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What to Know When Negotiating Construction Loans
In big news for the South Florida real estate market, real estate heavyweights Related Group and Dezer Development secured a $307 million construction loan, which will be used to finance a new 92-unit oceanfront development. The real estate developers secured the loan from an affiliate of New York’s Apollo Global Management.
Rosewood Residences, as the project will be called, is nearly 50 percent presold. The developers secured city approval to build the project shortly after receiving the loan.
For commercial construction development projects such as this in South Florida, one of the crucial steps is negotiating and obtaining the construction loan, whether from a bank or a private lender. An experienced construction project financing attorney can assist you in negotiating a construction loan to finance your development project.
What Are Some Important Construction Loan Documents?
Florida construction loan documents are similar to those in a mortgage loan but may include documents specific to the commercial construction, including:
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Construction Loan Agreement
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Guaranty Agreement (Construction Obligations)
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Certificates of consent for the general contractor, engineers, and architects
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Assignment of Permits
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Developer Agreement
What Terms Should You Include When Negotiating Construction Loan Financing?
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Push for flexibility: As a borrower, you should attempt to negotiate the ability to amend the plan as needed.
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Include a force majeure term: This should be a broad provision stating that in the event of unforeseeable natural or manmade events you are permitted delays in construction without affecting the loan terms.
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Include the right to cure: It is helpful to include terms that allow you to fix any defaults that may occur related to the construction or any disputes with contractors.
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Limits on the lender: Include a section that limits the ability of the lender to take over the construction project if things go south.
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Protect your collateral: Ensure that the collateral securing the loan is described and valued correctly.
What Negotiating Strategies Can Help?
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Know your business inside and out before you ask for a loan, and come prepared with at least a business and marketing plan.
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Do your research on the most appropriate sources of lending capital for your project, be they banks or private lenders.
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Establish trust with the lender by showing your track record of success.
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Have an experienced attorney who knows how to navigate the law to obtain the most favorable terms for you.
Contact a Broward County, FL Construction Loan Attorney
At The Elliot Legal Group, P.A. we understand the fast-paced nature of Florida’s international commercial real estate market. Our Oakland Park, FL real estate construction loan attorney can represent you while negotiating your construction loan. We are committed to providing excellent service for our clients. Call us at 754-332-2101 to speak to our experienced commercial loan attorney today.
