Appraisal: An evaluation of the property to determine its value.

Audit: An independent review of the funds control account to ensure compliance with loan agreement terms and appropriate use of funds.

Bid: A written proposal submitted by a contractor to compete for a construction project.

Blueprint: A detailed plan or drawing that outlines the design and specifications of a construction project.

Builder: The party responsible for constructing or renovating the property, typically hired by the borrower.

Building code: A set of regulations and standards that govern the construction and safety of buildings.

Building permit: A permit required for construction or renovation of a building, typically issued by the local building department.

Certificate of occupancy: A document issued by the local government stating that the property meets all building codes and is safe for occupancy.

Chain of title: The ownership history of a property, including all transfers of ownership and any liens or other legal issues affecting the title.

Change order process: A process used to document and approve any changes to the original construction plan or scope of work.

Change order: A written document that modifies the original construction plans, typically used to add or remove features or materials.

Change orders: Modifications to the original construction plans that may affect the amount or timing of disbursements from the funds control account.

Closing: The final stage of a real estate transaction in which the seller transfers ownership of the property to the buyer and the buyer pays the purchase price.

Collateral: Property or assets used to secure a loan, which may be seized by the lender in the event of default.

Completion bond: A type of surety bond that guarantees the project will be completed regardless of the financial situation of the contractor.

Completion date: The date by which the construction project must be completed according to the contract or agreement.

Completion guarantee: A guarantee provided by the contractor or subcontractor that the construction project will be completed to the satisfaction of the lender and in compliance with all building codes and regulations.

Conditional lien waiver: A lien waiver that is conditioned on the receipt of payment for work performed by the contractor or supplier.

Conditional use permit: A permit that allows for a use that is not typically allowed in a particular zoning district, subject to certain conditions and restrictions.

Construction loan: A loan provided to finance the construction of a new building or the renovation of an existing one.

Construction permit: A legal document granted by a government agency that allows construction to begin or continue.

Construction: The process of building or renovating a structure, typically involving the use of materials, equipment, and labor.

Contingency reserve: Funds set aside in a construction loan to cover unexpected costs or expenses that may arise during construction.

Contractor qualification process: A process used to evaluate the qualifications and experience of the contractor hired to complete the construction project.

Contractor: A person or company hired to complete a construction project, typically responsible for managing the project and overseeing subcontractors.

Deed: A legal document that transfers ownership of a property from one party to another.

Demolition permit: A permit required for demolition of a building or structure to ensure safety and compliance with environmental regulations.

Disbursement: The release of funds from the construction loan to the borrower or contractor based on the draw schedule and payment request.

Dispute resolution: A process for resolving any disputes that may arise between the payee and payor regarding disbursement from the funds control account.

Down date endorsement: An endorsement to an existing title insurance policy that updates the coverage to a later date.

Down payment: A portion of the purchase price paid by the borrower at the beginning of the construction loan.

Draw inspections: A process used to assess the progress of a construction project and ensure that funds are being disbursed appropriately.

Draw request: A request made by the borrower or contractor for a payment from the construction loan based on the current stage of the project.

Draw schedule: A schedule outlining the stages of construction and the corresponding draw payments from the construction loan.

Draw: A payment made to a contractor or borrower from a construction loan, typically after completion of a certain stage of construction.

Easement: A legal right to use a portion of another person’s property for a specific purpose, such as access to a public road.

Effective date: The date on which a title insurance policy becomes effective, typically the date of closing on the purchase or refinance of the property.

Electrical permit: A permit required for electrical work to ensure compliance with electrical codes and safety standards.

Encumbrance: Any legal claim or liability against a property, such as a lien or mortgage.

Endorsement: A document added to a title insurance policy that modifies or expands the coverage of the policy.

Environmental risk assessment: An evaluation of the environmental risks associated with the property being financed, including the potential for contamination or other hazards.

Escrow account: A type of account in which funds are held by a third-party intermediary until specific conditions are met, such as completion of the construction project.

Final lien waiver: A lien waiver that releases all lien rights of a contractor or supplier after the work on the project is completed and final payment is received.

Funds control: A process in which a third-party intermediary manages and disburses funds for a construction project.

General contractor: The primary contractor responsible for managing the construction project and hiring subcontractors.

Grading permit: A permit required for grading or excavation work to ensure proper drainage and erosion control.

Inspection process: A process used to ensure that the construction project is proceeding according to plan and that the work is being done properly.

Inspection: A review of the construction project by a building inspector to ensure compliance with building codes and regulations.

Inspection: A review of the construction project by a building inspector to ensure compliance with building codes and regulations.

Inspections: Regular reviews of the construction project by the funds control account to verify the completion of work and determine appropriate payment.

Inspector: A third-party professional hired to conduct draw inspections and report on the progress of the construction project.

Interest reserve: Funds set aside in a construction loan to cover interest payments during the construction phase.

Joint check agreement: An agreement between a contractor and a subcontractor that specifies that a payment for the subcontractor’s work will be made jointly to both the subcontractor and a supplier to ensure that the supplier is paid for materials.

Lender’s policy: A type of title insurance policy that protects the mortgage lender from financial losses due to defects or disputes in the title to the property.

Lien waiver: A legal document signed by a contractor or supplier indicating that they have been paid for their work and releasing any claims or liens on the property.

Lien: A legal claim placed on a property by a contractor or subcontractor for unpaid work or materials.

Loan agreement: A contract between the borrower and lender that outlines the terms and conditions of the loan, including the use of funds and disbursement requirements.

Loan origination fee: A fee charged by the lender for processing the construction loan application.

Loan-to-cost (LTC) ratio: The ratio of the loan amount to the total cost of the construction project, including land acquisition, construction costs, and other expenses.

Loan-to-value (LTV) ratio: The ratio of the amount of the loan to the value of the property being constructed or renovated.

Loan-to-value (LTV) ratio: The ratio of the loan amount to the value of the property being financed. Lenders typically require a lower LTV ratio for construction loans than for traditional mortgage loans.

Mechanic’s lien: A legal claim made by a contractor or supplier against a property to recover unpaid bills for labor or materials.

Mechanical permit: A permit required for mechanical work such as HVAC systems to ensure compliance with codes and safety standards.

Non-conforming use: A use that was legally established prior to a change in the zoning code and is no longer permitted in the current zoning district.

Notice of nonpayment: A notice sent by a subcontractor to the owner or general contractor of a project to inform them that payment has not been received for work performed.

Occupancy permit: A permit required before a building can be occupied, typically issued after all required inspections have been completed.

Overdraft protection: A feature of the funds control account that ensures the account has sufficient funds to cover all disbursements and prevents overdrafts.

Owner: The person or entity that owns the property being constructed or renovated.

Owner’s policy: A type of title insurance policy that protects the owner of a property from financial losses due to defects or disputes in the title to the property.

Partial lien waiver: A lien waiver that releases a portion of the lien rights of a contractor or supplier, typically in exchange for partial payment for work performed.

Payee: The party receiving payment from the funds control account, typically the contractor or subcontractor.

Payment bond: A type of surety bond that guarantees that subcontractors and suppliers will be paid for their work on a construction project, even if the general contractor defaults on the project.

Payment request form: A form submitted by the borrower or contractor requesting payment from the construction loan based on the current stage of the project.

Payor: The party providing the funds for the construction project, typically the lender.

Performance bond: A type of surety bond that guarantees the contractor will complete the project according to the terms of the contract.

Permanent financing: A long-term loan used to pay off a construction loan once the construction is complete.

Permit application: A document submitted to the government agency requesting permission to begin construction or renovation.

Permit fee: A fee charged by the government agency for processing the permit application and issuing the permit.

Permit: A legal authorization granted by a government agency allowing construction to begin or continue.

Plan review: A review of the construction plans by a building inspector to ensure compliance with building codes and regulations before the permit is issued.

Plumbing permit: A permit required for plumbing work to ensure compliance with plumbing codes and safety standards.

Premium: The fee paid for a title insurance policy, typically based on the purchase price of the property.

Progress payment: A payment made to the contractor based on the percentage of work completed.

Progress report: A report submitted by the inspector to the lender detailing the progress of the construction project and any issues or concerns.

Project management: The process of planning, organizing, and overseeing the construction project to ensure it is completed on time and within budget.

Punch list: A list of items that need to be completed or corrected before the construction project can be considered complete.

Refinance: The process of replacing an existing mortgage with a new mortgage, typically to obtain a lower interest rate or better terms.

Release of lien: A legal document that releases a mechanic’s lien on a property, typically after payment has been received for the work performed.

Retainage: A percentage of the construction loan held back by the lender until the project is completed, as a form of security for the borrower or contractor.

Risk mitigation: The process of identifying, assessing, and prioritizing risks and taking steps to minimize or eliminate their impact on a project.

Special exception: A use that is allowed in a particular zoning district with specific conditions and restrictions.

Subcontractor: A contractor hired by the general contractor to perform a specific portion of the work on a construction project.

Surety bond: A type of insurance that guarantees the completion of a construction project, typically required by the owner or lender.

Survey: A detailed map or drawing of a property that shows the location of buildings, boundaries, and other features.

Sworn statement: A statement made by a contractor or supplier under oath that details the amount owed to them for labor or materials on a construction project.

Title insurance policy: An insurance policy that protects the owner of a property or mortgage lender from financial losses due to defects or disputes in the title to the property.

Title insurance: A type of insurance that protects the lender and borrower against any defects in the title of the property being financed.

Title search: An investigation into the ownership history of a property to ensure there are no outstanding liens or other legal issues that could impact the construction loan or project.

Unconditional lien waiver: A lien waiver that releases all lien rights of the contractor or supplier without any conditions.

Use permit: A permit that allows for a specific land use in a particular zoning district.

Variance: An exception to the zoning code that allows for a specific deviation from the regulations, typically granted due to unique circumstances or hardships.

Violation: A failure to comply with building codes and regulations, which can result in fines, penalties, or stop-work orders.

Waiver of lien rights: A document signed by a subcontractor or supplier that waives their right to file a lien against the property being constructed or renovated.

Zoning board: A government board or commission responsible for administering and enforcing the zoning code.

Zoning code: A set of regulations and standards that govern land use and development in a particular area.

Zoning hearing: A public hearing held by the zoning board or commission to consider requests for variances, special exceptions, or conditional use permits.

Zoning map: A map that outlines the different zoning districts within a particular area.

Zoning permit: A permit required for construction or renovation to ensure compliance with zoning regulations.

Zoning: The process of dividing land into different zones or districts with specific regulations for land use, building size, and height.