Legal Alert - Partial Subordination Agreement not Involving or Affecting Mechanics Lien Claimant Priority is Enforceable in Nevada


by Leon F. Mead II

When visible construction begins, Nevada law says mechanic’s liens attach to the construction site. A construction lender wants to ensure that its deed of trust securing the construction loan has first priority to the property title, if the loan is not paid and the lender needs to initiate foreclosure proceedings. But if the project owner does not already have construction financing when construction begins, the mechanics liens will have “priority” over any deed of trust recorded after to secure that financing. NEV. REV. STAT. § 108.225. Nevada law makes such a “break” in the lender’s title priority difficult to change, making some lenders reluctant to finance construction projects after construction begins.

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