Commercial foreclosures and liens up in Manhattan
September brought the steepest rise seen in months in filings by frustrated lenders and claims by contractors on distressed real estate properties in Manhattan, although the numbers still remain below the recent highs.
The number of lenders filing mortgage-related liens, generally consisting of foreclosure lawsuits, doubled in September to 15 from August, while the number of contractors filing mechanic’s liens rose to 286 in the same time period, marking a 25 percent jump, according to new data provided to The Real Deal from research firm PropertyShark.com.
While the increases in September were substantial, both figures remain below their peak levels seen in the recent down cycle. The greatest number of mortgage-related liens filed in a month was 26 in July 2008, and March 2009 saw the most activity for mechanic’s liens, when 371 were filed in Manhattan, the figures show.
Lenders generally file mortgage-related suits to force the sale of a property in order to recoup a nonperforming loan. Contractors and suppliers, most often for construction projects, file mechanic’s liens to publicly record a claim of nonpayment.
Experts said while the number of foreclosure suits and mechanic’s liens were both up last month, the numbers are off their peaks because lenders are trying to work out their loans, and construction activity has declined.
Patrick Dore, partner and head of the real estate group at law firm Davis Polk & Wardwell, said lenders are trying to work with borrowers before resorting to court, which could reduce foreclosure actions.
“There is more restructuring going on now because people don’t want to take the losses at the bank level. The early ones were the low-hanging fruit,” he said.
Barry LePatner, partner at construction and real estate law firm LePatner & Associates, said the depressed construction market has reduced the number of mechanic’s lien filings from its peak this spring.
“That the current volume of liens is down is a function of the large decrease in construction and interior work in New York City,” LePatner said in an e-mail.
For the city overall, the number of commercial lis pendens fell in September
to 202. Lis pendens can be a foreclosure filing as well as other commercial filings such as a lawsuit to recover amounts claimed in a mechanic’s lien or a tax lien. Such filings have been on the decline since peaking in March 2009 at 364.