Construction projects and loans obtained to finance them contain a number of articles that may seem trivial at first but can lead to serious complications and problems if not given proper care and planning. Stored materials are a perfect example, both from the lender and borrower perspective as well as when dealing with contractors.
What is Retainage?
Retainage is the withholding of a portion of the funds that are due to a contractor or subcontractor until the construction project is finished. It is meant to serve as a financial incentive and an assurance that the contractor will complete the project in a satisfactory manner.
Retainage has been a standard practice in construction projects in the U.S. for a full century. Nowadays, it is a requirement on practically all construction loans. On public construction projects, retainage is prescribed by state laws with fixed percentages and release conditions, while on private projects it is regulated by the terms of the contract.
In the realm of construction loans, retainage is a bit of a controversial term. It is often painted as a burden placed on the owners and contractors by the lending institution, even though it primarily serves to provide added assurance that the construction project will be completed. But, before we get ahead of ourselves, let’s first define what we’re talking about.
Choosing a loan for your construction project is one of the most important decisions you will make. It is a long-term agreement with sizeable financial implications, and it is essential that you find a reliable partner that will ensure a tidy, transparent and stress-free process. Financial terms are the main point of focus, but you must also consider the lender’s reputation and their ability to assist you through the various stages of the construction project.
There are numerous factors that make up the price of a condo: size, location, quality of construction, interior works and furnishings, and so on. Sometimes, all these elements combine to check all the required boxes and then some!
Topics: Real Estate
The demand for construction loans has seen a steady growth over the past few years, and recent analysis shows the trend continuing in 2018. According to a study conducted by the National Association of Home Builders, one of the nation’s leading resources for housing and remodeling insights, the volume of residential construction loans has seen an increase of 1.7% in the second quarter of 2018.
Security is a top priority at Contract Simply. In a world where fraud is rampant, we must constantly think about ways to keep ourselves, the companies we work for, and the customers we work with safe against criminal activity. These are some best practices that we should all follow to avoid becoming victims.
The United States is experiencing one of the most prolonged economic growth cycles on record. This cycle has led to an expansion of the commercial construction industry with growth expected through 2020. However, in addition to the “what goes up must come down” history of recessions, signs of a potential downturn are peeking their heads up from behind the cinder block. We’re beginning to see subtle signs of a slowdown, like the upward inching of interest rates and inflation, and not so subtle signs, like skyrocketing costs for materials and trade wars.