When you're managing construction or renovation loans, timely and accurate draw inspections are the linchpin of sound disbursement decisions. They ensure work is completed before funds are released, helping you protect capital, minimize risk, and keep builders accountable. But what happens when a construction inspection report doesn’t support the draw request? As a lender, understanding how to navigate differences and inspection revisions is essential, not just for compliance, but for maintaining project momentum and lender-builder trust.
In this article, we’ll break down how to navigate an unsupported draw request, inspection differences, what to expect next, and how to streamline the process through digital draw solutions tailored for construction lenders.
What Is a Draw Inspection?
A draw inspection verifies that construction progress on a project aligns with the corresponding draw request. It’s the basis for releasing loan funds.
Key Steps in the Inspection Process:
• Draw Request Initiated: Borrower or builder submits a draw request for completed work.
• Site Evaluation: A third-party inspector visits the site to document and assess progress.
• Inspection Report Submitted: The inspector creates a detailed report with notes, progress estimates by line item, and photos.
• The third-party supplier reviews the inspector’s results prior to uploading the results digitally.
• Disbursement Review: The lender reviews the report to determine if the delivered inspection supports the release of the requested draw funds.
For lenders, draw inspections are a risk mitigation tool, protecting capital and ensuring proper use of funds. However, the inspection process is an opinion of completion and differences of opinion will exist.
What Causes Inspection Report Differences
Differences generally arise when the builder believes the inspection undervalues completed work, which can delay disbursement and strain relationships. Common causes include:
• Percent Complete Gaps: Inspector reports 50% completion, builder claims 80%.
• Missing Scope Updates: Change orders or revised schedules not reflected in inspection documentation.
• Timing Issues: Work may have advanced rapidly between inspection scheduling and execution.
• Environmental Limitations: Poor weather or site access can prevent full verification.
• Miscommunication: Inspector and builder interpret scope items differently.
For lenders, these differences signal the need for a clear, responsive dispute protocol.
How to Navigate an Inspection Dispute
When a builder challenges an inspection report, the lender plays a crucial role in resolving the issue and keeping the draw cycle on track. Here’s a step-by-step breakdown:
1. Review the builder’s rebuttal
Builders should submit:
• Specific items in dispute
• Supporting evidence (photos, invoices, job logs)
Encourage structured, professional feedback rather than general complaints.
2. Engage the Inspection Firm
Most draw inspection providers have dispute resolution protocols:
• Reinspection requests
• Evidence-based revisions
• Clarifications based on scope updates
Your inspection partner should acknowledge the dispute promptly and evaluate the submitted materials or escalated issues.
3. Assess Risk and Timeline
Use the report (and rebuttal) to:
• Re-evaluate project progress against draw request
• Increase the inspection results per the lender’s variance policy, typically, 5-10% on a line-item basis.
• Reduce draw amounts to better align with the inspection results
• Decide whether a re-inspection is necessary
Factor in the borrower’s credit profile, builder’s history, loan-to-cost ratio, and project timelines to make the call.
4. Communicate Clearly
Transparency with both the builder and inspection provider maintains trust. Share:
• Expected resolution timeline
• Any conditional adjustments
• Next inspection scheduling
Documentation matters, so make sure all adjustments are stored in your platform or CRM.
What Happens After You File a Dispute?
Once a dispute is submitted, here’s what typically unfolds:
• Inspection Firm Acknowledges Receipt: A reviewer evaluates the differences.
• Reinspection or Report Revision: Based on evidence or a re-review, a revision may be issued, or a second site visit scheduled.
• Lender Review: You receive a revised report and can reassess draw eligibility.
• Resolution: Either the original report stands, or the revised version supersedes it, and disbursements follow accordingly.
This process usually takes less than 1 business day but may vary based on the complexity of the request.
Pro Tips for Lenders Managing Draw Disputes
• Set Expectations Early: Clarify dispute protocols in loan agreements.
• Choose Reputable Partners: Work with inspection providers who have a transparent and responsive dispute timeline.
• Prioritize Documentation: Encourage builders to log daily progress and photo updates.
• Use a Centralized Platform: Leverage digital draw solutions to improve visibility, communication, and speed.
The Digital Advantage for Draw Inspections
Manual draw processes can lead to delays, miscommunication, and complex disputes. That’s why more lenders are shifting to digital draw inspection platforms that streamline every step, from scheduling to dispute resolution.
With real-time inspection updates, secure communication channels, and centralized documentation, you gain faster turnaround, clearer visibility into project progress, and a direct path to resolving differences. Digital platforms empower lenders to make informed decisions quickly, reduce administrative burden, and build stronger relationships with borrowers and builders through transparent workflows.
Partner with Trinity Real Estate Solutions
As a lender, you need clarity, speed, and accountability in your draw inspection process. That’s where Trinity Real Estate Solutions, America’s Trusted Digital Draw Solution™, delivers.
Whether you’re facing report challenges or want proactive inspection transparency, Trinity offers:
• Nationwide inspection coverage
• Mobile-first reporting tools
• Dedicated and responsive lender support
• Seamless draw cycle integration
Backed by years of experience and innovation, Trinity is America’s Trusted Digital Draw Solution™, helping lenders protect their investments and stay ahead of risk. Our clients say it best: “Trinity is the best in this space! Amazing customer service that answers promptly.” Another shared, “Very happy with the service you give us. Inspections come in on time to meet my borrowers’ timeline.” From responsive support to on-time inspections, Trinity doesn’t just meet expectations, we rise to the challenge. Like a trusted ally, we show up when it matters most, delivering speed, precision, and peace of mind with every draw.
To learn more, schedule a consultation.
