Pre-Closing Construction Due Diligence

Underwrite the construction, not just the sponsor

Credit underwriting establishes whether the borrower and the deal make sense. Construction due diligence answers a different question: can this project actually be built, on this budget and this schedule, by this team? For a construction lender or capital partner, that answer belongs before closing — when findings can still shape structure, reserves, and closing conditions rather than become losses.

ALLOT performs this review independently for the capital side, translating drawings, budgets, and contracts into a plain assessment of where the completion risk sits.

Document & site review

We review the project's foundational documents and conditions as an integrated set, because the risk usually lives in the gaps between them:

• Plans & specifications — completeness and internal consistency;
• Permits & approvals — status, gating items, and remaining agency actions;
• Budget — reasonableness of hard and soft costs against scope and market;
• Schedule — logic, duration, and sequencing realism;
• Contracts — delivery method, contract sum, and allocation of risk;
• Team qualifications — the GC's and key trades' capacity for a project of this type and scale;
• Site conditions — observed physical conditions and their implications; and
• Regulatory review — the approvals landscape, including the realities of building in New York City.

Sources-and-uses & contingency observations

We test the sources-and-uses for internal consistency and comment on whether contingency is sized appropriately for the project's complexity and stage — a lean contingency on a complex build is a finding, not a detail.

Interest reserve & completion sensitivity

We assess whether the interest reserve is realistic against the proposed schedule and draw curve, and we stress the plan for sensitivity: what a reasonable delay or cost overrun would do to reserve adequacy and to the capital required to reach completion.

Open-item register & risk-rated findings

Findings are delivered two ways so they are usable, not just informative:

• an open-item register that tracks each outstanding question or document to closure; and
• risk-rated findings that prioritize what matters, so attention goes to the issues most likely to affect completion or basis.

Closing conditions & ongoing-monitoring recommendations

The review concludes with practical recommendations: conditions worth attaching to closing, and a proposed approach to monitoring the project once the loan funds. Diligence and monitoring are a continuum — the baseline established here flows directly into Construction Loan Monitoring and per-draw draw review during construction.