Building Loan Agreement Law and Legal Definition

Building loan agreement is an agreement by which the lender advances money to an owner at fixed stages of construction. It is an agreement for a loan to be used in making payments to a contractor engaged in the construction of a building or other structure for the borrower, or to material men who furnish supplies for the construction of a building or other structure for the borrower. Such an agreement provides for the security of the lender, in the form of a mortgage on the property under improvement. It covers both present advances and advances to be made in the future during the course of the work and its completion by the contractor.