corporate borrower, understanding the legal implications of providing a legal charge is crucial for managing your company’s risk and ensuring that you meet your obligations under the loan agreement.

At Blackstone Solicitors, we specialise in advising businesses across England and Wales on all aspects of bridging finance, including legal charges. Our expert team will guide you through the process, from reviewing and negotiating the legal charge documentation to ensuring compliance with the loan terms, so that your business can proceed with confidence.

If your company is considering bridging finance or needs advice on legal charges, contact us today to discuss how we can assist you.

Why Legal Help is Important

Secured lending and property finance involve complex legal and financial arrangements that require expert advice. At Blackstone Solicitors, we work closely with businesses and individuals across England and Wales to ensure that every aspect of the transaction is handled with precision. We can assist in negotiating terms, ensuring regulatory compliance, and mitigating risks, all while keeping your business’s best interests at heart.

With our in-depth knowledge and experience, we ensure that you are fully protected throughout the lending process, from initial negotiations to final completion. If you’re looking to secure finance for a real estate project or are a lender, get in touch with our team today to discuss how we can assist you in achieving your business goals.

Our Services

The specialist solicitors at Blackstone provide a range of services to help businesses with their finances. These include, but are not limited to, the following:

Get in Touch

For more information about our services and how our secured lending and property finance solicitors can help you with any aspect of your financial dealings, do not hesitate to get in touch. You can call us on 0330 808 0839 or allow us to call you back by completing our online enquiry form.

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