As a condition of financing, the Owner’s lender may require the company to sign a Consent of Assignment of Contract letter. This document stipulates that the company agrees to work with and for the lender upon request by the lender in completion of the project and/or in the settlement of any disputes if the Owner defaults on their construction loan.
This is a side agreement between the lender, who assumes the rights and obligations of the Owner, and the company. It is important for the company to preserve its rights to recover cost and damages for delays due to the Owner’s default from the lender before proceeding with work for the lender.
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