Common use of Safeguards as to Application of Disbursements Clause in Contracts

Safeguards as to Application of Disbursements. The Bank shall have the right to require the Borrower to submit a breakdown of the portion of each disbursement which is to be paid to a particular contractor, subcontractor, materialman or supplier. The Bank shall further have the right to require at any time or prior to any disbursement that the contractor, subcontractor, materialmen, or supplier certify that all labor, material, or supplies were supplied, or will be supplied, directly to the Project and not to any other project or property, to acknowledge receipt of any and all payments which have been made as of such disbursement request and to release (if not previously done) any right to file a mechanic's or materialman's lien against the Secured Property for work done or materials supplied to the point of the disbursement request. The Bank shall have the right to require at any time, or from time to time, the presentation of receipts evidencing the payment of bills and costs for labor and materials in connection with the construction or the acquisition and installation of Personalty. The Bank may, in the Bank's reasonable judgment, make disbursement checks payable jointly to the Borrower and those mechanics or materialmen due or who will be due sums from the Borrower or Land Owner with respect to the Project. The Bank and its inspector shall at all times have access to the Obligors' books and records with respect to the Project and those of the Borrower's or Land Owner's contractor with respect to the Project so as to enable the Bank to verify that funds disbursed by the Bank for the Project are being used for the Project and that the bills of mechanics and materialmen are being paid currently. If the Bank exercises its rights hereunder and determines that Loan Proceeds are not being properly applied after disbursement, the Bank may suspend further disbursements until the Bank's objections have been cured to the Bank's satisfaction.