Document background
The Assignment Of Construction Contract To Lender is a crucial document in Canadian construction project financing, used when a lender requires direct rights over the construction contract as part of its security package. This assignment becomes particularly important in projects where the lender needs to ensure it can take control of the construction process if the borrower defaults on its financing obligations. The document typically includes detailed provisions for the assignment of rights, step-in procedures, payment mechanisms, and continued performance obligations, all while ensuring compliance with provincial construction lien legislation and federal banking laws. It's commonly used in large-scale construction projects across Canada where institutional financing is involved, and requires careful consideration of both common law principles and statutory requirements varying by province. The document serves as a critical risk management tool for lenders while providing clarity to contractors about their obligations in case of a change in project control.
