AMR Construction Begins Foreclosure Action on Main Street Lofts

AMR Construction Begins Foreclosure Action on Main Street Lofts
Manly Roberts

The contractor on downtown Little Rock’s Main Street Lofts project has initiated foreclosure action to press home its recent $974,784 arbitration award.

Little Rock’s AMR Construction LLC staked a priority claim to recover $896,756 for unpaid work on the unfinished three-building, 125,000-SF redevelopment at 510-524 Main St. The collection effort includes more than $78,000 in legal expenses and other costs associated with the arbitration case.

If its position is upheld, AMR will stand first in line among Main Street Loft creditors.

According to real estate records, Riverside Bank of Sparkman (Dallas County) holds a mortgage of $3.2 million secured by the 21,000-SF Arkansas Annex at 514 Main St. and 41,816-SF Arkansas Building at 524 Main St.

However, AMR Construction began work on the property on June 6, 2013, according to court filings. That was more than a month before Riverside filed its construction mortgage.

Typically, a lender requires a contractor to subordinate any future lien interest in a property before funding a project. Manly Roberts, president of AMR Construction, said his company didn’t waive its lien rights in favor of Riverside.

If AMR’s claims hold up to judicial scrutiny, the company will be in an enviable position among creditors.

“It’s a rarity because the contractor is in the driver’s seat,” said Joel Hoover, managing member of the Little Rock law firm of Newman & Associates. “That is never the case.”

It’s also common for a lender to require an affidavit from the borrower that no construction work has been performed on the property during the 120 days preceding the loan.

A sworn statement in this case would come from the owner-development group led by its managing partner, Scott Reed. It’s routine to verify and document the affidavit narrative with a site inspection and photos.

These steps are taken to create a priority lien for the lender to protect its financial position. What was done or not done in connection with the Main Street Lofts loan is unclear for now.

In addition to Riverside Bank, another creditor could stand in the way of AMR.

Asbestos remediation at the project was paid for by a $916,000 loan from Pulaski County through its Brownfields Revolving Loan Fund Committee. That Oct. 30, 2012, mort-gage predates AMR’s claim.

For now, the Brownfields fund appears to be third in line after its interests were subordinated to secure the Riverside construction loan nearly three years ago.

The conflicting security claims will be addressed in the coming weeks in Pulaski County Circuit Court.

The lien claim of AMR Construction extends to the 62,688-SF M.M. Cohn Building at 510 Main St., where Riverside Bank and the Brownfields fund also hold mortgage claims.

The M.M. Cohn roof was never repaired, although work was started on ground-floor improvements for the Arkansas Symphony Orchestra.

“We made several proposals for the roof,” AMR’s Roberts said. “We were real close to starting work on it, but Scott wouldn’t pull the trigger. He didn’t have the money to pay for it.”

According to the arbitration findings, AMR was paid $3.6 million of the more than $4.5 million it was entitled to under the original contract plus allowances and overages.

The contracting firm is seeking a judgment for the balance in hopes of collecting money by bringing the pressure of foreclosure to bear.