Developments and funding for construction lawyers

Many of the large construction projects in the UK and abroad would probably not take place without the assistance of external funding. In the UK, it is mainly the large banks and other financial institutions, such as insurance companies, who lend money to developers and other construction clients, to enable them to carry out these projects. Large construction projects require cash up front to fund the construction work. A client will only get a return on its investment following completion and only if it chooses to sell the development. Most construction clients would be unable to fund this cash flow model from their own cash reserves and so external funding is required.

The process of funding a construction project involves the lender providing funds to the developer during the life of the project and the developer agreeing to repay the loan at an agreed rate of interest at an agreed future date. The terms and conditions of the arrangement are recorded in various documents, but from a construction lawyer's point of view, the most important is the funding or facility agreement.

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