Draft Commercial Real Estate Loan Agreement

---
name: draft-commercial-real-estate-loan-agreement
task_id: real-estate/draft-commercial-real-estate-loan-agreement
description: Guides drafting of a lender-protective construction-to-permanent loan agreement by systematically reconciling economic terms across core transaction documents and flagging inconsistencies with bracketed drafting notes.
activates_for: [planner, solver, checker]
---

# Skill: Draft Commercial Real Estate Construction-to-Permanent Loan Agreement for Mixed-Use Development

## 1. Subject-matter triage

- Draft the loan agreement itself as the primary deliverable; do not stop at notes, a term sheet, or an issues summary.
- Treat the source set as a linked transaction package, not isolated documents; the loan text must conform to the budget, appraisal, construction contract, organizational documents, environmental materials, and any borrower comments.
- If the instruction references a final file, verify that the draft is complete and non-empty before any secondary commentary is considered.

## 2. Failure modes the skill is correcting

- Baseline drafts economic terms from one document and silently ignores inconsistencies in the rest of the package.
- Baseline converts a construction deal into a generic permanent loan and omits draw controls, completion protections, reserve mechanics, and conversion conditions.
- Baseline leaves unresolved gaps unmarked, instead of inserting bracketed drafting notes that identify the conflict and the drafting question.
- Baseline fails to reflect lender-protective mechanics around default, cash management, carve-outs, SPE discipline, and environmental risk.
- Baseline states legal conclusions as drafting assertions without anchoring them to the controlling transaction documents or governing authority reflected in the package.

## 3. Legal frameworks / domain conventions that apply

- Construction-to-permanent structure: the agreement should move from a draw-based construction phase to a post-completion permanent phase only after stated conversion conditions are met.
- Funding controls: advances typically require budget compliance, inspection/certification support, lien protection, and no-default confirmations.
- Retainage and reserve discipline: the draft should preserve lender control over retainage, contingency, and interest reserve sufficiency through completion.
- Completion protection: the agreement should require completion support from a creditworthy sponsor or guarantor on lender-protective terms.
- Benchmark-based pricing: floating-rate mechanics should use a benchmark plus spread and include a fallback path if the benchmark becomes unavailable.
- SPE discipline: the borrower should remain a single-purpose entity with restrictions on activities, transfers, commingling, and bankruptcy-related actions.
- Non-recourse framework: the loan should be non-recourse except for defined bad-boy carve-outs and other customary lender exceptions.
- Environmental risk allocation: the agreement should align environmental covenants and indemnity with disclosed conditions and any investigation or remediation issues in the record.
- If the source documents invoke a statute, regulation, case, rule, or other authority for a proposition, carry that authority through the drafting rather than restating the proposition abstractly.

## 4. Analytical scaffolds

- Extract each operative economic and control term from every source document, then draft the agreement around the reconciled set.
- For each material term, compare the relevant sources before drafting: amount, pricing, amortization, maturity, reserves, budget, collateral, guaranties, conditions precedent, and default triggers.
- If a term appears in multiple places with different formulations, preserve the lender-protective version in the agreement and add a bracketed note identifying the documents in tension and the issue to resolve.
- If a source leaves a point open, draft the clause in a commercially standard lender-protective way and add a bracketed note stating the missing input.
- For construction economics, align the loan terms with the budget, draw schedule, contingency treatment, and expected completion timeline; do not assume the documents are internally consistent.
- For conversion mechanics, test whether the conditions can be satisfied simultaneously and draft the permanent-phase triggers with objective measurement language.
- For organizational covenants, compare the borrower’s entity documents against the required SPE profile; note any mismatch that would need amendment before closing or first advance.
- For environmental provisions, match the indemnity and covenant scope to the disclosed conditions and flag any issue that may need further diligence, testing, or remediation.
- For borrower-favorable requested changes, preserve the issue as a bracketed drafting note and state the lender position rather than silently accepting the edit.
- When more than one party, period, or calculation basis is implicated, enumerate the distinct items first and then draft or reconcile each one separately.

## 5. Vertical / structural / temporal relationships

- Sequence the deal so that closing conditions, initial funding conditions, and conditions to each later advance are kept distinct; do not merge them into one generic precedent-condition section.
- Keep construction-period covenants, draw conditions, and reserve mechanics synchronized with the payment timetable and expected completion milestones.
- Make the conversion step expressly dependent on completion, occupancy or leasing tests where applicable, delivery of required certificates, and absence of default.
- Preserve the relationship between guaranty obligations, SPE restrictions, and transfer limitations so that required sponsor support is not undermined by entity-structure covenants.
- Draft remedies so that events of default occurring during construction can still preserve lender control through stop-funding, cash management, and completion rights, not only acceleration.
- If a calculation depends on multiple source figures, avoid performing hidden reconciliation in the draft; instead state the operative figure and note the discrepancy for confirmation.

## 6. Output structure conventions

- Produce a full commercial real estate loan agreement in conventional contract form, with standard articles for definitions, loan terms, conditions precedent, advances, covenants, events of default, remedies, and miscellaneous provisions.
- Include schedules and exhibits where needed for collateral, budgets, reserves, insurance, reporting, guaranties, and any construction-related administration.
- Insert bracketed drafting notes inline wherever a conflict, gap, or unresolved business point appears; each note should identify the source documents at issue and the precise drafting question.
- Use lender-protective operative language, not explanatory prose, for the body of the agreement.
- Do not copy source-document wording unless it is necessary to preserve a defined term or a specific technical formulation; keep any borrowed language minimal and functional.
- Name the output file exactly as instructed in the task.