A commercial mortgage is often a cornerstone of a business or property investment strategy. Whether you are acquiring commercial premises, refinancing existing debt, funding development works or arranging short-term bridging finance, the legal documentation and security you put in place can have long-lasting implications.

Commercial Mortgages: Getting the Security and Documentation Right

Jonathan Lea January 26, 2026

A commercial mortgage is often a cornerstone of a business or property investment strategy. Whether you are acquiring commercial premises, refinancing existing debt, funding development works or arranging short-term bridging finance, the legal documentation and security you put in place can have long-lasting implications.

For borrowers, commercial mortgage transactions are about more than securing funding on acceptable financial terms. The structure of the security and the wording of the legal documents will directly affect how you can operate, refinance or exit in the future. At The Jonathan Lea Network, we help borrowers understand these issues clearly and manage legal risk from the outset.

Why Legal Structure Matters for Borrowers

Borrowers understandably focus on interest rates, loan-to-value ratios and repayment terms. However, the finance and security documents govern what you can and cannot do throughout the life of the loan, not just what happens if there is a default.

Restrictions on leasing, asset disposals, group restructuring or further borrowing are common in commercial mortgage documentation. Without early legal advice, borrowers can find themselves agreeing to provisions that unintentionally limit commercial flexibility or complicate future transactions.

Common Legal Issues for Borrowers in Commercial Mortgage Transactions

From a borrower’s perspective, a number of specific legal issues arise regularly:

Restrictions on dealing with the property
Legal charges often restrict the ability to grant or vary leases, carry out alterations or dispose of part of a property without lender consent. These provisions can affect day-to-day asset management if not carefully reviewed and, where appropriate, negotiated.
Cross-collateralisation and “all monies” clauses
Lenders may seek security that extends beyond a single property or facility, particularly in group or portfolio structures. These provisions can make future refinancing or asset sales more complex. Borrowers should understand exactly what liabilities are being secured.
Corporate capacity and authority
Issues can arise where company articles, shareholder agreements or historic filings do not align with the proposed transaction. Resolving these issues late in the process can delay drawdown, making early legal review particularly valuable.
Financial covenants and technical defaults
Commercial mortgages often include financial covenants, information undertakings and non-financial default triggers. Breaches can occur even where payments are up to date. Borrowers should understand how these provisions operate in practice and the consequences of non-compliance.
Guarantees and personal exposure
Personal and corporate guarantees are common, especially in development or higher-risk lending. Borrowers and guarantors should be clear on the scope of liability, enforcement rights and long-term exposure before agreeing to provide guarantees.

Security Documents Borrowers Should Understand

Commercial mortgage transactions typically involve a suite of security documents, each with distinct implications:

Legal Charges
A legal charge secures repayment but also imposes ongoing obligations, including insurance, repair and use restrictions. These obligations can directly affect how the property is managed.
Debentures and Floating Charges
Debentures can restrict how a company deals with its assets and may impact future borrowing or restructuring plans. Borrowers should understand how these charges operate, particularly in insolvency scenarios.
Share Charges
Share security is commonly used in SPV structures and can give lenders significant enforcement rights. Borrowers should be aware of the control implications and how enforcement typically works in practice.
Priority and Intercreditor Agreements
Where more than one lender is involved, priority arrangements can affect cash flow, enforcement outcomes and future funding options. These agreements should be reviewed with the borrower’s wider strategy in mind.

Legal Due Diligence: A Borrower Advantage

Although legal due diligence is carried out for the lender, it plays a crucial role for borrowers. Title defects, missing documents, restrictive covenants or corporate inconsistencies can all delay or jeopardise funding.

By addressing these issues early, borrowers reduce the risk of last-minute conditions, renegotiation or funding delays. Our experience acting for both lenders and borrowers allows us to anticipate issues and propose practical solutions that keep transactions moving.

Supporting Borrowers Through Commercial Mortgage Transactions

Commercial mortgage transactions are often lender-driven and time-critical. Our approach is to provide borrowers with clear, practical advice that allows them to make informed decisions and protect their long-term interests without derailing the deal.

If you are a borrower considering a commercial mortgage, refinancing or bridging facility, we would be pleased to advise on the legal and security implications and support you through the transaction.

We usually offer a no-cost, no-obligation 20-minute introductory call as a starting point or, in some cases, if you would just like some initial advice and guidance, we will instead offer a one-hour fixed fee appointment (charged from £250 plus VAT depending on the complexity of the issues and seniority of the fee earner).

Please email wewillhelp@jonathanlea.net providing us with any relevant information or call us on 01444 708640. After this call, we can then email you a scope of work, fee estimate (or fixed fee quote if possible), and confirmation of any other points or information mentioned on the call.

Q&A: Commercial Mortgages: Getting the Security and Documentation Right

Do I really need a solicitor if the lender is instructing their own lawyers?: Yes. The lender’s solicitors act solely in the lender’s interests. Independent legal advice ensures you understand the obligations you are taking on and the impact on your business or investment strategy.
Can commercial mortgage terms be negotiated?: Yes. While some terms are standard, many provisions—particularly around covenants, consent rights and guarantees—can often be clarified or adjusted to better reflect the commercial deal.
What causes delays in commercial mortgage transactions?: Common causes include title defects, missing corporate approvals, incomplete security and unresolved due diligence issues. Early legal involvement helps reduce these risks.
Will a commercial mortgage restrict future refinancing or sale?: It can. Security structures, cross-collateralisation and share charges can all affect future transactions. This is why it is important to consider exit and refinancing strategies at the outset.
When should I take legal advice?: Ideally, as soon as heads of terms are agreed. Early advice allows potential issues to be identified and addressed before they become time-critical.
What is an “all monies” charge and why does it matter?: An all-monies charge secures not only the specific loan but potentially all present and future liabilities to the lender. This can unintentionally capture unrelated facilities or future borrowing, making refinancing more complex if not properly limited.
Can a lender enforce security even if payments are up to date?: Yes. Enforcement rights can arise from non-payment defaults as well as technical breaches, such as failures to provide information, breaches of covenants or changes in control. Understanding these triggers is essential.
How do share charges differ from personal guarantees in practice?: A share charge allows a lender to take control of the borrowing entity itself on enforcement, rather than pursuing the guarantor personally. This can have significant implications for ownership, group structure and reputation.
What happens if my company structure changes during the loan term?: Group restructurings, share transfers or changes in control can trigger consent requirements or events of default. Borrowers should ensure the documentation accommodates foreseeable corporate changes.
Can security extend to intellectual property or non-property assets?: Yes. Debentures and fixed charges can cover IP, shares and other business assets. Borrowers should understand what assets are being secured and how this may affect future funding or commercial arrangements.

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This article is intended for general information only, applies to the law at the time of publication, is not specific to the facts of your case and is not intended to be a replacement for legal advice. It is recommended that specific professional advice is sought before relying on any of the information given. © Jonathan Lea Limited.