After a proposition is successfully closed, disbursement for the project can take place. However, before that happens, a number of steps need to be completed. This article details the disbursement of a proposition.
At Crowdrealestate, all funds between investors and borrowers flow through an independent third-party account managed by the notary. A third-party account is a blocked bank account for funds accruing to third parties and held with a neutral and financially reliable third party.
1. Establishing the collateral
Firstly, a notarial deed establishes the mortgage right on the property in question. This is the most important security right you can obtain as an investor. Depending on the country where the project is located, this is done via a notary in the Netherlands, Germany or Belgium. In addition to the mortgage right on the property, additional collateral is regularly provided. This could include, for example, a pledge of rental income, a surety bond or a share pledge.
2. Disbursement of funds
Together with the underlying loan conditions, a disbursement statement is submitted to Crowdrealestate's permanent notary. This statement concerns an itemised representation of the spending purpose as included in the Special Loan Conditions. If applicable, a settlement note is enclosed with the final statement for a purchase or a repayment note in the case of a refinancing. This lists the outstanding amounts, which must be paid in order for the transaction to actually take place.
All documents are checked for correctness and completeness. This also applies to investor data. The participation deposits are also checked and the origin of the funds is examined. The disbursement is then made to the borrower or to another beneficiary of the project, such as the seller.
3. Release of construction deposit
If the funds are (partly) used to meet the costs of construction, rebuilding, restoration and/or renovation work, they are held in the trust account as a construction deposit. The funds can be disbursed all at once or in phases. The funds will be released only after the invoices have been submitted, their correspondence with the planned work and after being checked by the building inspector.