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How does a mechanics lien foreclosure affect the mortgagee's position?

New YorkLien Foreclosure

If I foreclose on the mechanics lien, what happens to the outstanding debt of the mortgage?

1 reply

Jan 31, 2020
The relationship between a mechanics lien and another encumbrance on the property is governed by the "priority" of each competing encumbrance. With respect to mechanics liens, the lien priority is generally set forth by NY Lien Law § 13. Priority of Liens. Generally, pre-existing mortgages will have priority over a mechanics lien claim. This is because, subject to some exceptions, NY follows a "first-in-time, first-in right" rule so mechanic liens have "priority over a conveyance, mortgage, judgment or other claim against such property not recorded, docketed or filed at the time of the filing of the" mechanics lien. [emphasis added]. There are many different and sometimes complicated rules regarding the priority of liens in New York, but generally if a mechanics lien is foreclosed on, and the property is sold to satisfy the debt, the outstanding mortgage debt will be paid from the proceeds of the sale prior to any money coming to the mechanics lien claimant.  
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