Developing Condos - Lending Questions

[Keith Schulz]

First let me start with, I'm a residential investor and have only done a few small commercial deals as an agent. I'm considering developing some condos. I've talked to a few commercial lenders and gotten a few different answers. In general commercial loans are shorter terms (3, 5, or 7 years) and often involve prepayment penalties if you pay it off or refinance early. 

How would you expect financing to be handled in terms of title and prepayment penalties for a scenario like this...  Let's say a full condo development is 10 million dollars so we borrow 7.5 million against the whole property for development and construction. A year down the road the development is completed and we've sold off 1/4 of the inventory. If we plop down 3-4 million on principal after a year to reduce the debt load:

1) What would you expect for a prepayment penalty each time we pay a chunk toward principal?

2) How do they handle releasing some units from the loan while maintaining a loan on the remaining units?