Undertakings are formal, legally enforceable promises given by one party to another, often required by lenders or legal counsel during property development finance arrangements in the UK. These may include obligations to carry out specific actions or refrain from certain behaviours—such as not varying planning permissions without consent. Undertakings are often set out in facility agreements or legal opinions and are critical for risk mitigation. They help ensure compliance with loan terms and protect the funder’s security position throughout the development lifecycle
In practice, undertakings form part of the wider framework of a Contractual Agreement, providing lenders and professional advisers with additional assurance that key actions will be completed or maintained throughout a transaction. They are particularly important where funding is conditional upon future events, such as satisfying planning requirements, delivering project information, or registering security documents. Unlike a Grant Agreement, which governs the terms of grant funding, undertakings focus on binding commitments that support transaction execution and ongoing compliance. Their fulfilment can also influence how profits and obligations are allocated between stakeholders, particularly where arrangements involve an Equal Share of Profits and Losses structure.
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