Construction Loan Note Investment Documentation
Every party involved in the construction loan process is required to review and execute concise, mandatory documentation to keep the loan funding on schedule. Some documents are executed between BCCG and the home builder, while others are executed between BCCG and the participating construction loan note investors, as outlined below:
SFH New Construction Loan Investment Summary & Due Diligence Exhibit Package (Issued Upon Request)
First-time investors receive an introductory packet outlining BCCG, the investment structure, and current loan offerings. The packet includes a concise, bullet-point summary of the opportunity and secure download links (via Box.com) to the full due diligence set—appraisals, title reports, construction budgets, sales contracts, loan applications, and all documents listed in the Due Diligence Checklist.
Loan Participation Letter of Intent (Executed After Due Diligence Review)
Investors ready to indicate interest complete the Letter of Intent included in every due diligence packet. The LOI allows investors to specify their intended participation amount and preferences and helps BCCG confirm the number of participants needed to finalize a closing date.
Note Investment Participation Agreement (Executed After LOI Submission)*
- Upon receipt of the LOI, BCCG issues the Loan Participation Agreement for execution. This agreement defines:
- The investor’s elected participation amount (“mortgage shares”).
- The total number of participation notes (LPNs) allocated to the investor.
- The requirement that at least two (2) investors participate for the investment to qualify as a Tenants-in-Common/Participation Loan.
- Escrow deposit instructions directing investors to submit funds directly to the title company’s escrow account—not to BCCG, which never receives or controls investor capital.
Note Investment Participation Certificate (Issued After Execution & Escrow Funding)*
- After funds are deposited into escrow, BCCG issues both:
- A formal Participation Certificate, and
- A Participation Acknowledgment Letter containing the investor’s tracking numbers and confirmation of all LPNs purchased.
Assignment of Mortgage Note Agreement (Issued Within 2 Business Days of Closing)*
The Fractional Assignment of Mortgage Agreement legally assigns and transfers each investor’s pro rata rights as a creditor and lien holder. It conveys the investor’s equitable and beneficial interest in the collateral, security instruments, principal repayment, and interest schedule. A specimen copy is included in the due diligence materials.
Construction Proceeds Disbursement Management Agreement
The official investment summary identifies the independent Loan Disbursement Agent responsible for releasing construction proceeds to the project manager. This agent follows the approved construction budget and disbursement schedule jointly executed by BCCG, the title company, and the builder.
Construction Site/Auditing Agreement
The investment summary also introduces the independent construction site/draw inspector. This inspector conducts routine on-site visits between disbursements and provides investors with detailed progress reports, photos, videos, and confirmation that previously released funds were used appropriately.
Independent Loan Servicing Agreement
The investment summary discloses the independent loan servicing company acting as the investor remittance agent. This firm manages the monthly distribution of interest-only payments and ensures that principal and any remaining interest are r