Seeking Clarity in New York`s Lien Law

ERHAPS THE LEAST understood area of law in a real estate practice is the area involving construction loan financing, including its interaction with the New York Lien Law. This is so for several reasons. First, New York’s lien law is dissimilar to the laws of any other jurisdiction in the country. Second, the priority provisions of the New York Lien Law as against building loan mortgages turns the ordinary priority rule on its head. All of the rules of priority relating to a race-notice jurisdiction go out the window, replaced by �22 affidavits and trust fund provisions. Third, the New York Lien Law is not, as we shall see, a model of clarity.

As a result, I find that, as an attorney for a title agency, I get a large number of calls from people who have questions about the Lien Law or about how specific facts relate to the preparation of their building loan mortgage, building loan agreement and/or �22 Lien Law affidavit. I find myself often re-affirming my understanding of certain Lien Law principles in answering these inquiries, and felt that it might be helpful to outline these principles in a question and answer format, using what I perceive as the most frequently asked questions as a tool.