DOCSLIB.ORG

AGC Guide to Construction Financing

Total Page：16

File Type：pdf, Size：1020Kb

Download full-text PDF Read full-text
AGC Guide to Construction Financing www.agc.org Guide to Construction Financing Second Edition TABLE OF CONTENTS ACKNOWLEDGEMENTS………………………………………………………………. 3 INTRODUCTION Why should contractors care about construction project financing? ....................... 4 1. SOME MORAL TALES A. The contractor as investor ..................................................................... 5 B. Read the contract .................................................................................. 5 C. Helping the owner obtain financing ....................................................... 5 2. UNDERWRITING CONSTRUCTION LOANS ........................................... 6 Red Flags ………………………………………………………………. 7 3. DEBT FINANCING A. Sources of construction loan financing ................................................... 8 B. The traditional construction loan .............................................................8 Interest, principal, maturity date and other terms of the loan............. 8 Mortgages ......................................................................................... 9 C. Single-purpose entities and guarantees ................................................ 10 LLCs, LPs and LLPs …………………………………………………… 11 Public Private Partnerships ……………………………………………. 11 Best Practices ……………………………………………………………. 12 D. Other types of debt financing ................................................................. 13 Red Flags ………………………………………………………………… 15 4. EQUITY FINANCING ................................................................................. 16 Best Practices …………………………………………………………… 16 5. THE LENDER AND THE CONTRACTOR A. Assignment ........................................................................................... 16 B. Agreement to complete ......................................................................... 17 C. Loan agreement requirements .............................................................. 18 6. DOES THE OWNER HAVE THE FINANCIAL CAPABILITY TO COMPLETE THE PROJECT? .................................................................... 19 7. INVESTING IN THE PROJECT.................................................................. 20 8. CONCLUSION .……………….................................................................... 20 GLOSSARY............................................................................................................ 22 2 ACKNOWLEDGEMENTS The AGC Guide to Construction Financing was originally written in 1999 by Gary Humes, an attorney with AGC of America associate member law firm Arnold & Porter LLP, Washington, DC. The 1999 Guide was a product of the AGC Construction Financing Committee. In 2009, AGC of America created a Construction Financing Guide Task Force in order to update the 1999 Guide. The following is a product of this Task Force. Task Force Chair Milton Smith McGriff, Seibels & Williams, Inc. Birmingham, AL Chad Bathke VJS Construction Services, Inc. Pewaukee, WI Patsy Fitzpatrick Charles River Company The Sea Ranch, CA Dirk Haire Smith Currie & Hancock LLP Washington, DC Connie Marschke VJS Construction Services, Inc. Pewaukee, WI James O’Connor Maslon Edelman Borman & Brand, LLP Minneapolis, MN Christine Irwin Parrish Holland & Knight, LLP Orlando, FL Project Manager Contributors Michael F. Stark Carrie Ciliberto & Megan McGarvey AGC of America AGC of America Arlington, VA Arlington, VA Nothing contained in this work shall be considered to be the rendering of legal advice for specific cases, and readers are responsible for obtaining such advice from their own legal counsel. This work and any forms herein are intended solely for educational and informational purposes. AGC Guide to Construction Financing, Second Edition © 2009 by The Associated General Contractors of America. No portions of this work may be reproduced or displayed without the express written permission of the copyright holders. All rights reserved. 3 AGC Guide to Construction Financing Second Edition INTRODUCTION Why should contractors care about construction project financing? One of the major hurdles that almost any owner faces in a construction project is financing the construction and other development costs. More and more, contractors are finding themselves involved in the financing process. Indeed, complete lack of involvement is almost impossible to avoid on today's projects. The owner may look to the contractor for anything from "free" pre- construction services (a form of "soft money" financing) to direct equity investment in a project. Lenders, endeavoring to reduce financing risks, will look directly to the contractor for various assurances, certifications, and agreements regarding the construction of the project and its completion. Contractors, seeking new business opportunities or higher profits, will on occasion participate directly in the financing or development of a project. A construction loan is simply a loan made on the security of a real estate mortgage (and perhaps other collateral), the proceeds of which are disbursed periodically (usually monthly) to pay the hard and soft costs of construction. They can be among the most complex real estate loans (compared to land acquisition loans or permanent loans, for example), and intimately involve the activities of the construction contractor. Understanding construction financing can help a contractor provide additional value to its clients and enhance its competitive position. Involvement in the financing process, however, is fraught with risks, which a contractor must understand if it is to protect its profitability. This Guide explains the construction financing process, and points out some of the opportunities and pitfalls for the contractor. 4 1. SOME MORAL TALES The contractor eventually settled with the bank, but not without incurring substantial The brief scenarios below illustrate some of legal bills and paying an amount to the bank the opportunities and pitfalls associated with far exceeding the contractor's fees on the the construction financing process. The project. scenarios are based on actual incidents, although they have been simplified and B. Read the contract modified for our purposes. A contractor successfully completed several A. The contractor as investor projects for a new client. When the next project came along from the same client, the A small contractor was looking for contractor signed the same form construction opportunities to expand its business. It was contract without a thought. This time, the introduced to a developer with a few small project ran into trouble, the owner missed two projects under his belt, whose next project monthly payments to the contractor, and the was to be in the downtown area of a nearby contractor stopped work. The lender took over city. The project—a small mixed-use office the project and the construction contract. and residential building on the edge of a Exercising its rights under the contract, the growing office district—seemed to have great bank directed the contractor back to work and potential. The developer (whose day job was agreed to be responsible for future payments as a law professor at the local university) had to the contractor. However, the bank declined already acquired the site and seemed to know to make up the two missing payments, saying the real estate business. A local bank was that it had already paid the corresponding prepared to finance the project. Eager to land amounts to its borrower. The contractor read the job and seeing the possibility of greater the contract carefully for the first time, and profits, the contractor agreed to reduce its saw that it was not at all clear that the usual fee in exchange for a small equity contractor was entitled to the skipped interest in the project. payments. Although the contractor and the bank ultimately reached a compromise on the The contractor finished the project on time matter, it was not without cost to the and on budget, and was paid the agreed contractor. amount, which was funded mostly by the bank. Unfortunately, the real estate market C. Helping the owner obtain had cooled by the time the building was financing finished, and the developer never obtained a single tenant. The developer was unable to A contractor and its client had worked keep up payments on the loan or to obtain together successfully on a number of design- other financing, and the lender foreclosed. As build projects. This time, however, the client the building was vacant and the market was was unable to obtain financing as the project down, the foreclosure proceeds were not costs were too high. Discussing the matter enough to pay off the bank's construction with the client, the contractor agreed to loan. change the project delivery method to Construction Management At-Risk, engaged Still seeking to be made whole, the bank sued in an extensive value engineering exercise its borrower for the difference. The contractor without fee, re-phased the project to shorten was surprised to find itself named in the the construction schedule by two months, and complaint. Consulting with its lawyer, it found was able to provide the client—and the that the equity investment agreement that it lender—with a guaranteed maximum price had signed with the developer had made it a based on very preliminary design documents. "general partner" of the owner/borrower—and The project was successfully financed and thus fully responsible for repayment of the completed. The client was pleased, and the construction loan. contractor earned a fair fee. 5 2. UNDERWRITING have access to a meaningful corporate
Load more

Recommended publications
  • Subnational Debt of China: the Politics-Finance Nexus*
    Subnational Debt of China: The Politics-Finance Nexus* HAOYU GAO, HONG RU and DRAGON YONGJUN TANG September 12, 2017 Abstract Using comprehensive proprietary loan-level data, we analyze the borrowing and defaults of local governments in China. Contrary to conventional wisdom, policy bank loans to local governments have significantly lower default rates than commercial bank loans with similar characteristics. Policy bank loans are relatively more important for local politician’s career advancement. Distressed local governments often strategically choose to default on loans from commercial banks. This selection is more pronounced after the abrupt ending of the “four trillion” stimulus when China started tightening local government borrowing. Our findings shed light on potential approach to hardening budget constraint for local government. JEL Codes: G21, G32, H74 * Haoyu Gao, Central University of Finance and Economics, 39 South College Road, Haidian Dist., Beijing 100081, China; [email protected]. Hong Ru, Nanyang Technological University, 50 Nanyang Avenue, Singapore, 639798; [email protected]. Dragon Yongjun Tang, University of Hong Kong, Pokfulam Road, Hong Kong; [email protected]. We thank Warren Bailey, Patrick Bolton, Anna Cieslak, Jinquan Duan, Di Gong, Brett Green, Zhiguo He, Harrison Hong, Sheng Huang, Liangliang Jiang, Bo Li, Hao Liang, Jose Liberti, Ruichang Lu, Wenlan Qian, Jay Ritter, Jose Scheinkman, Victor Shih, Michael Song, Mark Spiegel, Chenggang Xu, Xiaoyun Yu, Weina Zhang, Li-An Zhou, Hao Zhou, staff at China Development
    [Show full text]
  • Convertible Financing Bonds As Backdoor Equity
    Journal of Financial Economics 32 (1992) 3-21. North-Holland Convertible bonds as backdoor equity financing Jeremy C. Stein* Massachusetts Insrirure of Technology. Cambridge, .MA 021.59. LISA Received September 1991, final version received March 1992 This paper argues that corporations may use convertible bonds as an indirect way to get equity into their capital structures when adverse-selection problems make a conventional stock issue unattrac- tive. Unlike other theories of convertible bond issuance. the model here highlights: 1) the importance of call provisions on convertibles and 2) the significance of costs of financial distress to the information content of a convertible issue. 1. Introduction Convertible bonds are an important source of financing for many corpora- tions. According to data presented in Essig (1991), more than 10% of all COMPUSTAT companies had ratios of convertible debt to total debt exceeding 33% during the period 1963-1984. A good deal of research effort has been devoted to developing pricing models for convertibles,’ as well as to the issues surrounding corporations’ policies for calling them.2 Somewhat less work has addressed the fundamental question of why companies issue convertibles in the first place. This paper develops a rationale for the use of convertible debt. I argue that companies may use convertible bonds to get equity into their capital structures Correspondence to: Jeremy C. Stein, Sloan School of Management, Massachusetts Institute of Technology, 50 Memorial Drive, Cambridge, MA 02139. USA. *This research is supported by a Batterymarch Fellowship and by the International Financial Services Research Center at MIT. I thank Paul Asquith, Kenneth Froot, Steven Kaplan, Wayne Mikkelson (the referee).
    [Show full text]
  • Creative Finance for Smaller Communities James R
    Reaching for the Future Creative Finance for Smaller Communities James R. Harris Founding Partner James R. Harris Partners LLC The ULI Creative Financing project was made possible through a generous grant provided by ULI Foundation Governor James R. Harris, whose contributions and val- Cover: Music Hall ued counsel enabled the content and ideas found in this in Cincinnati’s report to take shape. The ULI Foundation acknowledges Washington Park. James Harris for his longstanding commitment to support 3CDC ULI’s efforts to advance the practice and understanding of responsible development and land use. Reaching for the Future Creative Finance for Smaller Communities About the Urban Land Institute The mission of the Urban Land Institute is to provide leadership in the responsible use of land and in creating and sustaining thriving communities worldwide. ULI is committed to ■■ Bringing together leaders from across the fields of real estate and land use policy to exchange best practices and serve community needs; ■■ Fostering collaboration within and beyond ULI’s membership through mentoring, dialogue, and problem solving; ■■ Exploring issues of urbanization, conservation, regeneration, land use, capital formation, and sus- tainable development; ■■ Advancing land use policies and design practices that respect the uniqueness of both built and natural environments; ■■ Sharing knowledge through education, applied research, publishing, and electronic media; and ■■ Sustaining a diverse global network of local practice and advisory efforts that address current and future challenges. Established in 1936, the Institute today has more than 37,000 members representing the entire spec- trum of the land use and development disciplines. ULI relies heavily on the experience of its members.
    [Show full text]
  • Capital Markets
    U.S. DEPARTMENT OF THE TREASURY A Financial System That Creates Economic Opportunities Capital Markets OCTOBER 2017 U.S. DEPARTMENT OF THE TREASURY A Financial System That Creates Economic Opportunities Capital Markets Report to President Donald J. Trump Executive Order 13772 on Core Principles for Regulating the United States Financial System Steven T. Mnuchin Secretary Craig S. Phillips Counselor to the Secretary Staff Acknowledgments Secretary Mnuchin and Counselor Phillips would like to thank Treasury staff members for their contributions to this report. The staff’s work on the report was led by Brian Smith and Amyn Moolji, and included contributions from Chloe Cabot, John Dolan, Rebekah Goshorn, Alexander Jackson, W. Moses Kim, John McGrail, Mark Nelson, Peter Nickoloff, Bill Pelton, Fred Pietrangeli, Frank Ragusa, Jessica Renier, Lori Santamorena, Christopher Siderys, James Sonne, Nicholas Steele, Mark Uyeda, and Darren Vieira. iii A Financial System That Creates Economic Opportunities • Capital Markets Table of Contents Executive Summary 1 Introduction 3 Scope of This Report 3 Review of the Process for This Report 4 The U.S. Capital Markets 4 Summary of Issues and Recommendations 6 Capital Markets Overview 11 Introduction 13 Key Asset Classes 13 Key Regulators 18 Access to Capital 19 Overview and Regulatory Landscape 21 Issues and Recommendations 25 Equity Market Structure 47 Overview and Regulatory Landscape 49 Issues and Recommendations 59 The Treasury Market 69 Overview and Regulatory Landscape 71 Issues and Recommendations 79
    [Show full text]
  • Rental Property Loans Rental Loan Overview
    Rental Property Loans • Investors can now unlock positive cash flow with a rental property loan. • Our Rental loan programs provide investors of all experience levels the ability to purchase, refinance or cash out individual rental properties, as well as entire portfolios. Rental Loan Overview Term Length: 30 Year, Fully Amortized Property Types: SFR 1-4/PUDs/Multifamily Single Property & Portfolios Minimum Loan Amount: $50,000 Maximum Loan Amount: $4,000,000 Minimum Credit Score: 660 Looking to Purchase and Rehab with an Investment Property Loan? Fixing and flipping homes is a great source of income, but it can be difficult to find the right funding. In order to renovate a home and flip it for a profit, you need sufficient capital. Our FixNFlip Program We offer a wide variety of fix and flip (FixNFlip) investment property loans for the real estate investor looking to purchase and rehab an investment property. Our full offering of FixNFlip, Construction, Cash Out, and Bridge Plus loan programs provide investors the ability to capitalize on the fantastic real estate opportunities that exist across the entire country. We have a passion for real estate and providing the best financing solutions for real estate investors across the country as they pursue their real estate investing goals. FixNFlip For the investor who wants to purchase and renovate an investment property in order to sell it. Term Length: 13 months Bridge Plus For the investor looking to quickly purchase or refinance for resale or bridge to long term financing Experience:: 2+ completed flips in the last 36 months Term Length: 13 months Heavy Rehab For the investor who owns an investment property and is in need of capital for construction.
    [Show full text]
  • The Importance of the Capital Structure in Credit Investments: Why Being at the Top (In Loans) Is a Better Risk Position
    Understanding the importance of the capital structure in credit investments: Why being at the top (in loans) is a better risk position Before making any investment decision, whether it’s in equity, fixed income or property it’s important to consider whether you are adequately compensated for the risks you are taking. Understanding where your investment sits in the capital structure will help you recognise the potential downside that could result in permanent loss of capital. Within a typical business there are various financing securities used to fund existing operations and growth. Most companies will use a combination of both debt and equity. The debt may come in different forms including senior secured loans and unsecured bonds, while equity typically comes as preference or ordinary shares. The exact combination of these instruments forms the company’s “capital structure”, and is usually designed to suit the underlying cash flows and assets of the business as well as investor and management risk appetites. The most fundamental aspect for debt investors in any capital structure is seniority and security in the capital structure which is reflected in the level of leverage and impacts the amount an investor should recover if a company fails to meet its financial obligations. Seniority refers to where an instrument ranks in priority of payment. Creditors (debt holders) normally have a legal right to be paid both interest and principal in priority to shareholders. Amongst creditors, “senior” creditors will be paid in priority to “junior” creditors. Security refers to a creditor’s right to take a “mortgage” or “lien” over property and other assets of a company in a default scenario.
    [Show full text]
  • Joint Tenancies and Creative Financing—The Land Contract
    University of Arkansas at Little Rock Law Review Volume 5 Issue 4 Article 1 1982 Joint Tenancies and Creative Financing—The Land Contract Robert Kratovil Follow this and additional works at: https://lawrepository.ualr.edu/lawreview Part of the Contracts Commons, and the Property Law and Real Estate Commons Recommended Citation Robert Kratovil, Joint Tenancies and Creative Financing—The Land Contract, 5 U. ARK. LITTLE ROCK L. REV. 475 (1982). Available at: https://lawrepository.ualr.edu/lawreview/vol5/iss4/1 This Article is brought to you for free and open access by Bowen Law Repository: Scholarship & Archives. It has been accepted for inclusion in University of Arkansas at Little Rock Law Review by an authorized editor of Bowen Law Repository: Scholarship & Archives. For more information, please contact [email protected]. UNIVERSITY OF ARKANSAS AT LITTLE ROCK LAW JOURNAL VOLUME 5 1982 NUMBER 4 JOINT TENANCIES AND "CREATIVE FINANCING"- THE LAND CONTRACT Robert Kratovil* The drying up of institutional mortgage money in recent years has resulted in a burgeoning of "creative financing" of home sales. Newspaper advertisements often seek to attract buyers by stating that "owner financing is available" or that the "mortgage is assuma- ble."' Another form of "creative financing" is the installment con- tract, which is commonplace in jurisdictions in which the simplified forfeiture process offers a quick and inexpensive means of extin- guishing the rights of a defaulting purchaser.2 Many of the homes financed by this method are owned by a husband and wife in joint tenancy.3 A question that will therefore recur is what effect the exe- cution of an installment contract by the joint tenants will have on an existing joint tenancy.
    [Show full text]
  • Vantage Towers AG
    Prospectus dated March 8, 2021 Prospectus for the public offering in the Federal Republic of Germany of 88,888,889 existing ordinary registered shares with no par value (Namensaktien ohne Nennbetrag) from the holdings of the Existing Shareholder, of 22,222,222 existing ordinary registered shares with no par value (Namensaktien ohne Nennbetrag) from the holdings of the Existing Shareholder, with the number of shares to be actually placed with investors subject to the exercise of an Upsize Option upon the decision of the Existing Shareholder, in agreement with the Joint Global Coordinators, on the date of pricing, and of 13,333,333 existing ordinary registered shares with no par value (Namensaktien ohne Nennbetrag) from the holdings of the Existing Shareholder in connection with a possible over-allotment, and at the same time for the admission to trading on the regulated market (regulierter Markt) of the Frankfurt Stock Exchange (Frankfurter Wertpapierbörse) with simultaneous admission to the sub- segment of the regulated market with additional post-admission obligations (Prime Standard) of the Frankfurt Stock Exchange (Frankfurter Wertpapierbörse) of 505,782,265 existing ordinary registered shares with no par value (Namensaktien ohne Nennbetrag) (existing share capital), each such share with a notional value of EUR 1.00 in the Company’s share capital and full dividend rights as of April 1, 2020 of Vantage Towers AG Düsseldorf, Germany Price Range: EUR 22.50 – EUR 29.00 International Securities Identification Number (ISIN): DE000A3H3LL2 German Securities Code (Wertpapierkennnummer, WKN): A3H 3LL Common Code: 230832161 Ticker Symbol: VTWR Joint Global Coordinators BofA Securities Morgan Stanley UBS Joint Bookrunners Barclays Berenberg BNP PARIBAS Deutsche Bank Goldman Sachs Jefferies TABLE OF CONTENTS Page I.
    [Show full text]
  • Ask the Regulators: CECL: Weighted-Average Remaining Maturity (WARM) Method (April 11, 2019)
    Ask the Regulators: CECL: Weighted-Average Remaining Maturity (WARM) Method (April 11, 2019) Jim Fuchs: Great. Thank you very much. Good afternoon, and welcome everybody to our Ask the Regulators session. Today we are coming to you from the Federal Reserve Board of Governors in Washington, DC. Our latest discussion on the current expected credit loss model is on the weighted average remaining at maturity methods. That is our primary focus today. My name is Jim Fuchs. I'm with the Federal Reserve Bank of St. Louis, and I will help moderate the call. I would specifically like to welcome all of our presenters. We are here in one room, together, to present and to answer your questions today. We have members of the Board of Governors and the Federal Reserve System, the FDIC, the OCC, SEC, CSBS, FASB, and the NCUA all in one room. So we've got a real cross-section, a lot of experts in one room, and I really look forward to getting not only into the content, but really taking your questions and addressing those. Now, before I ask the presenters to introduce themselves and we jump into the call, I would like to cover a few basic items in regards to how today's call is going to flow. So first off, every Ask the Regulators call is recorded. So the link that you use to register for the session today is how you can access the archive. I encourage you to do so. We understand that we are doing this live and in real time, but there's a lot of folks that you work with that probably will want to hear this.
    [Show full text]
  • Private Lending Presentation Kit
    Discover the Secrets of How to Fund Your Real Estate Deals with Private Lenders Discover the Secrets of How to Fund Your Real Estate Deals with Private Lenders -------------------------------------------------------- LEARN THE NEW SECRETS OF HOW TO FUND YOUR REAL ESTATE DEALS IN THE POST-BUBBLE REAL ESTATE MARKET WHERE TRADITIONAL LENDING SOURCES ARE GETTING VERY DIFFICULT TO OBTAIN -------------------------------------------------------- THIS REPORT HAS BEEN PREPARED BY: MICHEL LAUTENSACK PRIVATE LENDING PRESENTATION KIT Mike Lautensack Page 1 http://realestatewealthtoday.com/ Discover the Secrets of How to Fund Your Real Estate Deals with Private Lenders DISCLAIMER Mike Lautensack Page 2 http://realestatewealthtoday.com/ Discover the Secrets of How to Fund Your Real Estate Deals with Private Lenders ABOUT THE AUTHOR My name is Mike Lautensack and I started real estate investing in 1999 as a way to generate passive income and long-term wealth. Despite numerous mistakes and, what I like to refer to as "learning experiences", I started to have some real success by 2005 and made the leap to a full-time real estate investor. In 2007, I started a residential property management company called Del Val Property Management LLC which serves Philadelphia and the surrounding suburbs. Today, I continue to invest in real estate, grow and develop my property management company and now spend more and more time teaching and coaching real estate investors. I started out buying single family homes from Housing and Urban Development (“HUD”), Veterans; Administration (“VA”) and private sellers, using both bank money and my own personal funds to cover down payments. I quickly ran into a common problem when I ran out of cash and needed to find a better way to finance my real estate deals.
    [Show full text]
  • The Side Hustle Show
    THE SIDE HUSTLE SHOW with Nick Loper Episode 292 Free Houses: How to Build a $1 Million Real Estate Portfolio on the Side (w/ Austin Miller) http://www.sidehustlenation.com/292 Austin Miller got his start in real estate at 23 years old as a side hustle. Over the last 8 years, Austin has accumulated a property portfolio of $1.2 million and more importantly is cashflow positive to the tune of more than $3k a month. The kicker is that all his properties – more than a dozen homes – were free. Now Austin will be the first to tell you there’s no such thing as a free lunch, but “free houses” in this case means he didn’t have to come up with a traditional 20% down payment of his own money to buy them. How is this possible? • Austin finds a killer deal on a house that needs a lot of work. • He buys it with creative financing / other people’s money. • Either does the rehab work himself or hires contractors to do it. • Puts a tenant in the home. • Refinances with traditional bank financing to pay back the original funding source and lock in a lower interest rate. Because he buys the property at a good price he can do this because there is at least a 20% equity cushion after the rehab. The end game is a positive monthly cash flow from rental income, plus long-term wealth through having tenants pay off the homes. You can find out more by checking out Austin’s book: Free Houses: How To Build Your Real Estate Investment Portfolio With No Money.
    [Show full text]
  • Special Problems in Construction Loan
    SPECIAL PROBLEMS IN THE CONSTRUCTION LOAN WORKOUT by Stanley P. Sklar Bell, Boyd & Lloyd, LLC THE CONSTRUCTION PROCESS - BASICS FOR THE LENDER. Introduction. Too often, the construction lender treats the construction loan as it would treat any other commercial loan, without anyone with significant background in the vagaries of the construction industry, ready to "pull the plug" should the loan become "out of balance." No construction loan should be undertaken by a lender without a clear understanding of the industry, the participants, the legal effect of loan and non-loan related documents, and the customs usually encountered in construction relationships. The initial point to start is with the non-loan documents. For the reasons set forth below, every lender should review and approve the format of the construction contracts and subcontracts, since, in the event of a default by the owner or the general contractor, it may wish to utilize the same contractor (in the event of owner default) and subcontractors (in the event of a general contractor default) to complete the project. This avoids delays resulting from having to re-bid the entire project or have the contract renegotiated to the lender's detriment. The lender must ask itself, at a minimum, the following questions: 1. If changes in concept or plan occur, is it to be consulted to determine the adequacy of the loan balance for completion of the project? 2. In the event of construction delays (which appear to be endemic in the construction process), are there sufficient funds to pay for cost overruns customarily associated with delays? 3.
    [Show full text]