In re Skyline Properties, Inc.
United States Bankruptcy Court for the Western District of Pennsylvania
134 B.R. 830 (1992)
Contractor Mealy (creditor) began converting an old farmhouse into a sales office and building a new addition for Skyline Properties (debtor) on April 20; the bank (creditor) issued Skyline a mortgage on June 5, and Mealy filed a mechanic's lien for the work on September 23. After the bank initiated foreclosure and Skyline filed bankruptcy, Mealy and the bank disputed lien priority, with Mealy arguing its lien took effect on the date construction began (before the mortgage) and the bank arguing the lien didn't take effect until it was filed (after the mortgage).
Whether a mechanic's lien for a substantial building addition takes effect on the date construction began (as with new construction) or only when the lien is filed (as with alterations or repairs), for purposes of establishing priority against a later-recorded mortgage.