Legal Question in Construction Law in New Mexico

subcontractor liens preventing home buyer from obtaining permanent mortgage

Can a person who contracted to build a home with a builder be prevented from obtaining a permanent mortgage if the builder failed to pay subcontractors for work they did which resulted in subs placing liens on the home? In this case, the home has numerous construction defects in addition to the fact that the liens on the home were filed after all money from the construction loan had been distributed to the builder who used the construction money for other purposes. The person for whom the home was built is being told by banks and title companies that nothing can be done except to bond around the liens while the arbitration process moves forward which means that instead of receiving money back from the permanent loan that she needed to pay down credit cards that would allow her to get a better interest rate on the permanent loan, the bank is making her escrow this money to cover the liens in question and to pay for a bond as well. It seems incredible that a felonious builder can hold the home buyer hostage in this way and that there is no remedy or relief for the homebuyer who was hurt in this fashion.


Asked on 7/17/08, 1:30 pm

1 Answer from Attorneys
Kevin Connolly Kevin J. Connolly

Re: subcontractor liens preventing home buyer from obtaining permanent mortgage

There is nothing to be done to cut the liens off. However, if the contractor were to be contacted by the District Attorney, odds are he will suddenly find the money to make the victim whole.

You are the victim of a financial fraud. The contractor will diss you until you play hardball.

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Answered on 7/17/08, 1:36 pm


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