Lenders of building loan mortgages may take heart from a recent Court of Appeals decision which stands for the proposition that a failure to file a building loan contract does not necessarily subordinate an acquisition mortgage notwithstanding its consolidation with a building loan mortgage, which has been subordinated to the lien of subsequently filed mechanics liens.

New York's Lien Law protects contractors, laborers and materialmen by providing a level of financial transparency to a construction or repair project that they may consider participating in. Lenders who are providing building loans are required to provide a statement that shows prospective contractors how much money is available to them to pay for their services and or materials, so that they can make a prudent decision on whether to become involved in the construction project. Specifically, Section 22 of the lien law requires the filing of a building loan agreement and a Section 22 Lien Law Affidavit.