Cross-collateralisation is a legal mechanism in property development finance where a lender secures one loan facility across multiple assets or development sites owned by the borrower or group. This means if the borrower defaults, the lender can enforce their security against any or all of the secured properties. It is commonly used by lenders funding multiple developments for the same borrower, helping reduce risk exposure and improve loan recovery prospects. While it can increase funding access for developers, it also limits flexibility in refinancing or disposing of individual sites within the cross-collateralised pool.
In practice, cross-collateralisation is most often used where a developer operates several projects simultaneously and seeks funding on a portfolio basis rather than securing each facility against a single site. By allowing security to extend across multiple assets, lenders can strengthen their overall position and may be willing to offer larger or more flexible facilities. The arrangement is closely connected to Ranking of Security, particularly where different lenders or security interests affect the same group structure. Cross-collateralisation can also arise within more complex funding structures involving Split-Tranche Bridge facilities, where lenders seek comprehensive security coverage across several development assets.
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