A collateral description exhibit lists the precise legal descriptions and assets securing a CRE loan. It anchors the lender’s lien and guides title recording.
A collateral description exhibit is an attachment to a security instrument that enumerates and describes with specificity the real estate and related assets being pledged as collateral. It typically includes legal descriptions, parcel numbers, easements, addresses, and may list leases, fixtures, equipment or accounts when applicable. The exhibit creates clarity on what the lender’s lien covers and provides the precise language recorded in public records; accurate exhibits prevent disputes over scope of the lien and are reviewed closely in due diligence and title work.
During loan documentation and closing, title companies, lenders, and borrowers use the collateral description exhibit to confirm that the security instrument matches what will be recorded. Sponsors must provide surveyed legal descriptions, condominium plats, and schedules of tangible and intangible assets for inclusion. Counsel verifies that the exhibit captures any rights to rents, easements, and parking that secure the loan. This exhibit is the reference used by underwriters and servicers when enforcing remedies, issuing title policies, or releasing portions of the collateral.
The collateral description exhibit is important because precision in collateral scope determines enforceability, recording efficacy, and priority over competing claims. Incomplete or inaccurate descriptions can lead to title exceptions, limit enforceable remedies, or require corrective instruments that delay enforcement and increase cost. Well-drafted exhibits also facilitate partial releases and portfolio financing by specifying how individual assets may be carved out. For borrowers, ensuring accuracy prevents unexpected encumbrances on assets and preserves their ability to transact in the future.