Priority disputes happen a lot in mechanics’ lien litigation. Typically, a mortgage lender claims that its first-filed mortgage trumps a later-filed mechanics lien. The “trumps” part is activated if and when the property is sold and there aren’t enough proceeds to pay both the lender and contractor. If the lender’s mortgage has priority, it gets first dibs on the sale proceeds, leaving the …
Tag Archives: enhancement
Mechanics’ Lien Enhancement Rule – Post-Cypress Creek
Section 16 of the mechanics lien statute (770 ILCS 60/17), which codifies the enhancement rule (please see prior post), was recently amended in the wake of 2011’s LaSalle National Bank v. Cypress Creek 1, LLP decision: http://www.state.il.us/court/Opinions/SupremeCourt/2011/February/109954.pdf In Cypress Creek, the Illinois Supreme Court severely diluted contractor’s lien rights by allowing a construction lender to trump contractors’ rights …
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Illinois Contractor’s Lien Issues: The Enhancement Rule
The enhancement doctrine comes into play when liened property goes to foreclosure sale and the sale proceeds are insufficient to pay off both the lender and competing lien claimants. The lender, who often records its mortgage before the contractor’s lien attaches, will argue that its mortgage interest takes priority over the contractor’s lien and any property sale proceeds …
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