No Junior Lien Clause

[Mitchell Heddings]

Hi, Guys. I have a question for any attorneys & mortgage gurus out there, that might be able to help :) 

Recently... I obtained financing for a project and noticed an interesting clause at closing. Basically, it says - 

"Borrower understands the lender is the owner of the senior mortgage and obligations secured thereof"... and then... " if any interest in the property is subject to a junior mortgage without lenders express consent"... "lender reserves the right to require immediate payment in full of all sums due". 

It then spills another paragraph about acceleration and their option to execute if desired if another mortgage is attached to the property after closing. 

My question.... is this even legally allowed, or enforceable? I've been doing this for a while, and I've never seen a provision like this. I wasn't planning to even take out an additional loan but was quite surprised when I noticed the wording. It's different and peaked my interest. 

Also - I'm in the State of NY if that helps. 

[Bill Hamilton]

The answer may depend on whether this is commercial or residential and whether it is owner occ or investment property. I have seen clauses like this before but only on a commercial deal. Sometimes lenders don't want any other entity to have an interest in the property because the second or third lien holder can still initiate foreclosure proceedings. And that could create a more complex and expensive situation if the owner has financial difficulties.