Representations and warranties in real estate finance

Many of the usual representations and warranties for a typical bilateral or syndicated facility agreement will also be applicable to a real estate finance transaction. In a real estate finance transaction, the lenders will require the borrower to make additional representations in relation to the property addressing the following matters (among others):

• • title to the property;
• • no other interests which may adversely affect the use of the property or the lenders’ ability to take security over the property;
• • compliance with planning and environmental legislation;
• • condition of the property;
• • accuracy of information and reports supplied to the lender in relation to the property;
• • for a development finance facility, further representations will be included as to:
• • ◦ the property development site;e
• • ◦ the costs to complete the development project;
• • ◦ practical completion of the project;
• • ◦ the project design, plans and specifications; and
• • ◦ the underlying project documents and (if any) pre-sales contracts.

This guidance note discusses these property or development project-specific representations and warranties and the key considerations when drafting them.

See Representations and warranties in real estate finance.