Atlanta Building News - Fall 2017 - 17

Builders Should Not Sign

LEG A L C ORN ER

CP Loan Agreements
Without Carefully
Reading Them
By Frank O. Brown, Jr., Weissman Attorneys at Law

As a condition to making a
construction-to-permanent loan
(CP Loan), many lenders now require
builders to sign CP Loan agreements
between lenders and residential
borrowers. For two main reasons,
builders should carefully read these
agreements before agreeing to sign
them. First, they generally include
provisions that significantly increase
a builder's responsibilities and
liabilities to the borrower from those in
underlying construction agreement and
limited warranty between the builder
and borrower. Second, they include
provisions that create potential liability
for the builder to the lender.
Some common provisions in CP
Loan agreements that should be of
concern to builders are the following:
* Provisions that broadly state that
the terms of the CP Loan agreement
prevail over conflicting terms in
the construction agreement and/
or warranty. These provisions,
which may seem like innocuous
boiler plate language and may not
be conspicuous in the agreement,
can drastically alter the terms

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construction of the home will
be completed.
These are but examples - most
CP Loan agreements that builders
are required to sign include many
other provisions that should
concern builders.
Builders faced with objectionable
CP Loan agreements should attempt
to have them revised. If a lender
is unwilling to revise its CP Loan
agreement, the builder might decline
to construct the house. Construction
agreements should also include
provisions clarifying that the builder
is not obligated to alter the terms of
that agreement or its warranty by
signing a CP Loan agreement with
conflicting terms.
Frank O. Brown, Jr., is a shareholder
at Weissman, P.C., where he serves as
General Counsel to the Greater Atlanta
Home Builders Association, Inc. and
represents developers, contractors,
and others on construction and
real estate disputes. For questions
or comments about this article,
e-mail frankb@weissman.law.

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RELIANCE
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of carefully drafted construction
agreements and limited warranties
between the builder and borrower.
Provisions that increase the
construction standards from those
in the construction agreement.
Provisions that alter the conditions
or schedule of payments to
the builder from those in the
construction agreement.
Provisions that impose a completion
deadline tied to the period of the
loan, which deadline is not included
in the construction agreement and
is not contemplated by the builder.
Provisions that require the builder
to make various warranties and
representations to the lender.
Provisions that require the builder
to carry greater insurance than
specified in the construction
agreement or by law.
Provisions that allow a lender-chosen
architect to make binding decisions
in the event of disputes between
the builder and borrower about the
meaning of plans or specifications.
Provisions that require the builder
to guarantee to the lender that

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Table of Contents for the Digital Edition of Atlanta Building News - Fall 2017

Letter From the President
Education and Events Calendar
Marketing to Millennials: Engage a Tech-Savvy Market by Planning Upfront
Virtual Tours Make Homes Memorable
Legal Corner
Education
Bookstore
55+ Housing Council
Sales and Marketing Council
Pwb Atlanta Chapter
Homeaid Atlanta
Earthcraft
Index to advertisers/advertisers.com
Atlanta Building News - Fall 2017 - intro
Atlanta Building News - Fall 2017 - ebelly1
Atlanta Building News - Fall 2017 - ebelly2
Atlanta Building News - Fall 2017 - cover1
Atlanta Building News - Fall 2017 - cover2
Atlanta Building News - Fall 2017 - 3
Atlanta Building News - Fall 2017 - 4
Atlanta Building News - Fall 2017 - 5
Atlanta Building News - Fall 2017 - 6
Atlanta Building News - Fall 2017 - Letter From the President
Atlanta Building News - Fall 2017 - 8
Atlanta Building News - Fall 2017 - 9
Atlanta Building News - Fall 2017 - Education and Events Calendar
Atlanta Building News - Fall 2017 - 11
Atlanta Building News - Fall 2017 - Marketing to Millennials: Engage a Tech-Savvy Market by Planning Upfront
Atlanta Building News - Fall 2017 - 13
Atlanta Building News - Fall 2017 - 14
Atlanta Building News - Fall 2017 - Virtual Tours Make Homes Memorable
Atlanta Building News - Fall 2017 - 16
Atlanta Building News - Fall 2017 - Legal Corner
Atlanta Building News - Fall 2017 - Education
Atlanta Building News - Fall 2017 - 19
Atlanta Building News - Fall 2017 - Bookstore
Atlanta Building News - Fall 2017 - 55+ Housing Council
Atlanta Building News - Fall 2017 - Sales and Marketing Council
Atlanta Building News - Fall 2017 - 23
Atlanta Building News - Fall 2017 - Pwb Atlanta Chapter
Atlanta Building News - Fall 2017 - 25
Atlanta Building News - Fall 2017 - Homeaid Atlanta
Atlanta Building News - Fall 2017 - 27
Atlanta Building News - Fall 2017 - Earthcraft
Atlanta Building News - Fall 2017 - 29
Atlanta Building News - Fall 2017 - Index to advertisers/advertisers.com
Atlanta Building News - Fall 2017 - cover3
Atlanta Building News - Fall 2017 - cover4
Atlanta Building News - Fall 2017 - outsert1
Atlanta Building News - Fall 2017 - outsert2
Atlanta Building News - Fall 2017 - outsert3
Atlanta Building News - Fall 2017 - outsert4
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