The following Construction guidance note provides comprehensive and up to date legal information covering:
On every construction project which requires external funding, the lender will appoint its own team of lawyers to draft and/or negotiate the various documents. Part of the long list of documents which need to be agreed are the development and construction documents. The lender will appoint its own construction lawyer to review the construction documents and to negotiate with the borrower's lawyer where it considers that changes are required. The lender's lawyer will want to see that the construction documents protect both the borrower's and the lender's interests, both in the short term (whilst construction takes place) and in the longer term (after construction). This Practice Note highlights the construction documents which a lender's lawyer will typically review and the issues which will be key from the lender’s perspective.
In this Practice Note, the term borrower is used to describe the party who is borrowing money from the lender. The borrower will generally be the developer or the employer under the building contract (and this Practice Note assumes that this is the case).
The construction documents which a lender's lawyer will review are:
the building contract between the borrower and the building contractor
a parent company guarantee provided by the parent company of the building contractor to the borrower (if required)
a performance bond (if required)
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