Construction Draws

[Traume]

Are there any federal or state (Tennessee) laws protecting someone building a home when the construction draws are being handed/wired from the loan company to the contractor *without* the buyer being involved.

What if the contractor loses, let's say, a third of the construction draw.

Should the home owner be responsible? How about the lender or contractor.

Thanks.

[TJ2007]

How did the builder manage to lose draw money????

Obviously i would say they are legally accountable for any funds they recieve.

Many lenders have you and the contractor sign off on the draws so there are not problems.

But bottomline I guess is the lender is loaning you the money and you signed to be liable to pay it back...

[RealEstatePromos]

If the lender is doing that, they have their own inspectors insuring that things are done. I worked for banks for a long time doing this sorta thing. I can assure you that the bank is protected and won't let money get away without services being provided.