Construction Loan Agreement (Long form - Comprehensive)
Identification of Parties. THIS AGREEMENT is made [date] by and between [name] (Borrower) and [name], a [state] banking corporation, with a principal place of business in [address](mortgagee).
1. Note. Borrower has given to Mortgagee contemporaneously herewith a promissory note for ---------- dollars ($----------) secured by a mortgage of real estate with all the buildings and appurtenances thereon situated at and near [address or description of premises] in [state] and being more particularly described in the mortgage executed by Borrower and recorded in the [shire] Registry of Deeds.
2. Consideration. In consideration for periodic advances of the proceeds of the promissory note in accordance with the terms of this Agreement, Borrower agrees as follows:
a. Proceed With Construction. To proceed immediately with the construction of the buildings on the land as well as other improvements according to the specifications, drawings, and plans of [name] (Architect), dated [date], all to be in accordance with appropriate building laws, ordinances, and restrictions, if any; and to continue the construction without undue delay to completion in accordance with the construction contract therefor.
[Alternative Paragraph]
a. Proceed With Construction. Borrower expressly covenants to construct on the premises and pay for the building described below in accordance with the plans and specifications approved by Mortgagee. Before Mortgagee makes the first advance, Borrower shall file the plans and specifications with all governmental authorities having jurisdiction and shall obtain all necessary approvals of the plans and specifications and all necessary building permits. The building to be constructed by Borrower shall be [brief description of building, e.g., use, height, square metres]. The plans and specifications for the building that have been approved by Mortgagee and are to be used by Borrower are the following: [description].
b. Keep Premises Free of Caveats or other Liens. To keep the premises, building, and improvements free from any caveat, other liens, and claims whether inferior or superior to the mortgage. A discharge of the mortgage and taking of a new mortgage in substitution shall not release or diminish this obligation; to keep all buildings on the premises in good repair and insured against loss by fire and other casualty to an amount and by such companies as shall be satisfactory to Mortgagee, and maintain such insurance for the benefit of and first payable in case of loss to Mortgagee; in case of insured loss, Mortgagee, at Mortgagee's option, may credit all or part of the insurance proceeds to the outstanding debt of Borrower, or may use all or part of the proceeds for rebuilding or repairing the loss or damage.
c. Furnish Bonds, Releases, Etc. To furnish all bonds and waivers of liens or claims on the premises, buildings, or improvements and any surveys, releases, and assurances that Mortgagee may deem necessary or may request for Mortgagee's protection, including surety or other bonds and assurances of performance and payment by Borrower and any contractors; also, to pay for additional engineering or architectural studies and reports that Mortgagee in Mortgagee's judgment may require as a result of Mortgagee's periodic inspections of the construction project to provide assurance that the construction is proceeding in accordance with the plans and specifications, sound engineering and architectural principles, and commonly accepted safety standards.
d. Pay All Indebtedness. To pay all indebtedness and comply with all terms and conditions set forth in the promissory note, mortgage, and this Agreement, and set forth in any security agreement pertaining to personal property of Borrower that Mortgagee may require for Mortgagee's protection.
e. Use Borrower's Funds. To invest or expend such of Borrower's own funds in the project and construction as Mortgagee may require before Mortgagee begins to make advances of the proceeds of the promissory note, and to pay on demand to Mortgagee added construction funds should additional construction and related costs beyond original estimates be determined necessary by Mortgagee to complete the construction project.
f. Proof of Payment to Contractors; Contracts, Etc. To deliver to Mortgagee, upon Mortgagee's request, executed copies of all construction contracts and subcontracts, change orders, invoices, bonds, estimates with respect to the construction, and, also upon Mortgagee's request, to give sworn statements setting forth names of contractors, subcontractors, and all others furnishing labour, materials, and services to the construction, including amounts due, amounts paid, and total contract prices. Borrower agrees not to change or alter, without Mortgagee's prior written consent, any contract, specification, drawing, or construction detail.
g. Inspection of Premises. To allow Mortgagee, or Mortgagee's agents and employees, to inspect the construction project at all reasonable times. Borrower acknowledges the inspections are for Mortgagee's sole benefit as lender.
h. Payment of Fees, Title Reports, Etc. To pay at the time of the execution of this Agreement or, at the option of Mortgagee, at any time or times thereafter specified by Mortgagee all fees and charges agreed to be paid including the fees, if any, for procuring and making this loan and the charges for the examination of title to the premises, surveys, continuations of surveys and title reports, inspections, and drawing of papers, and to also pay recording and filing fees, mortgage-recording tax, and architects', engineers', and building loan service fees.
3. Mortgagee's Advances. Mortgagee agrees to lend and advance to Borrower the principal sum of the promissory note subject to the covenants and provisions in this Agreement in monthly installments as construction progresses in accordance with the specifications, drawings, and plans upon satisfactory evidence to Mortgagee of stages of completion as certified by an architect or other qualified person agreeable to Mortgagee. The advances are to be made within [number] days after such evidence is received, and each advance shall be equivalent to ---------- percent (----------%) of the construction costs then approved by Mortgagee after Mortgagee's examination of the stage of completion. The remaining ---------- percent (----------%) of the loan shall be withheld pending final completion, similarly certified, and release or termination of all caveats, other lien's against the premises superior to Mortgagee's lien. The monthly advances and other advances or proceeds of the loan may be made at Mortgagee's discretion directly to Borrower, or to any contractor, subcontractor, materialman, or other person or entity providing labour, services, or materials, or jointly to two or more of them.
[Alternative Paragraph]
3. Mortgagee's Advances. The principal sum will be advanced from time to time, upon not less than [number] days' advance written request to Mortgagee in each instance during the course of construction of the building. Each request for an advance shall be accompanied by a certificate of an architect satisfactory to Mortgagee that shall certify (a) that all work usually done at the stage of construction when the request is made has been done in a good and workmanlike manner, that all materials and fixtures usually installed and furnished at that stage of construction have been furnished and installed, and that all construction materials and fixtures then incorporated in the building are in strict conformity with the plans and specifications; and (b) the total amount then and theretofore payable to [name] (Contractor) under contract dated [date] between Borrower and Contractor. Each advance shall be made in an amount equal to the total amount referred to in Clause (b) of the immediately preceding sentence less the sums theretofore advanced by Mortgagee hereunder. Whenever Mortgagee shall require, Borrower shall furnish to Mortgagee, as a condition precedent to the making of any said advance, a receipt or certificate signed by Contractor confirming Architect's certificate tendered in connection with the advance. The final advance on account on the loan shall be made upon completion of the building.
Advances shall not be made more frequently than monthly, and no advance, interim or final, shall be due unless, in the judgment of Mortgagee, all work usually done at the stage of construction when the advance is requested has been done in a good and workmanlike manner, and all materials and fixtures usually installed and furnished at that stage of construction have been furnished and installed, and unless all construction, materials, and fixtures are in strict conformity with the plans and specifications. However, Mortgagee may advance part or the whole of any advance before it becomes due if Mortgagee believes it advisable to do so, and these advances or payments shall be deemed to have been made in pursuance of this Agreement and not to be modifications of it. The making of any advance, or any part of an advance, shall not be deemed an approval or acceptance by Mortgagee of the work theretofore done. Any advance or any part or parts thereof may be postponed or deferred by mutual consent of Borrower and Mortgagee, and any postponement shall be deemed to be in pursuance of this Agreement and not in modification of it. If the building is not completed by [date], then Mortgagee shall not be obligated to make any further advances. Mortgagee shall not be obligated to make any advance, interim or final, if and as long as there shall be filed of record against the land, premises or property, and remain undischarged, any caveat or other lien, notice of refusal, stop notice, lien claim, or similar lien or notice.
4. Binding Effect. All the provisions of this Agreement shall be binding upon and inure to the benefit of Borrower's and Mortgagee's heirs, successors, and assigns except as may otherwise be provided.
5. Receipts and Statements. Upon the making of each advance, and as a condition to making the advance, Borrower will: (a) execute under Borrower's corporate seal a dated receipt for the amount advanced, which receipt shall be indorsed upon or attached to the note; and (b) deliver to Mortgagee any written verified statements of Borrower and proofs of payment to Contractor, subcontractors, laborers, and materialmen, as Mortgagee may demand.
All advances are to be made at [address] or at such other place reasonably convenient to the parties as Mortgagee shall designate.
6. Sale, Bankruptcy, Etc. This Agreement is primarily between Borrower and Mortgagee, and if at any time before the entire loan has been advanced the interest of Borrower in the mortgaged premises shall pass from Borrower, voluntarily or involuntarily, or should Borrower be adjudicated bankrupt or insolvent, or if any court action affecting any part of the loan remaining to be advanced is pending, or if the building or improvements on the premises shall be substantially damaged in any manner, or if Borrower shall have violated or failed to perform any of the provisions in this Agreement, the note, mortgage, or any security agreement, as to personal property, or shall fail to perform or fail to cause to be performed the terms and conditions of the loan commitment letter(s) or agreement(s), if any, pursuant to which this Construction Loan Agreement is executed, Mortgagee shall not...
(Excerpt)
Premium Contract: Ready to fill-in and print. Instant download only $29.95!
How to prepare legal forms (click 
Premium Contract: Ready to fill-in and print. Instant download only $29.95!