When a supplier of goods or a lending institution extends credit there is an element of risk even in a strong economy. When the housing market in general, and the construction industry in particular, are in a downturn, the creditor’s primary concern, once creditworthiness is established, will be priority over other creditors.
In a 2-1 opinion filed on May 28, the Superior Court sent us all a reminder of the importance of the common law equitable lien and how, in the appropriate circumstance, the equitable lien holder will enjoy priority even against a trustee in bankruptcy and a secured creditor. Even though the events that gave rise to Trevdan Building Supply v. Toll Brothers Inc. and Gulf Coast Bank and Trust Co. occurred in 2005-06, its relevance is even more obvious in today’s market.
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