This article consists of a review and analysis of the Yarborough decision and the open-end mortgage statute and an assessment of their probable impact upon current construction loan lending procedures. In addition, the authors offer various observations regarding the form in which disbursing agreements and construction mortgage deeds should be drafted. The structure of the article may be briefly described as follows: First, attention will be given to the three methods by which a mortgagee can preserve the priority of its mortgage lien over liens of mechanics men which attach to the mortgaged premises after the recording of the mortgage but before any disbursements are made thereunder. Special consideration will be given to the manner in which the Yarborough decision affects each method.
Second, the writers will discuss the manner in which openend mortgages relate to: (1) non-statutory construction mortgages and (2) mechanics' and other types of liens which attach to the mortgaged premises after the recording of an open-end mortgage but before any optional disbursements are made thereunder. In this connection, the use of open-end mortgages to secure construction loans will be considered.
Third, the advisability of drafting an open-end mortgage which incorporates the provisions of § 1311.14 of the Mechanic's Lien Statute will be examined.
Fourth, the authors will discuss a proposed method by which a mortgagee can reasonably assure that its mortgage lien will take priority over any vendees' liens which exist on the date of the recording of the mortgage
Ramey, Malcom B. and Jefferies, Robert A. Jr.
"Construction Mortgage Financing in Ohio,"
Akron Law Review: Vol. 3
, Article 1.
Available at: http://ideaexchange.uakron.edu/akronlawreview/vol3/iss1/1