Jurisdiction(s):
United Kingdom

Related legal acts

Key definition

Collateral definition

What does Collateral mean? Collateral describes the assets or rights a borrower (or a third party) provides to a lender to create a security interest securing repayment or performance. If the borrower defaults, the secured creditor can enforce against the collateral to satisfy the debt. The term is a descriptive commercial expression rather than a single statutory definition. However, “financial collateral” is defined in the Financial Collateral Arrangements (No. 2) Regulations 2003 (UK) and the European Communities (Financial Collateral Arrangements) Regulations 2010 (Ireland). Collateral commonly includes land, plant and machinery, shares, bank accounts, receivables, intellectual property and cash. Security is typically taken by mortgage...

Real estate development finance: securing borrower collateral warranties—assignments (including section 136 LPA), charges and assignment restrictions (England and Wales)

Published by a LexisNexis Banking & Finance expert

Practice notes

collateral warranties sit at the heart of the suite of development documents in real estate development facilities. They are usually issued by the project team (e.g. the building contractor, architect, engineers and other consultants, and key sub-contractors to the building contractor) in favour of both lender and borrower. A lender commonly takes security over the borrower’s rights under key development contracts, including any collateral warranties given to the borrower, alongside taking collateral warranties addressed directly to the lender. This Practice Note concentrates on the collateral warranties delivered to the borrower and the ways a lender can secure the borrower’s rights under them. It explains:

what a collateral warranty is
which collateral warranties the lender should take security over
methods for taking security over the borrower’s rights under collateral warranties: assignment by way of security, or charge
how to address restrictions on assigning collateral warranties

What is a collateral warranty?

A collateral warranty is an agreement that is collateral to, or runs alongside, an underlying contract...

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Web page updated on 22/05/2026

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