The
financing technique used to finance building activities is the
construction
loan technique.
Main
economical and financial features
- The project is considered as
an independent financial and legal entity, separated from the other
activities of
the building company.
- Loans and other resources
(such as
payment of customers) are transferred to the bank account of the
project.
- The building company may
withdraw
money from the bank account only for the project purposes and subject
to the
consent of the bank.
- The bank will appoint an
expert,
who will check the project and stages of construction on a regular
basis, including payments to suppliers. His reports will also analyze
financial resources.
- The bank will assess the
project and
its risks according to the "completion technique". In the event of
default, the bank is entitled to bring the project to completion and to
transfer the apartments to the purchasers. The loan will
be reimbursed with the resources of the
completed project.
Legal
features
- The bank account is pledged
in
favor of the bank. Any withdrawal from the bank account is subject to
the
bank's consent.
- The real estate and property
rights are mortgaged in favor of the bank.
- The amounts owed by the
purchasers
are pledged in favor of the bank.
- Insurance policies related
to the
project are also
pledged in favor of the bank.
