Fix-and-Flip Loan Documents:
The Complete Lender's Checklist

By Anthony Geraci, Managing Partner & CEO, Geraci LLP  |  June 2025

Fix-and-flip loans are the bread and butter of private money lending. They're short-term, high-yield, and collateralized by real property — but they also carry unique risks that your documentation must address. A borrower who's renovating a property is doing construction work, managing contractors, pulling permits, and operating on a tight timeline. Your documents need to account for all of this.

Here's the complete document checklist for fix-and-flip loans, including the specialized documents that most lenders overlook.

Related: Complete Guide to Loan Documents  |  Compliance Guide 2026  |  How to Lend in Multiple States

Core Loan Documents

✓ Promissory Note

For fix-and-flip loans, the promissory note should reflect the short-term nature of the loan — typically 6 to 18 months. Key provisions include the maturity date, any extension options (and extension fees), the default interest rate, and a clearly drafted acceleration clause. Fix-and-flip notes should also address how interest is calculated during the renovation period, especially if the loan includes a holdback for construction draws.

✓ Deed of Trust / Mortgage

The security instrument secures the loan against the property being flipped. It must be drafted for the specific state where the property is located, with the correct foreclosure provisions, recording requirements, and legal descriptions. For fix-and-flip properties, the deed of trust should also include provisions related to construction activity — requiring the borrower to maintain the property, carry adequate insurance, and not allow mechanics' liens to attach.

✓ Loan Agreement

The loan agreement for a fix-and-flip loan should go beyond standard provisions. It should address the renovation scope, timeline expectations, draw procedures, inspection requirements, and what happens if the project goes off track. Covenants should require the borrower to obtain and maintain all necessary permits, use licensed contractors where required, and complete work within the agreed-upon timeline.

✓ Personal Guaranty

Fix-and-flip borrowers almost always operate through LLCs. The personal guaranty ensures that the individual flippers — not just their entity — stand behind the loan. For experienced flippers running multiple projects simultaneously, a guaranty becomes even more important because any one LLC may have limited assets beyond the project property.

Construction & Draw Documents

This is where fix-and-flip documentation diverges from standard private lending. If your loan includes a construction holdback — and most fix-and-flip loans should — you need additional documents to govern how renovation funds are disbursed.

✓ Draw Agreement / Holdback Agreement

The draw agreement establishes the rules for releasing construction funds. It should include the total holdback amount, the draw schedule tied to specific renovation milestones, the inspection requirements before each draw is released, and the documentation the borrower must provide (invoices, lien waivers, photos) to support each draw request.

A well-drafted draw agreement protects you from the most common fix-and-flip problem: the borrower takes the money but doesn't complete the work. By tying disbursements to verified milestones, you maintain control over the renovation budget.

✓ Renovation Scope of Work

The borrower's renovation scope should be documented as an exhibit to the loan agreement or draw agreement. This creates a clear record of what work was planned, what the budget is, and what the expected timeline is. If the borrower deviates significantly from the scope — or exceeds the budget — you have grounds to withhold future draws or declare a default.

✓ Completion Guaranty

A completion guaranty is the guarantor's personal commitment to finish the renovation if the borrower entity fails to do so. This is separate from the payment guaranty and addresses a risk unique to construction loans: an unfinished property is worth significantly less than a completed one. Without a completion guaranty, you could foreclose on a half-renovated property worth less than what you lent.

Compliance & Disclosure Documents

✓ Business-Purpose Certification

Fix-and-flip loans are business-purpose loans by nature — the borrower is acquiring property to renovate and resell for profit. But you should document this explicitly. A business-purpose certification signed by the borrower confirms the loan's business purpose and helps protect your exemption from consumer lending regulations.

✓ State-Specific Disclosures & Riders

Even for business-purpose loans, many states require certain disclosures. Your document package should include all state-required disclosures and compliance riders for the state where the property is located. This is particularly important in states like California, New York, and Nevada, which have extensive disclosure requirements even for non-consumer loans.

Insurance & Title Documents

✓ Hazard Insurance Requirements

Your loan agreement should require the borrower to maintain hazard insurance with you named as the loss payee. For fix-and-flip properties, this means a builder's risk or renovation policy — not a standard homeowner's policy. Standard policies typically exclude coverage for properties under renovation, which means you could be uninsured during the riskiest phase of the project.

✓ Title Insurance / Lender's Policy

A lender's title insurance policy protects your security interest against title defects, undisclosed liens, and other title issues. For fix-and-flip properties — especially those acquired at auction or from distressed sellers — title issues are more common than average. A lender's policy is a relatively small cost for significant protection.

The Complete Checklist

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