Mechanic's Liens (Statutory Liens for Services, Labor or Material)
Underwriting Manuals
- 3.44 Construction Loan Policies
- 5.32 Extended Coverage
- 5.36 Extrahazardous Risks
- 9.04 Indemnity Agreements
- 12.12 Mechanic's Liens
- 15.32 Pending Disbursement Clause
- 17.36 Residential Title Policies
Standard Exceptions
Bulletins
Forms
- No references available.
Table of Contents
MML
Mechanic's Liens (Statutory Liens for Services, Labor or Material)
Insurance against mechanic's liens is a major source of claims in our industry. Consequently, in order to provide insurance against mechanic's liens to owners (where customary) by deletion of the standard exception, 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). To furnish coverage to a lender, you must follow similar guidelines. However, if the loan relates to contemplated construction, the Company's guidelines are contingent upon analysis of state law (given the different rules of priority); in some states, the Company requires compliance with detailed procedures and/or special pending disbursement clauses; in some locations, the Company prefers to issue a construction loan policy (without endorsement) or use the standard mechanic's lien exception.
Requirements
MMLR01
STG
10/10/2011
V
3
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: In some states, a notice of completion will begin the time deadline for lien filing. If so, it is customary to require the correct notice of completion and passage of time to file liens. In some states, the Company also requires an inspection to verify completion.
Comment: In some states, a notice of completion will begin the time deadline for lien filing. If so, it is customary to require the correct notice of completion and passage of time to file liens. In some states, the Company also requires an inspection to verify completion.
MMLR02
STG
10/10/2011
V
3
Inspection to Determine No Commencement
The Company requires a satisfactory inspection of the land to be made at, or immediately prior to recording the mortgage to be insured. If the inspection discloses any evidence of commencement of a work of improvement, either on-site or off-site, the coverage for mechanic’s lien insurance will be deleted from the Policy, unless all the necessary documentation for indemnification has been submitted to the Company (including audited financial statements, draw procedure, all loan documents, any required subordinations, and bonds) and the indemnification has been formally approved by the Company, prior to the recording of the mortgage.
Comment: In some states, it is possible to determine that a construction loan has priority if no work commenced prior to recording of the mortgage. If that fact is not confirmed, the Company requires detailed financial analysis.
Comment: In some states, it is possible to determine that a construction loan has priority if no work commenced prior to recording of the mortgage. If that fact is not confirmed, the Company requires detailed financial analysis.
See Underwriting Manual
MMLR03
STG
10/10/2011
V
3
Require Statutory Bond for Recorded Lien
The Company requires for its review a satisfactory statutory bond against that mechanic’s lien recorded ____________.
Comment: Many states establish 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.
Comment: Many states establish 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 Underwriting Manual
MMLR04
STG
10/10/2011
V
3
Require Statutory Bond for Project
The Company requires for its review a satisfactory statutory bond against mechanic’s liens.
Comment: Many states establish 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.
Comment: Many states establish 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 Underwriting Manual
MMLR05
STG
10/10/2011
V
3
Require Release
Mechanic’s lien claim 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.
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
MMLX01
ALTA
10/10/2011
V
3
Notice of Intention to File
Notice of intention to file a statutory lien for services, labor or material in the amount of $___________, plus interest, executed by _____________ recorded ____________.
Comment: Some states require the filing of a notice of intent as a prerequisite to later lien claim perfection. This may be a red flag indicating other possible claimants.
Comment: Some states require the filing of a notice of intent as a prerequisite to later lien claim perfection. This may be a red flag indicating other possible claimants.
MMLX02
ALTA
10/10/2011
V
3
Statutory Lien for Services, Labor or Material
A statutory claim of lien for services, labor or material 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.
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.
MMLX03
ALTA
10/10/2011
V
3
Specify Possible Statutory Lien for Services, Labor or Material
A possible statutory lien claim for services, labor or material 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.
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.
MMLX04
ALTA
10/10/2011
V
3
Suit to Foreclose Statutory Lien for Services, labor or Material
A notice of pendency of action to foreclose a statutory lien for services, labor or material 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.
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.
MMLX05
ALTA
10/10/2011
V
3
Judgment Ordering Foreclosure of Statutory Lien for Services, Labor or Material
A judgment ordering foreclosure of mechanic's lien, recorded ______________
Court:
Case No.:
Creditor:
Attorney Information:
Name:
Address:
Phone Number:
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.
Court:
Case No.:
Creditor:
Attorney Information:
Name:
Address:
Phone Number:
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.
MMLX06
ALTA
10/10/2011
V
3
Statutory Notice of Commencement
Any lien, or claim of lien, for services, labor or materials by reason of that notice of commencement executed by ______________, and recorded ______________.
Comment: In some states, mechanic’s liens will relate back to the notice of commencement and prime the construction loan mortgage.
Comment: In some states, mechanic’s liens will relate back to the notice of commencement and prime the construction loan mortgage.
MMLX07
ALTA
10/10/2011
V
3
Notice of Non-responsibility
Any lien, or claim of lien, for service, labor or materials as evidenced by that notice of non-responsibility executed by ____________, and recorded ______________.
Comment: In some states, a notice of non-responsibility may give rise to mechanic’s liens.
Comment: In some states, a notice of non-responsibility may give rise to mechanic’s liens.
MMLX08
ALTA
10/10/2011
V
3
Statutory Lien for Services, Labor or Material (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.
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.
MMLX09
ALTA
10/10/2011
V
3
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..
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..
MMLX10
STG
10/10/2011
V
3
Mechanic’s Lien
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.
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
MMLX11
STG
10/10/2011
V
3
Mechanic's Lien Claims of any Tier By, Through or Under the Insured
Any lien or claim of lien arising by reason of unpaid bills or claims by claimants of any tier for services, labor or materials furnished in connection with any work or improvement placed or to be placed upon the Land by, through, or under the Insured.
Comment: Use this exception if this is the potential for liens or claims of liens from claimants of any tier in connection with improvements placed or to be placed on the Land by, through, or under the Insured.
MMLX12
STG
10/10/2011
V
4
Mechanic’s Lien Claims of any Tier for the Benefit of Insured
Any lien, or right of a lien, by claimants of any tier, for services, labor, material or equipment, heretofore or hereafter furnished to or for the benefit of, or contracted for or assumed by, an Insured, or any affiliate, subsidiary, or agent of an Insured, and imposed by law and not recorded in the Public Records.