August 10, 2012
Terry R. Pickard and Jordan R. Pavlus Obtain A Decision Resulting In Over $1.3 Million In Payments to Subcontractors
In the case, the lender advanced funds for construction prior to recording the mortgage which sought to secure said funds. The lender also failed to file a building loan agreement together with a Lien Law Section 22 affidavit with the County Clerk’s Office, which is designed to alert subcontractors to the amount of funds available for construction. Based upon these actions and oversights, the Supreme Court imposed a “subordination penalty” on the priority of the lender’s mortgage. As a result, mechanics liens of unpaid subcontractors (which were all filed subsequent to the mortgage recording) were granted a superior position to the mortgage.
The Supreme Court decision was upheld by the Appellate Division, Fourth Department and leave to appeal to the Court of Appeals was denied. As a result, on June 6, 2012, the Hotel Syracuse Tower property was sold at a foreclosure auction conducted by a referee at the Onondaga County Courthouse. The property was sold for over $1.3 million to the only bidder, The Hayner Hoyt Corporation, also the general contractor on the project. Pursuant to the Judgment of Foreclosure, subcontractors were paid the full amount of their mechanic’s liens. A motion for leave to appeal to the Court of Appeals is currently pending. The decisions in the case may be found at the following citations: Altshuler Shaham Provident Funds, Ltd v. GML Tower, LLC, 10 Misc.3d 475 (Onon. Sup. Ct. 2010), 83 A.D. 3d 1563 (4th Dept. 2011), 86 A.D.3d 934 (4th Dept. 2011), 18 N.Y.3d 892 (Ct. App. 2012), 19 N.Y.3d 837 (Ct. App. 2012).