1. What are the principal securities lenders will require borrowers to provide?
Securities which lenders will normally require borrowers to provide are:
- a first-rank mortgage on the financed property;
- the pledge over the shares of the borrower;
- the assignment of rental income;
- a pledge over the bank account where the rental income will be paid in as well as an order for the collection of the rental income;
- the assignment of insurance policies covering risks related to the destruction or deterioration of the financed property;
- the irrevocable mandate to sell the financed property;
- the commitment to treat intragroup claims as subordinate debt (irrespective of – and in addition to – any statutory provision, cf. for instance, s. 2467 Codice civile [Italian Civil Code – hereinafter “CC”]) as well as the issuance of a comfort letter or a “Letter of Responsibility” issued by the parent company/-ies, if any.
2. What statutory provisions apply to such securities?
The mortgage, the pledge, as well as single agreements (for instance, the assignment of rental income, the mandate, and unilateral declarations [for instance, the “comfort letter”]) are (primarily) ruled by the CC. Besides, ss 38–42 of the Consolidated Banking Act (Testo Unico Bancario – Legislative Decree no 385 of 1 September 1993 – hereinafter “CBA”)2 provide for a set of rules applicable to banks granting loans backed by mortgages (so-called “real estate loans” – credito fondiario).