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N.C. Court of Appeals: Limitations Period Does Not Apply to Local Government Enforcement of Subdivision Performance Bonds

A post-Great Recession treat, the North Carolina Court of Appeals affirmed today a ruling that the Town of Black Mountain is entitled to enforce subdivision performance bonds originally in the name of Buncombe County, after...more

General Contractors Beware of Subordination Clauses

In California, a general contractor can usually rest assured that in the event of nonpayment, it can rely upon the remedy of a mechanics lien, which remedy is, in fact, even a constitutional right....more

General Contractor’s Prospective Waiver of its Lien Rights is Enforceable in California

In an opinion published in September 2014, entitled Moorefield Construction, Inc. v. Intervest Mortgage Investment Company, et al., D065464, the California Court of Appeal held an original contractor can contractually waive...more

A Cautionary Tale for General Contractors

Construction lenders often go to great lengths to ensure their deeds of trust have priority over mechanic’s liens. Typically, as part of the construction loan process, general contractors are asked to sign documents...more

Vendees' Liens—Construction Lenders Beware!

A recent Arizona Court of Appeals decision highlights a lien priority risk for secured construction lenders when the financed project fails. The problem—known as a “vendee lien”—is most likely to arise when up-front deposits...more

Bankruptcy by the Developer/Owner: Mechanics Lien Rights May Still Prevail!

The rate of bankruptcies among construction industry participants is higher than some think. The bankruptcy of a developer creates an “automatic stay” under federal law preventing almost all collection activities, including...more

Editorial: Court Gives Nod to 1932 Florida Supreme Court Case, Blocking Developers’ Ability to Avoid Additional Payments

We are often asked when representing a client in defense of a claim whether the client could avoid the liability asserted by the claimant by potentially buying the cause of action out from under the claimant. The most common...more

Mechanic’s Lien Reigns Supreme in the Battle of a Project Default? Not for a Waiving General

In what can only be described as a devastating result for a general contractor, the Fourth Appellate District held that a general contractor may prospectively waive the priority of a mechanic’s lien to the owner’s...more

Construction Case Law Update - September 2014

FLORIDA STATE CASES - Forum selection clause in construction contract will not be enforced where third party defendant would be forced to testify in two venues. Forum selection clauses in contracts are generally...more

Arizona Supreme Court to Contractor: Sorry But Equitable Subrogation of a Bank’s Later Deed of Trust Trumps Earlier Mechanics’...

The smoke has finally cleared in a hard and long-fought battle between a bank and contractor both claiming priority to foreclose millions of dollars on a Phoenix condominium project. The project, well-known as Summit at...more

Nevada Supreme Court Clarifies Mechanic and Materialman Lien Issues

On August 7, 2014, the Nevada Supreme Court issued two opinions dealing with the priority of mechanics’ liens and the proof required for a materialman to establish a lien. These cases provide valuable guidance to lenders,...more

Changes Made to the Pennsylvania Mechanics’ Lien Law to Protect Holders of Open-End Mortgages and Residential Property Owners

Mechanics’ liens grant contractors and subcontractors an interest in improvements made to real property to secure the payment obligations of owners to contractors, and of contractors to subcontractors. While these liens...more

Pennsylvania Mechanics' Lien Law Amended, Clarifying Open-End Construction Loan Mortgage Priority

On July 9, 2014, Pennsylvania Governor Tom Corbett signed into law Act 117 of 2014, which amends the Pennsylvania Mechanics' Lien Law (MLL), 49 P.S. 1101, et seq., to provide that a construction loan secured by an open-end...more

News for Contractors and Construction Lenders in Arizona and Nevada – The Contractors' Lien May Trump the Bank's

In addition to an arid climate and plenty of sunshine, Arizona and Nevada have something more to offer contractors: a potentially advantageous position over lenders when a project goes bad. When a project derails and...more

Construction Lenders Beware: Unbonded Stop-Payment Notices May Be Worth More Than The Paper They Are Written On

A common perception in the construction industry is that the most valuable part of an unbonded stop payment notice is the paper it is written on, at least when it is served on a construction lender. While an unbonded stop...more

Certain Residential Developers are Unprotected by the Anti-Deficiency Statute after Foreclosure of a Deed of Trust on Vacant...

Nearly three years ago, in M&I Marshall & Isley Bank v. Mueller, the Arizona Court of Appeals held that the Arizona anti-deficiency statute (A.R.S. § 33-814) protects a borrower who started, but never completed, construction...more

Lender Cleared From Being Classified As a "Developer" Under the Interstate Land Sales Act

Poyner Spruill has been keeping an eye out for lawsuits where the plaintiffs attempted to lump lenders in with developers for liability purposes and we are glad to report the North Carolina Court of Appeals has refuted such...more

Reviving Construction Projects — How to Avoid Creating a Frankenstein Monster

Reviving dead or moth-balled projects presents risks and rewards. The rewards include a shorter ramp-up period. The risks include the revival of claims akin to the unintended creation of a Frankenstein monster. But those...more

Court of Appeals Rejects Attempted Restriction of “Mortgage Banker” Priority Provision

On February 20, 2014, the Wisconsin Court of Appeals issued an opinion interpreting the meaning of “mortgage banker” under Wis. Stat. § 224.71(3) and finding that a mortgage holder was entitled to the priority afforded under...more

Court of Appeal Confirms that Laborers and Materialmen Have Priority over Construction Lenders to Funds Used to Develop the...

A California Court of Appeal recently ruled that a construction lender must make available to stop notice claimants those amounts which the lender has already disbursed to itself on the construction loan. (Brewer Corp. v....more

Mortgage Lenders Can’t Jump Ahead of Mechanic’s Liens

In Weitz Co., LLC v. Heth, 223 Ariz. 442, 314 P.3d 569 (Ct. App. Nov. 26 2013), the Arizona Court of Appeals held that the plain language of Arizona’s mechanic lien statute, A.R.S. § 33-992(A), does not allow a lender to jump...more

There’s a Reason Why It’s Called a “Stop Payment” Notice Not a “Let Me Pay Myself First” Notice

In a decision published January 31, 2014 (Brewer Corp. v. Point Center Financial, Inc.), the California Court of Appeal (Fourth District) affirmed a trial court’s judgment holding a lender liable for contractors’ stop notice...more

In Site - Winter 2013/2014

Welcome to the Winter 2013/2014 edition of In Site. This edition covers the following topics: - Collateral warranties, third party rights and the decisions in Parkwood Leisure Ltd v Laing O’Rourke Wales and Royal...more

All About “Commitment”: CEQA Review is Not Triggered By Orange County’s AB 900 Application For State Funding To Expand Existing...

In a decision recently ordered published, the Fourth District Court of Appeal added to the growing progeny of Save Tara, and affirmed the trial court’s judgment denying the City of Irvine’s writ petition seeking to compel...more

Guarantors Beware! A.R.S. § 33-814 May Not Save You from a Deficiency Judgment

In First Credit Union v. Courtney, 309 P.3d 929, 669 Ariz. Adv. Rep. 18 (Ct. App. 2013), the Arizona Court of Appeals rejected three creative arguments that A.R.S. § 33-814 protected the guarantors from paying on their...more

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