Conditions precedent

Conditions precedent are the specific requirements a borrower must satisfy before a facility settles and funds are advanced — commonly a satisfactory valuation, executed security documents, evidence of insurance, a priority deed with an existing lender, or confirmation of pre-sales on a development facility. They are set out in the credit approval or loan offer and represent the gap between a facility being approved in principle and actually funding, and a file with a long or complex list of conditions precedent typically takes longer to reach settlement than one with few. Borrowers should treat the conditions precedent list as the practical roadmap to settlement, working through each item methodically with their broker and lawyer rather than waiting for the lender to chase outstanding items. Some conditions can be satisfied after settlement instead, in which case they become conditions subsequent, a structure lenders use where a minor outstanding item should not hold up an otherwise ready-to-settle facility.

Related

Credit approval · Conditions subsequent · Settlement