A.12.5.2 Problems Leading to Default

A. Construction problems due to:

1. Work stoppage,

2. Contractor abandonment of job,

3. A change in the contractor, owner or Architect during construction,

4. Construction defects untreated for 30 days, and

5. Extended periods of bad weather, strikes, etc.

• B. Financing problems due to:

1. Contractor's inability to complete construction because of under financing.

2. Cost overruns in carrying charges due to circumstances beyond the contractor's and Borrower’s control.

3. Cost overruns in construction hard costs caused by:

   • Mandatory changes,

• Voluntary changes, and

• Price escalation.

• C. Inadequate project income due to:

1. Underestimated operating expenses,

2. Overestimated rents and long-term occupancy levels, and

3. or lack of initial operating deficit.

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Appendix 12 Page A12-14

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Appendix 12 Construction Period A.12.5 Projects Experiencing Difficulties Before Final Closing

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