Construction Loans

News & Analysis as of

Coming Soon... New Closing (no, Consummation...) Rules!

What?! We can’t call it a closing anymore? Under new federal regulations regarding the Truth in Lending Act (“TILA”) and the Real Estate Settlement Procedures Act (“RESPA”), the terminology for a “closing” or “settlement” is...more

Obtaining Title Insurance on Construction Loans: Avoiding Pitfalls Regarding Title Insurance Underwriting for Construction Loans

Avoiding Pitfalls in Construction Mortgages: Top 5 Tips for Title Insurance Underwriting - Construction mortgages pose significant risks for title insurers and require specific underwriting analysis. Avoid the...more

Seventh Circuit Limits Construction Lender’s Use of Title Insurance Policy to Cover Construction Liens Created by Lender’s Cutoff...

In a recent decision written by Judge Sykes, affirming a decision from the Western District of Wisconsin, in an issue governed by Wisconsin law, the Seventh Circuit ruled that a title insurer has no duty to indemnify a...more

Whom the Gods Would Destroy, They First Make Meet A Higher Regulatory Capital Burden

Or perhaps Prometheus had it right in its original form. “Whom the Gods would destroy they first make mad.” Look at what we are doing to construction lending in the name of our seemingly endless safety and soundness...more

Construction Contract Claims Against a Third-Party Lender? The Unforeseen Consequences of a Standard Practice

For those of us who commonly represent lenders, there is nothing more unsettling than hearing the words “course and pattern of conduct” or “dominion and control” or some variation of the same. Any suit where someone seeks to...more

The Construct - May 2015

In This Issue: - Construction Contract Claims Against a Third-Party Lender? The Unforeseen Consequences of a Standard Practice: For those of us who commonly represent lenders, there is nothing more unsettling...more

Successful Laches Defense Becoming Commonplace in Colorado

Boiler plate language in responsive pleadings often includes “Plaintiff’s claims are barred by the doctrine of laches” (or “The doctrine of laches bars Plaintiff’s claims” if you prefer the active voice). However, litigation...more

Does Non-Recourse Liability Still Exist?

Several years ago, the real estate financing market took an unexpected turn. In 2011, a court in Michigan rendered a decision which called into question whether a non-recourse loan was truly “non-recourse” (liability limited...more

7th Circuit Rules That Title Insurer Is Not Liable for Construction Liens Resulting From Lender’s Failure to Fund

The 7th Circuit has ruled that a lender is not insured by a title company for liens that arise after a construction loan became significantly out of balance and the lender stopped funding. In BB Syndication Services, Inc v....more

To Fund or Not to Fund – that is the Question

On Friday the 13th (3/13/2015), the Court of Appeals for the 7th Circuit decided that a title insurer did not have to provide coverage to its insured – the perfected, first lien lender – for priming mechanics’ liens that –...more

LIHTC exit strategies: Loan sale

Note: This post is part of a continuing series on the Credit Report Blog on the subject of workouts and bankruptcies involving low-income housing tax credit (LIHTC) projects....more

Seventh Circuit Court of Appeals: No Coverage under Title Insurance for Mechanics’ Liens Arising after Construction Lender Stops...

On March 12, 2015, the United States Court of Appeals for the Seventh Circuit entered an opinion interpreting “the most litigated provision in the standard-form title-insurance policy purchased by real-estate lenders to...more

Colorado Supreme Court: Construction Lender's Subsidiary Is Not a Subsequent Purchaser - Negligence Claim May Not Be Asserted...

Lenders and contractors may want to take additional precautions before they take title to a newly constructed home through foreclosure (or deed in lieu of foreclosure) following a recent decision by the Colorado Supreme...more

Bank of Delmarva v. South Shore Ventures, LLC, Del. Super., C.A. No. S13C-05-008 THG (Oct. 21, 2014)

The Superior Court granted the Bank of Delmarva’s (“Bank”) motion for summary judgment as to each of Defendant John E. O’Brien’s (“Defendant”) counterclaims. In 2005, Defendant along with South Shore Ventures, LLC (“Shore”)...more

When a Construction Lender Steps into the Shoes of the Developer, the Door is Open for Claims by the General Contractor

Thank you to my partner Garret Murai for giving me the opportunity to post again on his excellent California Construction Law Blog. I am the author/editor of the Money and Dirt Blog, where I focus on issues relating to...more

(US) High Volatility Commercial Real Estate: New Rules Have Effect on Cost and Availability of Mortgage Capital

On January 1, 2015, the final Basel III rules regarding regulatory capital for banks with greater than $500 million in assets and all savings and loan holding companies took effect. Basel III imposes new rules for high...more

Commercial Restructuring & Bankruptcy Alert - February 2015

In This Issue: - Minority Holders Gain Leverage Through Recent Interpretation of Trust Indenture Act - New Jersey Joins Number of States Creating Specialty Business Courts - Credit Bid Rights Bolstered in...more

Orrick's Financial Industry Week in Review

Capital Requirements (Capital Buffers and Macro-prudential Measures) (Amendment) Regulations 2015 published - On January 13, 2015, the Capital Requirements (Capital Buffers and Macro-prudential Measures) (Amendment)...more

CFPB Finalizes Minor Changes to “Know Before You Owe” Rules

On January 20, CFPB finalized two minor modifications to the “Know Before You Owe” mortgage disclosure rules. The changes, which were proposed in October 2014, address when consumers will receive updated disclosures after...more

The Status of Lien Waivers in Utah Remains Cloudy

On December 19, 2014, the Utah Supreme Court issued its opinion in Lane Myers Construction, LLC v. National City Bank, et al. 2014 UT 58 (UT 2014). In this case, a total of nine Utah jurists considered the question of whether...more

Midconstruction Refinancing: A Plunge Into The Void?

Construction loans typically do not get refinanced before a project is completed. A construction loan is short-term in nature and both the lender and its customer expect that they will stay on the project until the project is...more

Act 117 Brings Significant Changes to Mechanic’s Lien Law

Over the summer, Governor Corbett signed into law Act 117 of 2014 (the “Act”), which brings two significant changes for contractors to the Mechanic’s Lien Law of 1963. First, subcontractors are now prevented from filing...more

Guarantor Waivers Narrowed

A general waiver by a guarantor of “all defenses” does not actually waive “all defenses.” California Bank & Trust v. Del Ponti, — Cal.Rptr.3d —, 2014 WL 6908141 (Cal.App. 4 Dist.). That was the holding in a recent opinion...more

Equitable Subordination: Construction Lenders Beware

Atlantic Builders Group, Inc. v. Old Line Bank (In re Prince Frederick Inv., LLC), 516 B.R. 778 (Bankr. D. Md. 2014) – A construction contractor contended that the claim of the debtor’s construction lender should be...more

General Contractors Beware of Subordination Clauses

In California, a general contractor can usually rest assured that in the event of nonpayment, it can rely upon the remedy of a mechanics lien, which remedy is, in fact, even a constitutional right....more

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