Construction-to-permanent financing is one of the more complex loan structures in Florida real estate — and one of the most useful tools for developers who want to reduce closing costs and streamline the path from groundbreaking to certificate of occupancy. At Richard Rosa Law, we have guided clients through multiple construction-to-perm transactions across Broward County and South Florida.

What Is a Construction-to-Perm Loan?

A construction-to-permanent loan (also called a “one-time close”) combines the construction phase financing and the permanent mortgage into a single loan product. Instead of two closings, two sets of costs, and two rounds of underwriting, the borrower closes once and the loan automatically converts from the construction draw structure to permanent amortization when the project is complete.

For Florida developers, this structure offers meaningful advantages: one appraisal, one set of title insurance premiums, one closing, and a locked-in permanent rate at the time of initial closing rather than at an unknown future rate environment.

A Recent Deal Structure: Spec Build in Broward County

The basics: $850,000 total project cost. Land already owned free and clear (valued at $180,000). Construction budget of $670,000. Anticipated completion value of $1.35 million.

Loan structure: The lender issued a construction-to-perm commitment covering 80% of the completed value ($1.08 million). During construction, the borrower drew against an $850,000 facility in staged draws tied to inspections and completion milestones. Interest during construction was calculated only on drawn amounts — minimizing early carrying costs.

Conversion: At certificate of occupancy, the loan automatically converted to a 30-year permanent mortgage at the rate locked at initial closing. The borrower avoided refinancing risk and the entire project was financed through a single closing we handled.

The Legal Work Behind the Transaction

1. Draw Schedule and Lien Waiver Compliance

Florida’s Construction Lien Law (Chapter 713, Florida Statutes) creates significant risk in any construction project. Before each draw is funded, we ensure the contractor provides appropriate partial lien waivers and that subcontractors and materialmen have either been paid or have waived their lien rights. A single missed lien waiver can cloud title and trigger a default under the construction loan agreement.

2. Title Insurance Through Conversion

The title policy issued at closing must cover the permanent loan amount, not just the initial construction facility. We coordinate with the title company to ensure proper endorsements are in place for the converted permanent mortgage — without the borrower paying a second full premium.

3. Contractor Agreement Review

Most lenders require the GC agreement to be reviewed before funding. We review the contract for completion milestones, payment terms, dispute resolution provisions, and termination rights — and flag issues the lender’s counsel will likely require be addressed.

4. Conversion Conditions

The loan agreement specifies what must happen before conversion to permanent financing — typically: certificate of occupancy, final inspection, as-built survey, and release of all mechanic’s liens. Missing any one of these can delay conversion and trigger extension fees or technical defaults.

Ready to Structure Your Florida Construction Project?

Richard Rosa Law handles construction loan closings, draw administration, and construction-to-perm transactions across Fort Lauderdale and Broward County. Call us at 954-351-7474 or schedule a consultation to discuss your project.