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Building Loan Agreement for Hong Kong

Building Loan Agreement Template for Hong Kong

A comprehensive legal agreement governed by Hong Kong law that establishes the terms and conditions under which a financial institution provides funding for a construction project. The document details the loan facility, drawdown mechanisms, security arrangements, construction milestones, and compliance requirements. It incorporates specific provisions aligned with Hong Kong's Banking Ordinance, Buildings Ordinance, and property laws, ensuring proper security registration and compliance with local construction regulations. The agreement serves as the primary financing document for construction projects, balancing the lender's security requirements with the practical needs of construction development.

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What is a Building Loan Agreement?

The Building Loan Agreement is a crucial document used in Hong Kong's real estate development and construction financing landscape. It is employed when a developer or property owner requires substantial financing for a construction project, whether for new development or major renovation. The agreement combines elements of traditional loan documentation with construction-specific provisions, ensuring that funding is aligned with construction progress and compliance with Hong Kong building regulations. It includes detailed mechanisms for drawdown against construction milestones, technical requirements for building works, and comprehensive security arrangements. The document must comply with Hong Kong's Banking Ordinance and Buildings Ordinance, while also considering environmental regulations and planning requirements. It's particularly important in Hong Kong's dense urban environment where construction projects often involve significant complexity and regulatory oversight.

What sections should be included in a Building Loan Agreement?

1. Parties: Identification of the lender(s) and borrower(s), including their registered addresses and company details

2. Background: Context of the agreement, including brief description of the project and purpose of the loan

3. Definitions: Detailed definitions of terms used throughout the agreement

4. Loan Facility: Details of the loan amount, purpose, and facility type

5. Conditions Precedent: Conditions that must be satisfied before the loan becomes available

6. Drawdown Provisions: Terms and procedures for drawing down the loan, including construction milestones

7. Interest and Fees: Interest rate, calculation method, fees, and payment terms

8. Repayment Terms: Repayment schedule, methods, and prepayment provisions

9. Security: Details of security arrangements, including property mortgage and other collateral

10. Construction Covenants: Borrower's obligations regarding construction, including timelines and standards

11. Representations and Warranties: Standard and specific representations by the borrower

12. Borrower Covenants: General and financial covenants the borrower must maintain

13. Events of Default: Circumstances constituting default and consequences

14. Monitoring and Reporting: Requirements for progress reports and lender's inspection rights

15. General Provisions: Standard clauses including notices, amendments, and governing law

What sections are optional to include in a Building Loan Agreement?

1. Multiple Lenders Provisions: Required when there are multiple lenders, covering voting rights and agent's role

2. Cost Overrun Facility: Additional facility to cover potential construction cost overruns

3. Green Building Requirements: Specific requirements if the project aims for green building certification

4. Insurance Requirements: Detailed insurance obligations beyond standard requirements

5. Property Management: Post-completion property management requirements if required by lender

6. Pre-sale Arrangements: If the project involves pre-sale of units

7. Contractor Direct Agreement: When direct agreements with main contractors are required

8. Guarantees: When additional personal or corporate guarantees are required

What schedules should be included in a Building Loan Agreement?

1. Schedule 1 - Property Details: Detailed description of the property and building plans

2. Schedule 2 - Construction Schedule: Detailed construction timeline and milestones

3. Schedule 3 - Drawdown Schedule: Specific drawdown conditions and amounts linked to construction milestones

4. Schedule 4 - Form of Drawdown Request: Template for drawdown requests

5. Schedule 5 - Security Documents: List and copies of all security documents

6. Schedule 6 - Required Insurances: Detailed list of required insurance policies

7. Schedule 7 - Form of Progress Report: Template for construction progress reports

8. Schedule 8 - Permitted Security Interests: List of pre-approved security interests

9. Appendix A - Construction Specifications: Detailed technical specifications for the building

10. Appendix B - Professional Team: Details of architects, engineers, and other professional consultants

Authors

Alex Denne

Head of Growth (Open Source Law) @ Ƶ | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

Jurisdiction

Hong Kong

Publisher

Ƶ

Cost

Free to use
Relevant legal definitions



























































Clauses




































Relevant Industries

Banking & Financial Services

Real Estate Development

Construction

Property Investment

Architecture & Design

Legal Services

Insurance

Property Management

Urban Planning

Relevant Teams

Legal

Real Estate Finance

Construction Management

Risk & Compliance

Property Development

Commercial Banking

Technical Services

Project Management

Credit Risk

Operations

Relevant Roles

Chief Financial Officer

Real Estate Finance Manager

Construction Project Manager

Legal Counsel

Property Development Director

Risk Manager

Facility Manager

Commercial Banking Manager

Construction Finance Specialist

Property Investment Manager

Compliance Officer

Technical Director

Senior Architect

Quantity Surveyor

Development Manager

Industries









Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks,  Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination,  Severance Pay, Governing Law, Entire Agreemen

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