Speed is useful, but the mandate can cost you more than the loan saves
If you are looking at a commercial or private loan, the most expensive mistake is often made before settlement. It is signing a mandate or offer without checking whether broker fees or lender costs can be secured by caveat over real property or by a PPSR registration over business assets.
That is one practical lesson from "Get a Second Opinion Before You Sign", Australia’s first book on private lending and construction finance. The point is simple: fast money documents can create real security rights for fees, not just for the loan itself.
Shane St Reynolds has been blunt about this for years because borrowers keep making the same mistake. They read the interest rate, skim the term sheet, and miss the enforcement clause.
“Most mandate agreements will charge the borrowers property and assets as security for the brokers fees.”
That line should slow you down.
The counter-intuitive part: the danger may sit in the fee clause, not the loan clause
Most borrowers assume security documents matter only if the loan settles. Not always. Some mandates and offers say that once the other side performs certain work, or incurs valuation or legal costs, you may owe fees even if the transaction does not complete.
If that obligation is backed by a caveat consent or a PPSR charge, the dispute stops being theoretical. You may then need to deal with a registration against land or business assets while trying to refinance, sell, settle another facility, or keep trading.
That is why the first question is not “How fast can you approve?” It is “What exactly can you register against me, and when?”
If you want a lender and broker who understand commercial reality and move quickly across first and second mortgages, caveat loans, development finance and bridging loans, start with Poseidon Finance. Then read the paperwork with your eyes open.
What a caveat and a PPSR registration actually do
A caveat is a notice recorded on title in the relevant state or territory land titles system. It warns the world that someone claims an interest in that land. In practice, it can delay or disrupt a sale, refinance or further dealing until the issue is resolved.
The PPSR is the Personal Property Securities Register, the national register for security interests in personal property under the Personal Property Securities Act 2009 (Cth). “Personal property” is broader than many people think. It can include plant and equipment, vehicles, stock, receivables and other business assets. A registration does not prove the claim is valid by itself, but it can affect priority and enforcement position.
The common mistake is treating these as remote legal technicalities. They are operational problems. If a caveat or PPSR registration appears at the wrong time, your next lender, your solicitor, your accountant and your buyer will all care immediately.
The real lesson from the book: ask when fees become secured, not just how much they are
In the chapter on caveat clauses and PPSR charges, "Get a Second Opinion Before You Sign" points readers to a basic truth: some documents let the other party secure fee recovery if they have carried out their side of the mandate and you default under yours. That can include legal costs for lodging and enforcing the security.
“The PPSR is the single, Australian register where details of security interests in personal property can be registered and searched.”
That is not obscure background material. It is a practical warning. Before you sign, work out:
- whether fees are payable only at settlement, or earlier;
- whether the document creates a charge over land or assets;
- whether you are consenting in advance to a caveat over current or future property interests;
- whether legal costs of enforcement are added to the debt; and
- what event counts as your default under the mandate.
If you do not know those answers, you are not ready to sign.
A five-point document check every borrower should do
Use this before agreeing to any private or commercial lending proposal, especially where speed is part of the pitch.
- Find the fee trigger.
Search the mandate, offer, terms and conditions, and authorities for words like fee earned, incurred, payable, default, abortive costs, solicitor and client basis, charge, caveat and PPSR. - Check whether the security is for the loan, the fees, or both.
These are not the same thing. A borrower may focus on the proposed mortgage and miss a separate right securing brokerage fees or expenses. - Ask what can be registered before settlement.
Use this exact question: “Before this loan settles, can you or any related party lodge a caveat or PPSR registration against me, my company, my trust or any guarantor for fees or costs? If yes, under what clause and on what trigger?” - Search the PPSR where relevant.
If you are using company assets, equipment, stock or receivables, ask your solicitor or accountant whether a PPSR search should be done as part of your broader due diligence. Existing registrations can affect what is available as security. - Get your own solicitor and accountant to review the liability points.
Do this before you sign, not after relations sour. Shane St Reynolds is not holding himself out as your lawyer; legal and tax consequences belong with your own advisers.
This is general information only, not legal or financial advice.
Why businesses choose Poseidon Finance
Borrowers usually come to private or commercial lending because time matters, the deal is outside standard bank settings, or the structure needs flexibility. That can be a working capital gap, a second mortgage, a caveat-backed requirement, a development need, a short bridging window, or an urgent settlement problem.
Poseidon Finance operates in that space: commercial and private lending from AUD 5,000 to AUD 7.5 million, including first and second mortgages, caveat loans, development loans and bridging loans, with fast indicative approvals and flexible terms.
That matters because a serious borrower needs two things at once:
- speed to a realistic indication; and
- clarity about terms, security and exit.
The wrong lender gives you speed without clarity. The better operator gives you both. That is one reason businesses choose Poseidon Finance. Another is simple range: when a deal does not fit one clean bank box, structuring options matter.
If you want to understand the broader lending landscape without the fluff, Shane St Reynolds also writes on law, business and public issues at shanereynolds.com.au.
Three red flags that should slow any borrower down
A clause reaching beyond the security property
If the document says a caveat may be lodged over the proposed security property or any other real property in which you have an interest, slow down. That wording can be much wider than borrowers expect.
Costs on a solicitor and client basis
If enforcement costs are recoverable on a solicitor and client basis, your exposure may be broader than standard party-party costs concepts people hear about in litigation. At minimum, get advice on what you are agreeing to.
Default defined too loosely
Some documents define default broadly enough that failing to complete paperwork, provide material, settle on time, or perform another obligation may trigger fee recovery rights. Read the default definition as carefully as the rate.
The blunt position: approval speed is secondary to enforceability risk
Reasonable people disagree on this because urgency is real. Businesses do need funds quickly. But I take the view that a fast indicative approval is worth less than most borrowers think if the paper gives away security rights too early or too widely.
The reason is practical, not academic. A bad rate can often be refinanced later. A badly drafted or badly understood security clause can block the very refinance or sale you need to fix the problem.
That is why disciplined borrowers ask hard questions up front. Not because they are anti-lender, but because they understand that documents outlast conversations.
Read fast, sign slow, move with the right lender
If your business needs a first or second mortgage, caveat finance, development funding or a bridging loan, there is nothing wrong with wanting speed. Just do not let speed push the caveat and PPSR clauses to the bottom of the pile.
Read the fee trigger. Read the security clause. Ask what can be lodged and when. Then deal with a lender who can move quickly without treating documentation as an afterthought.
Need funding or a second opinion before you sign?
Start with Poseidon Finance for commercial and private lending options across Australia. If you want the practical background first, get the revised edition of "Get a Second Opinion Before You Sign".
To discuss your situation, book a consultation, email [email protected] or call 08 6263 6236.