The gap lender signed off in week two and the deal still fell apart in week fourteen

The case you've laid out is a good dissection of a timing risk that gets treated as a documentation risk. The intercreditor agreement covered priority and payment waterfall. It did not cover cadence, and cadence is where the carry cost lives.

The assumption doing the most work in most gap commitments is that "committed" and "scheduled" are the same thing. They are not. The gap lender's right to require a progress inspection before advancing is standard. The absence of a defined inspection window, and a defined advance timeline after the inspection clears, is the gap in the gap agreement. That eleven-week pause was contractually permitted, which is the part that hurts most on review.

A few mechanics worth confirming are in your own documents before you treat a commitment as funded:

The inspection trigger should name who schedules it, within how many business days of a written draw request, and what the advance timeline is after the inspector signs off. If the agreement says "pending inspection" without a deadline, the gap lender holds the clock.

The remedy clause is the second place to look. What is the borrower's recourse if the gap lender misses their own window? A well-negotiated commitment names a default on the gap lender's side, not just the borrower's. Most do not.

The risk you did not name explicitly: even with tighter inspection language, the borrower in a subordinate-gap structure has limited practical leverage once the senior loan is accruing. A gap lender who is slow to inspect faces no interest cost themselves. The asymmetry is structural. Negotiating a per-diem carry credit against future interest if the inspection window is missed is one way to price that asymmetry in at commitment, though confirm with your counsel how that interacts with the intercreditor terms.

What does your current gap commitment define as the draw request trigger, written notice or something else?

Eleven weeks of senior accrual on a 55k gap piece is the real number people need to sit with.

My Maryvale refi in 2021 had a similar clause buried under "lender discretion" and I almost missed it, found it because the title company flagged a different section and I read the whole thing out of paranoia. What does your intercreditor actually say happens if the gap lender misses their own inspection window by more than, say, thirty days?

The remedy clause is the paragraph most borrowers never find because it sits three pages after the draw mechanics, labeled something like "lender's discretionary rights."

What's your recourse language say specifically, cure period, written notice, anything?

The inspection scheduling silence is the one I would have missed too, and I have been reading draw schedules on deals I am not even in yet just trying to understand the mechanics.

What was the gap lender's actual motivation to drag the inspection, were they liquidity-constrained on their end, or was the clause just a convenient out because the project looked messier than the photos they approved?

Fourteen percent on a 55k gap piece is light for the risk profile you're describing, and I want to push on that because in Indianapolis right now that number is running 16 to 18 depending on how the intercreditor reads and whether the gap lender has a path to cure if the senior calls a default. The 14 percent figure in this post is not wrong historically but it is not what the market is clearing at on a deal with draw-dependent construction and a first lien that keeps ticking regardless of what the second position is doing.

The piece I have not seen raised yet is the inspection vendor problem underneath the scheduling silence. The clause you are describing, where the gap lender can pause advances pending a progress inspection they have not yet scheduled, is almost always written that way because the gap lender does not have an in-house inspector and is dependent on a third party who works on no one's timeline but their own. I had a Scottsdale build in 2022 where the inspection vendor was shared across four different lenders' portfolios and a two-week window turned into six because two other jobs went into dispute and our inspector got pulled. What actually fixes this is a named vendor or a named category of vendor, a maximum scheduling window in calendar days from the draw request, and a deemed-approved provision if the inspection is not completed inside that window. That last one is what the gap lender will fight hardest against and it is the only one that actually protects the borrower.