In re Manhattan West Mechanic’s Lien Litig.

A subordination agreement subordinated a lien for original land financing to a new construction deed of trust. The holder of mechanics’ liens for work performed after the date of the original loan but before the date of the construction deed of trust filed suit. The district court determined that the subordination agreement only partially subordinated the lien for the original land financing to the new construction deed of trust and left the mechanics’ liens in the second-priority position. The holder of the mechanics’ liens petitioned for a writ of mandamus to compel the district court to vacate its order and recognize its mechanics’ liens as holding a first priority. The Supreme Court denied the petition for extraordinary writ, holding that the priority of the mechanic’s lien remains junior to the amount secured by the original senior lien, as (1) contractual partial subordination differs from complete subordination, and therefore, a contractual partial subordination by creditors of a common debtor do not subordinate a first priority lien to a mechanic’s lien; and (2) nothing in Nev. Rev. Stat. 108.225 changes the priority of a mechanic’s lien to a partially subordinated lien recorded before the mechanic’s lien became effective. View "In re Manhattan West Mechanic's Lien Litig." on Justia Law