Completion Guaranties in Construction Lending: Key Provisions for Lenders and Guarantors

Recording of a 90-minute premium CLE webinar with Q&A

Conducted on Thursday, October 22, 2020

Recorded event now available

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Program Materials

This CLE webinar will examine key provisions found in a construction completion guaranty and selected points that may be subject to negotiation. The panel will discuss how the nature of the project, the track record of the borrower, and other aspects of the transaction may figure into the final form of the completion guaranty.


In a construction loan, a principal concern for the lender is that the borrower will fail to complete the project, leaving the lender to oversee the construction of a partially finished building. Under a completion guaranty, the sponsor or other qualified third party agrees to complete the project in accordance with approved plans, on schedule, within budget, with no lien claims and otherwise in accordance with the loan documents. Some lenders may also include a carry component to the completion guaranty which requires the guarantor to pay certain operational costs until the project is completed or reaches stabilization.

Because they impose personal liability in addition to the liability under a payment guaranty, completion guaranty provisions are particularly important to the guarantor. Both borrower’s counsel and lender’s counsel need to understand the interplay between payment guaranties and completion guaranties.

Counsel must be prepared to negotiate specific terms of the guaranty agreement to limit their clients' exposure. Negotiation points include: under what circumstances the unfunded balance of the construction loan can be used to complete construction; whether the guaranty should be limited to only construction costs and not project carry costs; whether the guaranty should include a liquidated damages provision in case completing construction is impossible or impractical; and clearly defining when the completion guaranty obligations terminate.

Listen as our authoritative panel examines various aspects of completion guaranties and provisions that are high priority concerns for lenders and guarantors. The panel will also discuss provisions that can limit a guarantor's obligations under the guaranty and factors that might affect the ability of counsel to negotiate those provisions.



  1. Purpose of completion guaranties
    1. Defining guarantor's construction obligations
    2. Damages for failure to complete
  2. Factors impacting the scope of guaranty
  3. Loan funding and other conditions to completion obligation
  4. Limitations on liability
    1. Liquidated damages
    2. Limitation of costs: hard costs vs. costs to carry the loan
    3. Termination upon foreclosure or bankruptcy sale


The panel will review these and other key issues:

  • What are the factors to consider when drafting a liquidated damages clause?
  • Why should the guaranty obligation be limited to hard costs?
  • What events should be deemed to terminate the guaranty obligation?


Hanahan, Thomas
Thomas M. Hanahan

Wooden McLaughlin

Mr. Hanahan's practice focuses on a wide range of practice areas including finance, real estate,general business...  |  Read More

Lubinski, Joseph
Joey E. Lubinski

Husch Blackwell

Mr. Lubinski is a member of the firm’s Real Estate, Development and Construction team. His varied transactional...  |  Read More

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