Assignment by a funder in construction projects
Produced in partnership with Maxwell Winward
Assignment by a funder in construction projects

The following Construction guidance note Produced in partnership with Maxwell Winward provides comprehensive and up to date legal information covering:

  • Assignment by a funder in construction projects
  • Why does a bank wish to take an assignment?
  • What form does the assignment by a funder take?
  • Consent and restrictions under construction documents

Banks and other funders frequently take an assignment of the benefit of the suite of construction documents in respect of a development as an additional part of a security package for their loan to finance the development. See Practice Notes: Assignment in construction contracts and Legal and equitable assignment in construction contracts. This Practice Note looks at the different methods used for such an assignment and some of the risks. In this note, for brevity, all funders are referred to as ‘banks’.

Why does a bank wish to take an assignment?

It is worth noting that an assignment of construction documents is only one of a number of security measures that a bank will have. It will also probably register a charge against the employer itself and will also benefit from a suite of collateral warranties from the construction parties (contractor, professional consultants and key sub-contractors). These warranties will be likely to contain step-in rights so that the bank can assume the position of the employer in the event of the employer defaulting on its financial obligations during the course of the works. See Practice Notes: Assignment of a collateral warranty and Step-in rights in a collateral warranty.

See Practice Note: Lender protection on construction projects—introductory guide for more on the steps that a bank will usually take in relation to