acquisition, development, and construction loan

acquisition, development, and construction (ADC) loan

A loan made to allow a developer to buy land,install infrastructure such as streets and sewers,and build improvements.Because the value of the collateral depends on the development process adding significant value,these are considered somewhat risky loans.As a result,lenders limit the number of ADC loans they extend.A loan turndown from one lender may not be a stamp of disapproval for the project,but simply that lender's inability to extend any more ADC loans until others are paid off or converted to permanent financing.

The Complete Real Estate Encyclopedia by Denise L. Evans, JD & O. William Evans, JD. Copyright © 2007 by The McGraw-Hill Companies, Inc.
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