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Construction Financing

There are a unique set of issues to be addressed in connection with the financing of the construction of a new building or facility.  These issues are in addition to the concerns connected with real estate development in general, such as choice of ownership entity, negotiation of the construction contract, loan structuring, acceptability and insurability of title, development and environmental regulations, and tax consequences. The construction borrower’s primary concern is making certain that the loan proceeds are available when needed as the construction progresses.  The construction lender has many concerns it wants addressed before the loan moneys are disbursed, including proof of the injection of the borrower’s equity, approval of the plans, specifications and construction contracts, certification as to the absence of environmental or wetlands concerns, assurances regarding the financial solvency of the borrower and the ultimate occupant of the facilities, freedom from existing or potential mechanic’s lien claims, and the lien priority of the construction mortgage.

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The attorneys in MacDonald Illig’s Real Estate and Banking & Finance Practice Groups represent both construction borrowers and lenders, both of whom regularly rely on our real estate finance team to prepare and negotiate real estate loan and collateral documentation.  Our attorneys are intimately familiar with all aspects of the construction lending process, from what terms and conditions are typical in the loan documentation to how to avoid or eliminate the threat of the filing of a mechanic’s lien claim.  As title insurance agents, we are able to provide the policies of title insurance and construction-related endorsements which lenders require. 

Whether drafting or reviewing complex construction loan documents, negotiating loan covenants, or reviewing the quality of a borrower’s title to an intended construction site, MacDonald Illig’s team of real estate lawyers has the depth and breadth of experience to understand the issues, anticipate the challenges, and deliver timely and trustworthy advice and counsel to construction lenders and borrowers.

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