Court of Appeals — Foreclosure: Altshuler Shaham Provident Funds Ltd. v. GML Tower LLC

New York State Court of Appeals  

Foreclosure

Lien Priority — Construction Loans

Altshuler Shaham Provident Funds Ltd. v. GML Tower LLC
No 115
Judge Read

Background: A mortgage foreclosure action arose from a failed redevelopment of a hotel complex consisting of several properties. The lender for the redevelopment and numerous mechanic’s lienors disputed the priority of their respective claims to the foreclosure sale proceeds from the auction of the property.

Ruling: The Court of Appeals noted that failure to comply with the filing requirements of Section 22 of the Lien Law results in a change of priority of liens, with a properly filed mechanic’s lien taking priority over the interests of the parties to the underlying building contract. Therefore, a construction lender must file the building loan contract in order to achieve lien priority.

Bruce H. Lederman for the appellant; Timothy M. Bittel for the respondent Hayner Hoyt Corporation; Thomas P. Givas for the respondent LA Painting, Inc.; Jordan R. Pavlus for the respondents TAG Mechanical Systems Inc., et al.; Mark J. Moretti for the respondent Pike Company; Stewart L. Weisman for the respondent Pyramid Roofing & Sheet Metal Co. Inc.