Property was sold to Webber Enterprises, Inc. (“Webber”), subject to a judgment docketed against its seller. Weber executed a first mortgage to the Plaintiff’s predecessor in title. The Plaintiff then entered into an agreement with Defendants Mario and Nicole Curcio (“the Curcios”) to construct a home on the property for them. On and before December 3, 2013, the Curcios deposited $20,000 with Webber and were credited $9,661 for plumbing work they had paid for prior to December 5, 2013. Webber executed to the Plaintiff a second mortgage on December 20, 2013 and a third mortgage in 2014. The Curcios sought a ruling holding that they held an equitable lien prior in right to the liens of the second and third mortgages.

The Supreme Court, Monroe County, held that the judgment constituted a first lien on the property, and that the first mortgage was a second lien. The $20,000 deposited by the Curcios, and the amount for which they received a credit, together with statutory interest from December 5, 2013, was held to be an equitable third lien, prior to the second and third mortgages executed by Webber, to be paid from proceeds of any foreclosure sale after payment of the first and second liens. An equitable lien for $110,000 advanced by the Curcios after recording of the second mortgage was held to be subject to the lien of that mortgage. According to the Court,

“[t]he presence of [the second mortgage of record] put [the Curcios] on notice that the lender had a secured interest in the property and, hence, their investment as contract vendees after the entry of the second mortgage does not acquire a higher priority in the distribution of proceeds…For these reasons, any claim to an equitable lien for funds advanced by the [Curcios] after the recording of the second mortgage is denied”.

Maximum Income Partners, Inc. v. Webber, 2016 NY Slip Op 51902, decided July 18, 2016, was posted by the Slip Opinion Service, New York Official Reports, of the New York State Law Reporting Bureau on February 7, 2018 at http://www.nycourts.gov/reporter/3dseries/2016/2016_51902.htm.