Glossary definition
Second Charge
A legal charge registered against a property title that sits behind a first charge, giving the holder (typically a mezzanine lender) a subordinated claim on the security. In the event of enforcement, the second charge holder is only repaid after the first charge holder has been satisfied in full.
Definition
A legal charge registered against a property title that sits behind a first charge, giving the holder (typically a mezzanine lender) a subordinated claim on the security. In the event of enforcement, the second charge holder is only repaid after the first charge holder has been satisfied in full. Mezzanine finance is almost always secured by a second charge, which is why it carries a higher interest rate than senior debt.
See also
Closely related terms.
First Charge
A legal charge registered against a property title that gives the holder (typically the senior lender) first priority over all other creditors in the event of a sale or enforcement.
Mezzanine Finance
A layer of debt that sits between the senior loan and developer equity in the capital stack, secured by a second legal charge on the property.
Intercreditor Deed
A legal agreement between two or more lenders in the capital stack that defines their respective rights, priorities, and remedies in relation to the same borrower and security.
Capital Stack
The total structure of funding used to finance a development project, arranged by seniority from senior debt at the bottom through mezzanine finance to developer equity at the top.
Further reading
Guides that touch this term.
Guide
Mezzanine Finance vs Joint Venture Equity: How to Choose
Both mezzanine and JV equity reduce the cash you need to invest. But they work very differently and suit different situations. This guide helps you decide which is right for your project.
4 min read readReadGuide
The Capital Stack in Property Development: How to Structure Your Funding
A comprehensive guide to understanding and structuring the capital stack in UK property development, from senior debt through mezzanine to equity contributions.
9 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 readRead
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