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Lien position

Let me outline the exact scenario my project is 4,500,000..... I raised 4m Cash. And my lender wanted to give me 500k but he said he can't because his 500k cant become first position over the 4M.. i didn't quite understand him....If my equity guys investing 4m take 2nd position thats perfectly their choice right?

1 reply

Mar 20, 2020

Regarding lien position and priority - it's ultimately up to the preferences of creditors as to what position they're comfortable with. If a new lender comes in and secures their loan against the property without having some other lienor in front of them, then they'd be in first position if the property had to be sold or foreclosed. And, as you mentioned above, if the original money is ok with taking a backseat to a new lender in terms of their loan security, theyr'e free to do that. Admittedly, though, beyond mechanics liens - I'm not particularly familiar with lien priority in Georgia. So, contacting a local Georgia construction or real estate attorney might provide some valuable insight. For more discussion on lien priority: Lien Priority – What Happens When Everybody Is Trying to Grab a Piece from the Same Pie?

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