In Commerce Bank/Harrisburg, N.A. v. Kessler , No. 464 MDA 2011, 2012 WL 1610139 (Pa. Super. May 9, 2012), the Pennsylvania Superior Court issued its affirmance of a ruling of the Dauphin County Court of Common Pleas. In this case, the trial court had ruled that a mechanic’s lien would be given priority over a first-recorded open-end mortgage collateralizing the bank’s construction loan. Key to the Superior Court’s affirmance was the fact that all proceeds of the construction loan were not used in connection with actual construction of the borrower’s home.
In 2006, Stephen and Lisa Kessler contracted with Michael Ricker for the construction of a luxury home in Harrisburg. Ricker began excavation on the Kesslers’ lot on October 18, 2006. Shortly thereafter, the Kesslers obtained a construction loan from Commerce Bank (now known as Metro Bank) on January 12, 2007, in the principal amount of up to $435,000, which was secured with an open-end mortgage. The bank recorded the mortgage on January 24, 2007.
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