Lenders are a key participant in many development projects. They often provide debt financing for a large portion of a project, in addition to the equity provided by the developer that is the practice’s client. As they have a large stake in the project, they will closely monitor its progress to ensure the development is built on time and on budget.

Often, lenders will approach the practice directly, or through the client, for information such as time and budget status. It is important that all communication between the OAA member and the lender be through the client to avoid a conflict or interest, or with the client architect contract. Members are also cautioned not to sign any architectural services contract that binds them to future unknown commitments to a third party.

Members may want to review both OAA’s Practice Tip PT.17 Lending Institutions and PT. 29 Lending Institutions – Assignment of Contracts when faced with requests from clients on such matters. Pro-Demnity Insurance Co.’s articles, “Lender’ Undertakings (aka “Bank” or “Funder” Letter)” and “Two Risks That You Can Avoid Now” also provide insight on applying a cautionary lens when faced with such requests. 

The OAA does not provide legal, insurance, or accounting advice. Readers are advised to consult their own legal, accounting, or insurance representatives to obtain suitable professional advice in those regards.