A Deed of Priority is a binding agreement between lenders involved in the same UK property development finance transaction that establishes the priority of each party’s security interests. It sets out which lender is repaid first and how proceeds from the secured asset will be distributed in a default or enforcement scenario. These deeds are essential where senior and mezzanine or junior lenders coexist, avoiding legal disputes over repayment order. Proper registration and execution are critical to ensure enforceability. The deed provides clarity and risk allocation across the capital stack in structured development finance deals
In practice, a Deed of Priority becomes particularly important when multiple funding sources are secured against the same development asset, ensuring enforcement proceeds follow a pre-agreed order rather than becoming subject to dispute. As part of the wider framework of Securities and Collateral, it provides certainty for lenders and investors by defining how competing claims will be treated throughout the life of the project. It is often used alongside a Subordination Agreement, although the two documents serve different functions within the intercreditor structure. The arrangement can be especially relevant where Preferred Equity sits between senior debt and ordinary equity, requiring clear allocation of repayment rights and enforcement outcomes.
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