Duties of construction control. Every construction control shall:
1. Obtain a true copy, certified as true by a registered architect or licensed professional engineer and signed by the person or persons who executed the general contract of construction or the owner-contractor contracts, respectively, as owner, of the complete plans and specifications to be used in the construction subject to the construction control.
2. Obtain from the lender a written statement of the total net amount of money, credits or loan proceeds that will be available for disbursement or, as a lender engaging in construction control functions, review and ascertain its total net amount.
3. Obtain a true copy, signed by all the parties thereto, of the general contract of construction or all owner-contractor contracts, pursuant to which the construction will be performed.
4. Obtain a true copy, signed by the parties thereto, of all of the subcontracts entered into with a contractor if the construction is to be performed pursuant to a general contract of construction.
5. Compare the total amounts to be paid pursuant to all of the subcontracts with the total amount payable to the general contractor, and compare the amount payable with the total net loans proceeds available for disbursement as construction loan funds.
6. Compare the total amounts to be paid pursuant to all owner-contractor contracts entered into with the total net loan proceeds available for disbursement as construction loan funds.
7. Establish, in writing, the categories of disbursement and the amounts of money apportioned to each category for disbursement.
8. Disburse or authorize the disbursement of money from a particular category only for bills incurred within that category.
9. Disburse or authorize the disbursement of funds if the total net loan proceeds exceeds in amount or equals the total payable by the terms of:
(a) The general contract of construction, or the subcontracts entered into with the general contractor, whichever is greater; or
(b) The total payable by the terms of all owner-contractor contracts.
10. Receive funds before authorizing disbursement, if other funds are needed to create an excess of funds as required pursuant to subsection 9.
11. Restore categories of disbursement in the order in which they become exhausted and to the amount exhausted from any available funds in its hands and from other funds supplied by the borrower or borrowers.
12. Obtain from the obligee a mechanic’s lien release covering all work, labor and materials performed or supplied to the time specified in the lien release and for the amount payable pursuant to the terms of the release, before the disbursement of any money for payment of such bills.
13. Upon receipt of written notice of a change order entered into after the beginning of construction which requires expenditure of extra money and the amount thereof, require that any category of disbursement affected thereby be increased and restored to the extent of the amount of such extras from any available funds in its hands and from other funds supplied by the borrower before the disbursement of additional funds from that category.
14. Before disbursing money to a subcontractor or supplier, obtain from that subcontractor or supplier a true copy of the bill, in those instances in which the category was established based upon a proposal or bid of that subcontractor or supplier and not upon a firm contract.
Last modified: February 27, 2006