Can this agreement be signed electronically?

Yes. Electronic signatures are enforceable under the ESIGN Act (15 U.S.C. ch. 96) and UETA in most states, provided intent, consent, attribution, and reliable record retention are met. Notarization requirements may require RON or in-person notarization depending on the state.

Notarization and witness requirements by state

Requirements vary. Most states require a notary acknowledgement for real estate mortgages; witness counts differ by jurisdiction. Remote online notarization has distinct identity-proofing, audio-video, and record-retention standards; verify local county recorder and state notary commission rules before execution.

Common supporting exhibits and attachments for recording

Attach the construction contract, detailed budget, plans/specifications, title commitment, property legal description or survey, insurance certificates, permits, contractor license, and preliminary lien waivers. Missing or unsigned exhibits commonly delay recording, draws, or title insurance issuance.

Resolving draw disputes and holdback claims

The agreement should set inspection dispute procedures, cure periods, independent arbitrator or engineer review, escrow holdback mechanics, and payment schedule adjustments. If unresolved, remedies include withholding draws, contractor cure, or pursuing breach remedies per the contract and mortgage.

Recording steps, fees, and county processing

Record the executed mortgage with the county recorder in the property's jurisdiction, submit the original or certified copy, pay recording fees and any transfer taxes, and obtain the recording instrument number. County fees vary; typical recording costs range $25–$50 depending on locality.

Process to amend agreement after execution

Yes, if the agreement includes an amendment procedure and all parties consent in writing. Amendments should be dated, signed, and recorded if they affect mortgage terms or the public record. Consult counsel for material changes to avoid lender or title issues.

Electronic Signature
Templates
Real estate
Construction Mortgage Agreement

Construction Mortgage Agreement

This template is fully customizable. Edit the text, fill out the fields, and send it for signature. Give it a try!

CONSTRUCTION MORTGAGE AGREEMENT

This Construction Mortgage Agreement (the "Agreement") is made as of between Mortgagor: with mailing address ; and Mortgagee: with mailing address .

Property Identification

Property Address Parcel / APN Number Legal Description

Loan and Mortgage

Mortgagee agrees to make a construction loan to Mortgagor in the principal amount of $ (the "Loan"), which Loan shall be evidenced by a promissory note and secured by this mortgage (the "Mortgage") on the Property described above. Interest shall accrue at a rate of per annum on outstanding principal.

Loan Commitment Date Closing Date Maturity Date

Disbursements and Construction Draws

Disbursements shall be made in accordance with a draw schedule approved by Mortgagee. Mortgagor shall submit draw requests with certified invoices and lien waivers. The draw schedule is:

Draw Schedule and Conditions (attach or describe) Construction Contract Amount General Contractor

Construction Covenants and Requirements

Mortgagor covenants to complete construction of the Improvements in a good and workmanlike manner in accordance with the approved plans, specifications and applicable laws. Mortgagor shall obtain all permits and shall not permit mechanics' liens to attach to the Property by failing to pay contractors, subcontractors or suppliers. Mortgagor shall provide Mortgagee with progress schedules and inspection access.

Estimated Completion Date Retention / Holdback (% or amount)

Insurance and Risk Allocation

Mortgagor shall maintain and deliver to Mortgagee evidence of the following insurance coverages naming Mortgagee as mortgagee and loss payee as its interest may appear: (a) builder's risk insurance covering the full insurable value of the Improvements; (b) general liability insurance covering construction operations; and (c) property insurance upon completion. All policies shall be in form and amounts reasonably satisfactory to Mortgagee.

Builder's Risk Carrier / Policy No.

Taxes, Assessments and Hazard Insurance Escrow

Mortgagor shall pay when due all real estate taxes, assessments, and other charges against the Property. Mortgagee may, at its option and upon notice, establish an escrow account for payment of taxes, insurance premiums and assessments and Mortgagor shall deposit required amounts.

Liens, Waivers and Releases

Mortgagor shall promptly cause to be released any mechanics' or materialmen's liens arising from the construction and shall obtain conditional and final lien waivers from contractors and subcontractors as a condition to each draw. Mortgagor shall indemnify Mortgagee against any claims or liens resulting from construction.

Mechanics' Lien Release Requirement

Representations and Warranties

Mortgagor represents and warrants that: (a) Mortgagor is the lawful owner of the Property subject to the matters disclosed in this Agreement; (b) there are no outstanding notices of violation, unresolved code enforcement matters or pending litigation affecting the Property except as disclosed below; and (c) all information and financial statements delivered to Mortgagee are true and correct in all material respects.

Known Violations, Encumbrances or Pending Litigation (if any)

Default; Remedies; Acceleration

An Event of Default shall include failure to pay principal or interest when due, abandonment or failure to diligently prosecute construction, failure to maintain insurance, recordation of a mechanics' lien not released within the applicable cure period, and any other material breach of this Agreement. Upon occurrence of an Event of Default and the expiration of any applicable cure periods, Mortgagee may declare the entire indebtedness immediately due and payable, proceed to enforce and foreclose this Mortgage by judicial or nonjudicial foreclosure, or exercise any other remedy permitted by law or equity. Mortgagor shall be liable for all costs of collection, including reasonable attorneys' fees and costs.

Late Charge (if payment not made when due)

Indemnification and Environmental Matters

Mortgagor shall indemnify, defend and hold harmless Mortgagee from and against any and all claims, liabilities, losses, damages and expenses (including reasonable attorneys' fees) arising out of construction activities or the presence of hazardous materials on the Property that are caused by Mortgagor or its contractors, except to the extent caused by Mortgagee's gross negligence or willful misconduct.

Disclosures

The Mortgagor discloses the following known conditions affecting the Property. Select applicable box.

Lead-based paint known to exist: Yes No

Mold, water intrusion, rot, or structural damage known to exist: Yes No

Prior material damage or repairs affecting habitability or structural integrity: Yes No

Notices

All notices required or permitted hereunder shall be in writing and shall be delivered by hand, nationally recognized overnight courier, or certified mail, return receipt requested, to the addresses set forth above or to such other address as a party may designate by notice in accordance with this provision. Notices shall be effective upon receipt.

Mortgagor Contact for Notices Mortgagee Contact for Notices

Assignment; Governing Law; Miscellaneous

Mortgagee may assign its rights and remedies under this Agreement. This Agreement shall be governed by and construed in accordance with the laws of the jurisdiction where the Property is located. This Agreement, together with the promissory note and related documents, constitutes the entire agreement between the parties with respect to the Loan and supersedes all prior agreements. If any provision is held invalid, the remaining provisions shall remain in full force and effect.

Governing Law Jurisdiction

Miscellaneous Attachments

Attached Documents (checklist)

Approved plans and specifications Construction contract

Insurance certificates Sample lien waiver forms

Execution and Acknowledgment

Each party executing this Agreement represents that it has the full right, power and authority to enter into this Agreement and that the person signing on behalf of a party is authorized to do so.

Mortgagor - Printed Name:

By:

Date:

Mortgagee - Printed Name:

By:

Date:

What a Construction Mortgage Agreement Is

A Construction Mortgage Agreement is a loan contract that secures financing for building or major renovation by creating a mortgage on the property under construction. It sets the lender and borrower obligations, schedule of draws, disbursement conditions, work milestones, inspection and lien waiver requirements, insurance and title conditions, interest and repayment terms, and remedies for default. The agreement coordinates construction draws with certified progress, protects the lender’s collateral during work, and defines borrower responsibilities for permits, contractors, and completion timelines until final release or conversion to a permanent mortgage.

How this Agreement Protects Both Parties

Use a Construction Mortgage Agreement to allocate construction risk, ensure staged disbursements tied to verified progress, and preserve the lender’s security interest. It clarifies responsibilities, reduces lien disputes, and documents inspection, insurance, and completion conditions that protect both lender and borrower.

Who Typically Prepares and Signs This Agreement

Common parties include lenders, borrowers, general contractors, and title companies involved in construction lending and closing processes.

Commercial and residential lenders — bank, private, or construction lenders managing draw disbursements.
Borrowers/developers — owners funding construction who must meet draw and completion obligations.
Title insurers, surveyors, and municipal agencies — for title conditions, inspections, and permitting verification.

Consult attorneys, title professionals, and lenders early to align terms, inspection rights, and lien release procedures before construction starts.

Core Elements to Include in the Agreement

A complete Construction Mortgage Agreement should address security, draw mechanics, inspections, insurance, completion conditions, and remedies, with clear documentation and exhibits for enforceability.

Security

Describe the mortgage lien, legal description of the property, collateral scope during construction, priority of the mortgage, and any subordination or temporary lien arrangements required by lenders or investors.

Draw Schedule

Define disbursement triggers, required lien waivers, payee approvals, holdbacks, and conditions precedent for each draw, including percentage completion metrics and required documentation.

Inspections

Identify independent inspectors or lender representatives, inspection frequency, acceptable progress evidence, procedures for disputed inspection outcomes, and how disagreements affect draw releases and correction timelines.

Insurance

Specify required insurance types, coverage amounts, named insureds, builder’s risk policies, evidence of premiums paid, and responsibilities for maintaining coverage through completion.

Repayment

Set interest rate, construction period interest accrual, conversion to permanent financing if applicable, repayment milestones, prepayment terms, and escrow or reserve requirements.

Remedies

Detail default events, acceleration rights, foreclosure process, lender cure periods, contractor substitution rules, and procedures for completing or selling the collateral on default.

Step-by-Step: Preparing and Executing the Agreement

Follow these steps to prepare and execute a Construction Mortgage Agreement, align draw mechanics, and document required supporting exhibits and approvals.

01

Prepare Documents: Gather construction contract, plans, title, insurance certificates, and budget.
02

Define Draws: Set milestone metrics, amounts, holdbacks, and draw conditions.
03

Inspection Process: Specify inspector, frequency, and evidence required for each draw.
04

Sign and Record: Execute signatures, notarize if required, and record mortgage per state rules.

Setting Up an Online Signing and Routing Workflow

Set up an online signing workflow to route the Construction Mortgage Agreement, collect signatures, and attach required exhibits before finalizing.

Field	Configuration
Signer Order	Set borrower, lender, title company, then insurer as signer order.
Authentication	Use email plus SMS code or KBA for higher assurance.
Attachments	Attach contract, plans, insurance certificates, lien waivers, and permits.
Notifications	Enable email and in-app reminders for pending signatures and overdue draws.

Digital Signing and File Requirements

Use a platform that supports PDF or DOCX uploads, audit trails, and secure authentication to meet lender and regulatory expectations.

File Formats: PDF and DOCX supported
Authentication: Email, SMS, or KBA options
Integrations: Title and construction tools like Procore

Where to File, Send, or Deliver the Agreement

After execution, file or deliver the Construction Mortgage Agreement and required exhibits to the recorder, lender, title insurer, and permit authorities as applicable.

County Recorder: Record mortgage per local recording requirements.
Lender: Deliver executed originals and draw schedules.
Title Company: Provide for title exceptions and escrow instructions.
Permit Office: Submit final mortgage for permit closure when needed.

Typical Timelines and Processing Expectations

Key deadlines include draw notice windows, inspection response times, recording time frames, and loan conversion or maturity dates that affect obligations.

Draw Notice Window:

Submit notice per agreement, often 5–10 business days.

Inspection Response Time:

Inspector typically responds within 3–7 business days.

Recording Timeframe:

County recording can take 1–10 business days, varies by jurisdiction.

Loan Conversion Deadline:

Date when construction loan must convert or refinance to permanent loan.

Final Completion:

Final inspection and release of retainage typically within 30–90 days.

Common Mistakes to Avoid

Using an incomplete legal description or street address alone, which can prevent proper recording and leave collateral ambiguous.
Failing to specify draw conditions and required documentation, leading to disputes and withheld disbursements during construction.
Not indexing or attaching lien waivers and proof of payment, thereby leaving lenders exposed to mechanic’s liens.
Overlooking local recording or notary requirements, including witness or RON rules, which can invalidate recording or delay funding.

Key Risks and Consequences of Errors

Recording Failure: Mortgage may be subordinate or unenforceable.

Lien Exposure: Mechanic’s liens risk for unpaid contractors.

Funding Delays: Draws withheld until disputes resolved.

Increased Costs: Insurance lapses or cure costs escalate expenses.

Legal Action: Foreclosure or enforcement litigation possible.

Tax & Compliance: Incorrect dates trigger reporting and tax issues.

eSignature Pricing and Feature Snapshot for Construction Workflows

Compare starter pricing and core capabilities for commonly used eSignature providers to support Construction Mortgage Agreement workflows.

	signNow	DocuSign	Adobe Sign	PandaDoc	HelloSign
Starting Price	$8/user/mo	$15/user/mo	$14/user/mo	$19/user/mo	$15/user/mo
Free Trial	7-day free trial	Varies by plan	Varies by plan	Varies by plan	Varies by plan
Bulk Send	Yes	Yes	Yes	Yes	No
Audit Trail	Yes	Yes	Yes	Yes	Yes
HIPAA Compliant	Yes	Yes	Yes	No	No

Practical Examples of Agreement Use

Real-world examples illustrate how Construction Mortgage Agreements manage draws, inspections, and lender protections across project types.

Small Developer Loan

A small residential developer used a Construction Mortgage Agreement to secure funding with milestone-based draws, lien waivers, and inspector certifications tied to each payment.

Monthly inspections certified progress for disbursements.
Because the agreement specified precise documentation, holdbacks, and remediation steps, disbursement disputes were resolved quickly and the lender released funds on schedule, enabling project completion and streamlined title insurance issuance at closing.

Municipal Renovation

A municipal renovation project used a Construction Mortgage Agreement to align grant funds, contractor milestones, and phased municipal inspections before lien releases.

Phased draws matched permit and inspection milestones.
The contract required certified progress reports and payment bonds; specifying municipal acceptance criteria and recording procedures minimized legal challenges and accelerated final funding and project closeout, while protecting public funds and contractor remuneration.

Frequently Asked Questions and Practical Answers

Common questions about completing, signing, and recording Construction Mortgage Agreements, plus digital signing and retention guidance.

Need help? Contact support

be ready to get more

Join over 28 million airSlate SignNow users

Sign Now