Embarking on a construction project is an exciting venture, but it comes with a variety of processes that can trip up even the most seasoned developers. Read this blog and reach out to our seasoned Florida construction attorneys to learn about the steps developers should follow from loan commitment to project closing.
Critical Steps for Developers to Follow
Review and Understand Your Loan Commitment Terms
First and foremost, once you receive a loan commitment, review it meticulously. Ensure you understand every clause, condition, and obligation. Pay special attention to interest rates, repayment terms, and any contingencies or deadlines stipulated. Consulting with a knowledgeable attorney is wise, as any misunderstanding or oversight could lead to serious financial and legal consequences down the line. While reviewing, ask questions, get clarity on ambiguous terms, and document everything.
Meet Pre-Closing Conditions
Loan commitments often come with specific pre-closing conditions that must be fulfilled. These may include providing updated financial statements, finalizing construction contracts, or obtaining various insurance policies. Work closely with your legal team and financial advisors to ensure each condition is met timely. Developers should prepare by assembling necessary documentation and scheduling relevant inspections well in advance. Delays here could stall the entire project.
Obtain Necessary Permits and Approvals
In Florida, the permitting process can be particularly complex due to zoning laws, environmental regulations, and municipal codes. Before project closing, make sure to acquire all necessary permits. This includes building permits, environmental clearances, and zoning approvals. Staying compliant with local and state laws is crucial to avoiding project delays or legal complications later. As you navigate this, keep lines of communication open with your construction team and regulatory agencies.
Lock Down Construction Contracts
Securing well-drafted construction contracts is a critical step in the process. These contracts outline the scope of work, responsibilities, and timelines. Working with an experienced construction attorney can help ensure these contracts are clear, enforceable, and protective of your interests. Any ambiguity in the contract could result in disputes that stall the project. Don’t overlook the importance of detailed timelines and payment schedules, which set expectations for everyone involved.
Conduct a Comprehensive Due Diligence Review
Due diligence involves verifying that all project details align correctly and ensuring there are no hidden issues. This includes reviewing property surveys, soil tests, and title searches. It also means checking that there are no outstanding liens or legal disputes attached to the property. Developers should collaborate closely with engineers, architects, and legal professionals during this phase. A thorough due diligence review minimizes the risk of unpleasant surprises once construction begins.
Coordinate Title Insurance and Closing Documents
Obtaining title insurance protects against unforeseen claims on the property and ensures your investment is secure. This step often requires coordinating with a title company and ensuring all closing documents are in order. Your attorney should review these documents for accuracy. Prepare to sign a variety of documents, from the loan agreement to lien waivers, and make sure all paperwork is properly executed.
Finalize the Closing Process
Finally, as you approach the project closing, ensure all financial transactions are aligned and ready for disbursement. This is when the funds are released, and the construction officially begins. Double-check that all conditions of the loan have been satisfied and that the closing statement accurately reflects all expenses. At this stage, your attorney and financial advisors should be present to iron out any last-minute issues.
