The Superior Court of New Jersey sent a cautionary message to the banking industry when it ruled that one of the largest New Jersey mortgage lenders was liable for defects in condominiums that it assumed construction responsibilities for after a builder/developer defaulted.

The judgment went against Midlantic National Bank, of Edison, N.J., which took a partially completed condo project and assumed responsibility for all aspects of the development, including completion of construction and marketing. The ruling, which just recently came to light, was handed down July 19, 1993, and cost the lender $132,300.

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