What is a Construction Disbursement?
Introduced into the building process to alleviate the inherent risk of dealing with large sums of money, construction disbursements happen when a lender distributes a construction loan amount over a period of time.
Lenders don’t typically disburse the full construction loan amount at the closing or by the date a project starts. Instead, portions of the loan are released on specific dates or project benchmarks predetermined by a draw schedule, a timeline that’s created prior to the construction project’s start date.
Once a benchmark is reached, an inspection is performed in order to ensure that the work is complete and the next portion of the loan can be given out.
Construction Disbursement Assistance
How we help you
Monarch Title Company offers construction disbursement assistance to provide peace of mind for the lender and borrower. We will track the work completed to make sure that only completed work is being paid for. Our construction disbursement services include:
1.Handling of construction draw requests and inspections
Our timely and informed team of professionals make this process quick and painless. Monarch knows that when a disbursement draw request is made, the vendor needs payment as soon as possible in order to continue work on the construction project without delay.
2. Paying all subcontractors and suppliers directly
Monarch cuts out the middle man to ensure timely delivery of funds so that your construction project continues seamlessly.
3. Collecting all lien wavers and maintaining progress reports about the project status
We understand the importance of a paper trail when dealing with lenders, so Monarch tracks progress and keeps all documents safe and in one place.
How the Construction Disbursement Process Works
Although we would like for the construction disbursement process to be simple, it’s designed to protect the different parties involved, so paperwork is aplenty. There isn’t just a simple form to fill out, but several documents submitted together to the lender. These documents provide proof that the work has been done and supports the costs associated with reaching the benchmark in the draw schedule.
Here is the documentation you’ll need to submit with your draw request:
- Invoices and Receipts
- Schedule of Values
- Change Orders
- Lien Waivers
- Overview of Construction Project Progress
Once all supporting documentation has been received, it will be reviewed by the lender to determine if funds should be released for the work that’s been done. Turnaround time for disbursement depends on several factors. Did you submit all supporting documentation? Any incomplete information will slow down payment to vendors.
The amount of the draw request also comes into consideration along with the project size and its complexity. For a quicker turnaround, double check your submission for all necessary supporting documentation that the lender will need to make a fast and easy decision.
Once your draw request has been disbursed, the title insurance must be updated accordingly. Because the value of the construction project has increased upon completion of work, insurance coverage must be increased as well. The total amount of funds dispersed is a direct reflection of the title insurance coverage. Because Monarch is diligent in tracking construction project progress and expense documentation, you’ll never pay more for more title insurance than you need.
Missouri’s Leading Title Company
We can assist you with your construction disbursement needs anywhere in Missouri. Our closing offices are conveniently located in Columbia, Jefferson City, Boonville, Brookfield, and Osage Beach. Place an order or get a quote.