Chicago Title NCS Chicago: SYFCREC 2021

Surviving Your First Commercial Real Estate Closing I Mechanic’s Lien Risks & Construction Escrow Construction Escrow Benefits o Controlled payments to the contractors o Collection of necessary documentation in the event of a sale or refinance o One shot examination vs. construction escrow o More likely to have required documentation to provide coverage following project completion o Obtaining waivers from parties as they are performing work 23 Surviving Your First Commercial Real Estate Closing I Mechanic’s Lien Risks & Construction Escrow Construction Loan Escrow Agreement Variations o Agreement may be modified to pay GC directly, subject to Title Company review and approval o Requires review of GC financials and indemnity o Consider the risk that the Owner may need to pay twice for the same work o When the GC is paid directly, the GC will submit its waiver and sworn statement for the current draw, and the subcontractor / supplier waivers are provided one draw in arrears o Outside interim o Funds do not flow through Title Company o Title Company receives same draw documentation as a Construction Loan Escrow o Once Title Company confirms that the documentation is in good form and that title is clear, Lender will fund to the Contractor / Owner outside of escrow o Upon confirmation that the Lender has funded and the amount of disbursement, the endorsement is issued 24 23 24 85