Glossary definition
Condition Precedent
A requirement that must be satisfied before a lender is obliged to make funds available under a facility agreement, often abbreviated to CP. Common conditions precedent in development finance include receipt of satisfactory valuation, confirmation of planning consent, execution of the building contract, and evidence of equity contribution.
Definition
A requirement that must be satisfied before a lender is obliged to make funds available under a facility agreement, often abbreviated to CP. Common conditions precedent in development finance include receipt of satisfactory valuation, confirmation of planning consent, execution of the building contract, and evidence of equity contribution. Failure to satisfy all CPs within the agreed longstop date may entitle the lender to withdraw the facility offer.
See also
Closely related terms.
Facility Agreement
The legal contract between a borrower and a lender that sets out all terms and conditions of the loan including the facility amount, interest rate, drawdown mechanics, repayment terms, covenants, and events of default.
Underwriting
The process by which a lender assesses and approves a development finance application, evaluating the borrower's experience, the scheme's viability, the security offered, and the proposed exit strategy.
Security Package
The full suite of security taken by a lender to protect their position on a development loan, typically including a first legal charge over the property, a debenture over the borrowing company, personal guarantees from directors, and an assignment of key project contracts.
Sunset Clause
A contractual provision that sets a longstop date by which certain conditions must be fulfilled, failing which either party may terminate the agreement.
Further reading
Guides that touch this term.
Guide
Development Finance Application Checklist: Documents You Need
A comprehensive checklist covering every document lenders require for a development finance application, from development appraisals to contractor tenders and planning evidence.
11 min read readReadGuide
Legal Due Diligence in Development Finance: What Solicitors Check
Legal due diligence is the backbone of every development finance transaction. This guide explains what solicitors investigate, common issues that delay completions, and how to prepare your legal pack.
9 min read readReadGuide
How Does Development Finance Work? A Complete Guide for UK Developers
A ground-up guide to how development finance is structured in the UK, covering loan mechanics, drawdown schedules, monitoring surveyors, and what lenders look for in your application.
5 min read readRead
Where it shows up
Finance products using this term.
Service
Development Finance
Senior debt funding for ground-up residential and commercial developments.
From 6.5% p.a. · Up to 65-70% LTGDVReadService
Bridging Loans
Short-term finance for acquisitions, auction purchases and time-sensitive deals.
From 0.55% p.m. · Up to 75% LTVReadService
Mezzanine Finance
Stretch your capital stack beyond senior debt to reduce equity requirements.
From 12% p.a. · Up to 85-90% LTGDVRead
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