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Owner granted First Bank a properly recorded $600,000 mortgage on a warehouse. Owner later granted Second Bank a properly recorded $150,000 mortgage on the same warehouse. Owner then granted Contractor a recorded mechanic's lien for $40,000 after Contractor improved the warehouse. Owner defaulted on all obligations. First Bank foreclosed and named Owner and Second Bank as defendants, but through mistake did not name Contractor. The warehouse sold for $700,000 at the foreclosure sale.
Second Bank claims a right to surplus sale proceeds. Contractor claims that its lien survived because it was omitted from the foreclosure. Owner claims a right to redeem after the sale even though the jurisdiction has no statutory redemption period. A buyer at the foreclosure sale wants to know what interests remain.
Discuss the effect of the foreclosure. Address priority, distribution of proceeds, the rights of Second Bank and Contractor, the purchaser's title, and equitable or statutory redemption.