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The GC is not usually paid before the loan closes. Once the project has closed, the GC is paid on a monthly basis as defined in the contract. Your architect will be paid according to his or her contract, whether that contract is with the school or with the GC. Regardless, the architect will need to be paid for pre-construction phase services which include bid set, plans, and specifications. Legal counsel is usually paid hourly, and it is advisable to get an overall estimate. Regardless of which payment method is used, you and your development team must articulate the desired scope of services and negotiate the fee arrangement at the project’s outset.
Paying your Architect
Paying your General Contractor
General contractors are usually paid via stipulated sum or cost plus guaranteed maximum price. Banks typically prefer that the fee be capped when the construction contract has been finalized and prior to closing of the construction loan.
Nothing in this material should be construed as investment, financial, brokerage, or legal advice. Moreover, the facts and circumstances relating to your particular project may result in material changes in the processes, outcomes, and expenses described herein. Consult with your own professional advisors, including your financial advisors, accountants, and attorneys, before attempting to consummate any transaction described in this material.