Not all that is short is sweet!

Borrower [at 5:00PM]: I see the building loan docs just came in. The BLA is only 15 pages. You can get comments back to the lender tonight? I want to fund tomorrow.

Attorney: I took a quick peek. It will actually take some time to review. It is missing key provisions to protect you. I can try to get comments out tomorrow morning.

Borrower: What? No. I trust the lender. They promised I will get draws whenever I need.

Attorney: You are making a mistake. The loan documents say nothing of the sort. You have to listen to me.

Borrower: No. I need the funds. I cannot wait. Tell the lender you have no comments. It will be fine.

Thirty days later...

Borrower: THE LENDER IS NOT FUNDING ME. THEY ARE BREACHING OUR AGREEMENT AND IT IS ALL YOUR FAULT FOR NOT PROTECTING ME.

Attorney: Um, check our texts from last month!

WHY DIDN'T YOU WARN ME?!

This is not fiction. This is real life in real estate lending. Borrowers are often drawn to short building loan agreements because they seem simple and easy to close. But brevity can come at a steep price, especially when the document leaves out protections or contains hidden traps.

A Real Example:

On page 3 of the agreement, it says:

"Borrower shall be entitled to request monthly draws, subject to the lender’s standard requirements."

That sounds fine. But buried deep in a later section, one that the borrower never noticed, but the attorney did is this nugget:

"Notwithstanding anything to the contrary, no advance shall be made unless and until the lender, in its sole discretion, determines that construction progress is satisfactory and that sufficient funds remain to complete the project."

Now the borrower is stuck. They thought they would be funded each month like clockwork. But the lender is holding back funds based on legitimate internal standards, and the agreement gives them the discretion to do it.

Contracts are not just about what is said clearly, they are also about what is said quietly and where.

The Bottom Line

A short loan agreement can be worse than a long one if it lacks structure or is vague on key restrictions. Funding obligations should be express, measurable, and enforceable. You should know exactly what you need to do to get your money and exactly what happens if the lender fails to deliver.

If your building loan agreement is short, read it even more carefully. The real risks are often hidden between the lines. At the very least hire a competent attorney - and listen to them!