Collateral warranties v third-party rights — which to use?

When providing development finance, a lender will be looking for construction security to provide protection in the event something goes wrong. Such security will ordinarily be from the contractor, consultants and subcontractors involved in the project. One of the questions that can arise is whether security should be taken by way of collateral warranties or by relying on the granting of third-party rights.

Collateral warranties or third-party rights are required on construction projects for three main reasons…

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