Late in a deal, I was working to place a construction completion loan. The stated objective had not changed. But when I looked closely at what was actually in front of me, the work had.
Multiple lenders had touched the project across different phases. Construction costs had been incurred in ways that were not consistently documented. Portions of the capital stack were real but absent from the financials. Budget categories had evolved without a clean reconciliation back to the original plan. Then city inspectors required additional changes after permits had already been issued, adding cost and time the borrower had not planned for.
None of those things are uncommon. Construction deals accumulate complexity. What made this situation difficult was that no one had been maintaining the documentation needed to hold the narrative together. By the time we were deep enough to see it clearly, the gaps had compounded.
What Changed Underneath the Surface
The numbers that should have aligned needed explanation. Questions that should have been straightforward required context. The project had leverage on it, and at that stage of a deal, incomplete information does not stay in the background. It surfaces at the worst moment — in a lender’s underwriting process, or in a conversation where you need a clear answer and do not have one.
That is when I stopped treating the engagement as a standard brokerage assignment. Continuing to push it forward on the original terms would have meant absorbing increasing complexity without any structure to contain it. The scope had moved. The engagement needed to reflect that.
The Actual Work
What the situation required was a reconstruction of how the project had been financed from the beginning. Not refreshing a model or updating a budget — going back to identify what had actually been spent and what should have been credited to the borrower as capital at risk. Separating costs that were necessary to complete the project from finishes that could be deferred. Then organizing all of it in a way that a lender could read without concluding they were being asked to bail out a problem.
That kind of work takes time and carries a different level of responsibility than execution work does. It also cannot be done well under the frame of the original engagement, where the assumption is that the foundation is already solid.
I had a direct conversation with the client. No revisiting of prior decisions. No persuasion. A straightforward outline of what the work now involved, what it would require from both sides, and what the structure would look like going forward. The response was not resistance. It was relief.
The Cost of an Incomplete Record
Most of the time when a deal stalls or gets harder to explain, it is not because the deal is bad. It is because the documentation did not keep pace with the decisions. Capital that was genuinely at risk goes uncredited. Costs that were legitimately incurred are not traceable. By the time the project reaches a lender, the story it tells does not match the story the borrower lived.
In higher-leverage situations, construction completion, bridge loans, anything where the clock is running and the equity question matters, that gap is expensive. Lenders price uncertainty. They also pass on deals that feel harder to underwrite than the risk profile warrants.
Getting the documentation right, and presenting the capital structure in a way that holds up to scrutiny, is often the difference between a deal that closes and one that does not.
If This Sounds Familiar
If you are working on a transaction where the history is complicated, the capital structure has evolved, or you are not confident that the current documentation accurately reflects what has been spent and committed, that is worth a conversation before you go to market.
Not every situation requires full capital stack reconstruction. But most benefit from a clear-eyed review of where the gaps are and how they will read to a lender. The earlier that review happens, the more options remain on the table.
That is the conversation we are set up to have. Book a time on our calendar today: cre.marcelobermudezinc.com
Photo by Ernie Journeys on Unsplash
