construction lending review services
SAR+ has developed a comprehensive scope of services and reporting package designed to assist Lenders in evaluating a construction loan and subsequently, to provide monthly, third party review of the contractor’s requisitions including verification of work in place. SAR+ has first hand experience with many of the major local and national firms including Construction Management, Environmental, Engineering, Architectural, and M/E/P firms. This translates into an ability to immediately establish relationships and quickly assess construction planning activities and progress. In addition, we bring value by actively ensuring that the Lender’s business and financial objectives are met through the sharing of our expertise and recommended problem solving actions.
SAR+ can provide the following services to assist the Lender in evaluating or administering a construction loan:
Pre-Construction Analysis
- Review and comment on documents provided by the Borrower (as may be required by the Lender) such as, ALTA/ACSM Land Title Survey Plan, legal zoning opinions, utility connection letters, developer’s pro-forma, construction budget and schedule, geo-technical reports, and environmental reports;
- Review construction documents (plans and written plans and specifications) and comment regarding thoroughness of preparation for purposes of pricing and construction and to identify possible areas of exposure;
- Review Owner’s construction budget and proposed schedule and comment on reasonableness of each in relation to the current, local construction climate;
- Manage or review the contractor bid process, bid proposals, and proposed contract documents;
- Review Contractor’s qualifications and construction contract for General Contractor and, at Lender’s option, sub-contractor and architect’s contracts;
- Prepare a comprehensive written pre-construction report incorporating the above and providing a description of the project, project team members, and summary of the scope of work to be undertaken.
Monthly Lending Review Services
- Visit the project on a regular basis (weekly, bi-weekly or monthly depending upon Lender’s requirements) to attend the Owner-Architect-Contractor job meeting and tour the jobsite to monitor project status in relation to the most current requisition;
- Review construction status during walk-through with the Construction Manager’s representative and the Project Architect to document any issues of concern regarding cost overruns, schedule delays, or quality issues;
- Review submissions and reports of Owner’s independent materials testing laboratory to ensure quality control and document any issues of non-compliance with specifications;
- At Lenders option, review environmental remediation plans and comment on progress in the field;
- Provide an updated written description of the project status;
- Review construction schedule status, compare it with the original submitted project schedule, comment on any schedule variances and highlight concerns;
- Confirm any requisitioned stored on-site materials and, if requested by Lender, any materials stored off-site;
- Review the pencil copy of Construction Manager’s Application for Payment and recommend changes based on field observation of percentage of work completed;
- Review Construction Manager’s Application for Payment and executed change orders and comment on current completion percentage;
- Track receipt of Construction Manager’s and Subcontractors’ lien waivers;
- Track Construction Manager’s pending change orders and executed change orders summarizing the totals to date, describing the change and commenting on cost and schedule impacts;
- Comment on balances to complete remaining work on Application for Payment and indicate whether sufficient monies will be available to complete the project as specified by the contract documents;
- Provide a written recommendation for funding of the requisition;
- Prepare a written report incorporating above and providing captioned color photographs to identify the project in a general nature and to illustrate specific concerns.
