What is a Completion Guarantee?
With a Completion Guarantee, a "Guarantor" unconditionally and absolutely guarantees to the "Lender" that if the "Borrower" fails to complete the project, as required by the Construction Loan Agreement, that they (the Guarantor) will complete it. A Completion Guarantee can insure that if the project isn't completed, the lender is protected from risk.
When to use a Completion Guarantee:
- You're a guarantor who wants to insure a project.
- You're a lender who wants a project insured before approving a loan.
- You're a construction professional who wants to borrow money for a project.
- You manage a construction company, guaranty office, or company that provides loans.
THIS GUARANTY, made on this by of , ,
(hereinafter referred to as the "Guarantor"), to and for the benefit of , , ,
and any successor holder of the Note more particularly referred to below
(hereinafter collectively referred to as the "Lender").
of , , (hereinafter referred to as the "Borrower") has
applied to Lender for a loan in the principal amount of (hereinafter referred to as
the "Loan") to be evidenced by Borrower's Note (hereinafter referred to as the "Note") of even
date herewith, secured by a of even date therewith. The Loan is to be
advanced pursuant to the terms and conditions of a Construction Loan Agreement between
Borrower and Lender of even date herewith (hereinafter referred to as the "Construction Loan
Agreement") and will be used by Borrower to construct certain improvements (hereinafter
referred to as the "Project") upon the Land in accordance with plans and specifications therefore
prepared by or for Borrower and approved by Lender (hereinafter referred to as the "Plans and
Specifications"). The Note, Construction Loan Agreement and all other documents executed by
or for the benefit of the Lender in connection with or incident to the Loan are hereinafter
collectively referred to as the "Loan Documents."
Inducement for Guaranty
Lender is unwilling to make the Loan unless Guarantor guarantees completion of the Project in the manner herein provided.
Guaranty, Waiver And Consents
Guarantor unconditionally and absolutely guarantees unto Lender that if the Borrower shall fail
to complete the Project on the Land in the manner and within the period of time required by the
Construction Loan Agreement in accordance with the Plans and Specifications, with only such
amendments thereto as shall be approved by the Lender and in accordance with all laws, rules,
regulations and requirements of all governmental authorities having jurisdiction, or fail to keep
the Land and the Project free from all liens and claims which may be filed or made for
performing work and labor thereon or furnishing materials therefore in connection with the
construction thereof, or both, then Guarantor shall, provided that sums remaining to be disbursed
under the Construction Loan Agreement are thereafter advanced to Guarantor upon request by
Guarantor in the manner and under the terms and conditions therein provided: (1) cause the
Project to be completed free and clear of mechanics' and materialmens' liens in the manner and
within the period of time required by the Construction Loan Agreement, in accordance with the
Plans and Specifications, amended only as aforesaid, and in accordance with all laws, rules,
regulations and requirements of all governmental authorities having jurisdiction; (2) cause any
such mechanics' or materialmens' liens and claims to be removed and thereafter keep the Land
and the Project free from all such liens and claims; (3) make payment in full to all laborers,
subcontractors and materialmen on or before the date of completion for the costs of the Project
and related costs, and (4) pay all costs and expenses incurred in performing Guarantor's
obligations under this Guaranty. Guarantor further agrees to indemnify and hold harmless the
Lender from any loss (including reasonable attorney's fees) resulting from any default by the
undersigned under the terms of this Guaranty.
b.Waiver and Consents
Guarantor waives diligence, demand, extension of time, notice of acceptance of this Guaranty,
and indulgences and notices of every kind, and consents to any and all forbearances and
extensions of the time for payment of the Note or performance under the Loan Documents, and
to any and all changes in the terms, covenants and conditions of the Loan Documents hereafter
made or granted, (provided such changes or modifications do not materially affect (i) the amount
of funds budgeted for the construction of the Project, (ii) the manner in which the proceeds of the
Loan are to be advanced under the Construction Loan Agreement, or (iii) the scope of the work
provided for in the plans and specifications or the time for the completion of the same), and to
any and all substitutions, exchanges or releases of all or any part of the collateral therefore. It is
the intention hereof that Guarantor shall remain liable hereunder until the earlier of (i) full
amount of the principal of the Note, with interest, and any other sums due or to become due
under the Loan Documents, shall have been fully paid, and the terms, covenants and conditions
of the Loan Documents shall have been fully kept, observed and performed by Borrower, or (ii)
the Project has been fully completed in the manner provided in and contemplated by Section
Guaranty hereof, notwithstanding any act, omission or thing which might otherwise operate as a
legal or equitable discharge of Guarantor.
Agreements And Covenants of Guarantor
Guarantor agrees that it shall have no right of subrogation whatsoever with respect to the Loan
Documents, or to original moneys due and unpaid thereon, or any collateral securing the same,
unless and until Lender shall have received payment in full of all sums due under the Loan Documents.
This Guaranty may be enforced by Lender without first resorting to or exhausting any other
security or collateral and without first having recourse to the Note or any of the
remedies provided by the Loan Documents. Nothing herein contained, however,
shall prevent Lender from suing on the Note, or from exercising any other rights
under the Loan Documents.
c.Expenses of Enforcement
In the event this Guaranty is placed in the hands of an attorney for enforcement, Guarantor will
reimburse Lender for all expenses incurred in connection therewith, including reasonable attorney's fees.
Successors and Assigns
This Guaranty shall inure to the benefit of and may be enforced by Lender, and any subsequent
holder of the Note and shall be binding upon and enforceable against the legal representatives,
heirs and assigns of Guarantor.
No Alteration of Other Documents
No provision of this Guaranty shall be construed to alter or amend the Loan Documents, or to
relieve Borrower of any duties or obligations under the Loan Documents.
In the event that more than one person or party shall execute this Guaranty as the Guarantor herein, this
agreement shall bind all persons and parties jointly and severally.
This Guaranty and the terms and provisions hereof shall be governed by and construed according
to the laws of the , without regard to principles of conflict of laws.
Guarantor hereby agrees with Lender that all rights, remedies and recourses afforded to Lender by reason of this Guaranty, or otherwise, are separate and cumulative and may be pursued separately, successively or concurrently, as occasion therefore shall occur, and are non-exclusive and shall in no way limit or prejudice any other legal or equitable right, remedy or recourse which Lender may have.
This Guaranty shall be signed by on behalf of and by on behalf of .
IN WITNESS WHEREOF, the parties hereto have executed this Guaranty as of the date set