Client Alert: Construction Completion Guaranty: Worthwhile for a Guarantor to Negotiate

ABOUT THIS CLIENT ALERT:

In a construction loan, the real property securing the loan does not achieve its underwritten value until construction is complete and the project is generating income. A principal concern for a construction lender is that the borrower will fail to complete construction of the project, leaving the lender to oversee a construction project with a partially-finished building. In order to minimize this risk, a lender may require a third-party completion guaranty-- which assures the lender of project completion in accordance with approved plans, on schedule, within budget, free of lien claims (i.e., fully paid), and in accordance with other provisions of the applicable loan documents. This client alert, written by Real Estate Practice Group member Chad Richman, provides helpful information that a guarantor should consider while negotiating.

Click below to read the alert.