Ottawa Private Construction Loans After Title Severance for Two Townhouses

1. Executive Summary

An Ottawa client requested a construction loan for two townhouses he was building on a parcel of land. The construction plan itself was not the only issue. The major complication was that, while the client was building two separate townhouses and intended to sell them separately, the land was still under one common title. That created a significant legal, financing, and exit-strategy problem. We worked with the client and advised that the title issue had to be resolved before the financing could be cleanly structured. Once the title was severed for the two lots, we arranged two separate private construction loans to help him complete the project.

2. Borrower Profile

The borrower was building two townhouses in Ottawa, Ontario, with the intention of selling them separately after completion. Borrower identity, construction experience, income, credit score, corporation details, net worth, and lender name are not disclosed.

3. Property Profile

The project involved two townhouses being built on land that was initially held under one common title. Because the client intended to sell the townhouses separately, the title structure had to be corrected so each lot could be separately secured, financed, and sold. Exact address, land value, construction budget, appraised value, severance details, permits, loan amounts, loan-to-value, and lender name are not disclosed.

4. The Challenge

The borrower wanted construction financing for two townhouses, but the land title did not match the intended end use. The client planned to sell the townhouses separately, but the property was still under one common title. This created a significant financing and legal complication because lenders need clarity on security, title, marketability, exit strategy, and how each completed property will be sold or refinanced.

5. Why Conventional Solutions Failed

The file was not clean enough for straightforward construction financing while the two planned townhouses remained under one common title. A lender financing construction needs to know what property it is taking as security, how the completed units will be valued, and how the loan will be repaid. If the borrower intends to sell the units separately, but title has not been separated, the lender faces uncertainty around security, marketability, sale proceeds, and payout mechanics. The title issue had to be solved before the financing structure could make sense.

6. Our Analysis

Our analysis focused on the legal and exit structure of the project before lender placement. The client’s intended outcome was two separately saleable townhouses. The financing therefore had to follow that structure. A single common title created unnecessary complexity and lender hesitation. We advised the client to address the severance issue through the appropriate legal and municipal process. Once the lots were severed, the financing could be structured as two separate construction loans, each tied to a separately titled property.

7. Financing Structure

The file was structured in two stages. First, the client dealt with title severance so the two townhouse lots could be separated. Second, after severance, we arranged two separate private construction loans from a private lender. The loans were intended to help complete the townhouse project. Public details do not disclose the lender name, loan amounts, rates, fees, terms, draw schedule, construction budget, appraised values, severance documents, or borrower identity.

8. Why the Solution Worked

The solution worked because the legal structure was brought into alignment with the construction and sale strategy. Once the lots were severed, the lender could assess each townhouse as separate security. That improved clarity around valuation, loan structure, repayment, and sale exit. The underwriting principle is that a construction loan is only as strong as the exit: if the exit depends on separate sales, the title and security must support separate sales.

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