Garbish v. Malvern Federal Savings & Loan Ass'n

WOOD, J.,

This case brings before us a matter of first impression in the Commonwealth of Pennsylvania, but it is a wonder to the court that similar situations have not produced definitive litigation before this. The question before the court is whether a lender in a construction mortgage situation has any responsibility to the borrower if the lender makes unwarranted payments to the contractor? We hold herein that if, in such a situation, the lender insists on absolute control over the disbursement of funds already loaned to the borrower, and excludes the borrower from any control or input…