Construction Lending: Key Issues for Negotiation and Documentation
Mastering Conditions to Advances, Loan Balancing, Payment and Completion Guaranties, Retainage, and HVCRE Equity Requirements
Recording of a 90-minute CLE webinar with Q&A
This CLE webinar will provide lender’s counsel with guidance in negotiating and documenting construction loans, including provisions for making loan advances, budgeting and loan balancing, payment and completion guaranties, pre-leasing requirements, and retainage and project completion. The panel will also discuss best due diligence practices and how to document certain construction loans for exemption from HVCRE classification.
- Parties involved in a construction loan
- Construction loan risks
- Misapplication of construction draws; liens filed by contractors; delays caused by labor and contract disputes; force majeure
- Cost overruns due to deficient plans and specs, inaccurate budgets, increases in costs
- Due diligence—zoning and permitting, budget review, plans and specs, evaluation of borrower and contractor
- Construction loan documents—key issues
- Equity funding requirements and HVCRE
- Payment and completion guaranties
- Conditions to advances
- Project modifications
- Loan balancing and use of contigency
- Pre-leasing and pre-sales
- Stored materials
- Retainage—release on completion
The panel will review these and other key issues:
- What additional risks and concerns arise in construction lending as opposed standard commercial property loans?
- What are the key provisions in construction loan documents and the key points of negotiation?
- How do the payment and completion guaranties address construction risks and how do they vary?
- Can bank lenders avoid having construction loans classified as HVCRE assets? How should that be documented?
Lauren E. Anderson
Hillis Clark Martin & Peterson
Ms. Anderson offers extensive knowledge of the lending process in transactions ranging from basic commercial and... | Read More
Ms. Anderson offers extensive knowledge of the lending process in transactions ranging from basic commercial and industrial loans to syndicated construction loans with mezzanine financing. Recent engagements include representing a bank in connection with four loan transactions totaling $47 million for the construction of major retail centers as well the lead lender with respect to a $25 million loan for development of 25 apartment buildings.Close
Ms. Berden’s practice merges the traditional areas of leasing, acquisition, financing, construction and... | Read More
Ms. Berden’s practice merges the traditional areas of leasing, acquisition, financing, construction and development of commercial projects. She has significant experience in layering financial tools for projects to promote their long-term success. This includes representing both developers and lenders in traditional lending and tax credit financing transactions, including new markets tax credits and historic tax credits. Ms. Berden has been involved with over $200 million in tax credit financing transactions.Close
Heather M. Dorn
With over 20 years of experience, Ms. Dorn focuses her practice in the areas of corporate, business and real estate... | Read More
With over 20 years of experience, Ms. Dorn focuses her practice in the areas of corporate, business and real estate law. She represents and works with business owners, developers, private and institutional investors, nonprofit organizations, and asset management firms. In addition to advising her clients on business matters, Ms. Dorn handles contract negotiations, due diligence review, structured finance deals, and complex litigation matters.Close