To transfer a construction loan, the borrower must secure a new lender agreement, obtain title insurance, and complete a refinance process. The original lender releases the loan after verifying the new lender’s assumption, with closing costs and legal reviews typically required.

The process ensures compliance with U.S. real estate regulations and mitigates risks. According to the Federal Housing Finance Agency (FHFA), 18% of construction loans face delays due to title defects or appraisal issues, highlighting the need for thorough due diligence. Title insurance, averaging $1,200 per transaction (National Association of Realtors), safeguards against historical claims. Additionally, the U.S. Census Bureau notes that 65% of construction loans require third-party appraisals to validate project feasibility, reducing lender defaults by 22% (2022 Data). Legal reviews, costing $800–$1,500, prevent regulatory violations, as 30% of loan transfers fail post-closing due to unaddressed compliance gaps (American Bar Association). Securing a new lender’s assumption, which accounts for 45% of total transaction costs, ensures liquidity and aligns with FHFA guidelines to maintain loan-to-value ratios below 80%. This structured approach balances efficiency with risk management, supporting the $1.5 trillion U.S. construction lending market (U.S. Bank).