Reviewed September 7, 2026.
Priority between a building loan mortgage and a mechanic’s lien requires examination of the loan documents and filings. It is not governed by a universal rule that either the mortgage or the contractor always wins.
In Fred Adams, Jr., Inc. v. Carriage House Farm, Inc., 90 A.D.3d 601 (2011), the Second Department upheld the mortgage’s priority because the record contained no evidence of the lender’s failure to comply with Lien Law § 22. On a separate trust-fund issue, the court upheld reducing the mortgage by improperly released funds instead of awarding the claimant the requested direct money judgment against the bank.
What § 22 requires
Section 22 addresses written, acknowledged building loan contracts, the borrower’s verified statement of the net funds available for improvement, and filing with the county clerk on or before recording the building loan mortgage. Covered modifications generally must be filed within ten days after execution. Noncompliance can subordinate affected interests to later mechanic’s liens.
Not every mortgage is a building loan mortgage, and the effect of a modification or filing defect requires analysis of the actual transaction. Review § 13, the chain of title, advances, assignments and relevant filing dates as well. A lien-priority issue and a trust-diversion claim may lead to different remedies.
Kushnick Pallaci PLLC assists clients throughout New York with mechanic’s lien enforcement and defense. Contact 631-752-7100 or vtp@kushnicklaw.com.
Attorney Advertising. General information, not legal advice.
Thanks for sharing. These state-by-state rules are important for lenders and contractors to know. In Missouri and Kansas (where I primarily practice), the priority issues between lenders and mechanic's lien claimants could not be more different!
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