Most construction loans contemplate multiple advances or disbursements of funds at various stages of the construction project. The construction loan agreement will set forth the conditions that the borrower must satisfy to receive each advance of funds. Given that a construction loan concerns an active construction project, there is a risk that a lender could lose its lien priority in an advance (secured by the insured mortgage) to a mechanic’s lien. This post addresses how a title insurance policy and endorsements can insure against such a risk. Continue reading
This is the first post in an ongoing series of posts on real estate and construction lending. Check back soon for more posts in our series.
In New York, contractors must be careful to file the correct type of lien to ensure they will be paid for their labor and/or materials. State law provides for two distinct liens: (1) a mechanic’s lien for labor or materials provided for private real property, and (2) a public improvement lien for labor or materials provided for public improvements. Knowing which lien applies is important at the beginning of the filing process, as there are significant differences in the coverage and requirements for each.