Article Date: 05/23/11

CONSTRUCTION LENDER CANNOT TAKE INTEREST AND FEES AHEAD OF CONTRACTOR PAYMENT

Court of Appeal of California, Second Appellate District

Paveco Construction, Inc. v. East West Bank

No. B223912 (unpublished)
May 5, 2011

Overview

A California court has ruled that a construction lender cannot pre-allocate to itself interest and fees from the loan proceeds, thereby gaining a priority position over an unpaid contractor that served the lender with a stop notice.

Background

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