Harbor Builders began construction on three homes in its new division. After construction had begun, the buyers of the homes closed escrow on the homes. The lender for the buyers had the buyers sign affidavits stating that construction had not begun. The buyers gave the lender mortgages on their properties. If Harbor is not paid and the buyers default, who has first rights on the proceeds from the sale of the property?

Question

Quizplus · Accepted Answer

Harbor Builders has first rights because they began construction before the buyers closed escrow and signed affidavits. The mechanics' lien rights of Harbor Builders would take priority over the lender's mortgage since construction commenced before the mortgage was recorded.

Harbor Builders Began Construction on Three Homes in Its New