Purchasing or refinancing a commercial property—whether it’s an office building, retail unit, industrial site, or mixed-use development—often requires external funding. Unlike residential mortgages, commercial property loans are typically bespoke, negotiated transactions that involve detailed financial and legal scrutiny. For most businesses and investors, securing a commercial loan and completing conveyancing happen in parallel. The two processes are interdependent: a lender won’t release funds without clear legal confirmation that the property is sound security, and the conveyancer cannot complete the purchase without confirmed finance.
This blog provides a comprehensive overview of how to secure a commercial property loan during conveyancing, explaining each stage of the process, the roles of key stakeholders, and the legal and practical steps needed to ensure a smooth completion.
1. Understanding the Relationship Between Finance and Conveyancing
Commercial property conveyancing and commercial lending are closely intertwined. In essence:
- Conveyancing is the legal process of transferring ownership (or a leasehold interest) in a property from seller to buyer.
- Commercial lending provides the funding to complete that purchase, with the property itself acting as security for the loan.
Because the lender’s money is secured against the property, they require assurance—via the borrower’s solicitor—that the asset has good and marketable title, is free from undisclosed risks, and is suitable as loan security.
This means your solicitor not only represents your interests as buyer but also typically undertakes additional work on behalf of the lender—reviewing title, raising searches, and issuing a Certificate of Title confirming the property is sound.
Understanding this dynamic is vital. The legal due diligence your solicitor performs isn’t merely academic; it directly affects whether funds are released in time for completion.
2. Preparing for Finance: Lender Selection and Pre-Approval
Before the conveyancing process begins, it’s essential to identify your funding source and understand the type of loan you require. Commercial property loans differ widely from residential mortgages in terms of structure and criteria.
Types of commercial loans
- Owner-occupier loans – for businesses buying premises for their own operations.
- Commercial investment loans – for investors purchasing income-generating properties.
- Development finance – for projects involving refurbishment, conversion, or new builds.
- Bridging loans – short-term funding solutions, often used where timing is tight.
Pre-approval and initial lender requirements
Before offering finance, lenders will request:
- A detailed business plan or investment appraisal.
- Financial statements and cashflow forecasts.
- Evidence of rental income (if investment property).
- Valuation of the property by a lender-approved surveyor.
- Details of the borrower’s experience, track record, and structure (e.g., company, LLP, or SPV).
The outcome of this stage is typically an agreement in principle (AIP) or term sheet, setting out indicative loan terms: amount, interest rate, loan-to-value (LTV), fees, and conditions precedent.
3. Instructing Solicitors and Initiating the Conveyancing Process
Once your offer on the property is accepted and your lender has issued a term sheet, you should instruct your solicitors promptly. In commercial transactions, timing is crucial—delays in legal checks or finance documentation can cause deals to collapse.
Your solicitor’s tasks include:
- Reviewing the draft sale contract and title documentation.
- Ordering searches and enquiries (local authority, environmental, drainage, etc.).
- Checking for planning or regulatory issues that may affect lender security.
- Coordinating with the lender’s solicitors to satisfy their legal due diligence requirements.
Most lenders require the borrower’s solicitor to act for both parties (on a dual representation basis), provided there is no conflict of interest. Larger institutions, however, often instruct their own legal team, meaning correspondence must be coordinated between both sets of lawyers—a process that can add time and complexity.
4. The Lender’s Due Diligence Requirements
Commercial lenders adopt a risk-based approach. They need assurance that the property can be readily sold or let if they need to enforce their security. Consequently, their due diligence mirrors and often exceeds that of the purchaser.
Typical lender requirements include:
- Good and marketable title: The property must be free of material defects or encumbrances that would affect its value or saleability.
- Searches and enquiries: Up-to-date searches must confirm there are no planning breaches, environmental liabilities, or adverse rights.
- Occupational leases: For investment properties, copies of all leases, rent schedules, and service charge information are required.
- Planning and building regulation compliance: Any works or change of use must have valid permissions.
- Insurance: The property must be insurable for its reinstatement value and free of unacceptable risks (e.g., flooding, contamination).
- Valuation report: Carried out by a lender-approved surveyor, confirming the property’s value, condition, and rental yield.
Once these steps are complete and the lender’s solicitor is satisfied, the lender will issue formal loan documentation.
5. Negotiating and Reviewing the Loan Documents
Loan documentation for commercial property is more extensive than for residential lending. The key documents include:
The Loan Agreement
This sets out the principal terms: loan amount, interest rate, repayment schedule, covenants, events of default, and representations and warranties. It may also include conditions precedent—requirements that must be satisfied before funds are released (e.g., submission of searches, insurance certificates, valuation reports).
The Legal Charge or Mortgage Deed
This gives the lender security over the property. It allows the lender to take possession or sell the asset if the borrower defaults.
Debentures and Guarantees
If the borrower is a company, the lender may also require a floating charge over company assets (via a debenture) and personal or corporate guarantees from directors or parent entities.
Ancillary Security Documents
These may include assignments of rents, leases, or insurance policies, particularly for investment properties.
Your solicitor’s role is to review these documents carefully, negotiate where necessary, and ensure you fully understand your obligations. They will also ensure that the loan structure aligns with your commercial objectives—for example, avoiding overly restrictive covenants that limit business operations or refinancing flexibility.
6. Coordination Between Lender and Conveyancer
Throughout the conveyancing process, there is constant coordination between your solicitor, the lender (and possibly their solicitor), and the surveyor.
Your solicitor will:
- Send the lender copies of title, searches, and planning documentation.
- Respond to additional due diligence queries raised by the lender.
- Draft and deliver a Certificate of Title, confirming that the property meets the lender’s security requirements.
Only when the lender receives this certificate—along with all signed loan and security documents—will they authorise release of funds.
Timing is critical: your solicitor must ensure that lender funds are available on the scheduled completion date. Missing that deadline could trigger penalties under the sale contract or risk forfeiting your deposit.
7. Completion: Drawdown of Funds and Transfer of Title
Once all conditions precedent have been satisfied and both parties are ready, the transaction moves to completion.
On the day of completion:
- The lender releases funds to your solicitor’s client account.
- Your solicitor completes the purchase by transferring the funds to the seller’s solicitor.
- The signed transfer deed, mortgage deed, and other documents are exchanged.
- You take legal ownership (or leasehold interest) of the property, and the lender’s charge is simultaneously registered as security.
Your solicitor will then confirm completion to all parties and provide post-completion documentation to the lender.
8. Post-Completion: Registration and Compliance
After completion, several important steps remain:
- Stamp Duty Land Tax (SDLT) – Your solicitor must file the SDLT return and pay any tax due within 14 days of completion.
- Land Registry – The transfer and lender’s charge must be registered with HM Land Registry.
- Companies House – If the borrower is a company, the charge must also be registered at Companies House within 21 days.
- Delivery of final documents – The lender must receive copies of registration confirmations, updated title documents, and insurance policies noting their interest.
Failure to register the lender’s charge properly could render it void against third parties, so these steps are critical.
9. Common Challenges and How to Mitigate Them
The dual process of conveyancing and financing is intricate, and several issues can cause delay or risk. Common challenges include:
Late identification of title defects
Which can affect the lender’s willingness to lend. Mitigation: commission early title review and raise issues promptly.
Incomplete documentation
Missing searches or certificates can delay funding. Mitigation: maintain a clear checklist and timetable.
Valuation shortfalls
If the valuation comes in below expectations, the lender may reduce the loan amount. Mitigation: have contingency funding or renegotiate terms.
Unclear property use or planning issues
These can undermine lender confidence. Mitigation: secure planning confirmation or indemnity insurance early.
Coordination delays between multiple solicitors
Especially when lender and borrower have separate representation. Mitigation: agree clear lines of communication and milestones.
Engaging experienced commercial property solicitors and maintaining proactive communication are the best ways to prevent last-minute complications.
10. The Importance of Professional Guidance
Securing a commercial property loan during conveyancing requires close collaboration between professionals—solicitors, lenders, brokers, and surveyors. Each plays a distinct role in ensuring that:
- The transaction structure meets both commercial and legal requirements.
- The lender’s risk is mitigated without unduly restricting the borrower.
- The conveyancing timeline aligns with funding availability.
While it can be tempting to rush through legal formalities to meet tight deadlines, thorough due diligence is essential. A well-documented and compliant loan not only secures funding for the purchase but also safeguards your long-term interests, ensuring that the property remains a reliable and saleable asset.
Conclusion
The process of securing a commercial property loan during conveyancing is far more than a box-ticking exercise. It is an integrated workflow that combines legal precision, financial scrutiny, and careful project management. From initial lender engagement through to post-completion registration, each step must be handled meticulously to ensure both the buyer and lender are protected.
For businesses and investors alike, the key to success lies in early preparation, clear communication, and professional legal guidance. By understanding the lender’s expectations, addressing due diligence proactively, and coordinating finance and conveyancing timelines effectively, you can navigate this complex process with confidence—and secure the property on solid financial and legal foundations.