Court of Appeals of New York

In mortgage foreclosure action where the lender for a redevelopment project and numerous mechanic's lienors dispute the priority of their respective claims to the foreclosure sale proceeds from the auction of a tower building, judgment that plaintiff's entire $10 million mortgage was subordinate to the subsequently filed mechanic's liens is affirmed but modified, where: 1) the 2007 Loan Agreement was a building loan contract within the meaning of Lien Law section 22; 2) Lien Law section 22 obligated plaintiff to file the loan agreement in the county clerk's office prior to the recording of any mortgage made pursuant thereto, or suffer loss of lien priority; 3) plaintiff never filed the 2007 loan agreement or the 2008 amendment; but 4) $5.5 million of the loan proceeds, secured by the 2007 and 2008 mortgages, was not subject to the subordination penalty because the subordination penalty logically applies only to funds loaned to pay for improvements, not amounts used to pay off the existing purchase-money mortgage.

Appellate Information

• Decided 06/11/2013
• Published 06/11/2013

Judges

• READ

Court

• Court of Appeals of New York

Counsel