Construction Monthly IO Payments
Under the Loan tab you can locate the data entry for Construction Monthly IO Payments and can toggle "From Interest Reserve" to "From Borrower's own funds" to "Combination of Borrower's own funds and Construction period interest reserve funds".
These payments are made directly to the Lender.
If you select "From Interest Reserve" references will pull into the Construction Loan Agreement in Section B.9:
Also in Exhibit C, Section 7:
From Borrower's Own Funds: Borrower must put cash in first to cover all interest payments out‑of‑pocket. As such any cost overruns or shortfalls must be funded by Borrower as the Lender will not advance Loan funds unless Borrower’s own funds are deposited and used as required.
If you select "From Borrower's Own Funds" references will appear in the Construction Loan Agreement in Section B.9. If at any time the undisbursed Loan proceeds plus any Borrower funds held by Lender are insufficient to complete the Project, Lender may require Borrower to deposit additional non‑interest‑bearing funds in the amount of the shortfall. Borrower must deposit such funds within ten (10) days of Lender’s written demand.
As well as in the Construction Loan Agreement in Exhibit C, Section 7:
Lastly, selecting the "Combination of Borrower's own funds and Construction period interest reserve funds" pulls in a Cash Collateral & Security Agreement and reference in the Loan Agreement. The Construction Loan requires the Borrower to deposit funds into a non‑interest‑bearing cash collateral account controlled exclusively by the Lender, which serves as additional security for the Loan and is used as the first source of payment for project shortfalls, interest obligations, lender fees, cost overruns, or other amounts due under the Loan Documents. To further secure repayment and performance, the Borrower grants the Lender broad, first‑priority security interests in the cash collateral, all loan proceeds, and extensive project-related collateral, including permits, contracts, plans, approvals, reserves, refunds, insurance proceeds, pledged personal property, and pledged equity interests
In the Construction Loan Agreement in Exhibit C, Section 7. Exhibit C, Section 7 governs how construction loan funds are disbursed and controlled during the construction period, and it places primary responsibility on the Borrower to document progress, control costs, and protect the Lender from risk.Lender has tight control over construction draws as money is released only after verified progress. The Borrower carries the burden of proof at every stage of construction.
Security Agreement And Fixture Filing
We include a Security Agreement And Fixture Filing to get the security interest on the fixtures, equipment, etc., and to provide the fixture filing notice of this personal property lien so as to avoid the need to record a second UCC on the county level to create the fixture filing. This is a standard feature for nearly every dot or mortgage
UCCs
We do include the UCCs for construction loans as a default feature to make sure to capture all real and personal property collateral to secure the loan obligation. However, there is no requirement to file the UCC and we are happy to manually delete it from your package if you like. We can also talk to our development team to remove that default feature for construction loans. would you like us to do that?
Assignment of Agreements, Permits, Licenses and Approvals
The Assignment of Agreements, Permits, Licenses and Approvals document is a standard feature to make sure that the lender can take over all construction agreements, permits to construct, licenses to manage the construction project, etc., if the lender forecloses and needs to own, complete and operate the construction project. Again, this is a standard protection used in all states.
Construction Guaranty Options
For the drop-down menu for the construction guaranty option, the user can select between three guaranty types for their construction loans -- a payment (only - no construction completion guaranty), a lien free completion guaranty (only - no repayment guaranty) or a combined full payment and lien free completion guaranty.
On the Construction Tab you can select to add Electronic Draw Language:
Toggeling "yes" will pull in the below language into your construction loan documents:
