Practical completion
What is practical completion in a construction project?
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BY MICHAEL SHANG · SIXTEEN YEARS IN COMMERCIAL BANKING · UPDATED
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Practical completion is the stage at which a building is finished except for minor defects, can be used for its purpose, and is certified as such under the building contract. It sets off a chain of consequences: the builder's exposure to delay damages stops, the defects period begins and part of the retentions is usually released, bonds tied to construction often lapse, and on a presold development the clock starts on buyers settling. For the lender it is not repayment — the loan stays fully drawn until titles issue and the sales settle.
BASIS Practitioner judgment from sixteen years in commercial banking, set out in How Bankers Think (Highbank Press, 2026). Every borrower on this site is a composite constructed for teaching, not a client. The market is mid-market commercial lending as practised in New Zealand and Australia; where a convention differs elsewhere, the page says so.
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