LaSalle Bank loaned $8 million to Cypress Creek to build an apartment complex. The loan was secured
Question:
LaSalle Bank loaned $8 million to Cypress Creek to build an apartment complex. The loan was secured by a mortgage. Cypress Creek hired contractors to provide concrete work, plumbing, carpentry, and other construction services. Cypress Creek went bankrupt, owing LaSalle $3 million. The contractors recorded mechanic’s liens when they did not get paid for their work. The property was sold to LaSalle at a sheriff’s sale for $1.3 million. The contractors claimed that they should be paid the amounts they were owed out of the $1.3 million and that the mechanic’s liens should be satisfied before any funds were distributed to LaSalle for its mortgage. The trial court distributed the $1.3 million primarily to LaSalle, with only a small fraction going to the contractors. Do the liens come before the mortgage in priority of payment? Discuss. [LaSalle Bank v. Cypress Creek, 925 N.E.2d 233 (Ill.App.3d 2010)]
Step by Step Answer:
Business Law Text and Cases
ISBN: 978-1111929954
12th Edition
Authors: Kenneth W. Clarkson, Roger LeRoy Miller, Frank B. Cross