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Designed to Expose: Beware Lender Certificates

August 20, 2018 — Jacob Goodelman - Gordon & Rees Construction Law Blog
Danny the Developer wishes to build Greenacre, a large residential and retail condominium complex in downtown Boston. However, Danny’s lender – the Bank of Barbara – will not lend Danny the money to develop the complex unless Danny’s architect signs a lender certificate. Danny presents the lender certificate to Allie the Architect, the certificate is relatively short and simple, it states:

“Allie the Architect prepared plans and specifications relating to Greenacre. Allie the Architect certifies that the plans are in accordance with all applicable zoning, building, housing and other laws, ordinances, regulations including but not limited to the Federal Fair Housing Act, the Uniform Federal Accessibility Standards, and the Americans with Disability Act. The Plans do not encroach over, across or upon any such easements, rights-of-way, or subsurface rights and the like. Allie further certifies that the load bearing capacity of the soil is adequate to support the plans. The Bank of Barbara shall rely upon Allie the Architects certification in loaning money to Danny the Developer for Greenacre.”

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Reprinted courtesy of Jacob Goodelman, Gordon Rees Scully Mansukhani
Mr. Goodelman may be contacted at jgoodelman@grsm.com