19.2.3 Early Start of Construction

A. General Requirements. Construction may not start before Initial Endorsement and recordation of the Security Instrument, except with the prior written approval of the RC Director. (Note that the

MAP Guide, March 2021 Go to beginning of Chapter 19

Bookmarked Version Go to Acronym and Abbreviation List, Glossary, Index

Chapter 19 Page 19-11

To return to this page after clicking a link, press ALT + Back Arrow

Chapter 19 Closing Guide 19.2 Initial Loan Closing Procedures for New Construction and Substantial Rehabilitation

Go to Table of Contents

authority to give this approval may not be delegable.) In general, any construction work performed on the land after HUD’s receipt of the application for Firm Commitment but before Initial Endorsement constitutes an early start of construction. Unless the RC Director indicates otherwise, demolition, environmental remediation, and off-site work does not constitute an early start to the construction of the Project; however, the RC Director must approve these activities in advance to address compliance with environmental review and Davis-Bacon wage requirements. Further, any work undertaken prior to Initial Endorsement must not impair the first lien priority of the Security Instrument.

B. Early Start Date. For Projects where HUD approves an early start to construction, the HUD-approved start date (the Early Start Date) will be used instead of the Initial Closing date for determining: the completion date in the Construction Contract; the date of the first amortized payment under the Note; and the completion date in the Building Loan Agreement. If HUD approves an early start, the Construction Contract and Payment and Performance Bonds (or other completion assurance) and any other closing documents required to be signed by the General Contractor must be dated no later than the Early Start Date.

C. Document Submission and OGC Review. The documents listed on the Early Start Checklist must be submitted, reviewed, and approved by HUD prior to the commencement of construction, as defined in the Request for Permission to Commence Construction Prior to Initial Endorsement (form HUD-92415). See Section 19.4.1.4 for the online location of all HUD closing checklists.