Michael P. Ripp ©
Ryley Carlock & Applewhite

In the current turbulent Arizona real estate environment, construction lenders often encounter, and must grapple with how to address, potentially disruptive mechanics' liens and stop notices.  This Guide describes mechanics' liens (which constitute liens against a construction project) and stop notices (which request "holds" against unexpended construction funds) from the construction lender's perspective, beginning with who is permitted to claim a mechanic's lien or serve a stop notice, through and including a construction lender's strategies for addressing a mechanic's lien or stop notice that might otherwise disrupt a project or the flow of construction funds into the project.  The reader should bear in mind that this Guide addresses only Arizona law, and that every state's laws differ.  This Guide does not address public projects, which are covered by the so-called "Miller Act" and "Littler Miller Act" bonding requirements.

By Michael P. Ripp ©
Ryley Carlock & Applewhite

By Michael P. Ripp ©
Ryley Carlock & Applewhite

A.        Introduction.

            A real estate loan modification presents concerns with respect to not only the proper documentation of the changes to the existing loan terms, but also the possible discharge of borrowers, guarantors or collateral owners, the possible loss of the lender's lien priority and the possible impairment of the lender's title insurance coverage.  This Guide addresses concerns commonly encountered with loan modifications involving Arizona obligors and collateral.  This Guide does not attempt to address conduit loans, mezzanine loans and other less frequently encountered loan structures, the income tax consequences or tax reporting obligations associated with loan modifications, choice of governing law issues, or concerns dealing specifically with loan assumptions, workouts[1] or enforcement.  Some of those topics will be addressed in future Guides.