If Insurance of Credit for the Financing of Investment in Foreign Countries Insurance of a credit for construction and developer projects

Insurance of a credit for construction and developer projects of Czech companies in foreign countries is governed by EGAP's General Insurance Conditions for insurance of a credit for financing of investment of Czech legal persons in foreign countries against the risk of non-payment (insurance of the type "If"). Specific adjustments for construction and developer projects are contained in the insurance contract between EGAP and insured bank. A precondition for conclusion of an insurance contract is fulfilment of these basic principles:

  1. A Developer has to realize construction and following sale or lease through a subsidiary which may also be a company newly established exclusively for this purpose only (a Special Purpose Vehicle).
  2. The Developer has to invest into the project at least 20 per cent of own funds, of which at least 50 per cent have to be in a monetary form.
  3. The sum total of own resources of the developer and confirmed sales or leases before the start of the construction has to reach as a minimum 50 per cent of the total value of the project.
  4. The sum total of own resources of the developer and confirmed sales or leases has to reach 100 per cent of the total value of the project as on the day of the planned finishing of the construction.
  5. The developer shall submit before drawing from the credit:
    1. A valid and effective decision on location of the construction and the building permit,
    2. An independent legal opinion on property relations to the plot,
    3. An independent legal opinion on possibility of repatriation of own resources in case of cancellation of the SPV after finishing the project,
    4. Calculation of costs of the project and time schedule of the drawdown of the credit,
    5. An independent opinion on the state and expected development of the real estate market in the area of the construction.
  6. Length of the credit equals the sum of the construction period and period necessary for sale or lease and for collection of the purchase price or rent; however it may not be shorter than 3 years.
  7. An early repayment of the credit is possible.
  8. In case of high-quality projects, a 100 per cent security for the commercial risk of non-payment of the credit is not required.
  9. Drawdown of the credit and course of construction shall be checked by an independent subject.
© EGAP  2017
Site Map