I have just received a construction loan offer, the lender require “a written acknowledgement from the builder acknowledging that they understand progress payments will be made in line with valuer recommendations and not necessarily follow the progress draw schedule as outlined in the Building Contract”. Is this a common request in construction loan? What if the valuation is less than the builder’s invoice amount? Thanks
Bank doesn’t want to get caught on the hop for a Builder that overclaims and scarpers. With our bigger $100m+ project Banks assign a QS to verify our Progress Claims.
Bank progress claims don't align with the Fair Trading stages - this should have been sorted out pre-contract.
It could be a couple of things, the builder may have changed the percentages for the draw downs in the contract and the Bank does not like this and will generally request they be put back to the recommended amounts or they can do what they have done which is set their own terms and want confirmation from the builder that they will agree to it. Is this for a standard new build construction or a renovation? Are the percentages different than normal?
Not unusual, but if you have a formal loan offer the val is done and dusted. Builders will often try for what are in effect advance progress payment components - ie more than the actual value of the work done as determined by the valuer. ta rolf
