Construction Loan Agreements

This practice note provides an overview of construction loans generally and provides guidance as to the key components of the construction loan agreement, such as representations and warranties, covenants, transfer restrictions, single purpose entity requirements, defaults and remedies, and non-recourse carve-out provisions. Real estate construction loans may be taken out by owners and investors of real estate to develop and construct buildings and other improvements on land or property acquired or leased by such owners and investors. In addition, construction loans may also be taken out by such owners and investors who desire to renovate and refurbish buildings and other improvements that are already owned and may be leased. Some real estate construction loans may be combined with loans obtained by such owners and investors to acquire or lease the real estate.