The construction loan agreement should provide for the following:
•the contractor will comply with all building requirements of the appropriate governmental entity,
•inspections are for the benefit of the Bank only,
•the Bank is not responsible for the quality of the work,
•the borrower has the right to receive a copy of the Bank’s inspection report,
•the Bank has the right to approve any substitute contractor,
•cessation of work or failure to commence the work is a default under the loan documents, and
•the Bank has no obligations or responsibility except to fund the loan and to comply with specific state law requirements.