How a Project Finance Law Firm Reviews Delayed Loan Draws

Initial funding may require executed loan documents, project permits, and agreed security arrangements. Later draws may require updated progress reports, budgets, equity records, and certifications concerning specified defaults. Meeting closing conditions does not establish eligibility for every subsequent advance.

Identify the prescribed form, issuer, reporting period, and submission deadline. An engineer's report may establish progress but cannot replace a separate equity certificate. In commercial real estate finance, lenders may also require title updates showing the agreed collateral position.

Engineer certificates, payment applications, and inspections should describe consistent work quantities. Contractor approval under construction contracts does not necessarily fulfill the lender's independent certification requirements. Change orders may increase remaining costs. If the loan requires a loan-in-balance test, compare available debt and committed borrower funds against the updated cost to complete. A shortfall may prevent funding even when the requested work is finished.

Confirm that permits authorize the work covered by the draw and that their conditions have been met. Energy project finance may involve additional regulatory approvals. Where equity must precede debt, bank statements and contribution ledgers should show funds actually invested. A future funding promise may not satisfy that requirement.

Common records and deficiencies include:

A certificate of insurance describes coverage but does not alter the policy. Compare limits, dates, covered risks, and endorsements with the loan agreement. Mortgagee, loss payee, and additional insured designations carry different rights. Their suitability depends on the policy and required coverage.

California Civil Code §§ 8132 and 8134 prescribe forms for conditional and unconditional progress-payment waivers. Under § 8124, a conditional release requires evidence of payment, such as an endorsed check that has cleared or the claimant's written acknowledgment. An unconditional waiver may bind the signer even without payment. Check the claimant, through date, amount, and statutory exceptions, including retainage. A general contractor's waiver does not release separate claims of subcontractors or suppliers who have not provided effective waivers.

A contractor's waiver does not prove the lender perfected its security interests. For personal property governed by California law, Commercial Code § 9203 addresses attachment and § 9310 generally provides for filing, subject to exceptions. Control or possession may be relevant for certain assets. Sections 9301 and 9307 govern relevant choice-of-law questions, including the debtor's location. Real-property liens require separate recording and priority review.

An unsigned certificate may require resubmission; missing equity may require an actual contribution. An unresolved lien may call for payment records or an effective waiver. Refusal to fund does not itself prove a default, although the underlying problem might independently breach another obligation.

The agreement may allow supplemental evidence, an authorized waiver, or an amendment. Before responding, verify:

• The exact condition and stated reason for refusal.
• Any deadline to correct or resubmit documents.
• Who may approve a waiver and which advance it covers.
• Applicable notice and dispute procedures.

Approval of a prior draw does not automatically waive future conditions. A default cure period also need not extend a draw deadline. If compliant documents were submitted, review the lender's funding obligations and any contractual discretion standard.