Whenever taking on a large construction project, it will be necessary to negotiate a draw schedule with the lender. A draw schedule takes the full amount of the construction loan and splits it up into multiple payments that are made as work is completed. This helps to limit the risk that the bank takes on, while also ensuring the construction company has the money they need, when it is needed.
In most projects, the draw requests are completed without any significant issues, and the project is able to flow along efficiently. In some cases, however, disputes can occur between the construction company and the bank. These disputes can cause delays and other costly problems, which should be avoided whenever possible. The following tips can help you to avoid draw request disputes and keep your construction project moving forward:
Start with a Realistic Agreement
The best thing you can do to avoid draw request disputes is to start with a realistic agreement. Some construction companies are tempted to just agree to a draw request schedule to get the financing settled, without really taking the time to determine whether it is going to work for their project. This is really setting themselves up for a dispute down the road. Negotiating a good agreement from the beginning may take a little extra time, but it will be well worth it in the end.
If you think that the draw schedule is not going to work, or you need some type of modification, it is a good idea to begin communicating with the financial institution as soon as possible. Lenders have a vested interest in seeing your projects succeed, so if they are able, they will likely work with you. When you fail to communicate, however, it makes it much more difficult for the lenders to be willing, or able, to make the necessary adjustments.
Look at Compromise Options
In some cases, it may be in your best interest to compromise in certain areas in order to avoid a more serious dispute. If you can adjust your schedule to meet the demands of the lenders, or work with them to find a solution that makes everyone happy, that’s preferable. Each situation is unique, so don’t be afraid to think outside the box when trying to come up with solutions to problems.
Get Legal Help
While it may seem counterproductive, getting an attorney is often one of the best ways to avoid serious conflicts. An attorney can look at a situation dispassionately, and provide advice that is objective based only on the facts. Experienced attorneys also have ideas that you may not have considered, which could resolve the conflict quite amicably. If you’re facing any type of draw request dispute, please call Florida Construction Law Group to get the legal help you need.