What is a draw inspection: a site visit ordered by a construction lender to confirm how much of the work is actually in place before the next portion of the loan is paid out
A draw inspection is the check a lender orders during a construction loan each time the builder or borrower asks for money. An inspector who works for the lender, and for nobody else on the project, visits the site, compares the work in place with the draw request and reports a percentage complete. The lender funds against that report.
It matters because a construction loan is paid out in stages, called draws, and the security for it is a building that does not exist yet. If the money runs ahead of the work, the lender is holding a loan larger than the asset behind it. The same visit is called a construction progress inspection or a construction loan inspection. The term is American. In the UK a development finance lender appoints a monitoring surveyor who visits before each drawdown, and on a self-build mortgage the lender's valuer inspects at each stage payment.
How a draw inspection works
- The draw request. The builder submits a request against the agreed budget, often called the schedule of values: each line item, the amount asked for and the percentage claimed as complete. On commercial projects this usually arrives on the AIA G702 application for payment with its G703 continuation sheet.
- The order. The lender instructs an independent inspector or an inspection firm. The inspector is engaged by the lender, not by the borrower or the contractor.
- The visit. The inspector walks the site with the request in hand, photographs each line that has been claimed, and notes materials delivered and stored but not yet installed.
- The report. A percentage complete per line and for the project, the photographs, and a comment wherever the site and the request disagree.
- The funding decision. The lender reads the report alongside the rest of the draw package, typically lien waivers and a title update, and releases the verified amount.
How to do a draw inspection: what to record on site
The work is narrower than people expect. The question is whether the work listed on the request is in place to the percentage claimed.
- Start from the budget, not the building. Go down the request line by line. Anything not on the request is context.
- Photograph every claimed line twice. One wide shot that shows where it is, one close shot that shows what it is.
- Use the same vantage points at every visit. Front elevation, each side, each floor from the same corner. Progress is read by comparing visits.
- Treat stored materials as their own line. Windows stacked in the garage are on site, counted and not installed. Say so.
- Record what is missing. Work claimed and not found is the most useful line in the report.
- Keep date, time and place on every image. A timestamped photo with geotagging ties the picture to this site on this day.
- Note departures from the plans. Describe them and leave the judgement to the lender.
Draw inspection example: framing claimed at 80 per cent
A builder on a custom single-family home submits the third draw. The request claims framing at 80 per cent and lists the roof trusses as delivered. The inspector finds the ground floor walls complete, the upper floor walls standing on two sides of the house, and no trusses anywhere on the lot.
The report puts framing at 55 per cent, records the trusses as not on site, and carries fourteen photographs taken from the same positions as the previous visit. The lender funds the framing line at 55 per cent and holds the truss line. Two weeks later the builder asks again, the trusses are set, and the balance is released. Nobody argued about it, because the report showed the same corners of the same house on two dates.
What a draw inspection does not do, and the mistakes lenders make
It is not a building code inspection. That is the job of the local building department. A draw inspector reports progress and does not approve the work.
It is not a warranty of workmanship and it is not an appraisal. A wall can be 100 per cent complete and badly built. Value is a separate question, answered by an appraiser.
It does not show that subcontractors and suppliers have been paid. Lien waivers and the title update cover that.
The common mistakes: funding on photographs the builder emailed, with no date and no way to tell which lot they show; accepting one overall percentage with no line items behind it; counting stored materials as installed work; changing inspector or vantage points mid-project so that visits cannot be compared; and waiving the inspection on small draws, which is where a project that has stalled first shows up.
Where the draw inspection report goes
Into the loan file, against the draw it supported. Whoever administers the construction loan owns the sequence, and read in order the reports are the history of the build: what was in place on each date and what was paid for it. The last one confirms completion before the final draw. Like any inspection report, it is only as good as the link between each statement and the picture that backs it. Once the building is handed over, the defects walk is a different job, covered under snagging inspection.
Where a lender's policy accepts photo and video from the site for a draw, Venta Capture, a product of VentaVid, is one way to collect it. The builder or borrower receives a link and follows guided steps in the mobile browser with no app, one step per line of the request. What is recorded in the session arrives timestamped, located and digitally sealed on a case, and the inspector or loan administrator reviews it and decides the percentage. See Venta Capture.
