I did the framing labor for a new home, but the owner/contractor
shorted me $2800. I filed a Mechanics Lien for $2800 and started
foreclosure. Legal costs plus our lien are now at $10,000 . The
property owner, after 9 months, filed a Release of Lien and
Substitution of Collateral by posting a 150% bond ($4,200) pursuant to
the state law then in effect. Our framing contract allows us to
collect attorney fees in the event of default by the homeowner. The
construction loan was paid off and a mortgage was created (after our
lien was filed) and insured in 1st mortgage position by the title
company, even though our mechanics lien and lis pendens was recorded
first.
I don't see how the mortgage has priority unless your lien is
subordinated by statute. The general rule is "first in time first in
right". What state are you in? I presume you are represented by an
attorney, given "legal costs" of $7200. What does your attorney tell
you about the priority issue?
The injustice is the value I added by laboring to build the home
(including collection costs) benefits the lender and homeowner. I have
no way of collecting unless I file a lawsuit against the lender and
homeowner for unjust enrichment.
The way I see the facts, you will be made whole for your labor,
materials, interest, and some "legal costs" by the bond money. Any
injustice will be based on the uncollectibility (if any) of the
remaining $5,800 that you are (presumably) out of pocket for "legal
costs". And although the owner may not have much (or any) equity right
now, the value of your judgment lien will grow as his equity does. You
or your assignee will eventually be paid.
Is there any case law relative to priority disputes between lenders and
lien claimants?
Lots of it. But shouldn't your attorney be dealing with this issue?
