THIS BULLETIN IS FURNISHED TO INFORM YOU OF CURRENT DEVELOPMENTS. AS A REMINDER, YOU ARE CHARGED WITH KNOWLEDGE OF THE CONTENT ON VIRTUAL UNDERWRITER AS IT EXISTS FROM TIME TO TIME AS IT APPLIES TO YOU, AS WELL AS ANY OTHER INSTRUCTIONS. OUR UNDERWRITING AGREEMENTS DO NOT AUTHORIZE OUR ISSUING AGENTS TO ENGAGE IN SETTLEMENTS OR CLOSINGS ON BEHALF OF STEWART TITLE GUARANTY COMPANY. THIS BULLETIN IS NOT INTENDED TO DIRECT YOUR ESCROW OR SETTLEMENT PRACTICES OR TO CHANGE PROVISIONS OF APPLICABLE UNDERWRITING AGREEMENTS. CONFIDENTIAL, PROPRIETARY, OR NONPUBLIC PERSONAL INFORMATION SHOULD NEVER BE SHARED OR DISSEMINATED EXCEPT AS ALLOWED BY LAW. IF APPLICABLE STATE LAW OR REGULATION IMPOSES ADDITIONAL REQUIREMENTS, YOU SHOULD CONTINUE TO COMPLY WITH THOSE REQUIREMENTS.
Bulletin: SLS2008006
Bulletins by State or Territory
Bulletins by Country
Bulletin: SLS2008006
V
2
Date: March 31, 2008
To:
All Issuing Offices
RE:
Builder Transactions and Mechanic's Liens
Dear Associates:
Downturns in the housing market give rise to an increase in mechanic's lien claims involving builders. In order to minimize our mechanic's lien losses, please adhere to the following procedures when insuring on a builder sale or builder construction financing:
- If you are insuring on a sale of a home or other property by a builder, please be satisfied that subcontractors of the builder have been paid or are being paid out of closing proceeds, but do not rely solely on an affidavit of payment of bills by the builder unless you secure approval of Stewart Underwriting Personnel. If your state law adequately protects innocent purchasers against unfiled mechanic's liens (as some states do), you may rely on the state procedure for such protection. You may contact Stewart Underwriting Personnel for further guidance.
- If you are insuring on a construction loan mortgage by a builder in a state which may provide for priority of the mortgage over unfiled mechanic's liens, please be satisfied that you follow state procedure and our guidelines for determining and insuring priority of the insured mortgage if state law provides for priority of the mortgage. You should contact Stewart Underwriting Personnel for further guidance if priority of the mortgage cannot be obtained, unless you add an exception for unrecorded mechanic's liens in the policy (Schedule B Part 1). In Texas, you may comply when insuring construction loan mortgages by adding in Schedule B the promulgated exceptions in Procedural Rule P-8.
- If you insure on builder transactions, you should also secure an indemnity against mechanic's liens from the builder and its principals. This may be accomplished by a Master Indemnity. If you secure a builder indemnity it is best practice to maintain a record or log of policies issued pursuant to the indemnity, so that you can know the total exposure under the indemnity. You should contact Stewart Underwriting Personnel for further guidance and approval of the indemnity.
- You should secure overlimits approval of large transactions as required by your Underwriting Agreement.
If you have any questions, or seek guidance with respect to a particular builder, please contact Stewart Underwriting Personnel.
For on-line viewing of this and other bulletins, log onto http://www.vuwriter.com.
References
- Bulletins Replaced:
- None
- Related Bulletins:
- FL2010002 - Mechanic's Liens Coverage on Lender's Policies During Construction
- FL2024001 - UNDERWRITING - Mechanic's Liens Coverage on Lender's Policies During Construction
- GA2010006 - Mechanic's Liens Coverage During Construction
- GA2014002 - UNDERWRITING - Mechanic's Liens Coverage During Construction
- IL2010005 - Mechanic's Liens Coverage During Construction - No Priority
- IL2023002 - UNDERWRITING - Mechanic's Liens Coverage During Construction - No Priority
- LA2010010 - Mechanic's Liens Coverage During Construction - Initial Priority if No Commencement
- MA2010002 - Mechanic's Liens Coverage During Construction
- MD2014002 - UNDERWRITING - Mechanic’s Liens Coverage During Construction – Priority For Future Advances Established Upon Recording of Mortgage
- MI2009009 - New Construction Procedures and Requirements
- MI2010007 - Mechanic's Liens Coverage During Construction
- MI2011006 - Jeddo Drywall v. Cambridge Investment Group
- MO2009002 - Mechanic's Lien Coverage and Construction Loans
- MO2010003 - Residential New Construction and Mechanic's Liens
- MU2010007 - Mechanic's Liens Coverage During Construction - Priority if No Lien or Suit Filed when Disbursing (1)
- MU2010008 - Mechanic's Liens Coverage During Construction - Initial Priority if No Commencement (3)
- MU2010009 - Mechanic's Liens Coverage During Construction - No Priority (2)
- NC2008002 - Lien Waivers
- NC2010003 - Mechanic's Liens Coverage During Construction - Initial Priority if No Commencement
- NC2015001 - UNDERWRITING - Mechanic's Liens Coverage During Construction - Initial Priority if No Commencement
- ND2010001 - Mechanic's Liens/Construction Liens Coverage During Construction - Priority if No Lien or Suit Filed when Disburse
- NJ2010005 - Construction Lien Claims in New Jersey
- NM2010001 - Mechanic's Liens Coverage During Construction - Initial Priority if No Commencement
- PA2010009 - Mechanic's Liens Coverage During Construction - Initial Priority if No Commencement
- SLS2008021 - Foreclosures and Mechanic's Liens
- SLS2008024 - Vacation Homes and Mechanic's Liens
- SLS2009007 - Mechanic's Liens Recap
- VA2010001 - Mechanic's Liens Coverage During Construction
- WI2010005 - Mechanic's Liens Coverage During Construction
- Underwriting Manual:
- Exceptions Manual:
- Forms: