BUILDING LOANS. Loans made to per sons who are owners or lessees of laud, to lat used by them in defraying the cost of buildings to be erected by them tm such land. Such loans are usually made under a contract, which re cites the nature of the borrower's interest in the land, sets out in detail the character and estimated cost of tbe•structure to be erected, and contains a promise by the borrower to use the money so obtained exclusively for the build ing operations mentioned in the contract, and according to its terms. The loan is generally seeured by a mortgage on the property in ques tion to cover the future advances on the loan, whieh are made in stated installments as the building Such loans are usually somewhat precarious investments. because of the danger that the builder may not he able to complete the structure, in which case the ineom pleted building usually cannot be sold for what it cost. and the mortgagee is forced to foreclose the mortgage. buy in the property, and complete
the building, in order to protect himself. Buihl ing loans, therefore, bear a higher rate of inter est than is usual in loans on real estate security. Many States have provisions for the filing of such contracts in some office of public record, as \veil as for recording the mortgages, ing their priority with reference to other liens, as judgments and mechanics' liens (q.v.). Such loans are usually paid off when the building is completed, because of the high rate of interest, the money being obtained on a 'permanent loan' (that is. a loan for a definite number of years) at a loner rate of interest. Building loans of this description have become very common in recent years. especially in large cities. The term is also applied to loans by building and loan associations (q.v.).