Completion and carry guarantees: one invoice, one funding schedule

When completion and carry guarantees cover some of the same costs, adding their separate spreadsheets can overstate the sponsor’s combined funding requirement. Build one invoice-level ledger, identify which documents potentially address each cost, and assign each permitted funding dollar once. The worked map below produces a $300,000 sponsor call where simply adding two modeled gaps would show $370,000.

A completion guarantee can require more than providing the equity line shown in the original construction budget. The first task is to identify the work and performance promised, including required plans, deadlines, payment of project costs and completion evidence. The second is to determine which remaining loan proceeds and other funds can actually be used to perform that work.

A project’s percentage complete is not a reliable measure of its remaining cash need. Unfinished specialty work, unpaid retainage, corrective work and closeout conditions can be disproportionate to the physical work left. The investor should reconcile the cost-to-complete report with the contract scope and funding conditions before treating the guarantee as a remote contingency.

Separate the legal obligation from the funding estimate

The ACRES completion guaranty dated September 12, 2025, Section 1.1, defines required work and states that its construction budget does not cap that completion obligation. This is a historical negotiated example, not a universal guarantee provision or a recommended form.

Read the subject guarantee with the loan agreement, construction contract, approved plans and amendments. Identify completion milestones and the evidence needed to establish each. Substantial completion, permission to occupy, final completion and release of retainage may be different events. Ask counsel and the project professionals to resolve those differences rather than using one “complete” checkbox.

Record whether the obligation concerns performance, payment of costs, liquidated damages under stated conditions or another remedy. Do not convert the cost estimate below into a legal maximum unless the documents expressly create that limit.

Worked exhibit: committed money is not all usable money

Assume a hypothetical project has the following updated remaining needs. The figures are invented and should be replaced with a qualified, dated cost-to-complete review for a real project.

Assume the loan has $2.8 million of undisbursed commitment, but $300,000 is unavailable for these uses under the present conditions. Usable remaining loan proceeds are therefore $2.5 million. Add $350,000 of funded and permitted owner cash. The modeled funding shortfall is $150,000.

Using the full undisbursed commitment would incorrectly show $150,000 of excess funding. The swing is $300,000, exactly the amount excluded from usable proceeds. Explain why those funds are unavailable: a different reserve purpose, an unsatisfied condition or another documented restriction. Do not impose an arbitrary haircut without a source.

The model is a funding reconciliation, not an adjudication of guarantee liability. The guarantor’s obligations could be broader, narrower or subject to different conditions. It also assumes no duplicate costs between the contract balance, change orders and professional-cost estimate.

Assign responsibility for the remaining work

Build a closeout table that identifies each task, contractor or professional, cost, deadline and acceptance evidence. For physical work, use the approved scope and inspection record. For documentation, include the required certificates, lien-related evidence, warranties, as-built materials and approvals applicable to the transaction.

An unpaid invoice and unfinished work are different items. The contractor may have completed a task while payment remains due, or the budget may show a paid deposit for work not yet delivered. Reconcile both progress and payment status so the remaining-cost estimate does not omit one or count the same obligation twice.

If the original contractor cannot finish, identify replacement mobilization, access to plans, assignment rights, warranty issues and schedule effects with the project team. A replacement bid should not be treated as executable until the necessary rights and approvals are established.

Test delay as well as cost

Assume completion is delayed two months. If incremental insurance, site security, professional administration and other completion-related carrying items total $35,000 per month in the scenario, the additional modeled use is $70,000. The prior $150,000 gap becomes $220,000 before any other changes.

Keep interest and operating carry assigned to the correct obligation model. Some transactions have separate carry guarantees; the same invoice should not be counted twice in the sponsor’s aggregate funding schedule simply because two documents could address it. Conversely, separating documents should not cause an obligation to disappear from the combined view.

Confirm the draw process during any guarantor performance. The existence of an undisbursed commitment does not establish that the guarantor can draw it without satisfying the applicable conditions. Record the authorized recipient, eligible expenses and required evidence.

Map overlapping obligations to one dated cash requirement

Extend the preceding hypothetical delay case. The completion model contains $3 million of remaining work plus $70,000 of delay costs: $30,000 of site security and $40,000 of insurance. A separate carry model includes those same two invoices plus $180,000 of interest. Assume counsel identifies both guarantees as potentially addressing the security and insurance costs; the mapping does not decide liability or make either guarantee exclusive.

For this expanded scenario, assume an additional $100,000 funded interest reserve exists outside the earlier $2.8 million undisbursed commitment and $350,000 owner cash. It is available only for INT-01. The earlier excluded $300,000 of commitment remains unavailable. These separate funds must be verified by account and restriction; the new reserve is not a second description of an existing funding line.

Eligible construction draws of $2.5 million, owner cash of $350,000 and that $100,000 reserve provide $2.95 million. Unique uses of $3.25 million leave a $300,000 combined call. Adding the separate completion gap of $220,000 to the carry gap of $150,000 ($250,000 costs less its $100,000 reserve) would report $370,000. That overstates the requirement by the $70,000 of overlapping S-01 and I-01 costs. It does not establish that a legal claim under one guarantee reduces another; it reconciles cash needed to pay the same bills once.

Assume work invoices total $1.5 million at each month-end, security and insurance total $35,000 each month, and interest is $90,000 each month. Approved construction draws of $1.25 million and interest-reserve releases of $50,000 arrive before each payment date. The $350,000 owner cash is available at the start.

The $300,000 must arrive before month-two payments. If an invoice becomes due before the assumed draw, the temporary call can be larger despite unchanged total costs. Record the invoice owner, due date, approved reserve bucket, release condition and bank receipt beside each ID. A reserve release that remains conditional cannot be treated as received cash. The zero ending balance also leaves no contingency beyond the $200,000 already included in remaining work; it is not a liquidity recommendation.

Close the obligation with evidence

As milestones are achieved, retain acceptance records and update the outstanding obligation schedule. A contractor’s final invoice, an occupancy certificate and a lender’s completion acknowledgement answer different questions. Obtain the documents the actual guarantee requires before describing the obligation as terminated or reduced.

The sponsor’s decision file should show the defined work, independent project evidence, usable funding, remaining gap and conditions for release. That makes the completion commitment measurable without pretending that a budget spreadsheet can replace the legal scope or the technical assessment of unfinished work.