Legal Definitions - procuration fee

A procuration fee is a payment made to a professional, such as a solicitor, mortgage broker, or financial advisor, for their service in successfully arranging or obtaining a loan on behalf of a client. It is essentially a commission paid for the effort and expertise involved in securing the necessary financing.

Here are some examples to illustrate how a procuration fee might apply:

• Residential Mortgage Application: David is purchasing a new home and decides to use a mortgage broker to help him navigate the complex market and find the most suitable mortgage product. The broker researches various lenders, prepares the application, and negotiates terms on David's behalf. Once the mortgage is approved and finalized, David pays the broker a procuration fee for their service in securing the loan.

  This illustrates a procuration fee because the payment is a commission to the mortgage broker for successfully obtaining a loan (the mortgage) for David.

• Small Business Expansion: "Green Solutions Ltd.," a startup focused on eco-friendly products, needs a significant loan to scale up its production and marketing efforts. The company's director hires a financial consultant to help them secure a business loan from a bank. The consultant develops a compelling loan proposal, identifies suitable lenders, and manages the application process. Upon the successful approval and disbursement of the business loan, Green Solutions Ltd. pays the consultant a procuration fee for their role in securing the funding.

  This example demonstrates a procuration fee as it's a payment to the financial consultant for their professional service in procuring a business loan for Green Solutions Ltd.

• Commercial Real Estate Acquisition: A real estate investment firm, "CityScape Holdings," identifies a prime commercial property for acquisition but requires a large commercial loan to complete the purchase. They engage a specialist finance broker who has expertise in commercial property financing. The broker leverages their network to find lenders, structures the financing deal, and negotiates favorable terms. After the commercial loan is successfully secured and drawn down, CityScape Holdings pays the broker a procuration fee as agreed for arranging this complex financing package.

  Here, the procuration fee is the payment made by CityScape Holdings to the specialist finance broker for their expertise and effort in obtaining the large commercial loan for their property acquisition.