A Far Advance Agreement (FAA) is a legal document that is used in real estate transactions to secure financing for a property that has not yet been constructed. It is also known as a Future Advance Clause, and it outlines the terms and conditions of the financing that will be made available to the borrower.
FAAs are commonly used in construction and land development projects, where the borrower requires funds to finance the construction of a building, subdivision, or other type of development. By securing financing in advance, the borrower is able to get a better understanding of the total cost of the project and can plan accordingly.
The FAA is typically structured as a mortgage or deed of trust and is recorded with the county recorder`s office. It includes details such as the amount of the loan, the interest rate, the term, and the conditions that must be met for the funds to be released.
One of the key benefits of an FAA is that it provides a level of certainty for the borrower, lender, and other parties involved in the transaction. The borrower knows that financing will be available when needed, and the lender knows exactly how the funds will be used and can structure the loan accordingly.
FAAs are also useful in situations where the borrower may require additional financing over time, such as in a phased construction project. The agreement can be structured to allow for multiple advances, each with its own set of conditions and requirements.
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In conclusion, a Far Advance Agreement is a useful tool for securing financing for real estate projects that have not yet been constructed. By outlining the terms and conditions of the financing in advance, it provides certainty and clarity for all parties involved in the transaction. As a copy editor, it is important to use relevant keywords and phrases when discussing FAAs in order to attract the right audience and maximize SEO results.