{"id":56632,"date":"2026-10-14T14:24:27","date_gmt":"2026-10-14T18:24:27","guid":{"rendered":"https:\/\/www.millerthomson.com\/?p=56632"},"modified":"2026-10-14T14:50:47","modified_gmt":"2026-10-14T18:50:47","slug":"commercial-lending-five-issues-that-can-cause-delays-and-increase-legal-costs","status":"publish","type":"post","link":"https:\/\/www.millerthomson.com\/en\/insights\/financial-services\/commercial-lending-five-issues-that-can-cause-delays-and-increase-legal-costs\/","title":{"rendered":"Commercial Lending: Five issues that can cause delays and increase legal costs"},"content":{"rendered":"\n

The lender has approved the financing, the borrower needs the funds, and a closing date has been set. So why is the transaction taking longer, and costing more, than expected?<\/p>\n\n\n\n

In Canadian commercial lending, the steps between credit approval and funding can be easy to underestimate. Documents need to be settled, due diligence completed and funding conditions addressed, often with input from several parties. While unforeseeable complexities may arise from time to time that are outside everyone\u2019s control, there are some issues that, if addressed from the outset of the file, will allow lenders and borrowers to plan realistically and manage legal spend.<\/p>\n\n\n\n

1. Does counsel have clear and complete instructions?<\/h2>\n\n\n\n

It is important that both borrower and lender\u2019s counsel receive the commitment letter or term sheet and the lender\u2019s formal instructions early. Clear instructions at the beginning of the file can reduce repeated requests for direction and questions from counsel.<\/p>\n\n\n\n

The instructions should identify the borrower(s) and guarantor(s), the required covenant and security package, conditions to funding, the funding procedure and the intended closing date. A short discussion at the outset can help clarify those requirements, identify inconsistencies and raise practical questions.<\/p>\n\n\n\n

2. Is the borrower and its counsel organized and cooperative?<\/h2>\n\n\n\n

Delays and additional costs often stem from unresponsive or disorganized parties. Incomplete corporate records and slow responses can hold up document preparation, corporate approvals, legal opinions and closing.<\/p>\n\n\n\n

Early on, borrowers should involve their counsel,<\/u><\/a> assemble current corporate records and, where relevant, a corporate ownership chart. They should also identify existing financings and liens so counsel can assess any payout, discharge, consent or priority requirements. Delayed disclosures by the borrower can lead to a number of complications, including : (i) the need for additional diligence, (ii) parties learning of new facts that require changes to documents, and (iii) additional third party interactions.  <\/p>\n\n\n\n

Signing arrangements also deserve early attention. Confirm who must sign, their availability and whether any guarantees require independent legal advice or particular execution formalities.<\/p>\n\n\n\n

3. Where are the parties and assets located?<\/h2>\n\n\n\n

A transaction involving several jurisdictions may require additional searches, registrations, documents and local legal advice. The relevant requirements depend on the parties, the assets and the laws of the applicable jurisdiction.<\/p>\n\n\n\n

It is important that the lender and its counsel are given details of where each borrower and guarantor is organized and operates, as well as the location and ownership of the assets.  This will ensure that the necessary searches and registrations can be completed in all relevant jurisdictions. <\/p>\n\n\n\n

Identifying these details early allows counsel to assess local requirements and include the necessary work in the timetable and fee estimate.<\/p>\n\n\n\n

4. What registrations and third-party requirements need attention?<\/h2>\n\n\n\n

Results from corporate, title and off title searches may reveal registrations that can affect the lender\u2019s security and priority and must therefore be addressed before closing. The results will require investigation and arrangements acceptable to the lender before funds can be advanced.<\/p>\n\n\n\n

Depending on the terms of the financing, counsel may need to:<\/p>\n\n\n\n