Construction lending funds against progress, and the conditions to each draw are where the discipline lies.

Closing conditions. Approved plans and specifications; a fixed price or guaranteed maximum price contract; the budget with contingency; permits; the contractor’s qualifications, bonding and insurance; the survey; the title policy with pending disbursement or mechanic’s lien coverage; and appraisal supporting the loan to value on completion.

Draw conditions. An application certified by the borrower and the architect; an inspection report from the lender’s consultant; lien waivers from the contractor and subcontractors through the prior draw; title continuation confirming no intervening liens; and confirmation that the loan remains in balance.

In balance. The undisbursed proceeds plus committed equity must be sufficient to complete. Where they are not, the borrower must deposit the difference before further funding — the provision that governs every troubled construction loan.

Retainage held on each draw and released on completion conditions.

Stored materials funded only with conditions on storage, insurance and title.

Completion guaranty from a creditworthy party, distinct from a payment guaranty.

Change orders requiring lender consent above thresholds.