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- Title
GREENBACKS FOR BUILDING GREEN: DOES A LENDER FOR SUSTAINABLE CONSTRUCTION PROJECTS NEED TO MAKE ADJUSTMENTS TO ITS CURRENT PRACTICES?
- Authors
PRUM, DARREN A.
- Abstract
In the development of real property, the availability of money to secure construction resources is an important factor for success. The construction loan plays a central role in providing funds to erect a building on real property, but a lender faces numerous exposures that might result in a loss. In evaluating a project to determine its viability and to uncover any exposure it might present, a lender will conduct an extensive underwriting review process. It will then use mitigation techniques through the construction loan agreement and disbursement requirements to reduce the perceived risks' to an acceptable business level, for those developments deemed worthy. With the recent transition into more sustainable construction practices, many lenders will fail to recognize that the construction of a green building differs from that of a traditional one. The meaningful distinctions between these different methods merit an evaluation of their own to properly assess and manage the risk associated with a construction loan for a green building.' Accordingly, this article seeks to address the unique issues associated with a construction loan for a green building and provide solutions that can mitigate the exposures presented to acceptable levels.
- Subjects
SUSTAINABLE construction; LEGAL status of moneylenders; CONSTRUCTION loans; SUSTAINABLE building design &; construction; CONSTRUCTION costs; LOAN agreements; REAL estate development financing; ENCUMBRANCES (Law); ECONOMICS
- Publication
Environmental Law (Lewis & Clark Law School), 2013, Vol 43, Issue 3, p415
- ISSN
2831-9028
- Publication type
Article