Financial covenant meaning

This checklist is intended for use in a due diligence process where a purchaser, tenant or lender is examining title to property that is burdened by, or enjoys the benefit of, positive covenants. It sets out the relevant matters to consider when reviewing and reporting on positive covenants. Are there any positive covenants affecting the property? A positive covenant is a commitment to perform an act or to make a financial contribution to something. Typical examples in property transactions include covenants to erect and keep in repair a fence, or to contribute towards the upkeep of a shared driveway or other communal facilities. HM Land Registry has no duty or authority to record the benefit of a positive covenant on a registered title...

In this issue: Enforcing security and property insolvency Forfeiture Easements and covenants Disputes and remedies Residential tenancies No Weekly Highlights on 24 April 2025 Additional Property Disputes updates LexTalk®Property Disputes: a Lexis®Nexis community Daily and weekly news alerts New and updated content Dates for your diary Trackers Latest Q&As Enforcing security and property insolvency The treatment of principal secured debt under a mental health crisis moratorium (Seculink Ltd v Forbes) In Seculink Ltd v Forbes [2025] EWHC 524 (Ch), the High Court explained how the principal amount of a secured debt is dealt with during a mental health crisis moratorium (MHCM) under the Debt Respite Scheme (Breathing Space Moratorium and Mental Health Crisis Moratorium) (England and Wales) Regulations 2020, SI 2020/1311. The court confirmed that the principal of a secured debt does not constitute a ‘qualifying debt’ for the purposes of the Regulations, meaning secured creditors may enforce recovery of...

In this issue: Statutory compliance Property in Wales Property development Environment, energy and buildings Property management Residential property Transferring property Easements, right and covenants Property taxes Property in Scotland Additional property updates this week Daily and weekly news alerts Trackers New Q&As Statutory compliance Court of Appeal upholds retrospective leaseholder protections In Adriatic Land 5 Ltd v Long Leaseholders at Hippersley Point (Secretary of State for Housing, Communities & Local Government, intervening) [2025] EWCA Civ 856, the Court of Appeal, by a majority, ruled that paragraph 9 of Schedule 8 to the Building Safety Act 2022 (BSA 2022) applies retrospectively to stop the recovery of service charges covering legal and professional fees tied to safety defect liabilities under qualifying leases where those liabilities arose before 28 June 2022 (the date the relevant BSA 2022 provisions commenced). The court’s reasoning turned on the legislative intention to shield leaseholders from heavy...

On 27 August 2025, Cartwright Pension Trusts warned that pension schemes cannot sidestep the fallout from overlooking bitcoin treasury companies. The rise of these publicly listed firms, which raise capital to acquire and retain cryptocurrency, marks a change in how businesses view long-term value, the firm said. Sam Roberts, director of investment consulting, stressed they are not advocating that every scheme begin buying bitcoin. However, Roberts added, trustees and sponsors must grasp the implications of this seismic monetary shift for their particular circumstances...

Real estate finance (REF) transactions REF deals fall into two categories: investment finance and development finance. The difference depends on whether the property is bought as an investment that already produces income, or acquired with the intention that it will be developed. Investment finance transactions are encountered more frequently than development finance transactions. For a general introduction to investment facilities in real estate finance, see the following Practice Notes: Introduction to real estate finance—the lending structure Real estate finance—investment facilities—key features The Loan Market Association (LMA) has issued a recommended form of facility agreement for real estate finance investment transactions, accompanied by a user guide. Both are available to LMA members—see the Single Currency Term Facility Agreement for Real Estate Finance Multi-property Investment Transactions (LMA REF Investment Facility Agreement) and the related user guide on the LMA website. Real estate finance transactions can differ markedly, and the LMA acknowledges in its user guide that producing a genuine ‘standard form’ document for...

This Practice Note explores the principal legal terms typical of social housing finance and what distinguishes them from financing in other sectors. It focuses on standard financial covenants and other sector‑specific provisions, including events of default, together with terms linked to the availability of long‑term fixed rate interest options. For more on social housing finance transactions, see Practice Notes: Social housing entities entering into finance transactions Key deal structures in social housing finance Taking and enforcing security from social housing entities This Practice Note concentrates solely on private not‑for‑profit providers of social housing registered in England (referred to as ‘RPs’), as they comprise the vast majority of private debt finance raised by housing associations to date. It does not cover providers registered in Wales. Financial covenants—introduction The principal financial covenants in social housing finance are: loan to value gearing interest cover (less commonly) net rental income cover from charged properties Loan...

This Practice Note looks at: the principal features of loan to value (LTV) covenants in secured lending transactions possible issues with calling an event of default arising from a LTV covenant breach potential challenges to an event of default based on a LTV covenant breach remedying a LTV covenant breach the impact of the economy on LTV covenant breaches LTV covenants are a vital element of risk management in secured lending. An LTV covenant is a common financial covenant that requires the outstanding principal of a loan, expressed as a percentage of the value of the security charged in favour of a lender, to stay below a specified threshold for the life of the loan. This gives lenders a means to monitor and protect the strength of their security over time. For borrowers, grasping and negotiating these covenants is key to achieving favourable loan terms and steering clear of the pitfalls that can arise from a breach. Although a...

This Agreement is entered into on [ insert day and month ] 20[ insert year ] Parties The Lenders (as identified in Schedule 1) (the Lenders); and [ insert name of debtor company ], a company incorporated in [ insert country eg England and Wales ] under number [ insert registered number ] whose registered office is at [ insert address ] (the Company); (Each of the Lenders and the Company is a Party and, collectively, the Lenders and the Company are the Parties). Recitals The Parties have executed the following Finance Documents: [ insert list of finance documents ]. As at the Commencement Date, the amounts [ listed in OR calculated in accordance with Schedule 2 ] are owed under the Finance Documents. The Lenders consent to a moratorium on exercising their rights arising from any Event of Default or any breach of covenant under the Finance Documents. The Company will not be obliged...

Section 33 of the Local Government (Miscellaneous Provisions) Act 1982 (LG(MP)A 1982) This provision addresses how local authorities can enforce certain land-related covenants. It applies where a principal council and another person are parties to an instrument under seal that is executed for specific purposes relating to land in which that person has an interest. The section is engaged where the instrument is: executed to secure the carrying out of works on land within the council’s area in which the other party holds an interest; or executed to regulate the use of, or is otherwise connected with, land either within or outside the council’s area in which that party has an interest; and only where the instrument is neither executed to facilitate, nor otherwise connected with, the development of the relevant land. LG(MP)A 1982, s 33(2) sets out powerful enforcement provisions...