Bank account provisions in real estate finance facility agreements

In a typical real estate finance transaction, lenders rely on the income generated by the property as the primary source for repayment of the loan. The source of income may include rental income, sale proceeds and any money due to the borrower under other related agreements. Accordingly, lenders will seek to impose controls on how the borrower may deal with the income generated from the property, including:

• • requiring specific bank accounts into which cash income must be deposited;
• • imposing restrictions on the operation of each account; and
• • putting in place security arrangements over the bank accounts.

This guidance note details how each of the above matters are typically dealt with in facility documentation.

See Bank account provisions in real estate finance facility agreements.