Virtual Underwriter

© 2020 Stewart Title Company

Mechanic's Liens

Standard Exception Topic

MML

Mechanic's Liens

Insurance against mechanic's liens is a major source of claims in our industry. You must verify compliance with the Company's underwriting guidelines for determining that all work is paid for or that none was done on the entire "project" (e.g., condominium regime). If the loan relates to contemplated construction the mortgagee and any companion owner policy must contain exceptions required by Procedural Rule P-8.

Requirements

Standard Exception Subtopic

MMLR01

STG

05/21/2008
V 2

Require Statutory Notice of Completion

The Company will require the recordation of a notice of completion in accordance with applicable law and expiration of the appropriate lien period prior to the issuance of its policy of title insurance.
Comment: A notice of completion will establish the latest time deadline for lien filing. For endorsement of an Owner Policy to remove Procedural Rule P-8 exceptions, you should require the correct notice of completion and passage of time to file liens.

See Underwriting Manual

Standard Exception Subtopic

MMLR03

STG

05/21/2008
V 2

Require Statutory Bond for Recorded Lien

The Company requires for its review a satisfactory statutory bond against that mechanic’s lien recorded ____________.
Comment: Texas law affords a statutory procedure to bond around a lien claim and remove it as a lien. Even if state law is met, you must be cognizant of liens that may later be filed by other contractors or subcontractors. See Texas Property Code Sections 53.171-53.175.

See Underwriting Manual

Standard Exception Subtopic

MMLR04

STG

05/21/2008
V 2

Require Statutory Bond for Project

The Company requires for its review a satisfactory statutory bond against mechanic’s liens.
Comment: Texas has a statutory procedure to file a bond relating to a general contract and effectively prevent recordation of mechanic’s liens. The Company must approve reliance in whole or part on this bond: there may be other contracts; the general contractor may still file a lien; the bond may not be correct; or the bond may be modified to name Stewart Title Guaranty Company as an obligee. See Texas Property Code Sections 53.201-53.211.

See Underwriting Manual

Standard Exception Subtopic

MMLR05

STG

05/21/2008
V 2

Require Release

Affidavit claiming mechanic’s lien by ____________, in the amount of ____________, recorded ____________. The Company requires for its review and recordation a satisfactory release of said lien.
Comment: If a lien claim is filed, this may be a red flag indicating other possible lien claims not yet filed.

[itemize]

Note: You may add additional local requirements here. Please consult with our underwriting personnel in preparing appropriate provisions.

See Underwriting Manual

Exceptions

Standard Exception Subtopic

MMLX02

ALTA

05/21/2008
V 2

Mechanic’s Lien

A claim of mechanic’s lien recorded _______________.
Claimant:
Amount $__________ and any other amounts due thereunder.
Comment: If a lien claim is filed, this may be a red flag indicating other possible lien claims not yet filed.

See Underwriting Manual

Standard Exception Subtopic

MMLX03

ALTA

05/21/2008
V 2

Specify Possible Mechanic’s Lien

Possible mechanic’s lien claim by _______________, in the amount of __________, as evidenced by document, recorded _____________.
Comment: An invoice, letter, other document or communication may evidence a claim not yet perfected. If so, you must except to the possible claim. This possible claim may be a red flag indicating other possible lien claims not yet filed.

See Underwriting Manual

Standard Exception Subtopic

MMLX04

ALTA

05/21/2008
V 2

Suit to Foreclose Mechanic’s Lien

A notice of pendency of action to foreclose a mechanic’s lien, recorded _________
Court:
Case No.:
Plaintiff:
Defendant:
Attorney Information:
 Name:
 Address:
 Phone:
Comment: You must except to a known suit to foreclose mechanic’s lien, even if no lis pendens is filed. You must be aware of other possible lien claims that are disclosed by the suit or that may be filed on the project.

See Underwriting Manual

Standard Exception Subtopic

MMLX05

ALTA

05/21/2008
V 2

Judgment Ordering Foreclosure of Mechanic’s Lie

Judgment in favor of ______________ under Case or Docket Number __________ ordering foreclosure of mechanic’s lien described therein.
Comment: If a judgment orders foreclosure of a mechanic’s lien, you must be aware of other possible lien claims disclosed by the suit or that may be filed on the project.

See Underwriting Manual

Standard Exception Subtopic

MMLX08

ALTA

05/21/2008
V 2

Mechanic’s Lien (Inspection)

Any lien, or claim of lien, for services, labor or materials arising by reason of any work of improvement now in progress or recently completed, as disclosed by an inspection
Comment: If an inspection discloses that work has commenced, use this exception. Future mechanic’s lines may have priority over the insured mortgage, and may attach prior to Date of Policy.
Standard Exception Subtopic

MMLX09

ALTA

05/21/2008
V 2

Notice of Completion

Any lien, or claim of lien, for services, labor or materials arising by reason of a work of improvement, as disclosed by a notice of completion recorded ______________.
Comment: Use this exception if a notice of completion has been recently filed, unless you determine that the time for filing mechanic’s liens has conclusively passed under state law..

See Underwriting Manual

Standard Exception Subtopic

MMLX10

STG

05/21/2008
V 2

Mechanic’s Lien

Affidavit claiming mechanic’s lien claim by ____________, in the amount of ____________, recorded ____________.
Comment: If a lien claim is filed, this may be a red flag indicating other possible lien claims not yet filed.

Note: You may add additional local exceptions here. Please consult with our underwriting personnel in preparing appropriate provisions.

See Underwriting Manual