Construction Loan Reserve Fund Clause Samples
The Construction Loan Reserve Fund clause establishes a dedicated account or fund from which construction-related expenses are paid during the course of a project financed by a construction loan. Typically, the lender will allocate a portion of the loan proceeds into this reserve, and disbursements are made as construction progresses, often upon verification of completed work or submission of invoices. This clause ensures that funds are available to cover construction costs as they arise, thereby reducing the risk of project delays due to lack of financing and providing assurance to both the lender and borrower that the project can proceed as planned.
Construction Loan Reserve Fund. (a) Borrowers shall cause Mortgage Borrowers to comply with all of the terms and conditions set forth in Section 7.7 of the Mortgage Loan Agreement.
(b) In the event (i) Mortgage Lender waives the requirements of Mortgage Borrowers to maintain the Construction Loan Reserve Fund and the Construction Loan Reserve Account pursuant to the terms of Section 7.7 of the Mortgage Loan Agreement, or (ii) the Mortgage Loan has been repaid in full (without a prepayment of the Loan in full), Lender shall have the right to require Borrowers to establish and maintain an escrow that would operate in the same manner as the Construction Loan Reserve Fund and the Construction Loan Reserve Account in Section 7.7 of the Mortgage Loan Agreement and the provisions of Section 7.7 of the Mortgage Loan Agreement and all related definitions shall be incorporated herein by reference; provided, however, that all references to “Borrowers,” “Lender” and “Event of Default” therein shall be deemed references to Borrowers, Lender and Event of Default as defined herein.
Construction Loan Reserve Fund. (a) Borrowers shall cause Mortgage Borrowers to comply with all of the terms and conditions set forth in Section 7.7 of the Mortgage Loan Agreement.
(b) In the event (i)(A) Mortgage Lender waives the requirements of Mortgage Borrowers to maintain the Construction Loan Reserve Fund and the Construction Loan Reserve Account pursuant to the terms of Section 7.7 of the Mortgage Loan Agreement, (B) First Mezzanine Lender waives the requirements of First Mezzanine Borrowers to maintain the Construction Loan Reserve Fund and the Construction Loan Reserve Account pursuant to the terms of Section 7.7 of the First Mezzanine Loan Agreement and (C) Second Mezzanine Lender waives the requirements of Second Mezzanine Borrowers to maintain the Construction Loan Reserve Fund and the Construction Loan Reserve Account pursuant to the terms of Section 7.7 of the Second Mezzanine Loan Agreement; or (ii) the Mortgage Loan, the First Mezzanine Loan and the Second Mezzanine Loan have been repaid in full (without a prepayment of the Loan in full), Lender shall have the right to require Borrowers to establish and maintain an escrow that would operate in the same manner as the Construction Loan Reserve Fund and the Construction Loan Reserve Account in Section 7.7 of the Mortgage Loan Agreement and the provisions of Section 7.7 of the Mortgage Loan Agreement and all related definitions shall be incorporated herein by reference; provided, however, that all references to “Borrowers,” “Lender” and “Event of Default” therein shall be deemed references to Borrowers, Lender and Event of Default as defined herein.
Construction Loan Reserve Fund