Catherine Spode


David Gordon


CS: Do you think property investors in Britain are afraid of asking the relevant questions?

DG: Yes. This was clear when I was asked to act for an investor. The applicant for funding was in fact a friend of the investor , who had a plot of land to develop into an all singing all dancing seaside resort.

CS: How much was involved in terms of investment?

DG: Including the Senior Debt, into the hundred million

CS: What sort of questions did you ask?

DG: Well, there were gaping holes in the paperwork. We sought to clarify what legal entity would own the land, what legal entity would be the management company, the debt/equity ratio, as well as the actual  status of the planning permission.

CS: Those are pretty basic questions.

DG: Yes, and the replies were far from satisfactory. At one stage the applicant even told me that the investor did not need the answers to those questions.

CS: This must have given a wrong feel?

DG: Usually, with an experienced developer, the answers tell you the applicant is proud of the fact that the project will work, and the answers to questions come voluntarily, if not already in the paperwork.

CS: So there can be anomalies, but if there is a story which adds up, you as a lawyer will listen to that explanation?

DG: Yes. But I do need all the questions to be boxed off.

CS: What did you see as the worst case scenario if the investor were to proceed?

DG: The investor could end up with a plot of land with a couple of units completed and the rest abandoned – we have seen this happen in a number of cases, some well reported -- and no proper contract in place to complete the project.

CS: Would you agree there is an element of risk in every investment?

DG: Yes, however, if the answers to my questions are unsatisfactory and indicate the developer is “winging it”, I have to ask myself, would I put money into this?

CS: Do you have words of advice or guidelines for investors and indeed applicants?

DG: Investors should not be frightened to ask questions and expect clear answers – even if they fear damaging a personal relationship.

CS: What should applicants take from this?

DG: The developer should expect to have answers to basic due diligence questions before making the application. If the developer is serious, the questions which need answering should cement the relationship. And, yes, we Brits are often too “polite” to ask the key questions.


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