The purpose of an inspection is to ensure the items that the builder is requesting to be paid out have been complete and that the percentage of funds of the overall project that has been paid out is consistent with the percentage that the project is complete.  For example, if the inspector’s report indicates the project is just 50% complete but the builder is requesting funds that would result in 75% of the budget being paid out, that is a problem.  If the project is just 50% complete, you would want no more than 50% of the budget paid out.  Otherwise you are risking the project running out of funds before completion.

The inspection process begins when the inspector receives the request to inspect.  That request comes with a copy of the builder’s sworn statement that details what items and how much the builder is requesting to get paid out.  The inspector will then contact the builder to get access to the project to inspect.  Sometimes the builder will accompany the inspector.

During the inspection the inspector will note what has been completed and at what percentage.  They will also take pictures to back up their report.

Once completed, the inspector sends the inspection report to the lender.  The lender will then review the report to verify the work has been complete and the project’s completion percentage is in line with the funds being paid out.

If the items were not complete or not fully complete, the draw request may be shorted.  This would result in the homeowner or builder covering the difference.

Once the lender has reviewed the inspection report and determined the funding amount, they will send the funds to the title company.

Once the title company receives the funds from the lender, they will request the homeowner submit a signed owner’s statement and authorization to disburse the draw.