Final account verification is the last independent check a lender gets. Once the closing releases are made, the facility has advanced everything it is going to and the leverage that made every earlier condition enforceable has gone.
That makes the closing stage worth disproportionate attention relative to its value, and it is the stage most often handled as an administrative formality.
What the account should look like
The contract sum, adjusted by variations, provisional sum expenditure, prime cost adjustments, remeasurement, fluctuations and any loss and expense, with deductions applied.
Each adjustment evidenced and traceable, with provisional sums shown as omit and add so allowance and expenditure are both visible.
An account presented as a single adjusted total with a summary schedule is not verifiable. That structure is set out in how a final account is actually assembled.
The checks that matter
Whether every variation carries an instruction. Work paid for without one is money advanced against an item that was never authorised.
Whether provisional sums have been properly omitted before expenditure was added, which is a mechanical error that produces double counting.
Whether deductions the client is entitled to have actually been taken: contra charges, defective work, liquidated damages where time claims are resolved.
Whether any loss and expense has been agreed on a basis the evidence supports, or negotiated as a round figure to close the account.
Whether the account reconciles to the sums already certified and advanced.
Time claims must be closed first
An account settled while extension of time claims remain open is not settled. Damages cannot be applied until the time position is resolved, and prolongation cannot be assessed until the compensable period is known.
A borrower under pressure to complete a sale or a refinancing has an incentive to close the account quickly and leave the time position vague. That is a specific thing to look for.
Where a global settlement is proposed covering time, money and defects together, the components should be identified even if the total is agreed as one figure.
The certificates
Practical completion, which releases half the retention, ends damages liability and starts the defects period. Whether it was properly issued is worth establishing rather than assuming.
The certificate of making good, which releases the balance of retention. This is the one most often issued without anybody checking that the defects were actually resolved.
The final certificate, which in most forms has significant effects on the parties' ability to reopen matters afterwards. Its consequences are a legal question and one worth taking advice on before it is issued.
Each of these should be evidenced rather than issued to a date.
Retention and the defects tail
The facility term has to extend far enough to cover the defects period and the final release, and frequently it does not. A borrower refinancing a small balance at short notice is a foreseeable and avoidable position.
The lender's interest in defects is the same as the client's: an unresolved defect is a reduction in the value of the security, and after the retention is released there is no leverage to fix it.
The mechanism and where it fails is covered in defects, retention and the last five per cent.
Warranties, documentation and handover
Collateral warranties executed, professional indemnity cover confirmed, building control sign off obtained, statutory approvals discharged, and the operation and maintenance information delivered.
None of these are cost items and all of them affect the value of the completed asset. They are also conditions that borrowers deliver promptly while money is outstanding and slowly afterwards.
Listing them as conditions of the final release is the practical answer, and it works because it is the last moment at which it will.
What this means for you
Treat the closing stage as a verification rather than a formality. It is the smallest amount of money in the facility and the last point at which anything can be required.
Then condition the final release on the account being evidenced, the defects being certified and the documentation being delivered. All three are straightforward to obtain at that moment and effectively impossible afterwards. Our scope sits under what we do for the lender side.
Approaching the end of a facility?
Send the final account and the certificates. We will verify the position before the last release goes out.